10-Q
BRAND HOUSE COLLECTIVE, INC. (TBHC)
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| ☒ | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|---|---|
| For the quarterly period ended November 1, 2025 |
or
| ☐ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|---|---|
| For the transition period from ______to ______. |
Commission file number: 000-49885
The Brand House Collective, Inc.
(Exact name of registrant as specified in its charter)
| Tennessee | 62-1287151 |
|---|---|
| (State or other jurisdiction of | (IRS Employer Identification No.) |
| incorporation or organization) | |
| 5310 Maryland Way | |
| Brentwood, Tennessee | 37027 |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (615) 872-4800
Former Name, if Changed Since Last Report: Kirkland’s, Inc.
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock | TBHC | NASDAQ Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
|---|---|---|---|
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock, no par value – 22,461,383 shares outstanding as of December 9, 2025.
Table of Contents
THE BRAND HOUSE COLLECTIVE, INC.
TABLE OF CONTENTS
| Page | ||
|---|---|---|
| PART I | FINANCIAL INFORMATION | 3 |
| Item 1. | Financial Statements | 3 |
| Condensed Consolidated Balance Sheets (Unaudited) as of November 1, 2025, February 1, 2025, and November 2, 2024 | 3 | |
| Condensed Consolidated Statements of Operations (Unaudited) for the 13-week and 39-week periods ended November 1, 2025 and November 2, 2024 | 4 | |
| Condensed Consolidated Statements of Shareholders’ (Deficit) Equity (Unaudited) for the 13-week and 39-week periods ended November 1, 2025 and November 2, 2024 | 5 | |
| Condensed Consolidated Statements of Cash Flows (Unaudited) for the 39-week periods ended November 1, 2025 and November 2, 2024 | 6 | |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | 7 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 19 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 29 |
| Item 4. | Controls and Procedures | 29 |
| PART II | OTHER INFORMATION | 29 |
| Item 1. | Legal Proceedings | 29 |
| Item 1A. | Risk Factors | 29 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 30 |
| Item 5. | Other Information | 30 |
| Item 6. | Exhibits | 31 |
| SIGNATURES | 32 |
2
Table of Contents
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE BRAND HOUSE COLLECTIVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share data)
| November 1, | February 1, | November 2, | |||||||
|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2025 | 2024 | |||||||
| ASSETS | **** | **** | **** | ||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 6,457 | $ | 3,820 | $ | 6,756 | |||
| Inventories, net | 88,902 | 81,899 | 111,219 | ||||||
| Prepaid expenses and other current assets | 10,468 | 5,585 | 6,494 | ||||||
| Total current assets | 105,827 | 91,304 | 124,469 | ||||||
| Property and equipment: | |||||||||
| Equipment | 18,697 | 18,905 | 19,067 | ||||||
| Furniture and fixtures | 59,679 | 61,354 | 62,846 | ||||||
| Leasehold improvements | 95,702 | 97,635 | 99,923 | ||||||
| Computer software and hardware | 78,931 | 78,847 | 78,765 | ||||||
| Projects in progress | 664 | 287 | 526 | ||||||
| Property and equipment, gross | 253,673 | 257,028 | 261,127 | ||||||
| Accumulated depreciation | (235,893 | ) | (234,966 | ) | (237,289 | ) | |||
| Property and equipment, net | 17,780 | 22,062 | 23,838 | ||||||
| Operating lease right-of-use assets | 102,532 | 121,229 | 123,916 | ||||||
| Other assets | 3,090 | 7,593 | 7,591 | ||||||
| Total assets | $ | 229,229 | $ | 242,188 | $ | 279,814 | |||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | **** | **** | **** | ||||||
| Current liabilities: | |||||||||
| Accounts payable | $ | 55,040 | $ | 43,935 | $ | 61,177 | |||
| Accrued expenses and other liabilities | 21,417 | 20,183 | 23,830 | ||||||
| Operating lease liabilities | 35,650 | 39,355 | 38,541 | ||||||
| Related party debt, net | 1,538 | — | — | ||||||
| Current debt, net | — | 49,199 | — | ||||||
| Total current liabilities | 113,645 | 152,672 | 123,548 | ||||||
| Operating lease liabilities | 77,589 | 95,085 | 99,222 | ||||||
| Related party debt, net | 16,542 | — | — | ||||||
| Long-term debt, net | 61,602 | 10,003 | 80,397 | ||||||
| Other liabilities | 3,892 | 3,445 | 3,779 | ||||||
| Total liabilities | 273,270 | 261,205 | 306,946 | ||||||
| Shareholders’ deficit: | |||||||||
| Preferred stock, no par value, 10,000,000 shares authorized; no shares issued or outstanding at November 1, 2025, February 1, 2025, and November 2, 2024, respectively | — | — | — | ||||||
| Common stock, no par value; 80,000,000; 100,000,000; and 100,000,000 shares authorized at November 1, 2025, February 1, 2025, and November 2, 2024, respectively; 22,461,383; 13,117,942; and 13,117,942, shares issued and outstanding at November 1, 2025, February 1, 2025, and November 2, 2024, respectively | 188,227 | 177,543 | 177,310 | ||||||
| Accumulated deficit | (232,268 | ) | (196,560 | ) | (204,442 | ) | |||
| Total shareholders’ deficit | (44,041 | ) | (19,017 | ) | (27,132 | ) | |||
| Total liabilities and shareholders’ deficit | $ | 229,229 | $ | 242,188 | $ | 279,814 |
The accompanying notes are an integral part of these financial statements.
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THE BRAND HOUSE COLLECTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
| 13-Week Period Ended | 39-Week Period Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| November 1, | November 2, | November 1, | November 2, | |||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||
| Net sales | $ | 103,462 | $ | 114,423 | $ | 260,754 | $ | 292,465 | ||||
| Cost of sales | 82,342 | 82,288 | 206,981 | 215,602 | ||||||||
| Gross profit | 21,120 | 32,135 | 53,773 | 76,863 | ||||||||
| Operating expenses: | ||||||||||||
| Compensation and benefits | 19,306 | 19,409 | 54,987 | 57,348 | ||||||||
| Other operating expenses | 13,256 | 14,275 | 38,165 | 39,977 | ||||||||
| Depreciation (exclusive of depreciation included in cost of sales) | 551 | 843 | 1,802 | 2,729 | ||||||||
| Gain on sale of internally developed intangible assets | (10,000 | ) | — | (10,000 | ) | — | ||||||
| Asset impairment | — | 1 | 72 | 32 | ||||||||
| Total operating expenses | 23,113 | 34,528 | 85,026 | 100,086 | ||||||||
| Operating loss | (1,993 | ) | (2,393 | ) | (31,253 | ) | (23,223 | ) | ||||
| Interest expense | 1,738 | 1,719 | 4,550 | 4,266 | ||||||||
| Loss on extinguishment of debt | — | 3,338 | — | 3,338 | ||||||||
| Other income | (49 | ) | (126 | ) | (172 | ) | (362 | ) | ||||
| Loss before income taxes | (3,682 | ) | (7,324 | ) | (35,631 | ) | (30,465 | ) | ||||
| Income tax expense | 23 | 356 | 77 | 549 | ||||||||
| Net loss | $ | (3,705 | ) | $ | (7,680 | ) | $ | (35,708 | ) | $ | (31,014 | ) |
| Loss per share: | ||||||||||||
| Basic | $ | (0.16 | ) | $ | (0.59 | ) | $ | (1.60 | ) | $ | (2.38 | ) |
| Diluted | $ | (0.16 | ) | $ | (0.59 | ) | $ | (1.60 | ) | $ | (2.38 | ) |
| Weighted average shares outstanding: | ||||||||||||
| Basic | 22,461 | 13,116 | 22,338 | 13,052 | ||||||||
| Diluted | 22,461 | 13,116 | 22,338 | 13,052 |
The accompanying notes are an integral part of these financial statements.
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THE BRAND HOUSE COLLECTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’(DEFICIT) EQUITY (UNAUDITED)
(in thousands, except share data)
| Common Stock | Accumulated | Total Shareholders’ | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Shares | Amount | Deficit | Deficit | |||||||||
| Balance at February 1, 2025 | 13,117,942 | $ | 177,543 | $ | (196,560 | ) | $ | (19,017 | ) | |||
| Restricted stock issued | 131,006 | — | — | — | ||||||||
| Net share settlement of restricted stock units | (39,200 | ) | (51 | ) | — | (51 | ) | |||||
| Issuance of common stock to Bed Bath & Beyond, Inc. for subscription agreement | 4,324,324 | 7,730 | — | 7,730 | ||||||||
| Issuance of common stock to Bed Bath & Beyond, Inc. to convert term loan and accrued interest | 4,610,141 | 6,705 | — | 6,705 | ||||||||
| Issuance of common stock for payment of equity issuance costs | 310,135 | — | — | — | ||||||||
| Stock-based compensation expense | — | 239 | — | 239 | ||||||||
| Net loss | — | — | (11,824 | ) | (11,824 | ) | ||||||
| Balance at May 3, 2025 | 22,454,348 | $ | 192,166 | $ | (208,384 | ) | $ | (16,218 | ) | |||
| Restricted stock issued | 10,000 | — | — | — | ||||||||
| Net share settlement of restricted stock units | (2,965 | ) | (4 | ) | — | (4 | ) | |||||
| Stock-based compensation expense | — | 82 | — | 82 | ||||||||
| Gain on debt extinguishment from a related party | — | 1,158 | — | 1,158 | ||||||||
| Net loss | — | — | (20,179 | ) | (20,179 | ) | ||||||
| Balance at August 2, 2025 | 22,461,383 | $ | 193,402 | $ | (228,563 | ) | $ | (35,161 | ) | |||
| Stock-based compensation expense | — | 2 | — | 2 | ||||||||
| Correction of an immaterial error on debt extinguishment from a related party (see Note 1) | — | (5,177 | ) | — | (5,177 | ) | ||||||
| Net loss | — | — | (3,705 | ) | (3,705 | ) | ||||||
| Balance at November 1, 2025 | 22,461,383 | $ | 188,227 | $ | (232,268 | ) | $ | (44,041 | ) | |||
| Common Stock | Accumulated | Total Shareholders’ | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Shares | Amount | Deficit | (Deficit) Equity | |||||||||
| Balance at February 3, 2024 | 12,926,022 | $ | 176,552 | $ | (173,428 | ) | $ | 3,124 | ||||
| Restricted stock issued | 134,597 | — | — | — | ||||||||
| Net share settlement of restricted stock units | (21,641 | ) | (51 | ) | — | (51 | ) | |||||
| Stock-based compensation expense | — | 292 | — | 292 | ||||||||
| Net loss | — | — | (8,830 | ) | (8,830 | ) | ||||||
| Balance at May 4, 2024 | 13,038,978 | $ | 176,793 | $ | (182,258 | ) | $ | (5,465 | ) | |||
| Restricted stock issued | 72,660 | — | — | — | ||||||||
| Stock-based compensation expense | — | 264 | — | 264 | ||||||||
| Net loss | — | — | (14,504 | ) | (14,504 | ) | ||||||
| Balance at August 3, 2024 | 13,111,638 | $ | 177,057 | $ | (196,762 | ) | $ | (19,705 | ) | |||
| Restricted stock issued | 8,334 | — | — | — | ||||||||
| Net share settlement of restricted stock units | (2,030 | ) | — | — | — | |||||||
| Stock-based compensation expense | — | 253 | — | 253 | ||||||||
| Net loss | — | — | (7,680 | ) | (7,680 | ) | ||||||
| Balance at November 2, 2024 | 13,117,942 | $ | 177,310 | $ | (204,442 | ) | $ | (27,132 | ) |
The accompanying notes are an integral part of these financial statements.
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THE BRAND HOUSE COLLECTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
| 39-Week Period Ended | ||||||
|---|---|---|---|---|---|---|
| November 1, | November 2, | |||||
| 2025 | 2024 | |||||
| Cash flows from operating activities: | **** | **** | ||||
| Net loss | $ | (35,708 | ) | $ | (31,014 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
| Depreciation of property and equipment | 6,162 | 7,476 | ||||
| Amortization of debt issuance and original issue discount costs | 1,473 | 418 | ||||
| Asset impairment | 72 | 32 | ||||
| Loss on sale of property and equipment | 47 | 15 | ||||
| Gain on sale of internally developed intangible assets | (10,000 | ) | — | |||
| Stock-based compensation expense | 323 | 809 | ||||
| Loss on extinguishment of debt | — | 3,338 | ||||
| Changes in assets and liabilities: | ||||||
| Inventories, net | (7,003 | ) | (37,129 | ) | ||
| Prepaid expenses and other current assets | (4,883 | ) | 713 | |||
| Accounts payable | 11,185 | 15,209 | ||||
| Accrued expenses and other liabilities | 100 | 1,147 | ||||
| Operating lease assets and liabilities | (2,504 | ) | 736 | |||
| Other assets and liabilities | 4,747 | (784 | ) | |||
| Net cash used in operating activities | (35,989 | ) | (39,034 | ) | ||
| Cash flows from investing activities: | **** | **** | ||||
| Proceeds from sale of property and equipment | 24 | 20 | ||||
| Proceeds from sale of internally developed intangible assets | 10,000 | — | ||||
| Capital expenditures | (1,927 | ) | (1,653 | ) | ||
| Net cash provided by (used in) investing activities | 8,097 | (1,633 | ) | |||
| Cash flows from financing activities: | **** | **** | ||||
| Borrowings on revolving line of credit | 220,533 | 40,100 | ||||
| Repayments on revolving line of credit | (201,931 | ) | (9,100 | ) | ||
| Borrowings on term loans | — | 10,000 | ||||
| Repayments on FILO term loan | — | (10,000 | ) | |||
| Prepayment penalties on extinguishment of debt | — | (2,638 | ) | |||
| Proceeds from Beyond transaction | 5,000 | 17,000 | ||||
| Payments of debt and equity issuance costs | (1,018 | ) | (1,693 | ) | ||
| Cash used in net share settlement of stock options and restricted stock units | (55 | ) | (51 | ) | ||
| Proceeds from issuance of common stock | 8,000 | — | ||||
| Net cash provided by financing activities | 30,529 | 43,618 | ||||
| Cash and cash equivalents: | **** | **** | ||||
| Net increase | 2,637 | 2,951 | ||||
| Beginning of the period | 3,820 | 3,805 | ||||
| End of the period | $ | 6,457 | $ | 6,756 | ||
| Supplemental schedule of non-cash activities: | **** | **** | ||||
| Non-cash accruals for purchases of property and equipment | $ | 465 | $ | 516 | ||
| Non-cash accruals for debt and equity issuance costs | 1,004 | 650 | ||||
| Conversion of convertible note, accrued interest and unamortized debt issuance costs into common stock | $ | 6,705 | $ | — | ||
| Common stock issued in exchange for payment of equity issuance costs | 574 | — |
The accompanying notes are an integral part of these financial statements.
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THE BRAND HOUSE COLLECTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1 – Description of Business and Basis of Presentation
Nature of business — The Brand House Collective, Inc., formerly known as Kirkland’s, Inc., (the “Company”, “we”, “our” or “us”) is a multi-brand merchandising, supply chain and retail operator, managing a portfolio of iconic home and family brands including Kirkland’s Home and brands associated with Bed Bath & Beyond, Inc. (formerly known as Beyond, Inc., “Beyond”) such as Bed Bath & Beyond Home, Bed Bath & Beyond, buybuy Baby, and Overstock. The Company operated 306 stores in 35 states as of November 1, 2025, as well as e-commerce websites, www.kirklands.com and www.bedbathandbeyondhome.com.
Principles of consolidation — The condensed consolidated financial statements of the Company include the accounts of The Brand House Collective, Inc. and its wholly-owned subsidiaries Kirkland’s Stores, Inc., Kirkland’s DC, Inc., and Kirkland’s Texas, LLC. Significant intercompany accounts and transactions have been eliminated.
Basis of presentation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and are presented in accordance with the requirements of Form 10-Q and pursuant to the reporting and disclosure rules and regulations of the United States Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on May 2, 2025.
Seasonality — The results of the Company’s operations for the 13-week and 39-week periods ended November 1, 2025 are not indicative of the results to be expected for any other interim period or for the entire fiscal year due to seasonality factors.
Fiscal year — The Company’s fiscal year ends on the Saturday closest to January 31, resulting in years of either 52 or 53 weeks. Accordingly, fiscal 2025 represents the 52 weeks ending on January 31, 2026, and fiscal 2024 represents the 52 weeks ended on February 1, 2025.
Use of estimates — The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from the estimates and assumptions used. It should be understood that accounting measurements at interim dates inherently involve greater reliance on estimates than those at fiscal year-end.
Changes in estimates are recognized in the period when new information becomes available to management. Areas where the nature of the estimate makes it reasonably possible that actual results could materially differ from amounts estimated include, but are not limited to, impairment assessments on long-lived assets, inventory reserves, self-insurance reserves, and deferred tax asset valuation allowances.
Jackson, Tennessee distribution center — On May 20, 2025, a tornado impacted the Company’s leased Jackson, Tennessee distribution center, causing damage to the Company’s assets and disruptions to operations, particularly with respect to its e-commerce channel. The Company maintains insurance policies to cover the repair or replacement of the assets that suffered loss or damage, and is working closely with its insurance carriers to ascertain the full amount of insurance proceeds, net of the deductible on the policies, due to the Company as a result of the damages and the loss suffered. The Company’s insurance policies also provide coverage for interruption to the business, including lost profits, and reimbursement for other expenses and costs that have been incurred relating to the damages and losses suffered. In the second quarter of 2025, the Company incurred expenses of $2.0 million, net of insurance proceeds related to damages caused by the tornado, which included the write-off of damaged inventory which is included as a component of costs of sales in the condensed consolidated statement of operations for the period ended November 1, 2025, and freight to move product to temporary storage facilities and professional fees to secure and repair the site which is recorded as a component of other operating expenses in the condensed consolidated statement of operations. At this time, the full amount of combined property damage and business interruption costs and recoveries cannot be estimated, and accordingly, no additional amounts, including amounts for potential insurance recoveries, have been recorded as of November 1, 2025.
Sale of internally developed intangible assets - On September 15, 2025, the Company entered into an amendment to the Existing Purchase Agreement with Beyond that increased the purchase price for the sale of the Kirkland’s brand related intellectual property from $5.0 million to $10.0 million. The Company recorded a gain associated with this agreement that is included in operating loss in the 2025 statements of operations for the 13-week and 39-week periods ended November 1, 2025.
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Going concern assessment and management’s plans — The Company’s revenues, results of operations and cash flows have been materially adversely impacted by strategic and macroeconomic factors during the last several fiscal years. The persistently challenging home furnishings retail environment, including reduced consumer spending in the category and increased price sensitivity, has significantly impacted the Company’s performance and liquidity levels. Operating loss and negative cash flows from operations continue to reduce the Company’s liquidity levels. For the 39-week period ended November 1, 2025, the Company reported a net loss of $35.7 million and net cash used in operating activities of $36.0 million compared to a net loss of $31.0 million and net cash used in operating activities of $39.0 million in the prior year period. Further, as of December 15, 2025, the Company had $12.2 million available for borrowing, after the minimum required excess availability covenant, under the revolving credit facility and $20.0 million available to borrow under the Beyond Delayed Draw Term Loan Commitments (defined below).
When conditions and events, in the aggregate, raise substantial doubt about an entity’s ability to continue as a going concern, management evaluates the mitigating effect of its plans to determine if it is probable that the plans will be effectively implemented within the assessment period and, when implemented, will mitigate the relevant conditions and events to alleviate substantial doubt. The Company’s plans are focused on improving its operating results and liquidity through sales growth, cost reductions and additional financing. Throughout fiscal 2024 and 2025, the Company has implemented expense reductions to streamline its cost structure and improve its liquidity profile. The Company believes these actions are necessary as part of improving its profitability and liquidity trajectory, while minimizing any disruption to the Company’s focus on its strategic initiatives and the overall customer experience. The cost-savings initiatives included a reduction in corporate overhead, store payroll, marketing and third-party technology expenses. Additionally, during the 39-week period ended November 1, 2025 and subsequently, the Company has executed a series of debt, equity, and asset sale transactions with Beyond with the aim of increasing its liquidity position.
The Company’s going concern assessment includes the preparation of cash flow forecasts considering the completed financing transactions, annualized savings from cost-savings initiatives and the impact on profitability and cash flow from operations related to both the current elevated tariffs and the likelihood of challenging macroeconomic conditions that further constrain consumer demand, and these factors collectively suggest insufficient liquidity in the near-term. Due to these uncertainties and the consequences they may have on the projected cash flow in the near-term, there is substantial doubt about the Company’s ability to continue as a going concern for a period of at least 12 months from the date of issuance of the condensed consolidated financial statements.
As of February 1, 2025, the Company was in compliance with the financial covenants in the revolving credit facility and the Beyond Credit Agreement (as defined below). However, the Company’s conclusion that substantial doubt exists about its ability to continue as a going concern required an explanatory paragraph in the report of the independent registered public accounting firm on the Company’s financial statements for the fiscal year ended February 1, 2025, which resulted in a violation of affirmative covenants under the revolving credit facility and the Beyond Credit Agreement on May 2, 2025, when the fiscal 2024 Annual Report on Form 10-K was filed with the SEC. On May 7, 2025, the Company received waivers from the lenders under both facilities. As such, the Company has classified the outstanding borrowings under these agreements based on the contractual maturities on the condensed consolidated balance sheet as of November 1, 2025, while most of the Company’s debt was recorded as current as of February 1, 2025.
The accompanying consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the accompanying consolidated financial statements do not include any adjustments or charges that might be necessary should the Company be unable to continue as a going concern, such as charges related to impairment of the Company’s assets, the recoverability and classification of assets or the amounts and classification of liabilities or other similar adjustments.
Correction of prior interim period immaterial error – During the preparation of the condensed consolidated financial statements for the interim period ended November 1, 2025, management identified an immaterial error related to the accounting for the debt extinguishment with a related party that occurred during the quarter ended August 2, 2025. The immaterial error does not impact the Company’s results of operations, but did result in an understatement of related party debt of $5.2 million and an overstatement of common stock for a corresponding amount as of August 2, 2025 as the gain on debt extinguishment from a related party presented within the condensed consolidated statement of shareholder's (deficit) equity of $1.2 million should have been recorded as a loss on debt extinguishment with a related party of $4.0 million. As the error is considered immaterial, it has been corrected in the current interim period. Management believes that this correction does not affect the overall financial position or results of operations for the current period.
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Note 2 – Related Party
Strategic partnership with Beyond — The Company entered into a strategic partnership with Beyond on October 21, 2024, with the purpose of enabling cohesive collaboration between the companies, leveraging the strengths of each business to drive sustainable profitable growth and value for all stakeholders. As part of this partnership with Beyond, the companies entered into a $17.0 million term loan credit agreement (the “Beyond Credit Agreement”), an $8.0 million subscription agreement (the “Subscription Agreement”), a seven-year collaboration agreement (the “Collaboration Agreement”) and a trademark license agreement (the “Trademark License Agreement”). Proceeds of $17.0 million from the Beyond Credit Agreement, in the form of an $8.5 million non-convertible term loan (“Non-Convertible Term Loan”) and an $8.5 million convertible term loan (“Convertible Term Loan”) were used by the Company to repay its existing FILO term loan (“FILO Term Loan”), including prepayment fees and transaction expenses, and to reduce borrowings under the existing revolving credit facility. The $8.0 million equity purchase under the Subscription Agreement and the mandatory conversion of the Convertible Term Loan with accrued interest were both approved by the Company’s shareholders at the Company’s Special Meeting of Shareholders on February 5, 2025 in accordance with Nasdaq Listing Rules resulting in the issuance of 8,934,465 shares of Common Stock to Beyond, which completed the transaction. On May 7, 2025 the Company entered into an additional $5.2 million term loan (the “Additional Term Loan”) with Beyond to provide flexibility for general working capital purposes and for the support of the Company’s updated store conversion strategy. The Additional Term Loan and the existing $8.5 million term loan (collectively the “Beyond Term Loan”) are convertible into shares of the Company’s common stock at a price determined at the time of such conversion election, but subject to Nasdaq shareholder approval rules, if applicable. On September 15, 2025, the Company entered into an amendment to the Beyond Credit Agreement which provides a delayed-draw term loan in an aggregate principal amount of $20.0 million (the “Beyond Delayed Draw Term Loan Commitments”).
In connection with the closing of the Beyond Amendment and the Fourth Amendment described above, the Company entered into an amendment to the Existing Purchase Agreement (the Existing Purchase Agreement, as amended by the amendment, the “Purchase Agreement”), related to Kirkland's right, title, and interest in and to its trademarks and domain names comprised of or containing the element KIRKLAND'S increasing the purchase price from $5.0 million to $10.0 million. The consummation of the Purchase Agreement was conditioned upon obtaining the consent of Bank of America, N.A., as Administrative Agent and Collateral Agent for the Lenders (in such capacities, the “Agent”) and the release of all liens on the Kirkland’s Brand, each of which was obtained and documented in the Fourth Amendment dated *September 15, 2025.*The Purchase Agreement closed concurrently in connection with the closings of the Beyond Amendment and the Fourth Amendment on September 15, 2025, and in connection with the assignment of the Kirkland’s Brand to Beyond, the Amended and Restated Trademark License Agreement dated August 15, 2025 was amended, such that Beyond licenses the Kirkland’s Brand to the Company in connection with the Company’s operation of its then existing Kirkland’s-branded retail stores and e-commerce websites and any other retail stores or e-commerce websites approved by Beyond in its sole discretion (the “Second Amended and Restated Trademark License Agreement”). Pursuant to that amendment, the license with respect to Kirkland’s stores expires upon the earlier of (i) the rebranding or closure of such stores, or (ii) two years from the date of the amendment, and the license for other goods and services is terminable by Beyond upon expiration of the Kirkland’s stores license. Based on the contractual cash flows pursuant to the Second Amended and Restated Trademark License Agreement, the Company has not recognized any royalty expense relative to their use of the intellectual property, which is a relationship with a related party and may not be at arm’s length. For further discussion on the agreements with Beyond, refer to “Note 6 — Fair Value Measures”, “Note 10 — Long-Term Debt”, “Note 11 — Subscription Agreement” and “Note 15 — Subsequent Events”.
Collaboration Agreement fees — Under the terms of the Collaboration Agreement, the Company gave Beyond the right to receive a percentage of future revenues generated by the Company over the life of the Collaboration Agreement. The sale of a percentage of the Company’s future revenue to Beyond has been accounted for as debt financing, as the Company has significant continuing involvement in the generation of the related cash flows. As a result, the Company recorded the proceeds from these fees as debt, which will be accreted in interest expense using the effective interest rate method over the life of the arrangement. The debt was initially recorded at its fair value, net of allocated discount and deferred costs.
The liability and the related interest expense for these fees are based on the Company’s current estimates of future payments expected to be made over the life of the Collaboration Agreement. The Company will periodically assess the expected payments using internal projections. To the extent our future estimates of payments are greater or less than previous estimates, the Company will prospectively recognize related non-cash interest expense. For further discussion refer to “Note 6 — Fair Value Measures”, and “Note 10 — Long-Term Debt”.
Note 3 – Revenue Recognition
Net sales — The Company recognizes revenue at the time of sale of merchandise to customers in its stores. E-commerce revenue is recorded at the estimated time of delivery to the customer. Net sales includes the sale of merchandise, net of returns, shipping revenue, gift card breakage revenue and revenue earned from our private label credit card program and excludes sales taxes.
Sales returns reserve — The Company reduces net sales and estimates a liability for sales returns based on historical return trends, and the Company believes that its estimate for sales returns is a reasonably accurate reflection of future returns associated with past sales. However, as with any estimate, refund activity may vary from estimated amounts. The Company had a liability of approximately $977,000, $1.0 million and $1.2 million reserved for sales returns at November 1, 2025, February 1, 2025 and November 2, 2024, respectively, included in accrued expenses and other liabilities on the condensed consolidated balance sheets. The related sales return reserve products recovery asset included in prepaid expenses and other current assets on the condensed consolidated balance sheets was approximately $555,000, $517,000 and $583,000 at November 1, 2025, February 1, 2025 and November 2, 2024, respectively.
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Deferred e-commerce revenue — E-commerce revenue is deferred until the customer takes possession of the merchandise and the sale is complete, as the Company receives payment before completion of its customer obligations. Deferred revenue related to e-commerce orders that have been shipped but not estimated to be received by customers included in accrued expenses and other liabilities on the condensed consolidated balance sheets was approximately $425,000, $607,000 and $1.3 million at November 1, 2025, February 1, 2025 and November 2, 2024, respectively. The related contract assets, reflected in inventories, net on the condensed consolidated balance sheets, totaled approximately $240,000, $330,000 and $636,000 at November 1, 2025, February 1, 2025 and November 2, 2024, respectively.
Gift cards — Gift card sales are recognized as revenue when tendered for payment. While the Company honors all gift cards presented for payment, the Company determines the likelihood of redemption to be remote for certain gift card balances due to long periods of inactivity. The Company uses the redemption recognition method to account for breakage for unused gift card amounts where breakage is recognized as gift cards are redeemed for the purchase of goods based upon a historical breakage rate. In these circumstances, to the extent the Company determines there is no requirement for remitting unredeemed card balances to government agencies under unclaimed property laws, such amounts are recognized in the condensed consolidated statements of operations as a component of net sales.
The table below sets forth selected gift card liability information (in thousands) for the periods indicated:
| November 1, 2025 | February 1, 2025 | November 2, 2024 | ||||
|---|---|---|---|---|---|---|
| Gift card liability, net of estimated breakage (included in accrued expenses and other liabilities) | $ | 9,234 | $ | 10,673 | $ | 10,137 |
The table below sets forth selected gift card breakage and redemption information (in thousands) for the periods indicated:
| 13-Week Period Ended | 39-Week Period Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | |||||
| Gift card breakage revenue (included in net sales) | $ | 216 | $ | 311 | $ | 674 | $ | 861 |
| Gift card redemptions recognized in the current period related to amounts included in the gift card contract liability balance as of the prior period | 975 | 1,173 | 2,424 | 3,093 |
Customer loyalty program — The Company has a loyalty program called the K-club that allows members to receive points based on qualifying purchases that are converted into certificates that may be redeemed on future purchases. This customer option is a material right and, accordingly, represents a separate performance obligation to the customer. The related loyalty program deferred revenue included in accrued expenses and other liabilities on the condensed consolidated balance sheets was approximately $1.1 million, $1.5 million, and $1.5 million at November 1, 2025, February 1, 2025 and November 2, 2024, respectively.
Note 4 – Income Taxes
For the 13-week periods ended November 1, 2025 and November 2, 2024, the Company recorded an income tax expense of approximately $23,000, or (0.6)% of the loss before income taxes, compared to expense of approximately $356,000, or (4.9)% of the loss before income taxes, respectively. For the 39-week periods ended November 1, 2025 and November 2, 2024, the Company recorded an income tax expense of approximately $77,000, or (0.2)% of the loss before income taxes, compared to an expense of approximately $549,000, or (1.8)% of the loss before income taxes, respectively. The change in income taxes for the 13-week and 39-week periods ended November 1, 2025, compared to the prior year periods, was primarily due to changes in valuation allowance adjustments and state income taxes.
On July 4, 2025, H.R. 1, a bill to provide for reconciliation pursuant to title II of H. Con. Res. 14, informally known as the One Big Beautiful Bill Act (“OBBBA”), which includes several measures affecting corporations and other business entities, was signed into law. Among these measures, the OBBBA modifies and permanently extends certain expiring provisions of the 2017 Tax Cuts and Jobs Act (“TCJA”), including the restoration of 100% bonus depreciation, which was scheduled to phase out in 2027 under the TCJA. The OBBBA has multiple effective dates, with some provisions taking effect in 2025 and others phased in through 2027. We expect certain provisions of the OBBBA will decrease cash taxes paid in the current fiscal year and may change the timing of cash tax payments in future periods.
The Company recognizes deferred tax assets and liabilities using estimated future tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities, including net operating loss carry forwards. Management assesses the realizability of deferred tax assets and records a valuation allowance if it is more likely than not that all or a portion of the deferred tax assets will not be realized. The Company considers the probability of future taxable income and our historical profitability, among other factors, in assessing the amount of the valuation allowance. Adjustments could be required in the future if the Company estimates that the amount of deferred tax assets to be realized is more than the net amount recorded. Any change in the valuation allowance could have the effect of increasing or decreasing the income tax provision in the condensed consolidated statement of operations based on the nature of the deferred tax asset deemed realizable in the period in which such determination is made. As of November 1, 2025 and November 2, 2024, the Company recorded a full valuation allowance against deferred tax assets.
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Note 5 – Loss Per Share
Basic loss per share is computed by dividing net loss by the weighted average number of shares outstanding during each period presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares outstanding plus the dilutive effect of stock equivalents outstanding during the applicable periods using the treasury stock method and shares issuable upon conversion of convertible notes payable. Diluted loss per share reflects the potential dilution that could occur if options to purchase stock were exercised into common stock, if outstanding grants of restricted stock were vested and if the incremental shares issuable upon conversion of the currently convertible portion of the convertible notes were issued. Stock options, restricted stock units and the currently convertible portion of the convertible notes that were not included in the computation of diluted loss per share, because to do so would have been antidilutive, were approximately 6,024,000 shares and 1,357,000 shares for the 13-week periods ended November 1, 2025 and November 2, 2024, respectively, and 4,423,000 and 1,077,000 shares for the 39-week periods ended November 1, 2025 and November 2, 2024, respectively.
Note 6 – Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of their short maturities. The revolving line of credit approximates fair value due to the one, three or six-month interest terms. In fiscal 2024, the Company also had a non-depleting collateral trust with the Company’s workers’ compensation and general liability insurance provider named as beneficiary. The assets in this trust were invested in financial instruments that would fall within Level 1 of the fair value hierarchy, and were approximately $4.8 million as of February 1, 2025 and November 2, 2024, and they were included in other assets on the consolidated balance sheets. On February 19, 2025, the Company dissolved the non-depleting collateral trust and received cash from the trust for the then outstanding balance. The Company posted a $4.3 million letter of credit under the revolving line of credit for the benefit of the Company’s workers’ compensation and general liability insurance provider in lieu of the trust.
Fair value of the Beyond Term Loan, the Convertible Term Loan, the Additional Term Loan, and the Collaboration Agreement fees, which were entered into on October 21, 2024 and amended on *May 7, 2025,*are summarized as follows (in thousands):
| November 1, 2025 | February 1, 2025 | November 2, 2024 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Fair Value Hierarchy | Carrying Value ^(1)^ | Fair Value | Carrying Value ^(1)^ | Fair Value | Carrying Value | Fair Value | |||||||
| Beyond Term Loan ^(2)^ | Level 2 | $ | — | $ | — | $ | 5,531 | $ | 7,980 | $ | 5,401 | $ | 6,393 |
| Convertible Term Loan ^(2)^ | Level 2 | — | — | 6,676 | 7,003 | 6,586 | 7,753 | ||||||
| Additional Term Loan^(2)^ | Level 2 | 11,482 | 12,215 | — | — | — | — | ||||||
| Collaboration Agreement fees ^(3)^ | Level 3 | 6,598 | 10,098 | 3,995 | 5,439 | 3,806 | 4,450 | ||||||
| ^(1)^ | See “Note 10 — Long-Term Debt” for further discussion of the carrying values. | ||||||||||||
| --- | --- | ||||||||||||
| ^(2)^ | The fair value was estimated using available market information for debt instruments with similar maturities and credit risk. | ||||||||||||
| --- | --- | ||||||||||||
| ^(3)^ | The fair value estimate uses the Company’s estimated future revenue projections over the term of the Collaboration Agreement discounted using current market rates for debt investments with similar maturities and credit risk. | ||||||||||||
| --- | --- |
The Company measures certain assets at fair value on a non-recurring basis, including the evaluation of long-lived assets for impairment using Company-specific assumptions, including forecasts of projected financial information that would fall within Level 3 of the fair value hierarchy. The Company uses market participant rents (Level 2 input) to calculate the fair value of right-of-use assets and discounted future cash flows of the asset or asset group using a discount rate that approximates the cost of capital of a market participant (Level 2 input) to quantify fair value for other long-lived assets. See “Note 12 — Impairment” for further discussion.
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Note 7 – Commitments and Contingencies
The Company was named as a defendant in a putative class action filed in May 2018 in the Superior Court of California, Miles v. Kirkland’s Stores, Inc. The case was removed to United States District Court for the Central District of California. The complaint alleges, on behalf of Miles and all other hourly Kirkland’s employees in California, various wage and hour violations and seeks unpaid wages, statutory and civil penalties, monetary damages and injunctive relief. Kirkland’s denies the material allegations in the complaint and believes that its employment policies are generally compliant with California law. On March 22, 2022, the District Court denied the plaintiff’s motion to certify in its entirety, and on May 26, 2022, the Ninth Circuit granted the plaintiff’s petition for permission to appeal. The appeal was argued before the Ninth Circuit on November 13, 2023, and on January 8, 2024, the Court issued its opinion affirming the District Court in part and reversing in part. The Ninth Circuit affirmed the denial of certification as to the subclasses related to the security bag check and reversed as to the rest break claim. The Ninth Circuit did not find that there is liability nor that the rest break claim is certified. On February 28, 2025, the District Court dismissed this case in its entirety, without prejudice. On May 2, 2025, a complaint was refiled in this matter in the United States District Court for the Central District of California. The Company filed its answer in June 2025, and continues to believe the case is without merit and intends to vigorously defend itself against the allegations.
The Company was named as a defendant in a putative class action filed in August 2022 in the United States District Court for the Southern District of New York, Sicard v. Kirkland’s Stores, Inc. The complaint alleges, on behalf of Sicard and all other hourly store employees based in New York, that Kirkland’s violated New York Labor Law Section 191 by failing to pay him and the putative class members their wages within seven calendar days after the end of the week in which those wages were earned, rather paying wages on a bi-weekly basis. Plaintiff claims the putative class is entitled to recover from the Company the amount of their untimely paid wages as liquidated damages, reasonable attorneys’ fees and costs. The Company believes the case is without merit and is vigorously defending itself against the allegations.
On June 12, 2024, the Company was sued in Federal Court in Memphis by Rugs America Corp. for allegedly breaching a 2019 letter of understanding between the parties regarding the display and sale of Rugs America rugs in the Company’s stores. Rugs America claims that the Company, among other things, displayed non-Rugs America rugs on its rug fixtures in violation of the understanding and is asking for $5.0 million in damages. The Company maintains that the term of the understanding was for only two years, expiring in 2021, and believes that it was in compliance during the two-year term. On May 30, 2025, the Court granted the Company’s request to assert a counterclaim against Rugs America arising out of Rugs America’s refusal to retrieve the rug racks from Kirkland’s stores, and the Company filed a counterclaim. Discovery is currently pending in this litigation. After discovery is completed, the Company intends to file a motion for summary judgment, asking the Court to dismiss Rugs America’s claims before trial. The Company believes Rugs America’s claim is without merit and intends to vigorously defend itself against the allegations.
The Company is also party to other pending legal proceedings and claims that arise in the normal course of business. Although the outcome of such proceedings and claims cannot be determined with certainty, the Company’s management is of the opinion that it is unlikely that such proceedings and any claims in excess of insurance coverage will have a material effect on its consolidated financial condition, operating results or cash flows.
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Note 8 – Stock-Based Compensation
The Company maintains equity incentive plans under which it may grant non-qualified stock options, incentive stock options, restricted stock, restricted stock units, or stock appreciation rights to employees, non-employee directors and consultants. Compensation expense is recognized on a straight-line basis over the vesting periods of each grant. There have been no material changes in the assumptions used to compute compensation expense during the current year. The table below sets forth selected stock-based compensation information (in thousands, except share amounts) for the periods indicated:
| 13-Week Period Ended | 39-Week Period Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | |||||
| Stock-based compensation expense (included in compensation and benefits on the condensed consolidated statements of operations) | $ | 2 | $ | 253 | $ | 323 | $ | 809 |
| Restricted stock units granted | 960 | 10,000 | 1,977 | 402,585 | ||||
| Stock options granted | — | — | — | 228,126 |
Note 9 – Share Repurchase Plan
On January 6, 2022, the Company announced that its Board of Directors (the “Board”) authorized a share repurchase plan providing for the purchase in the aggregate of up to $30.0 million of the Company’s outstanding common stock. Repurchases of shares are made in accordance with applicable securities laws and may be made from time to time in the open market or by negotiated transactions. The amount and timing of repurchases are based on a variety of factors, including stock price, regulatory limitations and other market and economic factors. The share repurchase plan does not require the Company to repurchase any specific number of shares, and the Company may terminate the repurchase plan at any time. For the 39-week periods ended November 1, 2025 and November 2, 2024, the Company did not repurchase any shares of common stock under the share repurchase plan. As of November 1, 2025, the Company had approximately $26.3 million remaining under the current share repurchase plan.
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Note 10 – Long-Term Debt
Related party debt, net consisted of the following (in thousands):
| November 1, 2025 | |||
|---|---|---|---|
| Beyond Term Loan | $ | 13,689 | |
| Collaboration Agreement fees | 6,598 | ||
| Total outstanding related party borrowings | 20,287 | ||
| Less: unamortized debt discount and issuance costs | (2,207 | ) | |
| Total related party debt | 18,080 | ||
| Less: current portion of related party debt | (1,538 | ) | |
| Related party debt, net | $ | 16,542 |
Long-term debt, net consisted of the following (in thousands):
| November 1, 2025 | February 1, 2025 | November 2, 2024 | ||||||
|---|---|---|---|---|---|---|---|---|
| Revolving line of credit | $ | 61,602 | $ | 43,000 | $ | 65,000 | ||
| Non-Convertible Term Loan | — | 8,500 | 8,500 | |||||
| Convertible Term Loan | — | 8,500 | 8,500 | |||||
| Collaboration Agreement fees | — | 3,995 | 3,806 | |||||
| Total outstanding borrowings | 61,602 | 63,995 | 85,806 | |||||
| Less: unamortized debt discount and issuance costs | — | (4,793 | ) | (5,013 | ) | |||
| Total debt | 61,602 | 59,202 | 80,793 | |||||
| Less: current portion of long-term debt | — | (49,199 | ) | (396 | ) | |||
| Long-term debt, net | $ | 61,602 | $ | 10,003 | $ | 80,397 |
Revolving Line of Credit
On March 31, 2023, the Company entered into a Third Amended and Restated Credit Agreement (as the same has been amended from time to time, the “2023 Credit Agreement”) with Bank of America, N.A., as administrative agent and collateral agent, and lender. The 2023 Credit Agreement amended the previous Second Amended and Restated Credit Agreement (the “2019 Credit Agreement”) from a $75.0 million senior secured revolving credit facility to a $90.0 million senior secured revolving credit facility. The 2023 Credit Agreement contains substantially similar terms and conditions as the 2019 Credit Agreement including a swingline availability of $10.0 million, a $25.0 million incremental accordion feature and extended its maturity date to March 2028. The fee paid to the lenders on the unused portion of the 2023 Credit Agreement is 25 basis points when usage is greater than 50% of the total commitment amount; otherwise, the fee on the unused portion is 37.5 basis points per annum. As of November 1, 2025, there were $5.8 million in letters of credit outstanding under the 2023 Credit Agreement compared to no outstanding letters of credit outstanding under the 2023 Credit Agreement as of February 1, 2025 and November 2, 2024. For the 13-week periods ended November 1, 2025 and November 2, 2024, the Company recorded interest expense of $1.0 million and $1.2 million, respectively, related to the 2023 Credit Agreement. For the 39-week periods ended November 1, 2025 and November 2, 2024, the Company recorded interest expense of $2.8 million and $3.2 million, respectively, related to the 2023 Credit Agreement.
The Company is subject to a Third Amended and Restated Security Agreement (“Security Agreement”) with its lenders. Pursuant to the Security Agreement, the Company pledged and granted to the administrative agent, for the benefit of itself and the secured parties specified therein, a lien on and security interest in all of the rights, title and interest in substantially all of the Company’s assets to secure the payment and performance of the obligations under the 2023 Credit Agreement.
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The maximum availability under the 2023 Credit Agreement is limited by (i) a borrowing base formula, which consists of a percentage of eligible inventory and eligible credit card receivables, less reserves, and (ii) an excess required availability covenant, which limits the Company’s ability to borrow under the 2023 Credit Agreement. On September 15, 2025, the Company entered into a Fourth Amendment to the Third Amended and Restated Credit Agreement (the “Fourth Amendment”), which amended the excess required availability covenant. From the effective date of the Fourth Amendment through February 1, 2026, the Company is required to maintain availability equal to the greater of 10% of the borrowing base formula or $5.0 million. Thereafter, the covenant includes monthly step-ups, reducing the requirement to the greater of 10% of the borrowing base formula or $8.0 million; provided, however, if at any time the Company’s consolidated EBITDA for the immediately preceding trailing three month period is at less than 85% of the Company’s projected consolidated EBITDA, the borrowing base is limited by the greater of 10% of the borrowing base formula or $8.0 million.
FILO Term Loan
On January 25, 2024, the Company entered into a $12.0 million “first-in, last-out” asset-based delayed-draw term loan (the “FILO Term Loan”) with Gordon Brothers Group, via an affiliate entity, 1903P Loan Agent, LLC, as administrative agent and lender. The indebtedness under the FILO Term Loan was subordinated in most respects to the 2023 Credit Agreement. The FILO Term Loan had a maturity date of March 2028, coterminous with the 2023 Credit Agreement. The interest rate of the FILO Term Loan was one-month term SOFR, plus a margin of 9.50%.
Proceeds from the Beyond Credit Agreement were used by the Company to repay and terminate the FILO Term Loan on October 21, 2024. The Company paid $12.6 million, which consisted of $10.0 million of debt principal and $2.6 million of prepayment penalties. The Company recorded a loss on extinguishment of debt related to the termination of the FILO Term Loan of $3.3 million during fiscal year 2024, of which $2.6 million was for the prepayment penalty and the remainder was related to the write-off of unamortized debt issuance costs.
Beyond Credit Agreement
On October 21, 2024, the Company entered into the Beyond Credit Agreement with Beyond as administrative agent and lender. The Beyond Credit Agreement consists of an $8.5 million Convertible Term Loan that was mandatorily convertible into The Brand House Collective’s common stock at a price of $1.85 per share for a total of 4,594,594 shares upon the approval of the Company’s shareholders and an $8.5 million Non-Convertible Term Loan. The maturity date on the Non-Convertible Term Loan is September 30, 2028. The indebtedness under the Beyond Credit Agreement is subordinated to the 2023 Credit Agreement and is not subject to a borrowing base calculation. The Beyond Credit Agreement accrues interest at an annual rate equal to SOFR plus a margin of 275 basis points with no SOFR floor. On February 5, 2025, the Company held a Special Shareholders Meeting during which the shareholders approved the issuance of shares of the Company’s common stock to Beyond. Following the approval of the shareholders, the $8.5 million Convertible Term Loan with accrued interest converted to 4,610,141 shares of common stock at a price of $1.85 per share.
On May 7, 2025, the Company entered into an additional $5.2 million term loan (the “Additional Term Loan”) with Beyond to provide flexibility for general working capital purposes and for the support of the Company’s updated store conversion strategy. The Additional Term Loan consisted of $5.0 million in cash and $0.2 million in unpaid collaboration fees for the first 13 weeks of fiscal 2025 and any accrued and unpaid interest on the $8.5 million existing term loan. The modifications to the Beyond Credit Agreement (and the amended Collaboration Agreement on May 7, 2025 discussed further below) were accounted for as a debt extinguishment, which resulted in a loss on debt extinguishment of $4.0 million for the 39-week period ended November 1, 2025 that is recognized as a component of common stock given the related party nature of the lender.
On September 15, 2025, the Company entered into an amendment with Beyond to provide the Beyond Delayed Draw Term Loan Commitments (the Convertible Term Loan, the Additional Term Loan and the Beyond Delayed Draw Term Loan Commitments, collectively, the “Beyond Term Loans”). In addition, effective May 7, 2025, the agreement also provides Beyond the right to convert any of the outstanding loans under the Beyond Credit Agreement into shares of the Company’s common stock at a price equal to the closing price on Nasdaq on the day prior to the date on which a conversion election is made, up to a number of shares equal to 19.90% of the outstanding shares of the Company’s common stock on *May 7, 2025.*Beyond has the option to convert up to a greater number of shares, but not more than a number that would result in Beyond, holding for so long as any obligations remain outstanding under the 2023 Credit Agreement, 75% of the total outstanding number of shares of the Company’s common stock after such conversion, provided that such conversion would be subject to Nasdaq shareholder approval rules, if applicable.
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Collaboration Agreement Fees
The Company entered into the Collaboration Agreement with Beyond, which outlines the parties’ intentions to collaborate on numerous operating arrangements. Under the original terms of the Collaboration Agreement, the Company will pay Beyond a quarterly collaboration fee equal to 0.25% of the Company’s quarterly retail and e-commerce revenue starting in the first quarter of fiscal 2025 and continuing for the remaining seven-year term of the Collaboration Agreement. This fee will extend an additional two years beyond the Collaboration Agreement if the Beyond Credit Agreement is still outstanding as of the expiration or termination of the Collaboration Agreement. The Company will also pay to Beyond an incentive fee equal to 1.5% of the Company’s incremental growth in e-commerce revenue during the term of the Collaboration Agreement.
On May 7, 2025, the existing collaboration fee payable to Beyond of 0.25% of all revenues increased to 0.50% of brick-and-mortar retail revenues only, to capture the expanded brand opportunity, and in connection therewith, the prior 3.0% royalty fee obligation was eliminated. In addition, on May 7, 2025, the Company also entered into a purchase agreement providing for the future sale to Beyond, for a purchase price of $5.0 million, of Kirkland’s right, title and interest in and to its trademarks and domain names comprised of or containing the element KIRKLAND’S ( the “Kirkland’s Brand”). In connection with the closing of the Beyond Amendment and the Fourth Amendment described above, the Company has entered into an amendment to the Existing Purchase Agreement (the Existing Purchase Agreement, as amended by the amendment, the “Purchase Agreement”), increasing the purchase price from $5.0 million to $10.0 million. The consummation of the Purchase Agreement was conditioned upon obtaining the consent of Agent and the release of all liens on the Kirkland’s Brand, each of which was obtained and documented in the Fourth Amendment. The Purchase Agreement closed concurrently in connection with the closings of the Beyond Amendment and the Fourth Amendment on September 15, 2025, and in connection with the assignment of the Kirkland’s Brand to Beyond, the Amended and Restated Trademark License Agreement dated August 15, 2025 was amended, such that Beyond licenses the Kirkland’s Brand to the Company in connection with the Company’s operation of its then existing Kirkland’s-branded retail stores and e-commerce websites and any other retail stores or e-commerce websites approved by Beyond in its sole discretion (the “Second Amended and Restated Trademark License Agreement”). Pursuant to that amendment, the license with respect to Kirkland’s stores expires upon the earlier of (i) the rebranding or closure of such stores, or (ii) two years from the date of the amendment, and the license for other goods and services is terminable by Beyond upon expiration of the Kirkland’s stores license.
As payments are remitted to Beyond from the Company, the balance of the liability related to the sale of a percentage of future revenue will be repaid over the life of the Collaboration Agreement. In order to determine the amortization of the liability, the Company is required to estimate the total amount of future payments to Beyond over the life of the Collaboration Agreement. The liability will be accreted to the total of the payments as interest expense over the life of the Collaboration Agreement. At execution, the estimate of this total interest expense resulted in an effective annual interest rate of approximately 19.6%. This estimate contains significant assumptions that impact both the amount recorded at execution and the interest expense that will be recognized over the Collaboration Agreement period. The Company will periodically assess the estimated payments to Beyond and to the extent the amount or timing of such fees is materially different than the original estimates, an adjustment will be recorded prospectively to increase or decrease interest expense. The main factor that could materially affect the amount of the payments is changes in the Company’s estimated retail and e-commerce revenue.
General Terms and Conditions
Borrowings under the 2023 Credit Agreement and the Beyond Credit Agreement are subject to certain conditions and contain customary events of default, including, without limitation, failure to make payments, a cross-default to certain other debt, breaches of covenants, breaches of representations and warranties, a change in control, certain monetary judgments and bankruptcy and ERISA events. Upon any such event of default, the principal amount of any unpaid loans and all other obligations under the 2023 Credit Agreement and the Beyond Credit Agreement may be declared immediately due and payable. As of May 3, 2025, the Company was not in compliance with the financial covenants in the 2023 Credit Agreement and the Beyond Credit Agreement. The Company’s conclusion that substantial doubt exists about the Company’s ability to continue as a going concern required an explanatory paragraph in the report of its independent registered public accounting firm on the Company’s financial statements for the fiscal year ended February 1, 2025, which resulted in a violation of affirmative covenants under the 2023 Credit Agreement and the Beyond Credit Agreement. The Company received waivers from its lenders under both facilities on May 7, 2025. As such, the Company has classified the outstanding borrowings under these agreements as long-term debt on the condensed consolidated balance sheet as of November 1, 2025.
Note 11 – Subscription Agreements
On October 21, 2024, the Company and Beyond entered into the Subscription Agreement. On *February 5, 2025,*the Company’s shareholders approved at the Special Shareholders Meeting, Beyond’s purchase of $8.0 million of the Company’s common stock at a price of $1.85 per share for a total of 4,324,324 shares. After the $8.0 million equity purchase and the mandatory conversion of the Convertible Term Loan, Beyond owned approximately 40% of the Company’s then outstanding common stock. Beyond is considered a related party due to the significant influence they have over the Company.
On October 18, 2024, the Company and Consensus Securities LLC (“Consensus”), the Company’s financial advisor, entered into a subscription agreement. On February 5, 2025, in connection with completing the Beyond transaction, the Company issued 310,135 shares of common stock to Consensus as partial payment of a $574,000 success fee.
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Note 12 – Impairment
The Company evaluates the recoverability of the carrying amounts of long-lived assets when events or changes in circumstances dictate that their carrying values may not be recoverable. This review includes the evaluation of individual under-performing retail stores and the assessment of the recoverability of the carrying value of the assets related to the stores. Future cash flows are projected for the remaining lease life. If the estimated future cash flows are less than the carrying value of the assets, the Company records an impairment charge equal to the difference between the assets’ fair value and carrying value. The fair value is estimated using a discounted cash flow approach, considering such factors as future sales levels, gross margins, changes in rent and other expenses as well as the overall operating environment specific to that store. The amount of the impairment charge is allocated proportionately to all assets in the asset group with no asset written down below its individual fair value.
The table below sets forth impairment information (in thousands, except store counts) for the periods indicated:
| 13-Week Period Ended | 39-Week Period Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | |||||
| Impairment of leasehold improvements, fixtures and equipment at stores | $ | — | $ | 1 | $ | 72 | $ | 32 |
| Number of stores with leasehold improvements, fixtures and equipment impairment | — | 1 | 2 | 1 |
Note 13 – Segment Information
The Company conducts its business activities and reports financial results as one operating segment and one reportable segment, which includes the Company’s store locations and e-commerce operations. Due to its integrated omni-channel strategy, the Company views e-commerce sales as an extension of its physical store locations. The Company’s chief operating decision maker (“CODM”) is its President and Chief Executive Officer. The CODM assesses performance based on net loss as reported on the Company’s consolidated statements of operations. The CODM considers net income (loss) on a monthly basis when assessing performance of the segment. The significant expense categories regularly provided to the CODM are consistent with the categories included on the consolidated statements of operations. The measure of segment assets is reported on the Company’s consolidated balance sheets as total assets.
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Note 14 – New Accounting Pronouncements
New Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures.” The ASU requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold. Further, the ASU requires certain disclosures of state versus federal income tax expense and taxes paid. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued. The amendments should be applied on a prospective basis although retrospective application is permitted. The Company will adopt this standard with its fiscal 2025 annual filing. The Company is currently evaluating the impact of adoption on its financial disclosures.
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures” which requires entities to disclose more detailed information about certain costs and expenses presented in the income statement, including inventory purchases, employee compensation, selling expenses and depreciation. This ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adoption to determine the impact it may have on its financial disclosures.
Note 15 – Subsequent Events
As previously announced, on November 24, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Beyond and Knight Merger Sub II, Inc., a Delaware corporation and a wholly-owned subsidiary of Beyond (“Merger Sub”). The Merger Agreement provides, among other things, that, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into the Company, with the Company surviving as a wholly-owned subsidiary of Beyond (the “Merger”).
Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock, no par value per share, of the Company (“Company Common Stock”) issued and outstanding immediately prior to the Effective Time, will be converted into the right to receive 0.1993 shares of Beyond’s common stock, par value $0.0001 per share (“Beyond Common Stock”), plus cash in lieu of any fractional shares of Beyond Common Stock that otherwise would have been issued (such consideration, the “Merger Consideration”). Outstanding equity awards will be eligible to receive Merger Consideration in accordance with the terms of the Company’s Amended and Restated 2002 Equity Incentive Plan and the Merger Agreement.
The Merger is subject to the Company obtaining shareholder approval, a financing condition related to the refinancing or repayment of the Company's existing asset-based loan with Bank of America, N.A., and other customary closing conditions, including regulatory approvals, and is expected to close in the first quarter of fiscal 2026. If the Merger is consummated, the shares of Company Common Stock currently listed on the Nasdaq Global Select Market (“Nasdaq”) will be delisted from Nasdaq and will subsequently be deregistered under the Securities Exchange Act of 1934, as amended. As previously announced, on November 24, 2025, the Company and its subsidiaries entered into Amendment No. 2 to the Amended and Restated Term Loan Credit Agreement (the “Beyond Amendment”) with Beyond amending the previous Amended and Restated Term Loan Credit Agreement dated May 7, 2025, as amended by that certain Amendment No. 1 to the Amended and Restated Term Loan Credit Agreement, dated September 15, 2025, among the Company and its subsidiaries and Beyond (the “Existing Beyond Credit Agreement”), and the Existing Beyond Credit Agreement as amended by the Beyond Amendment, (the “Amended Beyond Credit Agreement”). Pursuant to the terms of the Amended Beyond Credit Agreement, the existing delayed-draw term loan commitments were increased in the amount of $10.0 million for a total aggregate principal amount of $30.0 million (the “Beyond Delayed Draw Term Loan Commitments”). Also on November 24, 2025, $10.0 million of the Beyond Delayed Draw Term Loan Commitments were drawn and funded, leaving $20.0 million in available Beyond Delayed Draw Term Loan Commitments.
On November 24, 2025, the Company also entered into a Fifth Amendment to the 2023 Credit Agreement (the “Fifth Amendment”). Among other amendments, the Fifth Amendment was entered into to permit the increase to the Beyond Delayed Draw Term Loan Commitments.
As of December 15, 2025, the Company had $20.7 million of outstanding debt and $5.8 million of outstanding letters of credit under its revolving credit facility with $12.2 million available for borrowing, after the minimum required excess availability covenant, and $23.7 million in term loans to Beyond with $20.0 million available under the Beyond Delayed Draw Term Loan Commitments.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is intended to provide the reader with information that will assist in understanding the significant factors affecting our consolidated operating results, financial condition, liquidity, and capital resources during the 13-week and 39-week periods ended November 1, 2025 and November 2, 2024. For a comparison of our results of operations for the 52-week period ended February 1, 2025 and the 53-week period ended February 3, 2024, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended February 1, 2025 filed with the SEC on May 2, 2025 (the “Annual Report”). The following discussion should be read with our consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q.
Cautionary Statement Regarding Forward-Looking Statements
Except for historical information contained herein, certain statements in this release, constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to the finalization of the Company’s quarterly financial and accounting procedures. Forward-looking statements deal with potential future circumstances and developments and are, accordingly, forward-looking in nature. You are cautioned that such forward-looking statements, which may be identified by words such as "anticipate," "believe," "expect," "estimate," "intend," "plan," "seek," "may," "could," "strategy," and similar expressions, involve known and unknown risks and uncertainties, many of which are outside of the Company’s control, which may cause the Company's actual results to differ materially from forecasted results. Those risks and uncertainties include, among other things, risks associated with the effect of the transactions entered into with Beyond, including the Merger (the “Transactions”) on the Company’s business relationships; the timing and likelihood of, and any conditions or requirements imposed in connection with, obtaining required shareholder or regulatory approval of the proposed Merger (and the risk that such approvals may result in the imposition of conditions that could adversely affect the expected benefits of the proposed Merger); the timing and likelihood of receiving the required lender consent from Bank of America, N.A., which is subject to the refinancing or repayment of the Company's existing asset-based loan; delays in closing the proposed Merger or the possibility of non-consummation of the proposed Merger; the ability to successfully integrate the Company’s business with Beyond following the closing of the proposed Merger; operating results and business generally; unexpected costs, charges or expenses resulting from the Transactions; potential litigation relating to the Transactions that could be instituted against Beyond, the Company or their affiliates’ respective directors, managers or officers, including the effects of any outcomes related thereto; continued availability of capital financing; the ability to obtain the various synergies envisioned between the Company and Beyond; the ability of the Company to successfully open new stores or rebrand or operate existing Kirkland’s Home stores under a Bed Bath & Beyond Home or other licensed brand; the ability of the Company to successfully market its products to new customers and expand through new e-commerce platforms and to implement its plans, forecasts and other expectations with respect to its business after the completion of the Transactions and realize additional opportunities for growth and innovation; risks associated with the Company's liquidity including cash flows from operations and the amount of borrowings under the secured revolving credit facility; the fact that the Company's independent registered public accounting firm's report for the year ended February 1, 2025 is qualified as to the Company's ability to continue as a going concern; the Company’s ability to successfully implement cost savings and other strategic initiatives intended to improve operating results and liquidity positions, the Company’s actual and anticipated progress towards its short-term and long-term objectives including its multi-brand and omni-channel strategy, the risk that natural disasters, pandemic outbreaks, global political events, war and terrorism could impact the Company’s revenues, inventory and supply chain; the continuing consumer impact of inflation and countermeasures, including high interest rates; the effectiveness of the Company’s marketing campaigns; risks related to changes in U.S. trade policy related to imported merchandise, particularly with regard to the impact of tariffs on goods imported from China and strategies undertaken to mitigate such impact; the Company’s ability to retain its senior management team; volatility in the price of the Company’s common stock; the competitive environment in the home décor industry in general and in the Company's specific market areas; inflation, fluctuations in cost and availability of inventory, increased transportation costs and potential interruptions in supply chain, distribution systems and delivery network, including the Company’s e-commerce systems and channels; the ability to control employment and other operating costs; availability of suitable retail locations and other growth opportunities; disruptions in information technology systems including the potential for security breaches of the Company's information or its customers’ information, seasonal fluctuations in consumer spending, and economic conditions in general. Those and other risks are more fully described in our filings with the Securities and Exchange Commission, including the Company’s Annual Report and subsequent reports. Forward-looking statements included in this Quarterly Report on Form 10-Q are made as of the date hereof. Any changes in assumptions or factors on which such statements are based could produce materially different results. Except as required by law, we disclaim any obligation to update any such factors or to publicly announce results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.
Overview
We are a multi-brand merchandising, supply chain and retail operator in the United States. As of November 1, 2025, we operated a total of 306 stores in 35 states, as well as e-commerce websites, www.kirklands.com, under the Kirkland’s Home brand and www.bedbathandbeyondhome.com, under the Bed Bath & Beyond Home brand. We provide our customers with distinctive brand experiences that provide curated, high-quality product assortments for every room, every moment, and for every budget.
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Strategic Partnership with Beyond
We entered into a strategic partnership with Bed Bath & Beyond, Inc. (“Beyond”) on October 21, 2024, with the purpose of enabling cohesive collaboration between the companies and leveraging the strengths of each business to drive sustainable, profitable growth and value for all stakeholders. As part of this partnership with Beyond, we entered into a $17.0 million term loan credit agreement (the “Beyond Credit Agreement”), an $8.0 million subscription agreement (the “Beyond Subscription Agreement”), a seven-year collaboration agreement (the “Collaboration Agreement”) and a trademark license agreement (the “Trademark License Agreement”). Proceeds of $17.0 million from the Beyond Credit Agreement, in the form of an $8.5 million non-convertible term loan (the “Non-Convertible Term Loan”) and an $8.5 million convertible term loan (the “Convertible Term Loan”) were used by us to repay our existing $12.0 million “first-in, last-out” asset-based delayed-draw term loan (the “FILO Term Loan”), including prepayment fees and transaction expenses, and to reduce borrowings under our existing revolving credit facility. Under the Trademark License Agreement, we have the exclusive license to operate small format, neighborhood brick-and-mortar stores and “Shops-within-a-Shop” locations under licensed Beyond-owned trademarks, which include Bed Bath & Beyond Home, Bed Bath & Beyond, buybuy Baby, and Overstock, and we may sell Bed Bath & Beyond branded merchandise in existing Kirkland’s Home stores.
The $8.0 million equity purchase under the Beyond Subscription Agreement and the mandatory conversion of the Convertible Term Loan with accrued interest were approved by our shareholders at our special meeting of shareholders on February 5, 2025 (the “Special Shareholders Meeting”) in accordance with Nasdaq Listing Rules resulting in the issuance of 8,934,465 shares of the Company’s common stock, no par value (“Common Stock”) to Beyond, which completed the transaction. On May 7, 2025, the Company entered into an additional $5.2 million term loan (the “Additional Term Loan”) with Beyond to provide flexibility for general working capital purposes and for the support of the Company’s updated store conversion strategy. On September 15, 2025, the Company entered into an amendment to the Beyond Credit Agreement which provides the Beyond Delayed Draw Term Loan Commitments to support the Company’s store conversion strategy. The Additional Term Loan, the Beyond Delayed Draw Term Loan Commitments and the existing $8.5 million term loan are convertible into shares of the Company’s common stock at a price determined at the time of such conversion election, but subject to Nasdaq shareholder approval rules, if applicable. Additionally, on September 15, 2025, the Company received $10.0 million from Beyond in accordance with the Asset Purchase Agreement entered into on May 7, 2025 and amended on September 15, 2025 with Beyond in which Beyond purchased the Company’s right, title and interest in and to its trademark and domain names comprised of or containing the Kirkland’s Brand. The consummation of the Asset Purchase Agreement was conditioned upon obtaining the consent of Bank of America, N.A. and the release of all liens on the Kirkland’s Brand, each of which was obtained and documented in the Fourth Amendment dated September 15, 2025.
As previously announced on November 24, 2025, we entered into the Merger Agreement by and among the Company, Beyond and Merger Sub. The Merger is subject to the Company obtaining shareholder approval, the refinancing or repayment of the Company's existing asset-based loan with Bank of America, N.A. and other customary closing conditions, including regulatory approvals, and is expected to close in the first quarter of fiscal 2026.
For further discussion on the agreements and the potential Merger with Beyond, refer to “Note 2 — Related Party”, “Note 6 — Fair Value Measures”, “Note 10 — Long-Term Debt”, “Note 11 — Subscription Agreement” and “Note 15 — Subsequent Events”.
Challenging Macroeconomic Conditions
The macroeconomic environment in which we operate remains uncertain as a result of numerous factors, including inflationary pressures, high interest rates, declines in consumer spending behavior, tariffs, and aggressive promotional activity. These negative macroeconomic factors have impacted our business, results of operations, cash flows, and liquidity levels over the last several fiscal years. They have also made it difficult to execute our strategic initiatives. See “Liquidity and Capital Resources” for additional information regarding our plans to mitigate these factors.
For additional information regarding risks related to macroeconomics, liquidity, and strategy and strategy execution, see “Item 1A. Risk Factors” in our Annual Report.
Impact of Recent Tornado on Jackson, Tennessee Distribution Center
On May 20, 2025, a tornado impacted our leased Jackson, Tennessee distribution center, causing damage to our assets and disruptions to operations, particularly with respect to our e-commerce channel. We maintain insurance policies to cover the repair or replacement of our assets that suffered loss or damage, and we are working closely with our insurance carriers to ascertain the full amount of insurance proceeds, net of the deductible on the policies, due to us as a result of the damages and the loss we suffered. Our insurance policies also provide coverage for interruption to our business, including lost profits, and reimbursement for other expenses and costs that have been incurred relating to the damages and losses suffered. In the second quarter of 2025, we incurred expenses of $2.0 million, net of insurance proceeds related to damages caused by the tornado, which included the write-off of damaged inventory which is recorded as a component of cost of sales in the condensed consolidated statement of operations, and freight to move product to temporary storage facilities and professional fees to secure and repair the site which is recorded as a component of other operating expenses in the condensed consolidated statement of operations for the period ended November 1, 2025. At this time, the full amount of combined property damage and business interruption costs and recoveries cannot be estimated, and accordingly, no additional amounts, including amounts for potential insurance recoveries, have been recorded as of November 1, 2025.
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Key Financial Measures
Net sales and gross profit are the most significant drivers of our operating performance. Net sales consists of all merchandise sales to customers, net of returns, shipping revenue associated with e-commerce sales, gift card breakage revenue, revenue earned from our private label credit card program, and excludes sales taxes. Gross profit is the difference between net sales and cost of sales. Cost of sales has five distinct components: merchandise costs (including product costs, inbound freight expenses, inventory shrink, and damages), store occupancy costs, outbound freight costs (including both store and e-commerce shipping expenses), central distribution costs, and depreciation of store and distribution center assets. Merchandise and outbound freight costs are variable, while occupancy and central distribution costs are largely fixed. Accordingly, gross profit expressed as a percentage of net sales can be influenced by many factors including overall sales performance.
We use comparable sales to measure sales increases and decreases from stores that have been open for at least 13 full fiscal months, including our online sales. We remove closed stores from our comparable sales calculation the day after the stores close. Relocated stores remain in our comparable sales calculation. E-commerce sales, including shipping revenue, are included in comparable sales. Increases in comparable sales are an important factor in maintaining or increasing our profitability.
Operating expenses, including the costs of operating our stores and corporate headquarters, are also an important component of our operating performance. Compensation and benefits comprise the majority of our operating expenses. Operating expenses contain fixed and variable costs and managing the operating expense ratio (operating expenses expressed as a percentage of net sales) is an important focus of management as we seek to increase our overall profitability. Operating expenses include cash costs as well as non-cash costs such as depreciation and amortization associated with omni-channel technology, corporate property and equipment, and impairment of long-lived assets. Because many operating expenses are fixed costs, and because operating costs tend to rise over time, increases in comparable sales typically are necessary to prevent meaningful increases in the operating expense ratio. Operating expenses can also include certain costs that are of a one-time or non-recurring nature. While these costs must be considered to fully understand our operating performance, we typically identify such costs separately where significant in the consolidated statements of operations so that we can evaluate comparable expense data across different periods.
Stores
The following table summarizes store information during the periods indicated:
| 13-Week Period Ended | 39-Week Period Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | |||||||||
| New store openings | — | — | — | 1 | ||||||||
| Store closures | 3 | — | 11 | 6 | ||||||||
| Decrease in store units | (1.0 | )% | 0.0 | % | (4.1 | )% | (1.5 | )% |
The following table summarizes our open stores and square footage under lease as of the dates indicated:
| November 1, 2025 | November 2, 2024 | |||
|---|---|---|---|---|
| Number of stores | 306 | 325 | ||
| Square footage | 2,489,079 | 2,635,551 | ||
| Average square footage per store | 8,134 | 8,109 |
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13-Week Period Ended November 1, 2025 Compared to the 13-Week Period Ended November 2, 2024
Results of operations. The table below sets forth selected results of our operations both in dollars (in thousands) and as a percentage of net sales for the periods indicated:
| 13-Week Period Ended | **** | **** | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| November 1, 2025 | November 2, 2024 | Change | ||||||||||
| % | % | % | ||||||||||
| Net sales | 100.0 | % | 100.0 | % | ) | (9.6 | )% | |||||
| Cost of sales | 79.6 | 71.9 | 0.1 | |||||||||
| Gross profit | 20.4 | 28.1 | ) | (34.3 | ) | |||||||
| Operating expenses: | ||||||||||||
| Compensation and benefits | 18.7 | 17.0 | ) | (0.5 | ) | |||||||
| Other operating expenses | 12.8 | 12.5 | ) | (7.1 | ) | |||||||
| Depreciation (exclusive of depreciation included in cost of sales) | 0.5 | 0.7 | ) | (34.6 | ) | |||||||
| Gain on sale of internally developed intangible assets | ) | (9.7 | ) | — | ) | 100.0 | ||||||
| Asset impairment | — | — | ) | (100.0 | ) | |||||||
| Total operating expenses | 22.3 | 30.2 | ) | (33.1 | ) | |||||||
| Operating loss | ) | (2.0 | ) | ) | (2.1 | ) | (16.7 | ) | ||||
| Interest expense | 1.7 | 1.5 | 1.1 | |||||||||
| Loss on extinguishment of debt | — | 2.9 | ) | (100.0 | ) | |||||||
| Other income | ) | — | ) | (0.1 | ) | (61.1 | ) | |||||
| Loss before income taxes | ) | (3.6 | ) | ) | (6.4 | ) | (49.7 | ) | ||||
| Income tax expense | (0.6 | ) | (4.9 | ) | ) | (93.5 | ) | |||||
| Net loss | ) | (3.7 | )% | ) | (6.7 | )% | (51.8 | )% |
All values are in US Dollars.
Net sales. Net sales decreased 9.6% to $103.5 million for the third 13 weeks of fiscal 2025 compared to $114.4 million for the prior year period. Comparable sales decreased 7.4%, or $8.3 million, for the third 13 weeks of fiscal 2025 compared to the prior year period. For the third 13 weeks of fiscal 2025, store comparable sales increased 1.7% compared to the prior year period, while e-commerce comparable sales decreased 34.6% compared to the prior year period. The decrease in comparable sales was driven by a decrease in consolidated average ticket and a decline in e-commerce traffic that was partially attributable to the business interruption caused by the tornado which impacted our Jackson, Tennessee distribution center, which was partially offset by an increase in store traffic and conversion. Most merchandise categories performed below prior period levels except for impulse, floral, tabletop, and fragrance, which all performed above prior period levels.
Gross profit. Gross profit as a percentage of net sales decreased 770 basis points from 28.1% in the third 13 weeks of fiscal 2024 to 20.4% in the third 13 weeks of fiscal 2025. The overall decrease in gross profit margin was due to unfavorable merchandise margin, store occupancy costs, and warehouse capital expense, partially offset by favorable e-commerce shipping expense. Merchandise margin decreased approximately 670 basis points from 53.5% in the third 13 weeks of fiscal 2024 to 46.8% in the third 13 weeks of fiscal 2025, mainly due to increased promotional activity. Store occupancy costs increased approximately 90 basis points to 13.4% of net sales due to the sales deleverage on these fixed costs. E-commerce shipping expense decreased by 180 basis points due to the reduction in e-commerce sales and changes in the product mix.
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Compensation and benefits. Compensation and benefits as a percentage of net sales increased approximately 170 basis points from 17.0% in the third 13 weeks of fiscal 2024 to 18.7% in the third 13 weeks of fiscal 2025, primarily due to sales deleverage, partially offset by reductions in store and corporate compensation and benefits costs.
Other operating expenses. Other operating expenses as a percentage of net sales increased approximately 30 basis points from 12.5% in the third 13 weeks of fiscal 2024 to 12.8% in the third 13 weeks of fiscal 2025. The increase as a percentage of net sales was primarily related to a $0.3 million expense in 2025 for consulting on store experience design.
Gain on sale of internally developed intangible assets. On September 15, 2025, the Company recorded a gain associated with this agreement that is included in operating loss in the 2025 statements of operations.
Loss on extinguishment of debt. Loss on extinguishment of debt, related to the payoff of our FILO Term Loan in 2024, was $3.3 million in the first 39 weeks of fiscal 2024, of which $2.6 million was related to a prepayment penalty and the remainder was for the write-off of the remaining unamortized debt issuance costs.
Income tax expense. We recorded income tax expense of approximately $23,000, or (0.6)% of the loss before income taxes, during the third 13 weeks of fiscal 2025, compared to an income tax expense of approximately $356,000, or (4.9)% of the loss before income taxes, during the prior year period. The change in the tax rate for the third 13 weeks of fiscal 2025 compared to the prior period was primarily due to changes in valuation allowance adjustments and state income taxes.
Net loss and loss per share. We reported net loss of $3.7 million, or a loss of $0.16 per diluted share, for the third 13 weeks of fiscal 2025 as compared to net loss of $7.7 million, or a loss of $0.59 per diluted share, for the third 13 weeks of fiscal 2024.
39-Week Period Ended November 1, 2025 Compared to the 39-Week Period Ended November 2, 2024
Results of operations. The table below sets forth selected results of our operations both in dollars (in thousands) and as a percentage of net sales for the periods indicated:
| 39-Week Period Ended | **** | **** | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| November 1, 2025 | November 2, 2024 | Change | ||||||||||
| % | % | % | ||||||||||
| Net sales | 100.0 | % | 100.0 | % | ) | (10.8 | )% | |||||
| Cost of sales | 79.4 | 73.7 | ) | (4.0 | ) | |||||||
| Gross profit | 20.6 | 26.3 | ) | (30.0 | ) | |||||||
| Operating expenses: | ||||||||||||
| Compensation and benefits | 21.1 | 19.6 | ) | (4.1 | ) | |||||||
| Other operating expenses | 14.6 | 13.7 | ) | (4.5 | ) | |||||||
| Depreciation (exclusive of depreciation included in cost of sales) | 0.7 | 0.9 | ) | (34.0 | ) | |||||||
| Gain on sale of internally developed intangible assets | ) | (3.7 | ) | — | ) | 100.0 | ||||||
| Asset impairment | 0.1 | — | 125.0 | |||||||||
| Total operating expenses | 32.6 | 34.2 | ) | (15.0 | ) | |||||||
| Operating loss | ) | (12.0 | ) | ) | (7.9 | ) | ) | 34.6 | ||||
| Interest expense | 1.7 | 1.5 | 6.7 | |||||||||
| Loss on extinguishment of debt | — | 1.1 | ) | (100.0 | ) | |||||||
| Other income | ) | (0.1 | ) | ) | (0.1 | ) | (52.5 | ) | ||||
| Loss before income taxes | ) | (13.7 | ) | ) | (10.4 | ) | ) | 17.0 | ||||
| Income tax expense | (0.2 | ) | (1.8 | ) | ) | (86.0 | ) | |||||
| Net loss | ) | (13.7 | )% | ) | (10.6 | )% | ) | 15.1 | % |
All values are in US Dollars.
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Net sales. Net sales decreased 10.8% to $260.8 million for the first 39 weeks of fiscal 2025 compared to $292.5 million for the prior year period. Comparable sales decreased 8.5%, or $24.2 million, for the first 39 weeks of fiscal 2025 compared to the prior year period. For the first 39 weeks of fiscal 2025, store comparable sales decreased 0.2% compared to the prior year period and e-commerce comparable sales decreased 33.4% compared to the prior year period. The decrease in comparable sales was driven by a decrease in consolidated average ticket and a decline in e-commerce traffic and conversion, which was partially offset by an increase in store traffic and conversion. Most merchandise categories performed below prior period levels except for impulse and fragrance, which performed above prior period levels.
Gross profit. Gross profit as a percentage of net sales decreased 570 basis points from 26.3% in the first 39 weeks of fiscal 2024 to 20.6% in the first 39 weeks of fiscal 2025. The overall decrease in gross profit margin was due to unfavorable merchandise margin and store occupancy costs, partially offset by favorable e-commerce shipping costs. Merchandise margin decreased approximately 500 basis points from 54.4% in the first 39 weeks of fiscal 2024 to 49.4% in the first 39 weeks of fiscal 2025, mainly due to increased promotional activity. Store occupancy costs increased approximately 160 basis points to 16.1% of net sales due to the sales deleverage on these fixed costs. E-commerce shipping costs decreased 130 basis points due to the reduction in e-commerce sales and changes in the product mix.
Compensation and benefits. Compensation and benefits as a percentage of net sales increased approximately 150 basis points from 19.6% in the first 39 weeks of fiscal 2024 to 21.1% in the first 39 weeks of fiscal 2025, primarily due to sales deleverage, partially offset by reductions in store and corporate compensation and benefits costs.
Other operating expenses. Other operating expenses as a percentage of net sales increased approximately 90 basis points from 13.7% in the first 39 weeks of fiscal 2024 to 14.6% in the first 39 weeks of fiscal 2025. The increase as a percentage of net sales was primarily related to increased insurance costs in the current year, which is a result of the tornado in the second quarter. Expenses related to the tornado through the first 39 weeks of 2025 were approximately $1.2 million.
Gain on sale of internally developed intangible assets. On September 15, 2025, the Company recorded a gain associated with this agreement that is included in operating loss in the 2025 statements of operations.
Loss on extinguishment of debt. Loss on extinguishment of debt, related to the payoff of our FILO Term Loan in 2024, was $3.3 million in the first 39 weeks of fiscal 2024, of which $2.6 million was related to a prepayment penalty and the remainder was for the write-off of the remaining unamortized debt issuance costs.
Income tax expense. We recorded an income tax expense of approximately $77,000, or (0.2)% of the loss before income taxes, during the first 39 weeks of fiscal 2025, compared to an income tax expense of approximately $549,000, or (1.8)% of the loss before income taxes, during the prior year period. The change in the tax rate for the first 39 weeks of fiscal 2025 compared to the prior period was primarily due to changes in valuation allowance adjustments and state income taxes.
Net loss and loss per share. We reported net loss of $35.7 million, or a loss of $1.60 per diluted share, for the first 39 weeks of fiscal 2025 as compared to net loss of $31.0 million, or a loss of $2.38 per diluted share, for the first 39 weeks of fiscal 2024.
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Non-GAAP Financial Measures
To supplement our unaudited consolidated condensed financial statements presented in accordance with generally accepted accounting principles (“GAAP”), this earnings release contains certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted operating loss, adjusted net loss and adjusted diluted loss per share. These measures are not in accordance with, and are not intended as alternatives to, GAAP financial measures. The Company uses these non-GAAP financial measures internally in analyzing our financial results and believes that they provide useful information to analysts and investors, as a supplement to GAAP financial measures, in evaluating the Company’s operational performance.
The Company defines EBITDA as net loss before income tax expense, interest expense, other income, the loss on extinguishment of debt, and depreciation. Adjusted EBITDA is defined as EBITDA adjusted to remove the gain on sale of internally developed intangible assets (as this does not represent a normal recurring gain), asset impairment, stock-based compensation expense (due to the non-cash nature of this expense), severance charges (as it fluctuates based on the needs of the business and does not represent a normal recurring operating expense), tornado related costs (as these do not represent a normal recurring expenses), and any financing related legal or professional fees that, due to their nature, did not qualify for capitalization as deferred debt or equity issuance costs.
Adjusted operating loss is defined as operating loss adjusted for the gain on sale of internally developed intangible assets, asset impairment, stock-based compensation expense, severance charges, tornado related costs, and financing related legal or professional fees not qualifying for capitalization. The Company defines adjusted net loss as net loss adjusted for gain on sale of internally developed intangible assets, stock-based compensation expense, severance charges, tornado related costs, the loss on extinguishment of debt, financing related legal or professional fees not qualifying for capitalization, and the related tax adjustments. The Company defines adjusted loss per diluted share as adjusted net loss divided by weighted average diluted share count.
Non-GAAP financial measures are intended to provide additional information only and do not have any standard meanings prescribed by GAAP. Use of these terms may differ from similar measures reported by other companies. Each non-GAAP financial measure has its limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of the Company’s results as reported under GAAP.
The following table shows an unaudited non-GAAP measure reconciliation of net loss to EBITDA and adjusted EBITDA (in thousands) for the periods indicated:
| 13-Week Period Ended | 39-Week Period Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | |||||||||
| Net loss | $ | (3,705 | ) | $ | (7,680 | ) | $ | (35,708 | ) | $ | (31,014 | ) |
| Income tax expense | 23 | 356 | 77 | 549 | ||||||||
| Interest expense | 1,738 | 1,719 | 4,550 | 4,266 | ||||||||
| Loss on extinguishment of debt | — | 3,338 | — | 3,338 | ||||||||
| Other income | (49 | ) | (126 | ) | (172 | ) | (362 | ) | ||||
| Depreciation | 2,012 | 2,339 | 6,162 | 7,476 | ||||||||
| EBITDA | 19 | (54 | ) | (25,091 | ) | (15,747 | ) | |||||
| Adjustments: | ||||||||||||
| Gain on sale of internally developed intangible assets^(1)^ | (10,000 | ) | — | (10,000 | ) | — | ||||||
| Asset impairment^(2)^ | — | 1 | 72 | 32 | ||||||||
| Stock-based compensation expense^(3)^ | 2 | 253 | 323 | 809 | ||||||||
| Beyond transaction costs not subject to capitalization^(4)^ | 75 | 266 | 304 | 266 | ||||||||
| Severance charges^(5)^ | — | — | 283 | 390 | ||||||||
| Tornado expenses, net^(7)^ | — | — | 1,974 | — | ||||||||
| Total adjustments | (9,923 | ) | 520 | (7,044 | ) | 1,497 | ||||||
| Adjusted EBITDA | $ | (9,904 | ) | $ | 466 | $ | (32,135 | ) | $ | (14,250 | ) |
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The following table shows a reconciliation of operating loss to adjusted operating loss (in thousands) for the periods indicated:
| 13-Week Period Ended | 39-Week Period Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | |||||||||
| Operating loss | $ | (1,993 | ) | $ | (2,393 | ) | $ | (31,253 | ) | $ | (23,223 | ) |
| Adjustments: | ||||||||||||
| Gain on sale of internally developed intangible assets^(1)^ | (10,000 | ) | — | (10,000 | ) | — | ||||||
| Asset impairment^(2)^ | — | 1 | 72 | 32 | ||||||||
| Stock-based compensation expense^(3)^ | 2 | 253 | 323 | 809 | ||||||||
| Beyond transaction costs not subject to capitalization^(4)^ | 75 | 266 | 304 | 266 | ||||||||
| Severance charges^(5)^ | — | — | 283 | 390 | ||||||||
| Tornado expenses, net^(7)^ | — | — | 1,974 | — | ||||||||
| Total adjustments | (9,923 | ) | 520 | (7,044 | ) | 1,497 | ||||||
| Adjusted operating loss | $ | (11,916 | ) | $ | (1,873 | ) | (38,297 | ) | (21,726 | ) |
The following table shows a reconciliation of net loss and diluted loss per share to adjusted net loss and adjusted diluted loss per share (in thousands, except for share data) for the periods indicated:
| 13-Week Period Ended | 39-Week Period Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| November 1, 2025 | November 2, 2024 | November 1, 2025 | November 2, 2024 | |||||||||
| Net loss | $ | (3,705 | ) | $ | (7,680 | ) | $ | (35,708 | ) | $ | (31,014 | ) |
| Adjustments: | ||||||||||||
| Gain on sale of internally developed intangible assets^(1)^ | (10,000 | ) | — | (10,000 | ) | — | ||||||
| Asset impairment^(2)^ | — | 1 | 72 | 32 | ||||||||
| Stock-based compensation expense^(3)^ | 2 | 253 | 323 | 809 | ||||||||
| Beyond transaction costs not qualifying for capitalization^(4)^ | 75 | 266 | 304 | 266 | ||||||||
| Severance charges^(5)^ | — | — | 283 | 390 | ||||||||
| Loss on extinguishment of debt^(6)^ | — | 3,338 | — | 3,338 | ||||||||
| Tornado expenses, net^(7)^ | — | — | 1,974 | — | ||||||||
| Total adjustments | (9,923 | ) | 3,858 | (7,044 | ) | 4,835 | ||||||
| Tax benefit of adjustments | 8 | 2 | 28 | 20 | ||||||||
| Total adjustments, net of tax | (9,915 | ) | 3,860 | (7,016 | ) | 4,855 | ||||||
| Adjusted net loss | $ | (13,620 | ) | $ | (3,820 | ) | $ | (42,724 | ) | $ | (26,159 | ) |
| Diluted loss per share | $ | (0.16 | ) | $ | (0.59 | ) | $ | (1.60 | ) | $ | (2.38 | ) |
| Adjusted diluted loss per share | $ | (0.61 | ) | $ | (0.29 | ) | $ | (1.91 | ) | $ | (2.00 | ) |
| Diluted weighted average shares outstanding | 22,461 | 13,116 | 22,338 | 13,052 | ||||||||
| ^(1)^ | Internally developed intangible assets refers to the Kirkland's brand that was sold to Beyond for a purchase price of $10.0 million in the third quarter. | |||||||||||
| --- | --- | |||||||||||
| ^(2)^ | Asset impairment charges are related primarily to property and equipment. | |||||||||||
| --- | --- | |||||||||||
| ^(3)^ | Stock-based compensation expense includes amounts expensed related to equity incentive plans. | |||||||||||
| ^(4)^ | Consulting and legal fees incurred relating to the Company’s transaction with Beyond that, due to their nature, did not qualify for capitalization as deferred debt or equity issuance costs. Given the magnitude and scope of this strategic transaction, the Company considers the incremental consulting and legal fees incurred not reflective of the ongoing costs to operate its business. | |||||||||||
| --- | --- | |||||||||||
| ^(5)^ | Severance charges include expenses related to severance agreements and permanent store closure compensation costs. | |||||||||||
| --- | --- | |||||||||||
| ^(6)^ | Loss on extinguishment of debt includes expenses related to the extinguishment of the FILO Term Loan including a $2.6 million prepayment penalty and the write-off of the remaining unamortized debt issuance costs. | |||||||||||
| ^(7)^ | Tornado related costs include the write-off of damaged inventory, a component of cost of sales, and expenses to move product to temporary storage and professional fees to secure and repair the damage caused by the tornado that damaged the Company’s distribution center in Jackson, Tennessee on May 20, 2025 which are recorded in other operating expenses, net of insurance proceeds. |
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Liquidity and Capital Resources
Our principal capital requirements are for working capital and capital expenditures. Working capital consists mainly of merchandise inventories offset by accounts payable, which typically reach their peak by the early portion of the fourth quarter of each fiscal year. Capital expenditures primarily relate to existing store maintenance, conversions, refreshes and remodels, technology and omni-channel projects, and new or relocated stores. Historically, we have funded our working capital and capital expenditure requirements with internally generated cash and borrowings under our asset-based revolving credit facility.
In fiscal 2023, we entered into the FILO Term Loan to provide additional liquidity, as internally generated cash and borrowings under our existing asset-based revolving credit facility did not provide enough liquidity to effectively execute our financial turnaround strategy in fiscal 2024. Throughout fiscal 2024, we implemented expense reductions to streamline our cost structure and improve our liquidity profile. The cost-savings initiatives included a reduction in corporate overhead, store payroll, marketing, and third-party technology expenses. On October 21, 2024, we entered into the Beyond Credit Agreement and Beyond Subscription Agreement. As part of this partnership, Beyond invested $25.0 million in us through a combined debt and equity transaction. Proceeds of $17.0 million from the Beyond Credit Agreement were used by us to repay our FILO Term Loan, including prepayment fees and transaction expenses, and to reduce borrowings under our existing revolving credit facility. The $8.0 million equity purchase under the Beyond Subscription Agreement and the mandatory conversion of the $8.5 million Convertible Term Loan with accrued interest into Common Stock at a price of $1.85 per share were both approved by the Company’s shareholders at the Company’s Special Shareholders Meeting on February 5, 2025, in accordance with Nasdaq Listing Rules resulting in the issuance of 8,934,465 shares of Common Stock to Beyond, which completed the transaction. On May 7, 2025, we entered into an Amended Beyond Credit Agreement, which included the Additional Term Loan of approximately $5.2 million for general working capital purposes and support for the Company's updated store conversion strategy. On September 15, 2025, the Company entered into an amendment to the Beyond Credit Agreement which provides a $20.0 million delayed draw term loan to support the Company’s store conversion strategy. Additionally, on September 15, 2025, we received $10.0 million from Beyond in accordance with the Asset Purchase Agreement entered into on May 7, 2025 and amended on September 15, 2025 with Beyond in which Beyond purchased the Company’s right, title and interest in and to our trademark and domain names comprised of or containing the Kirkland’s Brand. The consummation of the Asset Purchase Agreement was conditioned upon obtaining the consent of Bank of America, N.A. and the release of all liens on the Kirkland’s Brand, each of which was obtained and documented in the Fourth Amendment dated September 15, 2025. For additional information about the Beyond Delayed Draw Term Loan Commitments and Asset Purchase Agreement see “Note 15 — Subsequent Events” in the condensed consolidated financial statements.
Our going concern assessment includes the preparation of cash flow forecasts considering the completed financing transactions, annualized savings from cost-savings initiatives and the impact on profitability and cash flow from operations related to both the current elevated tariffs and the likelihood of challenging macroeconomic conditions that further constrain consumer demand, and these factors collectively suggest insufficient liquidity in the near-term. Due to these uncertainties and the consequences they may have on the projected cash flow in the near-term, there is substantial doubt about our ability to continue as a going concern for a period of at least 12 months from the date of issuance of the condensed consolidated financial statements.
As of February 1, 2025, we were in compliance with the financial covenants in the revolving credit facility and the Beyond Credit Agreement. However, our conclusion that substantial doubt exists about our ability to continue as a going concern required an explanatory paragraph in the report of our independent registered public accounting firm on our financial statements for the fiscal year ended February 1, 2025, which resulted in a violation of affirmative covenants under the revolving credit facility and the Beyond Credit Agreement. On May 7, 2025, we received waivers from the lenders under both facilities. As such, we have classified the outstanding borrowings under these agreements based on the contractual maturities on the condensed consolidated balance sheet as of November 1, 2025.
On November 24, 2025, the Company and its subsidiaries entered into Amendment No. 2 to the Amended and Restated Term Loan Credit Agreement (the “Beyond Amendment”) with Beyond amending the previous Amended and Restated Term Loan Credit Agreement dated May 7, 2025, as amended by that certain Amendment No. 1 to the Amended and Restated Term Loan Credit Agreement, dated September 15, 2025, among the Company and its subsidiaries and Beyond (the “Existing Beyond Credit Agreement”, and the Existing Credit Agreement as amended by the Beyond Amendment, (the “Amended Beyond Credit Agreement”). Pursuant to the terms of the Amended Beyond Credit Agreement, the existing delayed-draw term loan commitments were increased in the amount of $10.0 million for a total aggregate principal amount of $30.0 million (the “Beyond Delayed Draw Term Loan Commitments”). On November 24, 2025, $10.0 million of the Beyond Delayed Draw Term Loan Commitments were drawn and funded, leaving $20.0 million in available Beyond Delayed Draw Term Loan Commitments.
The accompanying consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the accompanying consolidated financial statements do not include any adjustments or charges that might be necessary should we be unable to continue as a going concern, such as charges related to impairment of our assets, the recoverability and classification of assets or the amounts and classification of liabilities or other similar adjustments. As of December 15, 2025, the Company had $20.7 million of outstanding debt and $5.8 million of outstanding letters of credit under its revolving credit facility with $12.2 million available for borrowing, after the minimum required excess availability covenant, and $23.7 million in term loans to Beyond with $20.0 million available under the Beyond Delayed Draw Term Loan Commitments.
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Cash flows from operating activities. Net cash used in operating activities was approximately $36.0 million and $39.0 million during the third 39 weeks of fiscal 2025 and the third 39 weeks of fiscal 2024, respectively. Cash flows from operating activities depend heavily on operating performance and changes in working capital. The decrease in the amount of cash flows used in operations in fiscal 2025 compared to fiscal 2024 was primarily due to inventory, as we experienced a $37.1 million increase in inventory levels during the first 39 weeks of 2024 and only a $7.0 million increase during the first 39 weeks of 2025. We also saw a decrease in cash used in other assets and liabilities, as we dissolved our non-depleting collateral trust with our workers' compensation and general liability insurance provider during 2025, and we received cash from the trust for the outstanding balance. These benefits to operating cash flows were partially offset by a gain on the sale of internally developed intangible assets (adjustment to net income and reflected as cash flows from investing activities) of $10.0 million in the sale of the Kirkland's brand name to Beyond, and also by a decline in operating performance.
Cash flows from investing activities. Net cash provided by investing activities for the first 39 weeks of fiscal 2025 consisted primarily of the $10.0 million received in the sale of the Kirkland's brand name to Beyond, partially offset by a $0.2 million increase in capital expenditures in 2025. $1.9 million was spent in the first 39 weeks of 2025 as compared to $1.7 million in capital expenditures for the prior year period. The table below sets forth capital expenditures by category (in thousands) for the periods indicated:
| 39-Week Period Ended | ||||
|---|---|---|---|---|
| November 1, 2025 | November 2, 2024 | |||
| Existing stores | $ | 1,796 | $ | 1,012 |
| Technology and omni-channel projects | 95 | 322 | ||
| New and relocated stores | 4 | 305 | ||
| Corporate | 22 | 12 | ||
| Distribution center and supply chain enhancements | 10 | 2 | ||
| Total capital expenditures | $ | 1,927 | $ | 1,653 |
The capital expenditures in the current and prior year period related primarily to the maintenance of existing stores and technology and omni-channel projects.
Cash flows from financing activities. During the first 39 weeks of fiscal 2025, net cash provided by financing activities was $30.5 million, as we received $8.0 million for the issuance of common stock to Beyond and $5.0 million in additional financing from Beyond. Borrowings on our revolving credit facility were $18.6 million more than repayments during the year. These cash inflows were partially offset by payments of debt and equity issuance costs of $1.0 million. During the first 39 weeks of fiscal 2024, net cash provided by financing activities was approximately $43.6 million, as we borrowed $17.0 million under our Beyond Credit Agreement and borrowed a net $31.0 million under our revolving credit facility, partially offset by prepayment penalties payments of $2.6 million, a $10.0 million repayment of our FILO term loan, and $1.7 million of debt and equity issuance cost payments.
Long-term debt. For additional information about our outstanding borrowings see “Note 10 — Long-term Debt” in the condensed consolidated financial statements.
Subscription Agreements. See “Note 11 — Subscription Agreements” in the condensed consolidated financial statements for a description of the Subscription Agreements.
Share repurchase plan. See “Note 9 — Share Repurchase Plan” in the condensed consolidated financial statements for a description of our share repurchase plan.
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies or estimates during the 39-week periods ended November 1, 2025. Refer to our Annual Report for a summary of our critical accounting policies and a discussion of the critical accounting estimates and assumptions impacting our consolidated financial statements.
New Accounting Pronouncements
See “Note 14 — New Accounting Pronouncements” in the condensed consolidated financial statements for accounting pronouncements not yet adopted.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to interest rate changes, primarily as a result of borrowings under our long-term debt agreements, as discussed in “Note 10 — Long-Term Debt,” in the notes to the condensed consolidated financial statements, which bear interest based on variable rates.
We manage cash and cash equivalents in various institutions at levels beyond federally insured limits per institution, and we may purchase investments not guaranteed by the Federal Deposit Insurance Company. Accordingly, there is a risk that we will not recover the full principal of our investments or that their liquidity may be diminished.
We were not engaged in any foreign exchange contracts, hedges, interest rate swaps, derivatives or other financial instruments as of November 1, 2025.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures. Both our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), after the evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended) was performed by management with the participation of our Chief Executive Officer and Chief Financial Officer, have concluded that, as of November 1, 2025, our disclosure controls and procedures were effective as of the end of the period covered by this report.
Change in internal controls over financial reporting. There have been no changes in internal control over financial reporting that have occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For a description of the Company’s legal proceedings, refer to “Note 7 — Commitments and Contingencies,” in the notes to the condensed consolidated financial statements.
ITEM 1A. RISK FACTORS
The risk factors described in Part I, “Item 1A. Risk Factors” in our Annual Report should be carefully considered together with the other information contained or incorporated by reference in this Quarterly Report on Form 10-Q and in our other filings with the SEC, in connection with evaluating the Company, our business, and the forward-looking statements contained in this Quarterly Report on Form 10-Q. There have been no material changes to our risk factors as previously disclosed in the Annual Report, other than the items noted below. The risks described in this report and in our Annual Report are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Risks Related to the Proposed Merger
The announcement and pendency of the Merger Agreement may have an adverse effect on our business results.
On November 24, 2025, we entered into the Merger Agreement. We are subject to risks in connection with the announcement and pendency of the proposed Merger which may have an adverse effect on our business, financial condition and operating results in the near term, including:
| ● | customers, vendors, suppliers, landlords, and other business partners may delay or defer certain business decisions, seek alternative relationships with third parties or seek to alter their present business relationships with us; |
|---|---|
| ● | the restrictions imposed on our business and operations pursuant to certain covenants set forth in the Merger Agreement may prevent us from pursuing certain opportunities, entering into certain contracts with vendors, suppliers and landlords, or taking certain other actions without approval of Beyond; |
| --- | --- |
| ● | we may be unable to attract, recruit, retain and motivate current and prospective employees who may be uncertain about their future roles following completion of the proposed Merger, and our employees could lose productivity as a result of uncertainty regarding their employment following the proposed Merger; |
| --- | --- |
| ● | the pursuit of the Merger and planning for the integration may place a significant burden on management and other internal resources, and the diversion of management’s attention away from day-to-day business concerns and other opportunities that may have been beneficial to us could adversely affect our business, financial condition and operating results; and |
| --- | --- |
| ● | the Merger Agreement may discourage other companies from trying to acquire us for greater consideration than what Beyond has agreed to pay pursuant to the Merger Agreement. |
| --- | --- |
The failure to complete the Merger could have a material and adverse effect on our business, results of operations, financial condition, cash flows, and stock price.
The Merger, which is expected to close in the first quarter of fiscal 2026, is subject to the satisfaction or waiver of customary closing conditions, including, the adoption of the Merger Agreement by our shareholders. There is no assurance that all of the various conditions will be satisfied, or that the Merger will be completed on the proposed terms, within the expected timeframe or at all. The closing of the Merger may be delayed, and the Merger may ultimately not be completed, due to a number of factors, including:
| ● | the failure to satisfy the closing conditions set forth in the Merger Agreement; |
|---|---|
| ● | potential future shareholder litigation and other legal and regulatory proceedings, which could delay or prevent the consummation of the Merger; and |
| --- | --- |
| ● | the failure to satisfy any other conditions set forth in the Merger Agreement. |
| --- | --- |
If the Merger does not close, we may suffer other consequences that could adversely affect our business, financial condition, operating results, cash flows and stock price.
If the Merger does not close, our shareholders may be exposed to additional risks, including:
| ● | to the extent that the current market price of our common stock reflects an assumption that the Merger will be completed, the price of our common stock could decrease if the Merger is not consummated; |
|---|---|
| ● | investor confidence in us could decline, shareholder litigation could be brought against us, relationships with existing and prospective vendors, suppliers, landlords, and other business partners may be adversely impacted, we may be unable to hire or retain key personnel, and our operating results and cash flows may be adversely impacted due to costs incurred in connection with the Merger; |
| --- | --- |
| ● | failure to complete the proposed Merger may result in negative publicity and a negative impression of us in the investment community; |
| --- | --- |
| ● | the risk that we would be required to pay Beyond a termination fee or any other fees associated with the termination of the Merger Agreement; |
| --- | --- |
| ● | the risk that we may not be able to continue as a going concern without the Board seeking alternative strategic opportunities, which may result in a reduction or discontinuation of operations for the foreseeable future; |
| ● | any disruptions to our business resulting from the announcement and pendency of the Merger, including adverse changes in our relationships with employees, and business partners, may continue or intensify in the event the Merger is not consummated or is significantly delayed; and |
| --- | --- |
| ● | we would have incurred significant costs, including professional services fees and other transaction costs, in connection with the proposed Merger that we would be unable to recover. |
| --- | --- |
The Merger is subject to a financing condition related to the refinancing or repayment of the Company’s existing asset-based loan with Bank of America that, if not obtained, could prevent the completion of the Merger and result in adverse consequences to the financial condition of the Company.
The Merger Agreement requires each party to use commercially reasonable efforts to amend or refinance the Company’s existing asset-based loan credit facility with Bank of America, or at Beyond’s election, to secure replacement debt financing to repay the Bank of America facility. The completion of the Merger may be prevented if this condition is not satisfied and, as a result, the financial condition of the Company may be adversely affected. Successful execution of the Company’s store-conversion strategy and omni-channel retail operations will require increased access to working capital. If the Merger is not completed and the Company is unable to secure an amendment to, or a replacement of, its existing credit facility, the Company may experience a reduction or discontinuation of operations for the foreseeable future.
In addition, as previously disclosed, due to the uncertainty of our ability to meet our current operating and capital expenses, our independent registered public accounting firm’s report for the year ended February 1, 2025, is qualified as to our ability to continue as a going concern. If the Merger is not completed and the Company is unable to secure an amendment to, or a replacement of, its existing credit facility, the presence of the going concern description in our financial statements may continue and may have an adverse impact on the Company’s ability to operate its business and could make it challenging and difficult to raise additional financing, all of which could have a material adverse impact on the Company’s business and prospects and result in a significant or complete loss of investment. In such event, if we are unable to obtain a waiver from our lenders, our lenders could instruct the administrative agent under such credit facilities to exercise available remedies, including declaring the principal of and accrued interest on all outstanding indebtedness immediately due and payable and terminating all remaining commitments and obligations under the credit facilities. Although the lenders under our credit facilities may waive the defaults or forbear the exercise of remedies, the lenders are not obligated to do so. Failure to obtain such waivers would have a material adverse effect on the liquidity, financial condition, and results of operations and may result in filing a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in order to implement a restructuring plan.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Repurchases of Equity Securities
On January 6, 2022, the Company announced that the Board authorized a share repurchase plan providing for the purchase in the aggregate of up to $30.0 million of the Company’s outstanding common stock. Repurchases of shares are made in accordance with applicable securities laws and may be made from time to time in the open market or negotiated transactions. The amount and timing of repurchases are based on a variety of factors, including stock price, regulator limitations and other market and economic factors. The share repurchase plans do not require us to repurchase any specific number of shares, and the Company may terminate the repurchase plans at any time. For the 39-week periods ended November 1, 2025, the Company did not repurchase any shares of common stock under the share repurchase plan. As of November 1, 2025, the Company had approximately $26.3 million remaining under the current share repurchase plan.
ITEM 5. OTHER INFORMATION
None of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as each term is defined in Item 408 of Regulation S-K) during the quarter ended November 1, 2025.
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ITEM 6. EXHIBITS
* Incorporated by reference.
- Management contract of compensatory plan or arrangement.
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Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| THE BRAND HOUSE COLLECTIVE, INC. | |
|---|---|
| Date: December 16, 2025 | /s/ Amy E. Sullivan |
| Amy E. Sullivan<br> <br>President, Chief Executive Officer and Director | |
| Date: December 16, 2025 | /s/ Andrea K. Courtois |
| Andrea K. Courtois<br> <br>Senior Vice President and Chief Financial Officer |
32
ex_897048.htm
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
among
BED BATH & BEYOND, INC.
KNIGHT MERGER SUB II, INC.
and
THE BRAND HOUSE COLLECTIVE, INC.
Dated as of November 24, 2025
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER 2
Section 1.1 The Merger 2
Section 1.2 Closing; Effective Time 2
Section 1.3 Effects of the Merger 3
Section 1.4 Certificate of Incorporation and Bylaws 3
Section 1.5 Directors; Officers 3
Section 1.6 Subsequent Actions 3
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES 3
Section 2.1 Conversion of Capital Stock 3
Section 2.2 Exchange and Payment 4
Section 2.3 Treatment of Options and Other Equity-Based Awards 7
Section 2.4 No Fractional Shares 8
Section 2.5 Tax Withholding 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 9
Section 3.1 Organization, Standing and Power 10
Section 3.2 Capital Stock 10
Section 3.3 Authority 12
Section 3.4 No Conflict; Consents and Approvals 12
Section 3.5 SEC Reports; Financial Statements 14
Section 3.6 No Undisclosed Liabilities 15
Section 3.7 Certain Information 16
Section 3.8 Absence of Certain Changes or Events 16
Section 3.9 Litigation 16
Section 3.10 Compliance with Laws 17
Section 3.11 Benefit Plans 17
Section 3.12 Labor Matters 20
Section 3.13 Environmental Matters 21
Section 3.14 Taxes 22
Section 3.15 Contracts 25
Section 3.16 Insurance 28
Section 3.17 Properties 28
Section 3.18 Intellectual Property 29
Section 3.19 Data Privacy 31
Section 3.20 Certain Payments 31
Section 3.21 State Takeover Statutes 32
Section 3.22 Affiliate Transactions 32
Section 3.23 Brokers 32
Section 3.24 Opinion of Financial Advisor 33
Section 3.25 No Other Representations or Warranties 33
Section 3.26 No Reliance 33
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB 34
Section 4.1 Organization, Standing and Power 34
Section 4.2 Capital Stock 35
Section 4.3 Authority 36
Section 4.4 No Conflict; Consents and Approvals 36
Section 4.5 SEC Reports; Financial Statements 37
Section 4.6 No Undisclosed Liabilities 39
Section 4.7 Certain Information 39
Section 4.8 No Parent Material Adverse Effect 39
Section 4.9 Litigation 40
Section 4.10 Compliance with Laws 40
Section 4.11 Brokers 40
Section 4.12 No Prior Activities 41
Section 4.13 No Other Representations or Warranties 41
Section 4.14 No Reliance 41
ARTICLE V COVENANTS 42
Section 5.1 Conduct of Business of the Company 42
Section 5.2 Conduct of Business of Parent 45
Section 5.3 No Control of Other Party’s Business 46
Section 5.4 No Solicitation by the Company 46
Section 5.5 Preparation of Form S-4 and Proxy Statement; Company Shareholders Meeting 52
Section 5.6 Access to Information; Confidentiality 54
Section 5.7 Further Action; Efforts 55
Section 5.8 Company 401(k) Plan 55
Section 5.9 Takeover Laws 55
Section 5.10 Stock Exchange Listing 55
Section 5.11 Stock Exchange Delisting 55
Section 5.12 Indemnification, Exculpation and Insurance 56
Section 5.13 Rule 16b-3 57
Section 5.14 Public Announcements 58
Section 5.15 Obligations of Merger Sub 58
Section 5.16 Notices of Certain Events 58
Section 5.17 Stockholder Litigation 58
Section 5.18 Certain Tax Matters 59
Section 5.19 Revolver Loan Credit Facility 59
Section 5.20 Existing Agreements 63
Section 5.21 Director Resignations 63
Section 5.22 280G Analysis 63
Section 5.23 Parent Support Agreement 63
ARTICLE VI CONDITIONS PRECEDENT 64
Section 6.1 Conditions to Each Party’s Obligation to Effect the Merger 64
Section 6.2 Conditions to the Obligations of the Company 65
Section 6.3 Conditions to the Obligations of Parent and Merger Sub 66
Section 6.4 Frustration of Closing Conditions 66
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER 67
Section 7.1 Termination 67
Section 7.2 Effect of Termination 68
Section 7.3 Fees and Expenses 69
Section 7.4 Amendment or Supplement 70
Section 7.5 Extension of Time; Waiver 71
ARTICLE VIII GENERAL PROVISIONS 71
Section 8.1 Nonsurvival of Representations and Warranties and Pre-Closing Covenants 71
Section 8.2 Notices 71
Section 8.3 Certain Definitions 72
Section 8.4 Interpretation 78
Section 8.5 Entire Agreement 78
Section 8.6 Parties in Interest 78
Section 8.7 Governing Law 79
Section 8.8 Submission to Jurisdiction 79
Section 8.9 Assignment; Successors 79
Section 8.10 Specific Performance 80
Section 8.11 Currency 80
Section 8.12 Severability 80
Section 8.13 Waiver of Jury Trial 80
Section 8.14 Counterparts 81
Section 8.15 Facsimile or .pdf Signature 81
Section 8.16 No Presumption Against Drafting Party 81
Section 8.17 Non-Recourse 81
Exhibits
Exhibit A Form of Certificate of Merger
Exhibit B Form of Articles of Merger
INDEX OF DEFINED TERMS
Definition Section
Action 3.9
Affiliate 8.3(a)
Agreement Preamble
Anti-Corruption Laws 3.19
Articles of Merger 1.2(b)
Book-Entry Shares 2.2(c)
Business Day 8.3(b)
Cancelled Shares 2.1(a)(ii)
Certificate of Merger 1.2(b)
Certificates 2.2(c)
Closing 1.2(a)
Closing Date 1.2(a)
Code Recitals
Collateral Agent 5.19(a)
Company Preamble
Company 401(k) Plan 5.8
Company Acquisition Proposal 5.4(i)(i)
Company Adverse Recommendation Change 5.4(c)
Company Alternative Acquisition Agreement 5.4(c)
Company Award 3.2(d)
Company Award Consideration 2.3(b)
Company Awards 2.3(b)
Company Board Recitals
Company Board Recommendation 3.2(d)
Company Bylaws 3.1(b)
Company Charter 3.1(b)
Company Closing Price 8.3(c)
Company Disclosure Letter III
Company Intervening Event 5.4(i)(ii)
Company Leased Real Property 3.17(a)
Company Material Adverse Effect 8.3(e)
Company Material Contract 3.15(a)
Company Plan 3.11(a)
Company Real Property Leases 3.17(a)
Company Registered IP 3.18(b)
Company RSU 2.3(b)
Company RSU Consideration 2.3(b)
Company SEC Documents 3.5(a)
Company Shareholder Approval 8.3(e)
Company Shareholders Meeting 5.5(a)
Company Shares 2.1(a)(i)
Company Stock Option 2.3(a)
Company Stock Option Consideration 2.3(a)
Company Superior Proposal 5.4(i)(iii)
Company Superior Proposal Notice 5.4(d)(ii)
Company Termination Fee 7.3(b)(iii)
Confidentiality Agreement 5.6
Contract 3.4(a)
control 8.3(f)
Credit Facility 5.19(a)
Credit Facility Amendment 5.19(a)
Delaware Secretary of State 1.2(b)
DGCL Recitals
Disinterested Shareholder 8.3(g)
Effect 8.3(e)
Effective Time 1.2(b)
Encumbrance 8.3(l)
Environmental Laws 3.13(c)(i)
Environmental Permits 3.13(c)(ii)
Equity Interest 8.3(m)
ERISA 3.11(a)
ERISA Affiliate 3.11(c)
Exchange Act 3.4(b)
Exchange Agent 2.2(a)
Exchange Fund 2.2(b)
Exchange Ratio 8.3(n)
Form S-4 3.7
Fractional Share Cash Consideration 2.4(b)
GAAP 3.5(b)
Government Official 3.19
Governmental Entity 3.4(b)
Indemnified Parties 5.12(a)
Intended Tax Treatment Recitals
IRS 3.11(a)
knowledge of Parent 8.3(p)
knowledge of the Company 8.3(q)
Labor Agreement 3.12(a)
Law 3.4(a)
Liens 3.2(c)
Materials of Environmental Concern 3.13(c)(iii)
Maximum Annual Premium 5.12(c)
Measurement Date 3.2(a)
Merger Recitals
Merger Consideration 2.1(a)(i)
Merger Sub Preamble
Merger Sub Board Recitals
Most Recent Company Balance Sheet 3.6
Most Recent Parent Balance Sheet 4.6
Nasdaq 3.4(b)
Net Option Share Amount 2.3(a)
NYSE 4.4(b)
OFAC 8.3(z)
Organizational Documents 8.3(r)
Parent Preamble
Parent Board Recitals
Parent Bylaws 4.1(b)
Parent Charter 4.1(b)
Parent Common Stock Recitals
Parent Disclosure Letter IV
Parent Material Adverse Effect 8.3(s), 8.3(t)
Parent SEC Documents 4.5(a)
Parent Stock Issuance Recitals
Parent Stock Options 4.2(a)
Payoff Letter 5.19(a)
Permits 3.10
Permitted Encumbrance 8.3(u)
Person 8.3(v)
Personal Information 8.3(w)
Preferred Stock 3.2(a)
Privacy Laws 8.3(x)
Privacy Requirements 3.19(a)
Process 8.3(y)
Prohibited Person 8.3(z)
Proxy Statement 5.5(a)
Relevant Legal Restraint 6.1(b)
Representatives 5.4(a)
Required Lenders 5.19(a)
Sarbanes-Oxley Act 3.5(a)
SEC 3.5(a)
Securities Act 3.5(a)
Security Incident 8.3(bb)
Subsidiary 8.3(cc)
Surviving Corporation Recitals
Takeover Laws 3.21
Tax Returns 3.14(d)(i)
Taxes 3.14(d)(ii)
TBCA Recitals
Tennessee Secretary of State 1.2(b)
Term Loan Credit Facility 5.20, 5.20, 5.20
Termination Date 7.1(b)(i)
Third Party 47
Willful Breach 8.3(dd)
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of November 24, 2025, is made by and among Bed Bath & Beyond, Inc., a Delaware corporation (“Parent”), Knight Merger Sub II, Inc., a Delaware corporation and a wholly-owned Subsidiary of Parent (“Merger Sub”), and The Brand House Collective, Inc., a Tennessee corporation (the “Company”).
RECITALS
WHEREAS, upon the terms and subject to the conditions of this Agreement and in accordance with the General Corporation Law of the State of Delaware (the “DGCL”) and the Tennessee Business Corporation Act (the “TBCA”), Parent, Merger Sub and the Company have agreed to enter into a business combination transaction pursuant to which Merger Sub will merge with and into the Company (the “Merger”), with the Company being the surviving corporation (the Company, in its capacity as the surviving corporation of the Merger, is sometimes referred to as the “Surviving Corporation”);
WHEREAS, for U.S. federal income Tax purposes, the parties hereto intend that (i) the Merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”) (the “Intended Tax Treatment”), and (ii) this Agreement is, and hereby is adopted as, a “plan of reorganization” for purposes of Sections 354, 361 and the 368 of the Code and within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3(a);
WHEREAS, the board of directors of the Company (the “Company Board”) unanimously (a) determined that the terms of this Agreement and the transactions contemplated hereby, including the Merger, are fair to, and in the best interests of, the Company and its shareholders, (b) determined that it is in the best interests of the Company and its shareholders, and declared it advisable, to enter into this Agreement, (c) approved the execution and delivery by the Company of this Agreement, the performance by the Company of its covenants and agreements contained herein and the consummation of the Merger and the other transactions contemplated hereby upon the terms and subject to the conditions contained herein and (d) subject to Section 5.4, resolved to recommend that the Company’s shareholders vote to adopt this Agreement;
WHEREAS, the board of directors of Parent (the “Parent Board”) unanimously (a) determined that the terms of this Agreement and the transactions contemplated hereby, including the Merger, are fair to, and in the best interests of, Parent and its stockholders, (b) determined that it is in the best interests of Parent and its stockholders, and declared it advisable, to enter into this Agreement, (c) approved the execution and delivery by Parent of this Agreement, the performance by Parent of its covenants and agreements contained herein and the consummation of the Merger and the other transactions contemplated hereby upon the terms and subject to the conditions contained herein and (d) resolved to approve the issuance of common stock, par value $0.0001 per share, of Parent (“Parent Common Stock”) pursuant to the Merger as contemplated by, and subject to the terms and conditions set forth in, this Agreement (the “Parent Stock Issuance”);
WHEREAS, the board of directors of Merger Sub (the “Merger Sub Board”) (a) approved this Agreement and declared its advisability and (b) resolved to recommend the adoption of this Agreement by the sole stockholder of Merger Sub;
WHEREAS, Parent, as the sole stockholder of Merger Sub, shall adopt this Agreement immediately following the execution of this Agreement upon the recommendation of the Merger Sub Board; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Merger and the other transactions contemplated by this Agreement and also to prescribe certain terms and conditions to the Merger as specified herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
&NBSP;&NBSP;&NBSP;&NBSP;THE MERGER
Section 1.1 The Merger
. Upon the terms and subject to the conditions of this Agreement, at the Effective Time and in accordance with the DGCL and the TBCA, Merger Sub shall be merged with and into the Company pursuant to which (i) the separate corporate existence of Merger Sub shall cease, (ii) the Company shall be the Surviving Corporation in the Merger and shall continue its corporate existence under the laws of the State of Tennessee as a direct, wholly owned Subsidiary of Parent and (iii) all of the properties, rights, privileges, powers and franchises of the Company and Merger Sub will vest in the Surviving Corporation, and all of the debts, liabilities, restrictions, obligations and duties of the Company will become the debts, liabilities, restrictions, obligations and duties of the Surviving Corporation, all as provided under the DGCL and the TBCA.
Section 1.2 Closing; Effective Time
.
(a) The closing of the Merger (the “Closing”) shall take place at 9:00 a.m., Eastern time, no later than the third (3rd) Business Day following the satisfaction or, to the extent permitted hereunder and by applicable Law, waiver of the last to be satisfied or waived of all conditions to the parties’ respective obligations to effect the Merger set forth in Article VI (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permitted hereunder and by applicable Law, waiver of those conditions at the Closing), at the offices of Latham & Watkins LLP, 330 North Wabash Avenue, Suite 2800, Chicago, Illinois 60611, unless another date, time or place is agreed to in writing by Parent and the Company; provided, that the Closing may occur remotely via electronic exchange of required Closing documentation in lieu of an in-person Closing, and the parties shall cooperate in connection therewith. The date on which the Closing actually occurs is referred to in this Agreement as the “Closing Date.”
(b) Subject to the provisions of this Agreement, at the Closing, the parties shall cause (i) a certificate of merger with respect to the Merger in the form set forth as Exhibit A hereto (the “Certificate of Merger”) to be duly executed and filed with the Secretary of State of the State of Delaware (the “Delaware Secretary of State”), in accordance with the relevant provisions of the DGCL, and (ii) articles of merger with respect to the Merger in the form set forth as Exhibit B hereto (the “Articles of Merger”) to be duly executed and filed with the Secretary of State of the State of Tennessee (the “Tennessee Secretary of State”), in accordance with the relevant provisions of the TBCA. The Merger shall become effective upon the filing of the Certificate of Merger with the Delaware Secretary of State or at such other time as the parties may mutually agree to in writing and as shall be specified in the Certificate of Merger. The date and time when the Merger shall become effective is herein referred to as the “Effective Time.”
Section 1.3 Effects of the Merger
. The Merger shall have the effects provided for in this Agreement and in the applicable provisions of the DGCL and the TBCA.
Section 1.4 Certificate of Incorporation and Bylaws
. From and after the Effective Time, subject to Section 5.10, the certificate of incorporation and the bylaws of Merger Sub as in effect immediately prior to the Effective Time shall be the certificate of incorporation and bylaws, respectively, of the Surviving Corporation, with such changes as reasonably required in accordance with applicable Law, until thereafter changed or amended as provided therein or by applicable Law (and subject to the provisions of Section 5.10).
Section 1.5 Directors; Officers
. From and after the Effective Time, (i) the directors of Merger Sub immediately prior to the Effective Time shall be the only directors of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified and (ii) the officers of Merger Sub immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified in accordance with the certificate of incorporation and bylaws of the Surviving Corporation.
Section 1.6 Subsequent Actions
. If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of the Company or Merger Sub, as applicable, acquired or to be acquired by the Surviving Corporation as a result of or in connection with the Merger or otherwise to carry out this Agreement, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name of and on behalf of either the Company or Merger Sub, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of each such corporation or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Corporation, or otherwise to carry out this Agreement.
ARTICLE II
&NBSP;&NBSP;&NBSP;&NBSP;EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.1 Conversion of Capital Stock
.
(a) Subject to the terms and conditions of this Agreement, at the Effective Time, automatically, by virtue of the Merger and without any action on the part of the Company, Parent, Merger Sub or the holders of any shares of capital stock of the Company, Parent or Merger Sub, and subject to the provisions of this Article II:
(i) each share of common stock, no par value, of the Company (such shares, collectively, the “Company Shares”) issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares), shall be converted automatically into and shall thereafter represent the right to receive, without interest, a number of validly issued, fully paid and nonassessable shares of Parent Common Stock equal to the Exchange Ratio, rounded down to the nearest whole share as contemplated by Section 2.4 with respect to fractional shares and any required withholding of Taxes pursuant to Section 2.5 (together with the Fractional Share Cash Consideration, the “Merger Consideration”).
(ii) each Company Share held in the treasury of the Company or held directly by Parent, any Subsidiary thereof, including Merger Sub, the Company or any wholly-owned Subsidiary of the Company immediately prior to the Effective Time shall automatically be cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor (such shares, the “Cancelled Shares”); and
(iii) each share of common stock, par value $0.0001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and nonassessable share of common stock, par value $0.0001 per share, of the Surviving Corporation with the same rights, powers, and privileges as the shares so converted and shall constitute the only outstanding shares of capital stock of the Surviving Corporation.
(b) If at any time during the period between the date of this Agreement and the Effective Time (and as permitted by Article V), any change in the outstanding shares of capital stock of Parent or the Company, or securities convertible into or exchangeable into or exercisable for shares of such capital stock, shall occur as a result of any reclassification, recapitalization, stock split (including a reverse stock split) or subdivision or combination, exchange or readjustment of shares, or any stock dividend or stock distribution with a record date during such period, merger or other similar transaction, then the Merger Consideration and any other amounts payable pursuant to this Agreement shall be adjusted to the extent appropriate to provide the same economic effect as contemplated by this Agreement prior to such action; provided, that nothing in this Section 2.1 shall be construed to permit the Company or Parent to take any action with respect to its securities that is prohibited by the terms of this Agreement. In addition to the foregoing, if Parent makes any dividend of cash or other property in respect of the capital stock of Parent the record date of which occurs prior to the Effective Date that would adversely affect the Company shareholders in a manner disproportionate to Parent and its shareholders, then the Exchange Ratio shall be subject to equitable adjustment as determined by Parent in good faith and in its sole discretion to provide the same economic effect as contemplated by this Agreement prior to such action.
Section 2.2 Exchange and Payment
.
(a) Appointment of Exchange Agent. Prior to the mailing of the Proxy Statement, Parent shall enter into an agreement (in a form reasonably acceptable to the Company) with a nationally recognized financial institution or trust company to act as an exchange agent (the “Exchange Agent”) for the purpose of paying the Merger Consideration and the Exchange Agent’s other responsibilities under this Agreement.
(b) Prior to the Effective Time, Parent shall deposit (or cause to be deposited) with the Exchange Agent (i) the aggregate Fractional Share Cash Consideration payable in the Merger to holders of Company Shares and (ii) evidence of Parent Common Stock in book-entry form representing the number of shares of Parent Common Stock sufficient to deliver the aggregate Merger Consideration payable in the Merger to holders of Company Shares (such cash and book-entry shares, together with any dividends or distributions with respect thereto, the “Exchange Fund”). The Exchange Fund shall not be used for any purpose other than to fund payments in respect of Company Shares converted into Merger Consideration pursuant to Section 2.1(a), except as provided in this Agreement (including payment of the Fractional Share Cash Consideration). Parent shall pay all charges and expenses of the Exchange Agent incurred by it in connection with the exchange of Company Shares for the Merger Consideration.
(c) As promptly as reasonably practicable after the Effective Time (but in no event later than three (3) Business Days after the Effective Time), the Surviving Corporation shall cause the Exchange Agent to mail to each holder of record of an outstanding certificate or outstanding certificates (“Certificates”) that immediately prior to the Effective Time represented outstanding Company Shares that were converted into the right to receive the Merger Consideration with respect thereto pursuant to Section 2.1(a), (i) a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates held by such Person shall pass, only upon proper delivery of the Certificates to the Exchange Agent) and (ii) instructions for use in effecting the surrender of such Certificates in exchange for the Merger Consideration payable with respect thereto pursuant to Section 2.1(a), the Fractional Share Cash Consideration payable pursuant to (a) and any dividends or other distributions such holder is entitled to receive pursuant to Section 2.2(i) below. Upon surrender of a Certificate to the Exchange Agent, together with such letter of transmittal, duly completed, in proper form and validly executed in accordance with the instructions thereto, with all required enclosures and attachments, with respect to such Certificates, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration for each Company Share formerly represented by such Certificate (subject to deduction for any required withholding Tax), and the Certificate so surrendered shall forthwith be cancelled and any shares of Parent Common Stock issued in connection with the foregoing shall be in non-certificated book-entry form. As promptly as reasonably practicable after the Effective Time, the Surviving Corporation shall cause the Exchange Agent to deliver to each holder of record immediately prior to the Effective Time of (1) uncertificated Company Shares represented by book entry (“Book-Entry Shares”) and (2) Certificates, the Merger Consideration payable with respect thereto pursuant to Section 2.1(a), the Fractional Share Cash Consideration payable pursuant to (a) and any dividends or other distributions such holder is entitled to receive pursuant to Section 2.2(i) below, in each case without the need for receipt of any further documentation, including any “agent’s message” or other evidence of surrender. The shares of Parent Common Stock issued in connection with the foregoing shall be in non-certificated book-entry form. No interest will be paid or accrued for the benefit of holders of Certificates or Book-Entry Shares on the Merger Consideration payable in respect of Certificates or Book-Entry Shares.
(d) If payment of the Merger Consideration or Fractional Share Cash Consideration is to be made to a Person other than the Person in whose name the surrendered Certificate or Book-Entry Share is registered, it shall be a condition of payment that such Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer or such Book-Entry Share shall be properly transferred and that the Person requesting such payment shall have paid any transfer and other Taxes required by reason of the payment of the Merger Consideration to a Person other than the registered holder of the Certificate or Book-Entry Share surrendered or shall have established to the satisfaction of Parent that such Tax either has been paid or is not applicable.
(e) Until surrendered as contemplated hereby, each Certificate or Book-Entry Share shall, at any time after the Effective Time, represent only the right to receive the applicable Merger Consideration provided in this Agreement and any dividends or other distributions such holder is entitled to receive pursuant to Section 2.2(i) below, in each case, in respect of Company Shares theretofore represented by such Certificate or Book-Entry Shares, as applicable, without any interest thereon.
(f) The Merger Consideration and any dividends or other distributions payable pursuant to Section 2.2(i) paid upon the surrender of Certificates or Book-Entry Shares in accordance with the terms of this Article II shall be deemed to have been paid in full satisfaction of all rights pertaining to the Company Shares formerly represented by such Certificates or Book-Entry Shares. At the Effective Time, the stock transfer books of the Company shall be closed and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the Company Shares that were outstanding immediately prior to the Effective Time. From and after the Effective Time, the holders of Certificates and Book-Entry Shares representing the Company Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such shares except as otherwise provided for herein or by applicable Law. If, after the Effective Time, Certificates are presented to the Surviving Corporation or the Exchange Agent for transfer or transfer is sought for Book-Entry Shares, such Certificates or Book-Entry Shares shall be cancelled and exchanged as provided in this Article II.
(g) The Exchange Agent shall, if directed by Parent in its sole discretion, invest any cash included in the Exchange Fund as directed by Parent, on a daily basis; provided, that any investment of such cash shall in all events be in short-term obligations of the United States of America with maturities of no more than 30 days or guaranteed by the United States of America and backed by the full faith and credit of the United States of America or in commercial paper obligations rated A‑1 or P‑1 or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation, respectively. If for any reason (including investment losses) the cash in the Exchange Fund is insufficient to fully satisfy all of the payment obligations to be made in cash by the Exchange Agent hereunder, Parent shall cause the Surviving Corporation to promptly deposit cash into the Exchange Fund in an amount which is equal to the deficiency in the amount of cash required to fully satisfy such cash payment obligations. Any interest and other income resulting from such investments shall be payable to the Surviving Corporation or such other party as may be determined by Parent.
(h) At any time following the date that is twelve (12) months after the Effective Time, the Surviving Corporation shall be entitled to require the Exchange Agent to deliver to it any funds (including any interest received with respect thereto) which have been made available to the Exchange Agent and which have not been disbursed to holders of Certificates or Book-Entry Shares, and thereafter such holders shall be entitled to look to Parent and the Surviving Corporation (subject to abandoned property, escheat or other similar Laws) only as general creditors thereof with respect to the Merger Consideration (and any dividends or other distributions payable with respect thereto pursuant to Section 2.2(i)) payable upon due surrender of their Certificate or Book-Entry Shares. Notwithstanding the foregoing, neither the Surviving Corporation nor Parent shall be liable to any holder of Company Shares for any amounts paid to a public official pursuant to applicable abandoned property, escheat, or similar Laws. Any amounts remaining unclaimed by holders of the Company Shares two (2) years after the Effective Time, or such earlier date, immediately prior to such time when the amounts would otherwise escheat to or become property of any Governmental Entity shall become, to the extent permitted by applicable Law, the property of the Surviving Corporation (or, at the option of Parent, Parent) free and clear of any claims or interest of any Person previously entitled thereto.
(i) If any Certificate shall have been lost, stolen or destroyed, upon the holder’s compliance with the replacement requirements established by the Exchange Agent, including, if necessary, an indemnity by such Person for any claim that may be made against it or the Surviving Corporation with respect to such Certificate, the Exchange Agent will deliver in exchange for such lost, stolen or destroyed Certificate the Merger Consideration, the Fractional Share Cash Consideration and any dividends or other distributions payable with respect thereto pursuant to Section 2.2(i), payable in respect thereof pursuant to this Agreement.
(j) No dividends or other distributions declared or made after the Effective Time with respect to shares of Parent Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate or Book-Entry Share with respect to the shares of Parent Common Stock that the holder thereof has the right to receive upon the surrender thereof, and no Fractional Share Cash Consideration shall be paid to any such holder pursuant to Section 2.4(b), in each case until the holder of such Certificate or Book-Entry Share shall have surrendered such Certificate or Book-Entry Share in accordance with this Article II. Following the surrender of any Certificate or Book-Entry Share, there shall be paid promptly to the holder of the Certificate or Book-Entry Share representing shares of Parent Common Stock issued in exchange therefor, without interest, (i) at the time of such surrender, the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such shares of Parent Common Stock and the Fractional Share Cash Consideration to which such holder is entitled pursuant to Section 2.4(b) and (ii) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to such surrender and a payment date subsequent to such surrender payable with respect to such shares of Parent Common Stock.
Section 2.3 Treatment of Options and Other Equity-Based Awards
.
(a) Company Stock Options. At the Effective Time, subject to and in accordance with the terms of the Company Stock Plan, each option to purchase Company Shares (“Company Stock Option” ) that is outstanding as of immediately prior to the Effective Time, will automatically, without any action on the part of Parent, Merger Sub, the Company or the holder thereof, be cancelled and converted into the right to receive, without interest and subject to applicable withholding Taxes, a number of validly issued, fully paid and nonassessable shares of Parent Common Stock equal to (i) the Net Option Share Amount multiplied by (ii) the Exchange Ratio, plus any Fractional Share Cash Consideration in accordance with Section 2.4 (the “Company Stock Option Consideration” ). For purposes of this Agreement, “Net Option Share Amount” means, with respect to each Company Stock Option, the quotient obtained by dividing (A) the product of (1) the excess, if any, of the Company Closing Price over the exercise price per Company Share subject to such Company Stock Option as of immediately prior to the Effective Time multiplied by (2) the number of Company Shares subject to such Company Stock Option immediately prior to the Effective Time, by (B) the Company Closing Price. For the avoidance of doubt, any Company Stock Option with an exercise price equal to or in excess of the Company Closing Price shall be cancelled and have no further force or effect by virtue of the Merger without any action on the part of the holder thereof and without any payment to the holder thereof.
(b) Company Restricted Stock Units. At the Effective Time, subject to and in accordance with the terms of the Company Stock Plan, each Company restricted share unit (“Company RSU,” together with the Company Stock Options, the “Company Awards” ) that is outstanding as of immediately prior to the Effective Time, whether vested or unvested, will automatically, without any action on the part of Parent, Merger Sub, the Company or the holder thereof, fully vest and be converted into the right to receive, without interest and subject to applicable withholding Taxes, a number of validly issued, fully paid and nonassessable shares of Parent Common Stock equal to (i) the number of Company Shares subject to such Company RSU immediately prior to the Effective Time multiplied by (ii) the Exchange Ratio, plus any Fractional Share Cash Consideration in accordance with Section 2.4 (the “Company RSU Consideration,” together with the Company Stock Option Consideration, the “Company Award Consideration” ).
(c) Payment Procedures. At or prior to the Effective Time, Parent shall deposit (or cause to be deposited) with the Exchange Agent the Company Award Consideration inclusive of (i) the aggregate Fractional Share Cash Consideration payable in the Merger to holders of Company Awards and (ii) evidence of Parent Common Stock in book-entry form representing the number of shares of Parent Common Stock sufficient to deliver the aggregate Company Award Consideration payable in the Merger to holders of Company Awards, which amount of cash and Parent Common Stock shall be deemed to be a part of the Exchange Fund, subject to Section 2.2 herein, and shall not be used for any purpose other than to fund payments in respect of Company Awards pursuant to this Section 2.3. Notwithstanding anything to the contrary contained in this Agreement, to the extent any Company RSU or Company Stock Option may constitute “nonqualified deferred compensation” subject to Section 409A of the Code, any payment made in respect thereof shall be paid on the applicable payment date for such Company RSU or Company Stock Option, as applicable, if required to comply with or be exempt from Section 409A of the Code.
Section 2.4 No Fractional Shares
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(a) No fractional shares of Parent Common Stock shall be issued in connection with the Merger, and no certificate or scrip representing fractional shares of Parent Common Stock shall be issued upon the surrender for exchange of Certificates or Book-Entry Shares or any other provision of Article II, and such fractional share interests shall not entitle the owner thereof to vote or to any other rights of a stockholder of Parent.
(b) Notwithstanding any other provision of this Agreement, each holder of Company Shares converted pursuant to the Merger who would otherwise be entitled to receive a fraction of a share of Parent Common Stock (or holder of other equity interests of the Company who would otherwise have been entitled to receive a fraction of a share of Parent Common Stock pursuant to the provisions of Section 2.3) (after aggregating all fractional shares of Parent Common Stock otherwise issuable to such holder pursuant to Section 2.1(a)) shall, in lieu thereof and upon surrender of such holder’s Certificates and Book-Entry Shares, as applicable, be paid in cash the dollar amount (rounded to the nearest whole cent), without interest and subject to any required tax withholding, determined by multiplying such fraction by the Parent Closing Price (the “Fractional Share Cash Consideration”). No such holder shall be entitled to dividends, voting rights or any other rights in respect of any fractional share of Parent Common Stock that would otherwise have been issuable as part of the Merger Consideration. As soon as practicable after the determination of the amount of the Fractional Share Cash Consideration, if any, to be paid to holders of the Company Shares in respect of any fractional shares, the Exchange Agent shall make available such amounts to the holders of the Company Shares entitled to receive such cash. The payment of Fractional Share Cash Consideration in lieu of fractional share interests pursuant to this Section 2.4(b) is not a separately bargained-for consideration but merely represents a mechanical rounding-off of the fractional share interests in the exchange.
Section 2.5 Tax Withholding
. Each of Parent, the Exchange Agent, Merger Sub, the Company, the Surviving Corporation and their respective Affiliates, as applicable, shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement, any amounts as are required to be deducted and withheld with respect to the making of such payment pursuant to the Code or any other applicable Tax Law. In the event any such deduction and withholding required to be made in respect of Parent Common Stock to be received by a holder of Company Shares in the Merger or with respect to Company Award Consideration, such deduction and withholding shall be satisfied by reducing the number of shares of Parent Common Stock to which such holder otherwise would be entitled under this Agreement by a number of shares equal to (x) the dollar amount of such deduction and withholding, divided by (y) the Parent Closing Price. To the extent that amounts are so deducted or withheld and, if required, paid over to the appropriate Governmental Entity, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding were made.
ARTICLE III
&NBSP;&NBSP;&NBSP;&NBSP;REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (a) as disclosed or reflected in the Company SEC Documents filed and publicly available after January 1, 2023 but at least two (2) Business Days prior to the date of this Agreement (but excluding any risk factor disclosures contained under the heading “Risk Factors,” any disclosure of risks included in any “forward-looking statements” disclaimer or any other statements that are similarly predictive or forward-looking in nature, in each case, other than any specific factual information contained therein), or (b) as set forth in the disclosure letter delivered by the Company to Parent concurrently with the execution of this Agreement (the “Company Disclosure Letter”) (it being agreed that disclosure of any information in a particular section or subsection of the Company Disclosure Letter shall be deemed disclosure with respect to any other section or subsection of this Agreement to the extent to which the relevance of such information is reasonably apparent on its face that such disclosure also qualifies or applies to such other section or subsections), the Company represents and warrants to Parent and Merger Sub as follows:
Section 3.1 Organization, Standing and Power
.
(a) The Company (i) is a corporation duly organized, validly existing and in good standing under the Laws of the State of Tennessee, (ii) has all requisite corporate or organizational, as the case may be, power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted and proposed to be conducted in all material respects and (iii) is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions that recognize such concept) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, except, with respect to clauses (ii) and (iii), for any such failure to have such power and authority or to be so qualified or licensed or in good standing that, individually or in the aggregate, would not be, and would not reasonably be expected to be, materially adverse to the Company or its Subsidiaries, taken as a whole.
(b) The Company has previously furnished or otherwise made available to Parent a true and complete copy of the Company’s certificate of incorporation (the “Company Charter”) and bylaws (the “Company Bylaws”), in each case as amended to the date of this Agreement, and each as so delivered is in full force and effect. The Company is not in material violation of any provision of the Company Charter or Company Bylaws.
(c) Each of the Company’s Subsidiaries (i) is an entity duly organized, validly existing and in good standing (with respect to jurisdictions that recognize such concept) under the Laws of the jurisdiction of its organization, (ii) has all requisite corporate or similar power and authority to own, lease and operate its properties and to carry on its business as now being conducted and (iii) is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions that recognize such concept) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, except in each case of clauses (i), (ii) and (iii), that, individually or in the aggregate, would not be, and would not reasonably be expected to be, materially adverse to the Company or its Subsidiaries, taken as a whole.
(d) The Company has previously furnished or otherwise made available to Parent a true and complete copy of the Organizational Documents of each Subsidiary of the Company, in each case as amended to the date of this Agreement, and each such Organizational Document as so delivered is in full force and effect. Except as would not be, and would not reasonably be expected to be, materially adverse to the Company or its Subsidiaries, taken as a whole, no such Subsidiary is in violation of any of the provisions of such Organizational Documents.
Section 3.2 Capital Stock
.
(a) The authorized capital stock of the Company consists of (i) 80,000,000 Company Shares and (ii) 10,000,000 shares of preferred stock, no par value (the “Preferred Stock”). As of November 19, 2025 (the “Measurement Date”), (1) 22,461,383 Company Shares were issued and outstanding, all of which were validly issued, fully paid and nonassessable and were free of preemptive rights, (2) no Company Shares were held in treasury, (3) no shares of Preferred Stock were outstanding, (4) an aggregate of 1,757,160 Company Shares were subject to or otherwise deliverable in connection with outstanding Company RSUs, (5) 258,164 Company Shares were issuable upon the exercise of outstanding Company Stock Options, and (6) 3,319,738 Company Shares were available for issuance of future awards under the Company Equity Plans (assuming all Company Awards are settled in Company Shares) and no other Company Shares were available for issuance of future awards under any other Company equity compensation plan or arrangement.
(b) Except as set forth above and except for changes since the Measurement Date resulting from the exercise of Company Stock Options outstanding on such date, as of the date of this Agreement, (1) there are not outstanding or authorized any (A) shares of capital stock or other Equity Interests of the Company, (B) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of capital stock or voting securities of the Company or any of its Subsidiaries or (C) options or other rights to acquire from the Company or any of its Subsidiaries, and no obligation of the Company or any of its Subsidiaries to issue, any capital stock or Equity Interests of the Company or any of its Subsidiaries, (2) there are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any capital stock or Equity Interests of the Company or any of its Subsidiaries, (3) there are no Liens relating to the issued or unissued capital stock of the Company or any of its Subsidiaries to which the Company or any of its Subsidiaries is a party, (4) there are no bonds, debentures, notes or other indebtedness of the Company or any of its Subsidiaries issued and outstanding having the right to vote (or convertible or exercisable or exchangeable for securities having the right to vote) on any matters on which shareholders of the Company may vote, and (5) there is no Contract to which the Company or any of its Subsidiaries is a party relating to the voting or registration of, or restricting any Person from purchasing, selling, pledging or otherwise disposing of (or from granting any option or similar right with respect to), any Company Shares or capital stock or other Equity Interests of any of the Company’s Subsidiaries.
(c) Each of the outstanding shares of capital stock of each of the Company’s Subsidiaries is duly authorized, validly issued, fully paid and nonassessable and all such shares are owned by the Company or another wholly-owned Subsidiary of the Company and are owned free and clear of all security interests, liens, claims, pledges, agreements, limitations in voting rights, charges, options, calls, warrants, preemptive rights, conversion rights, rights of first refusal or other rights, agreements, arrangements or other commitments or other Encumbrances (collectively, other than Encumbrances under applicable securities Laws, “Liens”) of any nature whatsoever, except where any such failure to own any such shares free and clear, individually or in the aggregate, has not been and would not be materially adverse to the Company or its Subsidiaries, taken as a whole. Section 3.2(c) of the Company Disclosure Letter sets forth a true and complete list of each Subsidiary of the Company and its jurisdiction of incorporation or organization.
(d) With respect to each Company RSU and Company Stock Option granted under the Company Equity Plans as of the Measurement Date (each, a “Company Award”), Section 3.2(d) of the Company Disclosure Letter sets forth, as of the Measurement Date: (i) the name or identification number of each holder of such Company Award; (ii) the type of Company Award; (iii) the name of the relevant Company Equity Plan under which the Company Award was issued; (iv) the date of grant; (v) the relevant vesting schedule and, if applicable, performance metrics, for the Company Award; (vi) the number of vested and unvested Company Shares covered by such Company Award; (vii) any portion of the Company Award, if applicable, that has been forfeited, cancelled or exercised; (viii) a description of the accelerated vesting, if applicable, for each Company Award, in connection with the transactions contemplated by this Agreement; (ix) the cash exercise price per Company Share of such Company Award, if applicable; and (x) the applicable expiration date.
(e) All Company Awards were issued under the Amended and Restated Kirkland’s, Inc. 2002 Equity Incentive Plan (as amended from time to time, the “Company Stock Plan”). All Company Awards were duly issued under the Company Stock Plan. No Company Stock Option has an exercise price less than the fair market value of a Company Share on the date such Company Stock Option was granted, as determined in accordance with Section 409A of the Code.
Section 3.3 Authority
. The Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and, subject to the Company Shareholder Approval, to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and no other corporate proceedings on the part of the Company are necessary to approve this Agreement or to consummate the transactions contemplated hereby, subject, in the case of the consummation of the Merger, to obtaining the Company Shareholder Approval. This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Merger Sub, constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms (except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws affecting the enforcement of creditors’ rights generally or by general principles of equity). As of the date hereof, the Company Board has, at a meeting duly called and held, (a) unanimously adopted resolutions (i) determining that the transactions contemplated by this Agreement, including the Merger, are advisable, fair to and in the best interests of the Company and its shareholders, (ii) approving, adopting and declaring advisable this Agreement and the transactions contemplated by this Agreement, including the Merger, (iii) directing that this Agreement be submitted to the shareholders of the Company for its adoption, and (iv) recommending that the Company’s shareholders adopt this Agreement (the “Company Board Recommendation”) and (b) resolved to include the Company Board Recommendation in the Proxy Statement. The Company Shareholder Approval is the only vote or consent of the holders of any class or series of capital stock of the Company necessary to approve this Agreement or the Merger or the other transactions contemplated hereby.
Section 3.4 No Conflict; Consents and Approvals
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(a) The execution, delivery and performance of this Agreement by the Company, and the consummation by the Company of the transactions contemplated hereby, do not and will not (i) conflict with or violate the Company Charter or Company Bylaws or the equivalent Organizational Documents of any of the Company’s Subsidiaries, (ii) result in the creation of any Lien upon any assets of the Company or any of its Subsidiaries that is material to the operation of the Company and its Subsidiaries or the suspension, revocation or forfeiture of any material franchise, permit or license granted by a governmental authority to the Company or any of its Subsidiaries, other than liens under federal or state securities laws, (iii) result in any breach or violation of, or constitute a default (or an event which with notice or lapse of time or both would become a default) under any material indenture or other agreement or instrument evidencing material indebtedness binding upon the Company or any of its Subsidiaries or their respective assets, or give rise to a right of any third party thereunder to require any material payment, repurchase or redemption to be made by the Company or any of its subsidiaries, or give rise to a right of, or result in, termination, cancellation or acceleration of any material obligation thereunder, (iv) assuming that all consents, approvals and authorizations contemplated by clauses (i) through (iv) of subsection (b) below have been obtained and all filings described in such clauses have been made, conflict with or violate any law, rule, regulation, order, judgment or decree (collectively, “Law”) applicable to the Company or any of its Subsidiaries or by which any of their respective properties are bound or (v) result in any breach or violation of, or constitute a default (or an event which with notice or lapse of time or both would become a default), or result in the loss of a benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit or other instrument or obligation (each, a “Contract”) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any of their respective properties are bound, except, in the case of clauses (iv) and (v), for any such conflict, breach, violation, default, loss, right or other occurrence that, individually or in the aggregate, would not be, and would not reasonably be expected to be, materially adverse to the Company or its Subsidiaries, taken as a whole.
(b) The execution, delivery and performance of this Agreement by the Company, and the consummation by the Company of the transactions contemplated hereby, do not and will not require any consent, approval, authorization or permit of, action by, filing with or notification to, any governmental or regulatory (including stock exchange) authority, agency, court commission, or other governmental body (each, a “Governmental Entity”), except for (i) such filings as may be required under applicable requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder, and under state securities, takeover and “blue sky” laws, (ii) such filings as necessary to comply with the applicable requirements of The Nasdaq Stock Market (“Nasdaq”), (iii) the filing with the Secretary of State of the State of Delaware of the Certificate of Merger as required by the DGCL, (iv) the filing with the Secretary of State of the State of Tennessee of the Articles of Merger, and (v) any such consent, approval, authorization, permit, action, filing or notification, in each case with respect to a Governmental Entity, the failure of which to make or obtain that, individually or in the aggregate, would not be, and would not reasonably be expected to be, materially adverse to the Company or its Subsidiaries, taken as a whole. The Company has taken all appropriate actions so that the restrictions on business combinations contained in TBCA Sections 48-103-205 and 48-103-206 will not apply with respect to or as a result of the consummation of the transactions contemplated hereby, without any further action on the part of the Company’s shareholders or the Company Board.
Section 3.5 SEC Reports; Financial Statements
.
(a) The Company has timely filed, furnished or otherwise transmitted all forms, reports, statements, certifications and other documents (including all exhibits, amendments and supplements thereto) required to be filed by it with the U.S. Securities and Exchange Commission (the “SEC”) since January 1, 2023 (all such forms, reports, statements, certificates and other documents filed since January 1, 2023 and prior to the date hereof, collectively, the “Company SEC Documents”). As of their respective dates, or, if amended, as of the date of the last such amendment, each of the Company SEC Documents complied as to form in all material respects with the applicable requirements of the Securities Act of 1933, as amended (the “Securities Act”) and the Exchange Act, and the applicable rules and regulations promulgated thereunder, as the case may be, each as in effect on the date so filed. As of their respective filing dates (or, if amended or superseded by a subsequent filing prior to the date hereof, as of the date of such amendment or superseding filing), none of the Company SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. No Subsidiary of the Company has been required to file any forms, reports or other documents with the SEC at any time since January 1, 2023. Since January 1, 2023 no executive officer of the Company has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith (as amended from time to time, the “Sarbanes-Oxley Act”). Neither the Company nor any of its executive officers has received notice from any Governmental Entity challenging or questioning the accuracy, completeness, form or manner of filing of such certifications.
(b) The audited consolidated financial statements of the Company (including any related notes thereto) included in or incorporated by reference in the Company SEC Documents (i) complied as to form in all material respects with the published rules and regulations of the SEC applicable thereto; (ii) have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q or any successor form under the Exchange Act, and except that unaudited financial statements may not contain footnotes and are subject to normal and recurring year-end adjustments); (iii) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries at the respective dates thereof and the results of their operations and cash flows for the periods indicated subject, with respect to unaudited interim statements, to normal and recurring year-end adjustments.
(c) The Company maintains, and at all times since January 1, 2023 has maintained, disclosure controls and procedures required by Rule 13a-15 or 15d-15 under the Exchange Act. Such disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in its filings with the SEC under the Exchange Act is recorded and reported on a timely basis to the individuals responsible for the preparation of the Company’s filings with the SEC under the Exchange Act. The Company maintains internal control over financial reporting (as defined in Rule 13a-15 or 15d-15, as applicable, under the Exchange Act). Such internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company’s management has completed an assessment of the effectiveness of the Company’s system of internal control over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act for the fiscal year ended February 1, 2025, and such assessment concluded that such controls were effective and the Company’s independent registered accountant has issued an attestation report concluding that the Company maintained effective internal control over financial reporting as of February 1, 2025. The Company has disclosed, based on the most recent evaluation of its Chief Executive Officer and its Chief Financial Officer prior to the date of this Agreement, to the Company’s auditors and the audit committee of the Company Board (i) any significant deficiencies and material weaknesses in the design or operation of its internal controls over financial reporting and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting, and each such deficiency, weakness and fraud so disclosed to auditors, if any, has been disclosed to Parent prior to the date hereof.
(d) Since January 1, 2023, (i) none of the Company or any Subsidiary of the Company nor, to the knowledge of the Company, any director or officer of the Company or any Subsidiary of the Company has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding accounting, internal accounting controls or auditing practices, procedures, methodologies or methods of the Company or any Subsidiary of the Company or any material complaint, allegation, assertion or claim from employees of the Company or any Subsidiary of the Company regarding questionable accounting or auditing matters with respect to the Company or any Subsidiary of the Company, and (ii) to the knowledge of the Company, no attorney representing the Company or any Subsidiary of the Company, whether or not employed by the Company or any Subsidiary of the Company, has reported evidence of a material violation of securities Laws, breach of fiduciary duty or similar violation by the Company, any Subsidiary of the Company or any of their respective officers, directors, employees or agents to the Company Board or any committee thereof, or to the General Counsel or Chief Executive Officer of the Company.
(e) As of the date hereof, the Company is in compliance in all material respects with all current listing requirements of Nasdaq.
(f) Neither the Company nor any Subsidiary of the Company is a party to, or has a commitment to effect, enter into or create, any joint venture, or “off-balance sheet arrangement” (as defined in Item 303(a) of Regulation S-K under the Exchange Act).
(g) As of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the SEC with respect to the Company SEC Documents, and none of the Company SEC Documents is, to the knowledge of the Company, the subject of ongoing SEC review or investigation.
Section 3.6 No Undisclosed Liabilities
. Neither the Company nor any of its Subsidiaries has any liabilities of any nature or type, whether accrued, absolute, determined, contingent, secondary, direct or otherwise and whether due or to become due or required to be reflected in the Company’s financial statements, except for: (i) liabilities disclosed in the financial statements (including any related notes) contained in the most recent audited balance sheet included in the Company SEC Documents (the “Most Recent Company Balance Sheet”); (ii) liabilities incurred in the ordinary course of business since the date of the Most Recent Company Balance Sheet; (iii) liabilities that, individually or in the aggregate, are not, and would not reasonably be expected to become, materially adverse to the Company and its Subsidiaries, taken as a whole; and (iv) liabilities and obligations incurred in connection with the transactions contemplated by this Agreement.
Section 3.7 Certain Information
. The information supplied or to be supplied by the Company specifically for inclusion in the registration statement on Form S‑4 to be filed by Parent in connection with the Parent Stock Issuance (as amended or supplemented from time to time, the “Form S-4”) shall not, at the time that the Form S‑4 is declared effective by the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representation or warranty is made by the Company with respect to statements made therein based on information supplied by or on behalf of Parent or Merger Sub specifically for inclusion in the Form S‑4. At the date the Proxy Statement, or any amendment or supplement thereof, is first mailed to the shareholders of the Company and at the time of the Company Shareholders Meeting, the Proxy Statement (or any amendment or supplement thereof, as applicable) will contain all information required to be included therein by the Company’s Organizational Documents and the TBCA and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that, in each case, no representation or warranty is made by the Company with respect to statements made therein based on information supplied by or on behalf of Parent or Merger Sub specifically for inclusion in the Proxy Statement.
Section 3.8 Absence of Certain Changes or Events
. Since January 1, 2025 through the date of this Agreement, (a) the businesses of the Company and its Subsidiaries have been conducted in the ordinary course of business in all material respects and in a manner consistent with past practice, and neither the Company nor any of its Subsidiaries has undertaken any action that if proposed to be taken after the date of this Agreement would require Parent’s consent pursuant to Section 5.1(b)(iii), (v), (ix), (x), (xi), (xiv), (xviii) or, as it relates to any of the foregoing clauses, Section 5.1(b)(xx), and (b) there has not been any Effect that has constituted or resulted in, or that would reasonably be expected to constitute or result in, a Company Material Adverse Effect.
Section 3.9 Litigation
. Except as, individually or in the aggregate, is not materially adverse to the Company and its Subsidiaries, taken as a whole, (a) there is no suit, claim, action, proceeding, arbitration, mediation or investigation, whether civil, legal or administrative, before any court or public or private body or tribunal or other Governmental Entity (each, an “Action”) pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries or any of their respective properties or assets, (b) neither the Company nor any of its Subsidiaries nor any of their respective properties or assets is or are subject to any judgment, order, injunction, rule or decree of any Governmental Entity and (c) there are no subpoenas, civil investigative demands or other written requests for information issued to the Company or any of its Subsidiaries relating to potential or actual violations of any Law that are pending or, to the knowledge of the Company, threatened, or any investigations or claims against or affecting the Company or any of its Subsidiaries, or any of their respective properties or assets, relating to potential or actual violations of any Law.
Section 3.10 Compliance with Laws
. The Company and each of its Subsidiaries are in compliance with, and have maintained and enforced policies and procedures reasonably designed to promote compliance with, all Laws applicable to them or by which any of their respective properties are bound, except where any non-compliance, individually or the aggregate, has not been, and would not reasonably be expected to be, materially adverse to the Company and its Subsidiaries, taken as a whole. Neither the Company nor any of its Subsidiaries has, during the three (3)-year period prior to the date of this Agreement: (i) to the knowledge of the Company, received any written notice or verbal notice from any Governmental Entity regarding any potential or actual material violation by the Company or any of its Subsidiaries of any Law; or (ii) provided any notice to any Governmental Entity regarding any potential or actual material violation by the Company or any of its Subsidiaries of any Law. The Company and its Subsidiaries have in effect all permits, registrations, licenses, exemptions, authorizations, franchises, orders, clearances and approvals of all Governmental Entities (collectively, “Permits”) necessary for them to own, lease or operate their properties and to carry on their businesses as now conducted, except for any Permits the absence of which, individually or in the aggregate, has not been, and would not reasonably be expected to be, materially adverse to the Company and its Subsidiaries, taken as a whole. Except as, individually or in the aggregate, has not been, and would not reasonably be expected to be, materially adverse to the Company and its Subsidiaries, taken as a whole, (w) all of the Company and its Subsidiaries’ Permits are valid and in full force and effect and are not subject to any administrative or judicial proceeding that could result in any modification, termination or revocation thereof and, to the knowledge of the Company, no suspension or cancellation of any such Permit is threatened, (x) no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation of any term, condition or provision of any such Permit (y) all fees and assessments due and payable in connection with such Permits have been timely paid, and (z) the Company and each of its Subsidiaries is in compliance with the terms and requirements of all such Permits. There are no Actions pending or, to the knowledge of the Company, threatened, that seek the revocation, cancellation or modification of any Permit. Neither the Company nor its Subsidiaries have, since January 1, 2023, received written notice of any charge, claim or assertion alleging any violations of or noncompliance with any Permit, nor to the knowledge of the Company, has any charge, claim or assertion been threatened, except as, individually or in the aggregate, has not been, and would not reasonably be expected to be, materially adverse to the Company and its Subsidiaries, taken as a whole.
Section 3.11 Benefit Plans
.
(a) Section 3.11(a) of the Company Disclosure Letter sets forth a true and complete list of each Company Plan. For purposes of this Agreement, “Company Plan” means each “employee benefit plan” (within the meaning of section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), each “multiemployer plan” (within the meaning of ERISA section 3(37)), and each bonus (including transaction bonus), incentive compensation, stock appreciation right, phantom stock, stock option, restricted stock, restricted stock unit, performance stock, performance stock unit, employee stock ownership, stock purchase, equity or equity-based, deferred compensation, change in control, employment, vacation, holiday, sick leave, retention, severance, retirement, defined benefit, defined contribution, pension, money purchase, target benefit, cash balance, pension equity, 401(k), savings, profit sharing, supplemental or executive retirement, excess benefit, medical, dental, vision, life insurance, cafeteria (Code Section 125), adoption assistance, dependent care assistance, health savings, health reimbursement, flexible spending, accident, disability, long-term care, employee assistance, scholarship, fringe benefit, expense reimbursement, welfare benefit, paid time off, salary continuation, and employment agreement, plan, policy, practice or arrangement and all other plans, agreements, programs, policies or other arrangements providing compensation or benefits, whether or not subject to ERISA (including any funding mechanism therefor now in effect or required in the future as a result of the transactions contemplated by this Agreement or otherwise), whether formal or informal, written, legally binding or not, under which any employee or former employee of the Company or its Subsidiaries has any present or future right to benefits, with respect to which the Company or its Subsidiaries has any liability, or which is sponsored, maintained or contributed to by the Company or its Subsidiaries. With respect to each Company Plan, the Company has furnished or made available to Parent a current, accurate and complete copy thereof (or, in the case of an unwritten Company Plan, a summary of the material terms and conditions thereof) and, to the extent applicable: (i) any related trust agreement or other funding instrument (including insurance contracts), (ii) the most recent determination, advisory or opinion letter from the Internal Revenue Service (the “IRS”), (iii) any summary plan description and summary of material modifications thereto and other equivalent written communications by the Company or its Subsidiaries to their employees; (iv) for the three most recent years (A) the Form 5500 and attached schedules, (B) audited financial statements, (C) actuarial valuation reports, and (D) nondiscrimination and other testing results; and (vi) copies of all material non-routine correspondence with any Governmental Entity in the past three years (including any filings under the Company Plans’ “Compliance Resolution System” or the Department of Labor Delinquent Filer Program).
(b) With respect to the Company Plans:
(i) (A) each Company Plan has been maintained, funded and administered in all material respects in accordance with its terms and in compliance in all material respects with all applicable Laws, (B) to the knowledge of the Company, no prohibited transaction, as described in Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to any Company Plan, and (C) all contributions required to be made under the terms of any Company Plan or applicable Law have been timely made or accrued in all material respects;
(ii) (A) no breaches of fiduciary duty or other failures to act or comply in connection with the administration or investment of the assets of such Company Plan have occurred for which the Company or any of its Subsidiaries has or could reasonably be expected to incur any material liability, and (B) no lien has been imposed under the Code, ERISA or any other applicable law;
(iii) each Company Plan intended to be qualified under Section 401(a) of the Code has received a currently effective, favorable determination, advisory and/or opinion letter, as applicable, from the IRS as to its qualified status, to the knowledge of the Company, nothing has occurred that would reasonably be expected to cause the loss, or failure to have, such qualified status of such Company Plan;
(iv) there are no (and in the past three (3) years have not been any) Actions (including any investigation, audit or other administrative proceeding) or other claims by the Department of Labor, the Pension Benefit Guaranty Corporation, the IRS or any other Governmental Entity or by any plan participant, beneficiary or other Person pending, or to the knowledge of the Company, threatened, relating to the Company Plans, any fiduciaries thereof with respect to their duties to the Company Plans or the assets of any of the trusts under any of the Company Plans (other than routine claims for benefits), that would reasonably be expected to result in a material liability of the Company or its Subsidiaries.
(c) No Company Plan is, and none of the Company, any of its Subsidiaries or any ERISA Affiliate maintains, sponsors or contributes to or has any liability with respect to (including on account of previously maintaining, sponsoring or contributing to) a plan that is subject to Section 302 or Title IV of ERISA or Section 412 of the Code. For purposes of this Agreement, “ERISA Affiliate” means any trade or business (whether or not incorporated) which is treated as a single employer along with the Company or any of its Subsidiaries for purposes of Section 4001 of ERISA or Section 414 of the Code. No Company Plan is, and none of the Company or its Subsidiaries has any liability with respect to a plan that is, a “multiemployer plan” within the meaning of Section 3(37) of ERISA or a “multiple employer welfare arrangement” within the meaning of Section 3(40) of ERISA.
(d) None of any Company Plan, the Company or any of its Subsidiaries provides or has any obligation to provide health or other welfare benefits following any current or former employee’s termination of employment or retirement with the Company or its Subsidiaries, except (i) to the extent required by Section 4980B of the Code or similar applicable Law or (ii) benefits in the nature of severance pay with respect to one or more of the Company Plans set forth on Section 3.11(a) of the Company Disclosure Letter.
(e) Each Company Plan that is subject to Section 409A of the Code has at all relevant times been in documentary and operational compliance with Section 409A of the Code in all material respects. Neither the Company nor any of its Subsidiaries is under any obligation to gross up or make any Person whole for any Taxes, including under or relating to Sections 409A or 4999 of the Code.
(f) No current or former employee or other individual service provider of the Company or any of its Subsidiaries will be or become entitled to any compensation or other consideration or any benefit or increased compensation or benefit in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated herein (either alone or in combination with another event) and neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated herein (either alone or in combination with another event) will accelerate the time of payment, funding or vesting, or increase the amount, of any compensation, equity award or any other benefit to any current or former employee or other individual service provider of the Company or any of its Subsidiaries. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated herein (whether contingent or otherwise) will result in any payments or benefits constituting an “excess parachute payment,” within the meaning of Section 280G of the Code (or any corresponding provision of state, local, or foreign Tax law).
Section 3.12 Labor Matters
.
(a) The Company has provided Parent with a complete and accurate list, as of November 12, 2025, of each employee of the Company and its Subsidiaries (each, a “Company Employee”) as of the date hereof, which includes, with respect to each such Company Employee, the Company Employee’s (i) name, (ii) primary work location, (iii) employing entity, (iv) hire date, (v) title, (vi) exempt/non-exempt status, (vii) full or part-time status, (viii) current base salary or hourly wage rate, (ix) current annual incentive compensation opportunity (including annual bonus, commission, and/or other incentive compensation), and (x) active or inactive status and, if on leave, if available, anticipated return date.
(b) The Company has provided Parent with a complete and accurate list, as of November 13, 2025, of each individual independent contractor of the Company and its Subsidiaries (each, a “Company Contractor”), which includes, with respect to each such Company Contractor, such Company Contractor’s (i) name, (ii) date of retention, (iii) primary work location, (iv) Company entity which engages such Company Contractor, (v) rate and frequency of remuneration, and (vi) type of services provided to the Company or its Subsidiaries.
(c) The Company is not a party to or otherwise bound by any collective bargaining agreement or other labor-related Contract, arrangement or understanding with a labor or trade or labor union, labor organization, employee representative body or works council (each, a “Labor Agreement”), nor is any such Labor Agreement presently being negotiated, nor, to the knowledge of the Company, are there any employees of the Company or any of its Subsidiaries represented by a labor or trade union, labor organization, employee representative body or works council with respect to such employment. To the knowledge of the Company, there are no organizing activities, representation campaigns, certification proceedings or petitions seeking a representation proceeding pending or threatened by or with respect to any of the employees of the Company or any of its Subsidiaries. In the past five (5) years, there has not been any, and there are no pending or, to the knowledge of the Company, threatened strikes, walkouts, lockouts, slowdowns or other labor stoppages against or affecting the Company or its Subsidiaries.
(d) The Company and its Subsidiaries are, and for the past five (5) years, have been, in compliance in all material respects with the terms of any applicable Labor Agreement and all applicable Laws respecting or relating to recruitment, employment and employment practices, and agency and other workers, including all Laws respecting terms and conditions of employment, health and safety, wages and hours, worker classification and authorization, child labor, immigration, harassment, employment discrimination, retaliation, privacy, record retention, whistleblowing, social welfare obligations, civil, veterans’ and disability rights or benefits, equal opportunity, plant closures and layoffs, affirmative action, workers’ compensation, labor relations, employee leave issues (including family and medical leave) and unemployment insurance.
(e) Except as has not had, and would not reasonably be expected to result in, any material liability of the Company and its Subsidiaries, individually or in the aggregate, there are no Actions against the Company or any of its Subsidiaries pending now or at any time in the past five (5) years, or, to the knowledge of the Company, threatened to be brought or filed, by or with any Governmental Entity in connection with the employment or engagement of any current or former employee, applicant for employment, independent contractor, temporary employee, or other individual service provider of the Company or any of its Subsidiaries or otherwise concerning the Company’s or any of its Subsidiaries’ labor or employment-related practices, including any claim relating to unfair labor practices, employment discrimination, harassment, retaliation, failure to properly pay wages, equal pay or any other employment related matter arising under applicable Laws.
(f) In the past five (5) years, neither the Company nor any of its Subsidiaries has received any sexual harassment or other discrimination or retaliation allegations brought by or with respect to any current or former employee or other current or former individual service provider of the Company or any of its Subsidiaries that has resulted, or would reasonably be expected to result in any material liability to the Company and its Subsidiaries. Neither the Company nor any of its Subsidiaries has, in the past five (5) years, entered into any settlement, separation, or severance agreements related to allegations of sexual harassment or other sexual misconduct by any current or former employee or other individual service provider of the Company or any of its Subsidiaries.
(g) To the knowledge of the Company, no current or former director, officer, employee or other individual service provider of the Company or any of its Subsidiaries is in any material respect in violation of any term of any employment agreement, nondisclosure agreement, common law nondisclosure obligation, fiduciary duty, noncompetition agreement, restrictive covenant or other legal or contractual obligation to the Company or any of its Subsidiaries or to a former employer of any such employee relating (i) to the right of any such individual to be employed by or provide services for the Company or its Subsidiaries or (ii) to the knowledge or use of trade secrets or proprietary information.
(h) During the five (5)-year period immediately prior to the date of this Agreement, neither the Company nor its Subsidiaries have implemented any “plant closing” or “mass layoff” (in each case, as defined under the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar applicable foreign, state or local Law).
Section 3.13 Environmental Matters
.
(a) Except as, individually or in the aggregate, has not been, and would not reasonably be expected to be, materially adverse to the Company and its Subsidiaries, taken as a whole: (i) the Company and each of its Subsidiaries are, and during the past three (3) years have been, in compliance with all applicable Environmental Laws, and possess and are, and during the past three (3) years have been, in compliance with all applicable Environmental Permits required under such Environmental Laws to operate the business; (ii) there has been no release, discharge or disposal of Materials of Environmental Concern that could reasonably be expected to result in a violation by, or a liability of, the Company and each of its Subsidiaries under any Environmental Laws (A) on, under, in or at any owned or leased real property, or (B) to the knowledge of the Company, on, under, in or at any real property formerly owned or leased by the Company or its Subsidiaries or at any third party waste disposal location used by the Company or its Subsidiaries; (iii) neither the Company nor any of its Subsidiaries have received any written request for information pursuant to section 104(e) of the Comprehensive Environmental Response, Compensation and Liability Act or similar state statute, concerning any release or threatened release of Materials of Environmental Concern at any location except, with respect to any such request for information concerning any such release or threatened release, to the extent such matter has been resolved as evidenced by a certificate of completion or other formal closure document issued by the appropriate foreign, federal, state or local regulatory authority; (iv) within the last three (3) years, neither the Company nor any of its Subsidiaries has received any written notice, claim or complaint, or is presently subject to any action or proceeding, relating to actual or alleged noncompliance with, or liability arising under, Environmental Laws or any other liabilities pursuant to Environmental Laws that is unresolved, and to the knowledge of the Company, no such matter has been threatened in writing; and (v) the Company has provided Parent reasonable access to all material environmental investigations, studies, audits, analyses or other reports (including any Phase I or Phase II reports) in the possession, custody or control of the Company or its Subsidiaries relating to the Company or each of its Subsidiaries compliance with Environmental Law or the presence of contamination by Materials of Environmental Concern on, under, in or at any property currently or formerly owned, leased, operated or occupied by the Company or its Subsidiaries.
(b) Notwithstanding any other representations and warranties in this Agreement, the representations and warranties in this Section 3.12 are the only representations and warranties in this Agreement with respect to Environmental Laws or Materials of Environmental Concern.
(c) For purposes of this Agreement, the following terms shall have the meanings assigned below:
(i)“ Environmental Laws” means all foreign, federal, tribal, state, or local statutes, regulations, ordinances, codes, or decrees protecting the quality of the environment and natural resources, including the ambient air, soil, surface water or groundwater, and human health and safety (in relation to exposure to Materials of Environmental Concern).
(ii)“ Environmental Permits” means all permits, licenses, franchises, approvals, consents, registrations, and other authorizations required under applicable Environmental Laws.
(iii)“ Materials of Environmental Concern” means any pollutant, contaminant, waste, or chemical or any radioactive, ignitable, corrosive, reactive, hazardous, acutely hazardous, or toxic substance or waste defined and regulated as such, or which could give rise to liability, under applicable Environmental Laws, including the Comprehensive Environmental Response, Compensation and Liability Act or the Resource Conservation and Recovery Act (or their state Law equivalents) or any substance, waste or material having or displaying any of the foregoing characteristics, including per- and polyfluoroalkyl substances, polychlorinated biphenyls and petroleum, its derivatives, by products and other hydrocarbons.
Section 3.14 Taxes
.
(a) Except as, individually or in the aggregate, has not constituted or resulted in, and would not reasonably be expected to constitute or result in, any material liability of the Company and its Subsidiaries, individually or in the aggregate:
(i) All Tax Returns required by applicable Law to be filed by or on behalf of the Company or any of its Subsidiaries have been timely filed in accordance with all applicable Laws (after giving effect to any extensions of time in which to make such filings), and all such Tax Returns are true, correct and complete.
(ii) The Company and its Subsidiaries have timely paid in full to the appropriate Governmental Entity all Taxes required to be paid by any of them (whether or not shown on any Tax Return) and have established adequate accruals and reserves in accordance with GAAP on the financial statements included in the Company SEC Documents for all Taxes payable by the Company and its Subsidiaries with respect to all taxable periods (and portions thereof) through the date of such financial statements.
(iii) Each of the Company and its Subsidiaries has (i) timely deducted, withheld and collected all amounts required to be deducted, withheld or collected by any of them with respect to any payment owing to, or received from, their employees, creditors, independent contractors, customers and other third parties and have timely paid or remitted over any amounts so withheld, deducted or collected to the appropriate Governmental Entity and (ii) otherwise complied with all applicable Laws relating to the withholding, collection and remittance of Taxes (including information reporting requirements).
(iv) There are no Liens for Taxes with respect to any assets or properties of the Company or any of its Subsidiaries, except for statutory Liens for Taxes not yet due and payable.
(v) No claim has been made in writing by any Tax authority in a jurisdiction where the Company or any of its Subsidiaries has not filed (and is not filing) a Tax Return of a particular type that the Company or its applicable Subsidiary, as the case may be, is or may be subject to Tax by, or required to file Tax Returns in, such jurisdiction with respect to Taxes that are the subject to such Tax Return, in each case, that remains unresolved with no further liability for Taxes with respect to such claim.
(vi) Neither the Company nor any its Subsidiaries (A) is or has been a member of any affiliated, combined, consolidated, unitary or similar group for purposes of filing Tax Returns or paying Taxes (except for any such group of which the Company is the common parent) or (B) has any liability for Taxes of any Person (other than the Company or any of its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar state, local or non-U.S. Law) or as a transferee or successor or otherwise pursuant to applicable Law.
(vii) Neither the Company nor any of its Subsidiaries is a party to or bound by, or has any obligation under, any Tax indemnity, sharing, allocation, or reimbursement agreement or arrangement, other than (A) customary Tax provisions in ordinary course commercial agreements, the principal purpose of which is not related to Taxes and (B) any agreement or arrangement solely between or among the Company and/or any of its Subsidiaries.
(viii) No audits or other proceedings are currently ongoing or pending, or threatened or proposed in writing, against or with respect to the Company or any of its Subsidiaries with respect to any Tax or Tax Return. No deficiencies for any amount of Taxes have been asserted or assessed in writing against the Company or any of its Subsidiaries that have not been paid in full by any of them or that are not being contested in good faith and for which adequate accruals or reserves for such deficiency have been established in accordance with GAAP on the financial statements included in the Company SEC Documents.
(ix) Neither the Company nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or any portion thereof) ending after the Closing Date as a result of (A) any installment sale or other open transaction disposition made prior to the Closing, (B) any “closing agreement” as described in Section 7121 of the Code (or any comparable, analogous or similar provision under any U.S. state or local or non-U.S. Law) executed prior to the Closing, (C) having entered into a “gain recognition agreement” within the meaning of Treasury Regulation Section 1.367(a)-8 or (D) pursuant to Section 965 of the Code. Neither the Company nor any of its Subsidiaries has made an election pursuant to Section 965(h) of the Code.
(x) Neither the Company nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or any portion thereof) ending after the Closing Date as a result of (A) any installment sale or other open transaction disposition made prior to the Closing, (B) any adjustment under Section 481(a) of the Code (or any comparable, analogous or similar provision under any U.S. state or local or non-U.S. Law) in respect of a change in method of accounting that occurred in a taxable period ending on or prior to the Closing Date, (C) any “closing agreement” as described in Section 7121 of the Code (or any comparable, analogous or similar provision under any U.S. state or local or non-U.S. Law) executed prior to the Closing, (D) any prepaid amount or deferred revenue received or accrued prior to the Closing other than as reported by the Company in the ordinary course of business, (E) having entered into a “gain recognition agreement” within the meaning of Treasury Regulation Section 1.367(a)-8 or (F) pursuant to Section 965 of the Code. Neither the Company nor any of its Subsidiaries has made an election pursuant to Section 965(h) of the Code.
(xi) Neither the Company nor any of its Subsidiaries (A) has filed any extension of time within which to file any Tax Returns that have not been filed, except in the ordinary course of business with respect to extensions not requiring the consent of any Governmental Entity, where such extension remains in effect, (B) has entered into any agreement or other arrangement waiving or extending the statute of limitations or the period of assessment or collection of any Taxes that remains in effect, (C) has granted any power of attorney that is in force (and will remain in force following the Closing) with respect to any matters relating to Taxes, (D) has applied for a ruling from any Tax authority relating to any Taxes that has not been granted or has proposed to enter into an agreement with a Tax authority that is pending, (E) has been issued any private letter rulings, technical advice memoranda or similar agreement or rulings by any Tax authority or (F) is currently the beneficiary of any Tax holiday or other Tax reduction or incentive arrangement with any Tax authority (other than those generally available to taxpayers who otherwise qualify under applicable Law) which is subject to termination, reduction, clawback or similar adverse consequence as a result of the Merger.
(xii) Neither the Company nor any of its Subsidiaries has participated in any “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(2) (or any similar state, local or non-U.S. Law).
(xiii) Neither the Company nor any of its Subsidiaries conducts a trade or business, has a permanent establishment (within the meaning of an applicable Tax treaty), operates or conducts business through any branch or is otherwise subject to taxation in any country other than the country of its formation.
(xiv) The Company has not been a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(b) Neither the Company nor any of its Subsidiaries has constituted a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock intended to qualify for Tax-free treatment under Section 355 of the Code (or any similar provision of state, local, or non-U.S. Law) or otherwise as part of a plan (or series of related transactions), within the meaning of Section 355(e) of the Code, that includes the Merger.
(c) Neither the Company nor any of its Subsidiaries has knowledge of any facts, agreements, plans or other circumstances or has taken or agreed to take any action that would reasonably be expected to prevent the Merger from qualifying for the Intended Tax Treatment.
(d) As used in this Agreement:
(i)“ Tax Returns” means any and all U.S. and non-U.S. (whether national, federal, state, provincial, local or otherwise) returns, claims for refund, declarations, forms, statements, reports or other documents filed or required to be filed with any Governmental Entity with respect to Taxes, including any schedules or attachments thereto and any amendments thereof.
(ii)“ Taxes” means any and all U.S. federal, state and local and non-U.S. taxes, assessments, levies, duties, tariffs, imposts and other charges and fees of any kind whatsoever similar to, or in the nature of, a tax imposed by a Governmental Entity, including any income, franchise, windfall or other profits, gross receipts, premiums, property, sales, use, net worth, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation, excise, withholding, ad valorem, stamp, transfer, value-added, and license, registration and documentation fees, severance, occupation, environmental, disability, real property, personal property, escheat or unclaimed property obligations, registration, alternative or add-on minimum or estimated taxes, together with any interest, penalties and additions imposed with respect thereto.
Section 3.15 Contracts
.
(a) Except for this Agreement and except as filed with the SEC as an exhibit to any Company SEC Document, as of the date hereof, none of the Company or any of its Subsidiaries is a party to or is bound by any of the following categories of Contracts (each such Contract required to be filed as an exhibit to any Company SEC Document or required to be listed in Section 3.15(a) of the Company Disclosure Letter, a “Company Material Contract”):
(i) any Contract required to be filed by the Company as a “material contract” pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act that has not been so filed (except for a Company Plan listed in Section 3.11(a) of the Company Disclosure Letter);
(ii) any Contract to which the Company is a party that (a) restricts the ability of the Company, its Subsidiaries or its Affiliates to (x) engage in or compete in any geographic area or line of business, market or field, (y) transaction with any Person or (z) solicit any client or customer, in each case in any manner that is material to the Company or that would restrict in any material respect Parent or its Subsidiaries following the Closing, (b) requires the Company, its Subsidiaries or its Affiliates to conduct any business on a “most favored nations” basis with any third party that restricts in any material respect the business of the Company or that would restrict in any material respect Parent or its Subsidiaries following the Closing, or (c) provides for “exclusivity,” rights of first refusal or offer or any similar requirement or right in favor of any third party that restricts in any material respect the business of the Company or that would restrict in any material respect Parent or its Subsidiaries following the Closing;
(iii) any purchase, sale or supply Contract that contains “take or pay” provisions, volume requirements or commitments, exclusive or preferred purchasing arrangements, “most favored nation” provisions or promotional requirements;
(iv) any Contract to which the Company is a party that provides for payments to or from the Company in excess of $500,000 in the aggregate annually, but excluding for this purpose purchase orders for and invoices for transportation related to the shipment of inventory entered into on customary terms in the ordinary course of business;
(v) any Contract creating, guaranteeing or securing indebtedness for borrowed money of the Company, in each case in excess of $500,000;
(vi) any Contract with respect to the creation, formation, governance or control of any material partnerships, joint ventures or joint ownership arrangements with third parties;
(vii) any Contract that (A) relates to the acquisition of material assets or capital stock or other securities (by merger, capital contribution or otherwise) of any Person after the date of this Agreement with a total consideration of more than $500,000 in the aggregate, (B) relates to the disposition (after the date of this Agreement), directly or indirectly, of material assets of the Company or its Subsidiaries or any capital stock or other securities (by merger, capital contribution or otherwise) of the Company or its Subsidiaries or (C) contains a put, call, right of first refusal or similar right pursuant to which the Company or its Subsidiaries could be required to purchase or sell, as applicable, any of the foregoing;
(viii) any Contract that relates to the sale, transfer or other disposition of a business or assets by the Company pursuant to which the Company has any continuing indemnification, guarantee, “earnout” or other contingent, deferred or fixed payment obligations;
(ix) any Contract with a term exceeding one year after the date of this Agreement which is a financial derivative interest rate hedge with a value in excess of $250,000;
(x) any Contract pursuant to which the Company or any of its Subsidiaries grants to or receives from a third party a license or other right to use any Intellectual Property that is material to the Company or any of its Subsidiaries or the operation of their businesses, excluding non-exclusive licenses to software that is commercially available to the public generally (including any such software provided on a SaaS basis) in each case with annual or one-time license, maintenance, support and other fees of less than $250,000;
(xi) each Contract that grants any right of first refusal, first notice, first negotiation or right of first offer or similar right with respect to any assets, rights or properties of the Company or its Subsidiaries;
(xii) each Labor Agreement;
(xiii) any Contract with a Governmental Entity;
(xiv) the Company Real Property Leases;
(xv) each Contract (other than any Organizational Document) between the Company or any of its Subsidiaries, on the one hand, and any director, officer or Affiliate (other than a wholly owned Subsidiary of the Company) of the Company or any of its Subsidiaries or any of their respective “associates” or “immediate family” members (as such terms are defined in Rule 12b-2 and Rule 16a-1 of the Exchange Act), on the other hand, including (but not limited to) any Contract pursuant to which the Company or any of its Subsidiaries has an obligation to indemnify such director, officer, Affiliate or “associate” or “immediate family” member, but excluding any Company Plan;
(xvi) each Contract expressly limiting or restricting the ability of the Company or its Subsidiaries (i) to make distributions or declare or pay dividends in respect of their capital stock, partnership interests, membership interests or other equity interests, as the case may be, (ii) to pledge their capital stock or other equity interests, (iii) to issue any guaranty, (iv) to make loans to the Company or its Subsidiaries, or (v) to grant liens on the property of the Company or its Subsidiaries; and
(xvii) each Contract that obligates the Company or its Subsidiaries to make any loans, advances or capital contributions to, or investments in, any Person, except for (i) loans or advances for indemnification, attorneys’ fees, or travel and other business expenses in the ordinary course of business, or (ii) loans, advances or capital contributions to, or investments in, any Person that is not an Affiliate or Company Employee not in excess of $100,000 individually;
(xviii) each Contract that is a (A) bid bonds, payment bonds, performance bonds, Tax bonds, licensing bonds, reclamation bonds, surety bonds or any similar undertaking or financial security arrangements or (B) indemnity or underwriting agreements or other contracts with a surety, in each case in excess of $500,000.
(b) Each Company Material Contract has not been terminated prior to the date of this Agreement, is valid and binding on the Company and each of its Subsidiaries party thereto and, to the knowledge of the Company, any other party thereto, except (i) for such failures to be valid and binding or to be in full force and effect that, individually or in the aggregate, has not been, and would not reasonably be expected to be, materially adverse to the Company and its Subsidiaries, taken as a whole, or (ii) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws affecting the enforcement of creditors’ rights generally or by general principles of equity. Except as, individually or in the aggregate, has not been, and would not reasonably be expected to be, materially adverse to the Company and its Subsidiaries, taken as a whole, there are no existing breaches or defaults under any Company Material Contract or Company Real Property Lease by the Company or any of its Subsidiaries party thereto or, to the knowledge of the Company, any other party thereto, and no event or action has occurred or failed to occur that with the lapse of time or the giving of notice or both would constitute a default thereunder by the Company or any of its Subsidiaries party thereto or, to the knowledge of the Company, any other party thereto. Prior to the date of this Agreement, the Company has made available to Parent accurate and complete copies of each Company Material Contract in effect as of the date of this Agreement, together with all material amendments and supplements thereto in effect as of the date of this Agreement. Prior to the date of this Agreement, no counterparty to a Company Material Contract or Company Real Property Lease has cancelled, terminated or substantially curtailed its relationship with the Company or its Subsidiaries, given notice to the Company or its Subsidiaries of any intention to cancel, terminate or substantially curtail its relationship with the Company or its Subsidiaries, or, to the knowledge of the Company, threatened to do any of the foregoing or, to the knowledge of the Company, been threatened with bankruptcy or insolvency.
Section 3.16 Insurance
. Except as, individually or in the aggregate, has not been, and would not reasonably be expected to be, materially adverse to the Company and its Subsidiaries, taken as a whole, (a) all insurance policies of the Company and its Subsidiaries are in full force and effect and provide insurance in such amounts and against such risks as is, in all material respects, commercially reasonable, (b) neither the Company nor any of its Subsidiaries is in breach or default, and neither the Company nor any of its Subsidiaries has taken any action or failed to take any action which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification of, any of such insurance policies (including the payment of all premiums and other payments due on such policies in due and timely fashion) and (c) since the earlier of the most recent renewal date and January 1, 2023, as of the date hereof, the Company has not received any written notice (i) threatening termination of, or premium increases with respect to, or material alteration of coverage under, any such policies, other than premium increases or alterations of coverage occurring in the ordinary course during the renewal process for any such policies, (ii) refusal of any coverage or rejection of any material claim under any insurance policy held by the Company or any of its Subsidiaries. As of the date of this Agreement, there is no pending material Action by the Company or its Subsidiaries against any insurance carrier under any insurance policy held by the Company or its Subsidiaries.
Section 3.17 Properties
.
(a) Section 3.17(a) of the Company Disclosure Letter sets forth a true and complete list of all the leased real property that the Company or a Subsidiary leases, subleases or otherwise occupies (the “Company Leased Real Property” ) pursuant to which the Company or a Subsidiary is a tenant, subtenant, or otherwise occupies such Company Leased Real Property (individually and collectively, the “Company Real Property Leases” ) and the parties to such agreement. The Company Real Property Leases are in full force and effect and constitute a legal, valid and binding obligation on the Company or the applicable Subsidiary which is a party to it, enforceable in accordance with its terms, except as, individually or in the aggregate, has not been, and would not reasonably be expected to be, materially adverse to the Company and its Subsidiaries, taken as a whole. There are no subleases, licenses, occupancy agreements, consents, assignments, purchase agreements, or other contracts granting to any person (other than the Company or a Subsidiary) the right to use or occupy the Company Leased Real Property, and no other Person (other than the Company and its Subsidiaries) is in possession of the Company Leased Real Property, except as, individually or in the aggregate, has not been, and would not reasonably be expected be, materially adverse to the Company and its Subsidiaries, taken as a whole. There are no outstanding options, rights of first offer or rights of first refusal in favor of any other party to purchase or lease the Company Leased Real Property or any portion thereof or interest therein. The Company or a Subsidiary has provided a true and complete copy of each such Company Real Property Lease. The Company or its Subsidiaries have a valid leasehold estate in all Company Leased Real Property, free and clear of all Encumbrances, other than Permitted Encumbrances. The Company and its Subsidiaries, as applicable, have materially performed all obligations required to be performed by them to date under such Company Real Property Lease.
(b) Except as, individually or in the aggregate, has not been, and would not reasonably be expected to be, materially adverse to the Company and its Subsidiaries, taken as a whole, the Company or a Subsidiary of the Company owns and has good and valid title to all of its tangible personal property. No representation is made under this Section 3.17 with respect to any Intellectual Property, which is the subject of Section 3.18.
(c) Neither the Company nor any of its Subsidiaries owns any real property.
Section 3.18 Intellectual Property
.
(a) The Company or its Subsidiaries own, or have the right pursuant to valid and enforceable licenses to use, all Intellectual Property used in or necessary for the business of Company and its Subsidiaries as currently conducted and as proposed to be conducted. All Company Intellectual Property will be owned or continue to be available for use, following the consummation of the transactions contemplated by this Agreement, on the same terms (including the same payment obligations) as they were owned or available for use by Company and its Subsidiaries immediately prior to the Effective Time.
(b) Section 3.18(b) of the Company Disclosure Letter sets forth a true and complete list of all Company Owned Intellectual Property that is registered or issued under the authority of any Governmental Entity or Internet domain name registrar (collectively, “Company Registered IP”), including (i) the name of the applicant/registrant (including, if different, the legal owner(s) and beneficial owner(s) of such item), (ii) any other co-owners, (iii) the date and jurisdiction of application/registration (including with respect to domain names, the applicable Internet domain name registrar), (iv) the application or registration number, and (v) the status of such item. Each item of Company Registered IP is subsisting and, to the knowledge of Company, all issued or registered Company Registered IP is valid and enforceable. No Company Registered IP is involved in any interference, reissue, reexamination, opposition, cancellation or similar proceeding and, to the knowledge of Company, no such action is or has been threatened with respect to any of the Company Registered IP in the past three (3) years. All material Company Registered IP is owned by or licensed to Company or one its Subsidiaries free and clear of all Encumbrances, other than Permitted Encumbrances. Neither Company nor any of its Subsidiaries has received any written notice or claim in the three (3) years prior to the date hereof challenging the validity or enforceability or inventorship or ownership of any Company Registered IP.
(c) Each employee, director, independent contractor or consultant of the Company or any of its Subsidiaries who is or was involved in the creation or development of any material Intellectual Property on behalf of the Company or any of its Subsidiaries, has signed a valid and enforceable written agreement containing an irrevocable present assignment to the Company or its applicable Subsidiary of all Intellectual Property developed by such Person during such Person’s employment or engagement with the Company or its Subsidiaries.
(d) Each of the Company and its Subsidiaries has taken commercially reasonable steps to maintain the confidentiality of all information of the Company or its Subsidiaries that derives economic value (actual or potential) from not being generally known to other Persons who can obtain economic value from its disclosure or use, including taking commercially reasonable steps to safeguard any such information that is accessible through computer systems or networks, and to the knowledge of the Company, such information has not been used by or disclosed to any Person except pursuant to written, valid and appropriate non-disclosure agreements. Each employee or contractor of the Company and its Subsidiaries with access to any such information is subject to legally binding obligations to maintain the confidentiality of such information.
(e) To the knowledge of the Company (i) the Company and its Subsidiaries are not infringing, misappropriating, diluting, or otherwise violating any Intellectual Property of any third party and (ii) no third party is misappropriating or infringing any Company Intellectual Property owned by the Company. Neither the Company nor any of its Subsidiaries has delivered or received in the three (3) years prior to the date hereof any written notice or claim asserting any such infringement, misappropriation, dilution or other violation of Intellectual Property. No Company Owned Intellectual Property is the subject of any Action between the Company and any other Person or is subject to any outstanding order, judgment, decree or stipulation restricting or limiting in any material respect the use or licensing thereof by the Company or any of its Subsidiaries.
(f) Neither this Agreement nor the transactions contemplated by this Agreement, including the assignment to, or assumption by, Parent by operation of law or otherwise of any Contracts to which the Company or any of its Subsidiaries is a party, will result in: (i) Parent or any of its Affiliates granting to any other Person any right to or with respect to any Intellectual Property owned by Parent or any of its Affiliates (other than rights granted by the Company or any of its Subsidiaries prior to the Closing Date to Company Owned Intellectual Property), (ii) Parent or any of its Affiliates being bound by, or subject to, any non-compete or other material restriction on the operation or scope of their respective businesses (excluding any non-compete or other material restriction that arises from any agreement to which the Company or any of its Subsidiaries is not a party), or (iii) Parent or any of its Affiliates being obligated to pay any royalties or other material amounts, or offer any discounts, to any other Person pursuant to any Contract to which the Company is a party in excess of those payable by, or required to be offered by, the Company in the absence of this Agreement or the transactions contemplated hereby.
(g) The computers, servers, software, systems, routers, hubs, switches, circuits, networks, data communications lines and all other information technology equipment owned, leased or licensed by the Company and its Subsidiaries and which are in use in connection with the operation of their businesses (the “Company IT Systems”) operate and perform in all material respects as required by the Company and its Subsidiaries and have not malfunctioned or failed in any material respect in the past three (3) years. The Company and its Subsidiaries have in place commercially reasonable data backup, system redundancy, and disaster avoidance and recovery procedures, as well as a commercially reasonable business continuity plan, in each case consistent with customary industry practices. The Company and its Subsidiaries have in place commercially reasonable policies and procedures to protect the security and integrity of the Company IT Systems. There has been no security breach or other unauthorized access to the Company IT Systems during the past three (3) years which has resulted in the unauthorized access, use, disclosure, deletion, destruction, modification, encryption or corruption of any material information or data stored therein or processed thereby.
Section 3.19 Data Privacy
.
(a) The Company, and to the knowledge of the Company, all third-parties Processing Personal Information on behalf of the Company (“Data Partners”), comply and have at all times in the three (3) years prior to the date hereof complied, in all material respects with all applicable (i) Privacy Laws, (ii) policies, notices, and/or statements related to privacy, security, or the Processing of Personal Information, and (iii) contractual commitments related to the privacy, security, or Processing of Personal Information (collectively, the “Privacy Requirements”). The execution, delivery, and performance of this Agreement and the Merger will not: (x) conflict with or result in a breach of any Privacy Requirements by the Company; or (y) otherwise prohibit the transfer of Personal Information to Parent.
(b) The Company has at all times implemented, maintained and complied with, and required all Data Partners to implement, technical, physical, and organizational measures, plans, procedures, controls, and programs, including a written information security program, which at a minimum meet industry best practice and protect Personal Information and confidential information against Security Incidents. The Company has not, and to the knowledge of the Company, no Data Partner has, in the three (3) years prior to the date hereof, experienced any Security Incidents that would require notice to any Person under any Privacy Requirement, or that have otherwise resulted in, or are reasonably likely to result in, any liability or material impact.
(c) In the three (3) years prior the date hereof, in relation to any Security Incident and/or actual or alleged violation of a Privacy Requirement, the Company has not (i) notified or been required to notify any customer, consumer, employee, Governmental Entity, or other Person, or (ii) received any written notice, inquiry, request, claim, complaint, correspondence or other communication from, or been the subject of any investigation or enforcement action by, any Governmental Entity or other Person. To the knowledge of the Company, there are no facts or circumstances that could give rise to the occurrence of (i) or (ii).
Section 3.20 Certain Payments
. Neither the Company nor any of its Subsidiaries nor any director, officer, employee, agent or other person acting on behalf of the Company or its Subsidiaries has, within the past five (5) years, directly or indirectly, (a) violated or taken any action that could potentially result in a violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act of 2010 or its predecessor laws, or any other Laws concerning corrupt payments applicable to the Company or its Subsidiaries (collectively, the “Anti-Corruption Laws”) or (b): (i) used, offered to use or authorized the use of any funds of the Company or any of its Subsidiaries for unlawful contributions, unlawful gifts or unlawful entertainment, or for other unlawful payments, related to political activity or otherwise; (ii) made, offered to make or authorized any unlawful payment to foreign or domestic Government Officials or employees or to foreign or domestic political parties or campaigns from funds of the Company or its Subsidiaries; (iii) established or maintained any unlawful fund of monies or other assets of the Company or its Subsidiaries; (iv) made any inaccurate entry on the books or records of the Company or its Subsidiaries; (v) made, offered to make or authorized any bribe, unlawful rebate, unlawful payoff, unlawful influence payment, unlawful kickback or other unlawful payment to any person, private or public, in any form or (vi) engaged in or facilitated any transaction or dealing in property or interests in property of, received from or made any contribution of funds, goods or services to or for the benefit of, provided any payments or material assistance to, or otherwise engage in or facilitated any transactions with any Prohibited Person. Neither the Company nor any of its Subsidiaries is or within the past five (5) years has been (i) under external or internal investigation by any Governmental Entity for any potential or actual violation of any Anti‑Corruption Laws or (ii) has received any written or other notice from any Governmental Entity regarding any potential or actual violation of, or potential or actual failure to comply with, any Anti‑Corruption Laws. Since January 1, 2019 neither the Company nor any of its Subsidiaries has made any disclosure (voluntary or otherwise) to any Governmental Entity with respect to any alleged irregularity, misstatement or omission or other potential violation or liability arising under or relating to any Anti-Corruption Laws. “Government Official” means any person employed by or that is an agent of any Governmental Entity or any political party or that is a candidate for Governmental Entity office, or the family member or close affiliate of any of these.
Section 3.21 State Takeover Statutes
. No “fair price,” “moratorium,” “control share acquisition,” “interested shareholder,” “business combination” or similar antitakeover Law (collectively, “Takeover Laws”) enacted under of any state Laws in the United States apply to this Agreement or any of the transactions contemplated hereby, including the Merger.
Section 3.22 Affiliate Transactions
. Except (i) as set forth on Section 3.22 of the Company Disclosure Letter or (ii) for directors’ and employment-related Company Material Contracts filed or incorporated by reference as an exhibit to a Company SEC Document filed by the Company prior to the date hereof and for any intercompany agreements, as of the date hereof, no executive officer or director of the Company is a party to any Company Material Contract with or binding upon the Company or any of its Subsidiaries or any of their respective properties or assets or has any material interest in any material property owned by the Company or any of its Subsidiaries or has engaged in any material transaction with any of the foregoing since January 1, 2023.
Section 3.23 Brokers
. No broker, investment banker, financial advisor or other Person, other than Consensus Advisory Services LLC and Consensus Securities LLC, is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company or any of its Subsidiaries. The Company has made available to Parent true, correct and complete copies of all engagement, fee and similar Contracts between the Company (or any Subsidiary of the Company) and Consensus Advisory Services LLC and Consensus Securities LLC under which the Company has continuing obligations as of the date hereof.
Section 3.24 Opinion of Financial Advisor
. Consensus Advisors LLC has delivered to the Company Board its oral opinion (which will be confirmed in writing), dated as of the date of this Agreement, to the effect that, as of the date of this Agreement and based upon and subject to the assumptions, qualifications, limitations and other matters set forth therein, the Merger Consideration pursuant to this Agreement is fair, from a financial point of view, to the holders of Company Shares (other than Parent). The Company will make available to Parent a copy of such opinion as soon as practicable following the execution of this Agreement for information purposes only.
Section 3.25 No Other Representations or Warranties
. Except for the representations and warranties contained in Article IV or in any certificate delivered pursuant to this Agreement, the Company acknowledges that none of Parent, Merger Sub nor any other Person on behalf of Parent or Merger Sub makes any other express or implied representation or warranty with respect to Parent or Merger Sub, Parent’s business or operations or with respect to any other information provided to the Company, any of its affiliates, stockholders and representatives or any other Person or had or has any duty or obligation to provide any information to the Company or any of its affiliates, stockholders or representatives, or any other Person, in connection with this Agreement, the transactions contemplated hereby or otherwise. Neither Parent nor any other Person will have or be subject to any liability to the Company, its Subsidiaries, affiliates, and representatives or any other Person resulting from the distribution to the Company or its Subsidiaries, affiliates, and representatives or the Company’s or its Subsidiaries’, affiliates’, and representatives’ use of, any such information, including any information, documents, projections, forecasts or other material made available to the Company or its Subsidiaries, affiliates, and representatives in certain “data rooms” or management presentations in expectation of, or in connection with, the transactions contemplated by this Agreement.
Section 3.26 No Reliance
. The Company acknowledges and agrees that it (a) has had an opportunity to discuss and ask questions regarding the business of Parent and its Subsidiaries with the management of Parent, (b) has had access to the books and records of the Parent and its Subsidiaries, the “data room” maintained by the Parent and its Subsidiaries for purposes of the transactions contemplated by this Agreement and such other information as it has desired or requested to review and (c) has conducted its own independent investigation of Parent and its Subsidiaries and the transactions contemplated hereby, and has not relied on any representation or warranty by any Person on behalf of Parent or any of its Subsidiaries, except for the representations and warranties set forth in Article IV or in any certificate delivered in connection with this Agreement. Without limiting the foregoing, except for the representations and warranties set forth in Article IV of this Agreement or in any certificate delivered in connection with this Agreement, each of Parent and Merger Sub further acknowledges and agrees that none of Parent or Merger Sub or any of their respective stockholders, directors, officers, employees, Affiliates, advisors, agents or other Representatives has made any representation or warranty concerning any estimates, projections, forecasts, business plans or other forward-looking information regarding Parent, its Subsidiaries or their respective businesses and operations. The Company hereby acknowledges that there are uncertainties inherent in attempting to develop such estimates, projections, forecasts, business plans and other forward-looking information with which the Company is familiar, that except for the representations and warranties set forth in Article IV or in any certificate delivered in connection with this Agreement, the Company are taking full responsibility for making their own evaluation of the adequacy and accuracy of all estimates, projections, forecasts, business plans and other forward-looking information furnished to them (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, business plans and other forward-looking information), and the Company will have no claim against Parent, Merger Sub or any of their respective stockholders, directors, officers, employees, Affiliates, advisors, agents or other Representatives with respect thereto and (subject to the express representations and warranties of Parent set forth in Article IV) the Company and its Subsidiaries, affiliates, stockholders and representatives expressly disclaim reliance on any such information (including the accuracy or completeness thereof) or any representations or warranties or other statements or omissions that may have been made by Parent or any Person with respect to Parent other than the representations and warranties set forth in this Agreement.
ARTICLE IV
&NBSP;&NBSP;&NBSP;&NBSP;REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except (a) as disclosed or reflected in the Parent SEC Documents filed and publicly available after January 1, 2024 but at least two (2) Business Days prior to the date of this Agreement (but excluding any risk factor disclosures contained under the heading “Risk Factors,” any disclosure of risks included in any “forward-looking statements” disclaimer or any other statements that are similarly predictive or forward-looking in nature, in each case, other than any specific factual information contained therein), or (b) as set forth in the disclosure letter delivered by Parent to the Company concurrently with the execution of this Agreement (the “Parent Disclosure Letter”) (it being agreed that disclosure of any information in a particular section or subsection of the Parent Disclosure Letter shall be deemed disclosure with respect to any other section or subsection of this Agreement to the extent to which the relevance of such information is reasonably apparent on its face that such disclosure also qualifies or applies to such other section or subsections), Parent and Merger Sub represent and warrant to the Company as follows:
Section 4.1 Organization, Standing and Power
.
(a) Each of Parent, its Subsidiaries and Merger Sub (i) is an entity duly organized, validly existing and in good standing under the Laws of the State of Delaware, (ii) has all requisite corporate or organizational, as the case may be, power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted and proposed to be conducted in all material respects and (iii) is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions that recognize such concept) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, except, with respect to clauses (ii) and (iii), for any such failure to have such power and authority or to be so qualified or licensed or in good standing that, individually or in the aggregate, has not constituted or resulted in, and would not reasonably be expected to constitute or result in, a Parent Material Adverse Effect.
(b) Parent has previously furnished or otherwise made available to the Company a true and complete copy of Parent’s certificate of incorporation (the “Parent Charter”) and bylaws (the “Parent Bylaws”), in each case as amended to the date of this Agreement, and each as so delivered is in full force and effect. Parent is not in material violation of any provision of the Parent Charter or the Parent Bylaws in any material respect.
(c) Each of Parent’s Subsidiaries (i) is an entity duly organized, validly existing and in good standing (with respect to jurisdictions that recognize such concept) under the Laws of the jurisdiction of its organization, (ii) has all requisite corporate or similar power and authority to own, lease and operate its properties and to carry on its business as now being conducted and (iii) is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions that recognize such concept) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, except in each case of clauses (i), (ii) and (iii), that, individually or in the aggregate, has not constituted or resulted in, and would not reasonably be expected to constitute or result in, a Parent Material Adverse Effect.
Section 4.2 Capital Stock
.
(a) The authorized capital stock of Parent consists of (i) 100,000,000 shares of Parent Common Stock and (ii) 5,000,000 shares of preferred stock, par value $0.0001 per share. As of November 19, 2025, (1) 68,848,745 shares of Parent Common Stock were issued and outstanding, all of which were validly issued, fully paid and nonassessable and were free of preemptive rights, (2) 7,489,129 shares were held in treasury, (3) no shares of preferred stock were outstanding, (4) an aggregate of 1,850,133 shares of Parent Common Stock were subject to or otherwise deliverable in connection with outstanding restricted stock units that vest solely based on the passage of time, (5) an aggregate of 851,844 shares of Parent Common Stock were subject to or otherwise deliverable in connection with outstanding restricted stock units that vest based in whole or in part on performance metrics (at the target level of performance), (6) an aggregate of 2,250,000 shares of Parent Common Stock were subject to or otherwise deliverable in connection with the exercise of outstanding options to purchase Parent Common Stock (“Parent Stock Options”), (7) 1,471,613 shares of Parent Common Stock were available for issuance of future awards under Parent’s equity incentive plans, and (8) no shares of Parent Common Stock subject to or otherwise deliverable in connection with the exercise of outstanding convertible notes.
(b) Except as set forth above and except for changes since the Measurement Date resulting from the exercise of Parent Stock Options outstanding on such date, as of the date of this Agreement, (1) there are not outstanding or authorized any (A) shares of capital stock or other Equity Interests of Parent or any of its Subsidiaries, (B) securities of Parent or any of its Subsidiaries convertible into or exchangeable for shares of capital stock or voting securities of Parent or any of its Subsidiaries or (C) options or other rights to acquire from Parent or any of its Subsidiaries, and no obligation of Parent or any of its Subsidiaries to issue, any capital stock or Equity Interests of Parent or any of its Subsidiaries, (2) there are no outstanding obligations of Parent or any of its Subsidiaries to repurchase, redeem or otherwise acquire any capital stock or Equity Interests of Parent or any of its Subsidiaries, (3) there are no Liens relating to the issued or unissued capital stock of Parent or any of its Subsidiaries to which Parent or any of its Subsidiaries is a party, (4) there are no bonds, debentures, notes or other indebtedness of Parent or any of its Subsidiaries issued and outstanding having the right to vote (or convertible or exercisable or exchangeable for securities having the right to vote) on any matters on which stockholders of Parent may vote, and (5) there is no Contract to which Parent or any of its Subsidiaries is a party relating to the voting or registration of, or restricting any Person from purchasing, selling, pledging or otherwise disposing of (or from granting any option or similar right with respect to), any Parent Common Stock or capital stock or other Equity Interests of any of Parent’s Subsidiaries.
(c) Each of the outstanding shares of capital stock of each of Parent’s Subsidiaries is duly authorized, validly issued, fully paid and nonassessable and all such shares are owned by Parent or another wholly-owned Subsidiary of Parent and are owned free and clear of all Liens of any nature whatsoever, except where any such failure to own any such shares free and clear, individually or in the aggregate, has not constituted or resulted in and would not reasonably be expected to constitute or result in, a Parent Material Adverse Effect.
(d) All of the issued and outstanding capital stock or interests of Merger Sub is owned, directly or indirectly, by Parent. Merger Sub has no outstanding options, warrants, rights or any other agreements pursuant to which any Person other than Parent may acquire any equity security or interests of Merger Sub.
Section 4.3 Authority
. Each of Parent and Merger Sub has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and, subject to the approval of this Agreement by Parent as the sole stockholder of Merger Sub, to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Parent and no other corporate proceedings on the part of Parent or Merger Sub are necessary to approve this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Parent and Merger Sub and, assuming the due authorization, execution and delivery by Parent and Merger Sub, constitutes a valid and binding obligation of each of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its terms (except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws affecting the enforcement of creditors’ rights generally or by general principles of equity). As of the date hereof, the Parent Board has, at a meeting duly called and held, (a) unanimously adopted resolutions (i) determining that the transactions contemplated by this Agreement, including the Merger, are advisable, fair to and in the best interests of Parent and its stockholders, (ii) approving, adopting and declaring advisable this Agreement and the transactions contemplated by this Agreement, including the Merger, and has resolved to adopt and approve the Parent Stock Issuance contemplated hereby.
Section 4.4 No Conflict; Consents and Approvals
.
(a) The execution, delivery and performance of this Agreement by each of Parent and Merger Sub, and the consummation by each of Parent and Merger Sub of the transactions contemplated hereby, do not and will not (i) conflict with or violate the Parent Charter or Parent Bylaws or the equivalent Organizational Documents of any of Parent’s Subsidiaries or Merger Sub, (ii) result in the creation of any Lien upon any assets of Parent or any of its Subsidiaries that is material to the operation of Parent and its Subsidiaries or the suspension, revocation or forfeiture of any material franchise, permit or license granted by a governmental authority to the Parent or any of its Subsidiaries, other than liens under federal or state securities laws, (iii) result in any breach or violation of, or constitute a default (or an event which with notice or lapse of time or both would become a default) under any material indenture or other agreement or instrument evidencing material indebtedness binding upon Parent or any of its Subsidiaries or their respective assets, or give rise to a right of any third party thereunder to require any material payment, repurchase or redemption to be made by Parent or any of its subsidiaries, or give rise to a right of, or result in, termination, cancellation or acceleration of any material obligation thereunder, (iv) assuming that all consents, approvals and authorizations contemplated by clauses (i) through (iv) of subsection (b) below have been obtained and all filings described in such clauses have been made, conflict with or violate any Law applicable to Parent, any of its Subsidiaries or Merger Sub or by which any of their respective properties are bound or (v) result in any breach or violation of, or constitute a default (or an event which with notice or lapse of time or both would become a default), or result in the loss of a benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of, any Contract to which Parent, any of its Subsidiaries or Merger Sub is a party or by which Parent, any of its Subsidiaries or Merger Sub or any of their respective properties are bound, except, in the case of clauses (iv) and (v), for any such conflict, breach, violation, default, loss, right or other occurrence that, individually or in the aggregate, has not constituted or resulted in, and would not reasonably be expected to constitute or result in, a Parent Material Adverse Effect.
(b) The execution, delivery and performance of this Agreement by each of Parent or Merger Sub, and the consummation by each of Parent or Merger Sub of the transactions contemplated hereby, do not and will not require any consent, approval, authorization or permit of, action by, filing with or notification to, any Governmental Entity, except for (i) such filings as may be required under applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder, and under state securities, takeover and “blue sky” laws, (ii) such filings as necessary to comply with the applicable requirements of the New York Stock Exchange (“NYSE”), (iii) the filing with the Secretary of State of the State of Delaware of the Certificate of Merger as required by the DGCL, (iv) the filing with the Secretary of State of the State of Tennessee of the Articles of Merger, and (v) any such consent, approval, authorization, permit, action, filing or notification, in each case with respect to a Governmental Entity, the failure of which to make or obtain that, individually or in the aggregate, has not constituted or resulted in, and would not reasonably be expected to constitute or result in, a Parent Material Adverse Effect.
Section 4.5 SEC Reports; Financial Statements
.
(a) Parent has timely filed, furnished or otherwise transmitted all forms, reports, statements, certifications and other documents (including all exhibits, amendments and supplements thereto) required to be filed by it with the SEC since January 1, 2023 (all such forms, reports, statements, certificates and other documents filed since January 1, 2023 and prior to the date hereof, collectively, the “Parent SEC Documents”). As of their respective dates, or, if amended, as of the date of the last such amendment, each of the Parent SEC Documents complied as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act, and the applicable rules and regulations promulgated thereunder, as the case may be, each as in effect on the date so filed. As of their respective filing dates (or, if amended or superseded by a subsequent filing prior to the date hereof, as of the date of such amendment or superseding filing), none of the Parent SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. No Subsidiary of Parent has been required to file any forms, reports or other documents with the SEC at any time since January 1, 2023. Since January 1, 2023 no executive officer of Parent has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act. Neither Parent nor any of its executive officers has received notice from any Governmental Entity challenging or questioning the accuracy, completeness, form or manner of filing of such certifications.
(b) The audited consolidated financial statements of Parent (including any related notes thereto) included in or incorporated by reference in the Parent SEC Documents (i) complied as to form in all material respects with the published rules and regulations of the SEC applicable thereto; (ii) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q or any successor form under the Exchange Act, and except that unaudited financial statements may not contain footnotes and are subject to normal and recurring year-end adjustments); (iii) fairly present in all material respects the consolidated financial position of Parent and its Subsidiaries at the respective dates thereof and the results of their operations and cash flows for the periods indicated subject, with respect to unaudited interim statements, to normal and recurring year-end adjustments.
(c) Parent maintains, and at all times since January 1, 2023 has maintained, disclosure controls and procedures required by Rule 13a-15 or 15d-15 under the Exchange Act. Such disclosure controls and procedures are designed to ensure that information required to be disclosed by Parent in its filings with the SEC under the Exchange Act is recorded and reported on a timely basis to the individuals responsible for the preparation of Parent’s filings with the SEC under the Exchange Act. Parent maintains internal control over financial reporting (as defined in Rule 13a-15 or 15d-15, as applicable, under the Exchange Act). Such internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Parent’s management has completed an assessment of the effectiveness of Parent’s system of internal control over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act for the fiscal year ended December 31, 2024, and such assessment concluded that such controls were effective and Parent’s independent registered accountant has issued an attestation report concluding that Parent maintained effective internal control over financial reporting as of December 31, 2024. Parent has disclosed, based on the most recent evaluation of its Chief Executive Officer and its Chief Financial Officer prior to the date of this Agreement, to Parent’s auditors and the audit committee of the Parent Board (i) any significant deficiencies and material weaknesses in the design or operation of its internal controls over financial reporting and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in Parent’s internal control over financial reporting, and each such deficiency, weakness and fraud so disclosed to auditors, if any, has been disclosed to the Company prior to the date hereof.
(d) Since January 1, 2023, (i) none of Parent or any Subsidiary of Parent nor, to the knowledge of Parent, any director or officer of Parent or any Subsidiary of Parent has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding accounting, internal accounting controls or auditing practices, procedures, methodologies or methods of Parent or any Subsidiary of Parent or any material complaint, allegation, assertion or claim from employees of Parent or any Subsidiary of Parent regarding questionable accounting or auditing matters with respect to Parent or any Subsidiary of Parent, and (ii) to the knowledge of Parent, no attorney representing Parent or any Subsidiary of Parent, whether or not employed by Parent or any Subsidiary of Parent, has reported evidence of a material violation of securities Laws, breach of fiduciary duty or similar violation by Parent, any Subsidiary of Parent or any of their respective officers, directors, employees or agents to Parent Board or any committee thereof, or to the General Counsel or Chief Executive Officer of Parent.
(e) As of the date hereof, Parent is in compliance in all material respects with all current listing requirements of the NYSE.
(f) Neither Parent nor any Subsidiary of Parent is a party to, or has a commitment to effect, enter into or create, any joint venture, or “off-balance sheet arrangement” (as defined in Item 303(a) of Regulation S-K under the Exchange Act).
(g) As of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the SEC with respect to the Parent SEC Documents, and none of the Parent SEC Documents is, to the knowledge of Parent, the subject of ongoing SEC review or investigation.
Section 4.6 No Undisclosed Liabilities
. Neither Parent nor any of its Subsidiaries has any liabilities of any nature or type, whether accrued, absolute, determined, contingent, secondary, direct or otherwise and whether due or to become due, required to be reflected in Parent’s financial statements, except for: (i) liabilities disclosed in the financial statements (including any related notes) contained in the most recent audited balance sheet included in the Parent SEC Documents (the “Most Recent Parent Balance Sheet”); (ii) liabilities incurred in the ordinary course of business since the date of the Most Recent Parent Balance Sheet; (iii) liabilities that, individually or in the aggregate, have not constituted or resulted in, and would not reasonably be expected to constitute or result in, a Parent Material Adverse Effect; and (iv) liabilities and obligations incurred in connection with the transactions contemplated by this Agreement.
Section 4.7 Certain Information
. The information supplied or to be supplied by Parent and Merger Sub specifically for inclusion in the Form S-4 and the Proxy Statement shall not, at the time that the Form S‑4 is declared effective by the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representation or warranty is made by Parent with respect to statements made therein based on information supplied by or on behalf of the Company specifically for inclusion in the Form S‑4.
Section 4.8 No Parent Material Adverse Effect
. Since January 1, 2024 through the date of this Agreement, there has not been any Effect that has constituted or resulted in, or that would reasonably be expected to constitute or result in, a Parent Material Adverse Effect.
Section 4.9 Litigation
. Except as, in each case, individually or in the aggregate, has not had, or would not reasonably be expected to have a Parent Material Adverse Effect, (a) there is no Action pending or, to the knowledge of Parent, threatened against Parent or any of its Subsidiaries or any of their respective properties or assets, (b) neither Parent nor any of its Subsidiaries nor any of their respective properties or assets is or are subject to any judgment, order, injunction, rule or decree of any Governmental Entity and (c) there are no subpoenas, civil investigative demands or other written requests for information issued to Parent or any of its Subsidiaries relating to potential or actual violations of any Law that are pending or, to the knowledge of Parent, threatened, or any investigations or claims against or affecting Parent or any of its Subsidiaries, or any of their respective properties or assets, relating to potential or actual violations of any Law.
Section 4.10 Compliance with Laws
. Parent and each of its Subsidiaries are in compliance with, and have maintained and enforced policies and procedures reasonably designed to promote compliance with, all Laws applicable to them or by which any of their respective properties are bound, except where any non-compliance, individually or the aggregate, has not constituted or resulted in, and would not reasonably be expected to constitute or result in, a Parent Material Adverse Effect. Neither Parent nor any of its Subsidiaries has, during the three (3)-year period prior to the date of this Agreement: (i) to the knowledge of Parent, received any written notice or verbal notice from any Governmental Entity regarding any potential or actual material violation by Parent or any of its Subsidiaries of any Law; or (ii) provided any notice to any Governmental Entity regarding any potential or actual material violation by Parent or any of its Subsidiaries of any Law. Parent and its Subsidiaries have in effect all Permits necessary for them to own, lease or operate their properties and to carry on their businesses as now conducted, except for any Permits the absence of which, individually or in the aggregate, has not constituted or resulted in, and would not reasonably be expected to constitute or result in, a Parent Material Adverse Effect. Except as, individually or in the aggregate, has not constituted or resulted in, and would not reasonably be expected to constitute or result in, a Parent Material Adverse Effect, (x) all of Parent and its Subsidiaries’ Permits are valid and in full force and effect and are not subject to any administrative or judicial proceeding that could result in any modification, termination or revocation thereof and, to the knowledge of Parent, no suspension or cancellation of any such Permit is threatened, (x) no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation of any term, condition or provision of any such Permit, (y) all fees and assessments due and payable in connection with such Permits have been timely paid, and (z) Parent and each of its Subsidiaries is in compliance with the terms and requirements of all such Permits. There are no Actions pending or, to the knowledge of Parent, threatened, that seek the revocation, cancellation or modification of any Permit. Neither Parent nor its Subsidiaries have, since January 1, 2023, received written notice of any charge, claim or assertion alleging any violations of or noncompliance with any Permit, nor to the knowledge of Parent, has any charge, claim or assertion been threatened, except as, individually or in the aggregate, has not constituted or resulted in, and would not reasonably be expected to constitute or result in, a Parent Material Adverse Effect.
Section 4.11 Brokers
. No broker, investment banker, financial advisor or other Person, other than Ankura Consulting Group, LLC, is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made.
Section 4.12 No Prior Activities
. Except for obligations incurred in connection with its organization and the transactions contemplated hereby, Merger Sub has not incurred any obligation or liability nor engaged in any business or activity of any type or kind whatsoever or entered into any Contract with any Person.
Section 4.13 No Other Representations or Warranties
. Except for the representations and warranties contained in Article III or in any certificate delivered pursuant to this Agreement, each of Parent and Merger Sub acknowledges that neither the Company nor any other Person on behalf of the Company makes any other express or implied representation or warranty with respect to the Company or any of its Subsidiaries, or any of their respective businesses or operations, with respect to any other information provided to Parent or Merger Sub, or any of their respective affiliates, stockholders and representatives or any other Person or had or has any duty or obligation to provide any information to Parent or Merger Sub, or any of their respective affiliates, stockholders or representatives, or any other Person, in connection with this Agreement, the transactions contemplated hereby or otherwise. Neither the Company nor any other Person will have or be subject to any liability to Parent or Merger Sub, or any of their respective affiliates and representatives, or any other Person resulting from the distribution to Parent or Merger Sub, or any of their respective affiliates and representatives, or Parent’s or Merger Sub’s, or any of their respective affiliates’ and representatives’, use of, any such information, including any information, documents, projections, forecasts or other material made available to Parent or Merger Sub, or any of their respective affiliates and representatives, in certain “data rooms” or management presentations in expectation of, or in connection with, the transactions contemplated by this Agreement.
Section 4.14 No Reliance
. Each of Parent and Merger Sub acknowledges and agrees that it (a) has had an opportunity to discuss and ask questions regarding the business of the Company and its Subsidiaries with the management of the Company, (b) has had access to the books and records of the Company, the “data room” maintained by the Company for purposes of the transactions contemplated by this Agreement and such other information as it has desired or requested to review and (c) has conducted its own independent investigation of the Company and its Subsidiaries and the transactions contemplated hereby, and has not relied on any representation or warranty by any Person on behalf of the Company or any of its Subsidiaries, except for the representations and warranties set forth in Article III or in any certificate delivered in connection with this Agreement. Without limiting the foregoing, except for the representations and warranties set forth in Article III of this Agreement or in any certificate delivered in connection with this Agreement, each of Parent and Merger Sub further acknowledges and agrees that none of the Company or any of its stockholders, directors, officers, employees, Affiliates, advisors, agents or other Representatives has made any representation or warranty concerning any estimates, projections, forecasts, business plans or other forward-looking information regarding the Company, its Subsidiaries or their respective businesses and operations. Each of Parent and Merger Sub hereby acknowledges that there are uncertainties inherent in attempting to develop such estimates, projections, forecasts, business plans and other forward-looking information with which Parent and Merger Sub are familiar, that except for the representations and warranties set forth in Article III or in any certificate delivered in connection with this Agreement, Parent and Merger Sub are taking full responsibility for making their own evaluation of the adequacy and accuracy of all estimates, projections, forecasts, business plans and other forward-looking information furnished to them (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, business plans and other forward-looking information), and that Parent and Merger Sub will have no claim against the Company or any of its stockholders, directors, officers, employees, Affiliates, advisors, agents or other Representatives with respect thereto and (subject to the express representations and warranties of Parent set forth in Article III) Parent and Merger Sub, and their respective affiliates, stockholders and representatives, expressly disclaim reliance on any such information (including the accuracy or completeness thereof) or any representations or warranties or other statements or omissions that may have been made by the Company or any Person with respect to the Company other than the representations and warranties set forth in this Agreement.
ARTICLE V
&NBSP;&NBSP;&NBSP;&NBSP;COVENANTS
Section 5.1 Conduct of Business of the Company
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(a) The Company covenants and agrees that, during the period from the date hereof until the Effective Time, except (i) as expressly required by this Agreement, (ii) as disclosed in Section 5.1(a) of the Company Disclosure Letter, (iii) as required by applicable Law or (iv) to the extent Parent shall otherwise request or consent to in writing (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall, and shall cause each of its Subsidiaries to, (w) conduct their respective business in the ordinary course of business consistent with past practice and (x) use commercially reasonable efforts to preserve substantially intact their respective business organizations and material assets, to keep available the services of its and its Subsidiaries’ current officers and key employees, to preserve their respective present relationships and goodwill with material customers and material suppliers and others with whom it has business relations and comply in all material respects with all applicable Laws.
(b) Without limiting the generality of the foregoing, between the date of this Agreement and the Effective Time, except (w) as expressly required by this Agreement, (x) as disclosed in Section 5.1(b) of the Company Disclosure Letter, (y) as required by applicable Law or (z) to the extent Parent shall otherwise request or consent to in writing (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall not, and the Company shall cause each of its Subsidiaries not to:
(i) amend or otherwise change its Organizational Documents (other than such amendments as may be necessary to effect the transactions contemplated by this Agreement, the Merger) or adopt any stockholder rights plan, “poison pill” antitakeover plan or similar device, in each case, to the extent that it would apply to the transactions contemplated by this Agreement, including the Merger;
(ii) issue, deliver, sell, pledge, grant, transfer, dispose of or encumber any shares of capital stock, or grant to any Person any right to acquire any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other Equity Interests, except pursuant to the exercise of Company Stock Options or settlement of settlement of Company RSUs outstanding as of the date hereof (or permitted hereunder to be granted after the date hereof) in accordance with their terms;
(iii) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, in respect of any of its capital stock or other Equity Interests (except for any dividend or distribution by a Subsidiary of the Company to the Company or to other Subsidiaries) or enter into any agreement with respect to the voting or registration of its capital stock or other Equity Interests (other than in connection with this Agreement);
(iv) adjust, split, combine, exchange, redeem, repurchase or otherwise acquire any shares of capital stock or other Equity Interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any of its Subsidiaries’ capital stock or other Equity Interests (except in connection with the cashless exercises or similar transactions pursuant to the exercise of Company Stock Options or settlement of Company RSUs or other awards or obligations outstanding as of the date hereof or permitted to be granted after the date hereof), or reclassify, combine, split, subdivide or otherwise amend, directly or indirectly, the terms of its capital stock or other Equity Interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any of its Subsidiaries’ capital stock or other Equity Interests;
(v) (A) acquire (whether by merger, consolidation or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any assets other than purchases of inventory and other assets in the ordinary course of business or pursuant to existing Contracts; (B) sell, pledge, assign, transfer, lease, license, guarantee, encumber or otherwise dispose of (whether by merger, consolidation or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any property or assets, other than, in each case, (x) sales of inventory, goods or services in the ordinary course of business or of obsolete equipment or assets in the ordinary course of business; (w) as security for any borrowings permitted by Section 5.1(b)(viii); or (y) licenses granted to customers or other third parties in the ordinary course of business; or (z) dispositions of assets which do not constitute Company Intellectual Property, and with respect to which the fair market value of all such assets does not exceed $500,000 in the aggregate;
(vi) except in the ordinary course of business consistent with past practice, (x) materially amend or terminate any Company Material Contract (other than terminations pursuant to the expiration of the existing term of any Company Material Contract), (y) waive, release or assign any material rights under any Company Material Contract or (z) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Company Material Contract;
(vii) make, or agree or commit to make, any capital expenditure, except in accordance with the capital expenditure budget set forth in Section 5.1(b)(vii) of the Company Disclosure Letter, plus a 2.5% variance for each principal category set forth in such capital expenditure budget;
(viii) (A) make any loans, advances or capital contributions to, or investments in, any other Person (other than a Subsidiary of the Company or routine travel and business expense advances made to directors or employees in the ordinary course of business consistent with past practice), (B) incur, redeem, repurchase, prepay, defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or advances or capital contributions to any other Person, except for: (1) subject to Section 5.18, repayment of the amounts outstanding under the Credit Facility when due in accordance with their terms; (2) borrowings in an aggregate principal amount outstanding at any time not to exceed $250,000 incurred in the ordinary course of business pursuant to existing credit facilities or letters of credit, (3) any indebtedness among the Company and its Subsidiaries or among Subsidiaries of the Company (and guarantees by the Company or its Subsidiaries in respect thereof) and (4) purchase money financings and capital leases entered into in the ordinary course of business in an aggregate amount not to exceed $250,000^^at any time outstanding, (C) assume, guarantee, endorse or otherwise become liable or responsible for the indebtedness or other obligations of another Person (other than a guaranty by the Company on behalf of its Subsidiaries) or (D) incur any Encumbrance on any of its material property or assets, except Permitted Encumbrances;
(ix) except to the extent required by applicable Law or any Company Plan in effect as of the date hereof, (A) increase or decrease the compensation or benefits of any director or any Company Employee (other than annual base salary increases for employees with annual compensation less than $200,000 in the ordinary course of business consistent with past practice, and corresponding increases in target bonus compensation), (B) enter into, establish, amend, terminate or modify (including by exercising discretion to accelerate vesting or the time of payment or funding) any Company Plan, or any arrangement that would be a Company Plan if in effect as of the date of this Agreement; (C) grant or increase any severance or termination pay or termination or change in control payments or benefits, or any similar compensation, (D) hire or engage any individual as an employee or other individual service provider (except, with respect to any individual whose annual base compensation does not exceed $200,000, to fill a vacancy); (E) terminate the employment of any Company Employee (other than for cause); or (F) enter into any Labor Agreement;
(x) implement or adopt any material change in its methods of accounting, except as may be required to conform to changes in statutory or regulatory accounting rules or GAAP or regulatory requirements with respect thereto;
(xi) adopt a plan of (A) complete or partial liquidation of the Company or any Subsidiary of the Company or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Subsidiaries of the Company;
(xii) commence, compromise, settle or agree to settle any Action (including any Action relating to this Agreement or the transactions contemplated hereby), or consent to the same, other than compromises, settlements or agreements in the ordinary course of business that (A) involve only the payment of money damages (1) for an amount (in excess of insurance proceeds) for each such compromise or settlement that is, individually, less than $100,000 and for all such compromises or settlements that is, in the aggregate, less than $500,000 or (2) consistent with the reserves reflected in the Company’s balance sheet at November 1, 2025, (B) do not impose any restriction on the Company’s business or the business of its Subsidiaries, (C) do not relate to any litigation, claim, suit, action or proceeding by the Company’s shareholders in connection with this Agreement or the Merger and (D) do not include an admission of liability or fault on the part of the Company or any of its Subsidiaries;
(xiii) waive, release, pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, contingent or otherwise) with value in excess of $250,000, except in the ordinary course of business consistent with past practice and in accordance with their terms.
(xiv) (A) make, change or revoke any material Tax election, (B) change or adopt any Tax accounting period or material method of Tax accounting, (C) amend or refile any material Tax Return, (D) settle or compromise any material liability for Taxes or any audit, claim or other proceeding relating to a material amount of Taxes, (E) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any similar state, local or non-U.S. Law), (F) request any ruling from any Governmental Entity relating to Taxes, (G) knowingly surrender any right to claim a material refund of Taxes, (H) other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes, or (I) initiate any voluntary disclosure, amnesty or similar program with respect to a material amount of Taxes;
(xv) sell, transfer, assign, license, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), or grant a Lien on, covenant not to sue in respect of, mortgage, encumber or exchange any material Intellectual Property owned or purported to be owned by, or exclusively licensed to, the Company or any Subsidiary of the Company;
(xvi) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xvii) (A) amend any Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Permits;
(xviii) enter into any Company Real Property Leases;^^
(xix) take any action (or knowingly omit to take any action) intended to or that would reasonably be expected to cause or result in a material breach of the Credit Facility; or
(xx) agree to take or otherwise authorize, approve or enter into any agreement or make any commitment to take any of the actions described in Sections 5.1(b)(i) through (xix).
Section 5.2 Conduct of Business of Parent
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(a) Parent covenants and agrees that, during the period from the date hereof until the Effective Time, except (i) as expressly required by this Agreement, (ii) as disclosed in Section 5.1(a) of the Parent Disclosure Letter, (iii) as required by applicable Law or (iv) to the extent the Company shall otherwise consent in writing (which consent shall not be unreasonably withheld, conditioned or delayed), Parent shall, and shall cause each of its Subsidiaries to, (w) conduct their respective business in the ordinary course of business and (x) use commercially reasonable efforts to preserve substantially intact their respective business organizations and material assets, to keep available the services of its and its Subsidiaries’ current officers and key employees, to preserve their respective present relationships with material customers and material suppliers and comply in all material respects with all applicable Laws.
(b) Without limiting the generality of the foregoing, between the date of this Agreement and the Effective Time, except (w) as expressly required by this Agreement, (x) as disclosed in Section 5.1(b) of the Parent Disclosure Letter, (y) as required by applicable Law or (z) to the extent the Company shall otherwise consent in writing (which consent shall not be unreasonably withheld, conditioned or delayed), Parent shall not, and Parent shall cause each of its Subsidiaries not to:
(i) amend or otherwise change its Organizational Documents;
(ii) implement or adopt any material change in its methods of accounting, except as may be required to conform to changes in statutory or regulatory accounting rules or GAAP or regulatory requirements with respect thereto;
(iii) adopt a plan of (A) complete or partial liquidation of Parent or any Subsidiary of Parent or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Subsidiaries of Parent; or
(iv) agree to take or otherwise authorize, approve or enter into any agreement or make any commitment to take any of the actions described in Sections 5.1(b)(i) through 5.1(b)(iii).
Section 5.3 No Control of Other Party’s Business
. Nothing contained in this Agreement (including anything in Section 5.1(b)) shall give Parent, directly or indirectly, the right to control or direct the Company’s or its Subsidiaries’ operations prior to the Effective Time, and nothing contained in this Agreement shall give the Company, directly or indirectly, the right to control or direct Parent’s or its Subsidiaries’ operations prior to the Effective Time. Prior to the Effective Time, each of the Company and Parent shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
Section 5.4 No Solicitation by the Company
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(a) Except as expressly permitted by this Section 5.4, the Company agrees that it shall not, and shall cause its Subsidiaries and its and their respective directors, officers, employees, investment bankers, attorneys, consultants, accountants and other advisors, agents or representatives (collectively, “Representatives”) not to, directly or indirectly, (i) initiate, solicit, knowingly assist, knowingly induce or knowingly encourage or facilitate (including by providing information) any inquiries, proposals or offers with respect to, or the making, submission, announcement or completion of, any proposal or offer that constitutes, or would be reasonably expected to lead to, a Company Acquisition Proposal or (ii) engage in, continue or participate in any negotiations or discussions with any Persons (any such Person, a “Third Party”) other than Parent, Merger Sub and their respective Affiliates and Representatives to the extent acting on behalf of Parent or Merger Sub (other than to refer the inquiring Person to this Section 5.4) concerning any Company Acquisition Proposal or any inquiry, proposal or offer that would reasonably be expected to lead to any Company Acquisition Proposal, (iii) furnish or provide or cause to be furnished or provided any non-public information or data relating to the Company or any of its Subsidiaries in connection with, or for the purpose of soliciting, initiating, encouraging or facilitating, or in response to, any inquiry, proposal or offer that constitutes of would reasonably be expected to lead to a Company Acquisition Proposal, or (iv) resolve or agree to do any of the foregoing. The Company agrees that it will, and will cause its Subsidiaries and its and their respective Representatives to, (x) immediately cease and cause to be terminated any existing activities, discussions or negotiations with any Third Party conducted heretofore with respect to any Company Acquisition Proposal, (y) deliver a written notice to any such Third Party explicitly stating that the Company is terminating all discussions and negotiations with such Third Party with respect to any Company Acquisition Proposal, and requesting that such Third Party promptly return or destroy all confidential or proprietary information concerning the Company and its Subsidiaries, and (z) promptly terminate access of any such Third Party to any due diligence or electronic or physical data room with respect to any Company Acquisition Proposal; provided, that nothing in this Agreement shall restrict the Company from permitting a Person to request the waiver of a “standstill” or similar obligation or from granting such a waiver, in each case, solely to the extent necessary to allow the applicable counterparty thereof to make a Company Acquisition Proposal in accordance with this Agreement and only after the Company Board has determined in good faith, after consultation with its outside counsel, that failure to take such action would reasonably be expected to be inconsistent with its fiduciary duties under applicable Law.
(b) Notwithstanding anything to the contrary in Section 5.4(a), at any time prior to obtaining the Company Shareholder Approval, in response to an unsolicited bona fide written Company Acquisition Proposal from a Third Party made after the date hereof that (x) did not result from a material breach of Section 5.4(a) or Section 5.4(c) by the Company, any of its Subsidiaries or any of its or their respective Representatives, and (y) the Company Board determines in good faith, after consultation with the Company’s outside legal counsel and its financial advisor, constitutes or may reasonably be expected to lead to a Company Superior Proposal and that failure to engage in such discussions or negotiations, or provide such information, would reasonably be expected to be inconsistent with the Company Board’s fiduciary duties to the Company and its shareholders under applicable Law, the Company and its Representatives may, following receipt of an executed customary confidentiality agreement with nondisclosure provisions that are at least as restrictive of such Third Party as the Confidentiality Agreement (except for such changes specifically necessary in order for the Company to be able to comply with its obligations under this Agreement) and that does not prohibit compliance by the Company with this Section 5.4: (i) furnish information with respect to the Company and its Subsidiaries to such Third Party making such Company Acquisition Proposal and (ii) participate in discussions or negotiations with such Third Party and its Representatives regarding such Company Acquisition Proposal; provided, that the Company shall promptly (following such time as it is provided or made available to such third party and in no event later than 24 hours) provide or make available to Parent any material non-public information concerning the Company or any of its Subsidiaries to the Person making such Company Acquisition Proposal or its Representatives which was not previously provided or made available to Parent. If the Company receives a Company Acquisition Proposal or any inquiry or request for information with respect to a Company Acquisition Proposal or that is reasonably likely to lead to a Company Acquisition Proposal, then the Company shall promptly (and in no event later than 24 hours after its receipt of such Company Acquisition Proposal or request) notify Parent in writing of such Company Acquisition Proposal or request (which notification shall include the identity of the Person making or submitting such request or Company Acquisition Proposal and an unredacted copy of any such written request or proposal (or, if not in writing, a written summary of the material terms and conditions thereof)), together with copies of any proposed transaction agreements, and the Company shall thereafter keep Parent reasonably informed in writing, on a current basis (and, in any event, within 24 hours), of the status of such Company Acquisition Proposal or request, including informing Parent of any material change to the terms of such Company Acquisition Proposal, and the status of any negotiations, including any change in its intentions as previously notified.
(c) Subject to the permitted actions contemplated by clauses (d) and (e) below, and Section 7.1(c)(ii), neither the Company Board nor any committee thereof shall (i) withdraw, change, qualify, withhold, amend or modify in a manner adverse to Parent or Merger Sub, or publicly propose to withdraw, change, qualify, withhold, amend or modify in a manner adverse to Parent or Merger Sub, the Company Board Recommendation or make, or permit any director or executive officer to make, any public statement in connection with the Company Shareholders Meeting by or on behalf of the Company Board or such committee that would reasonably be expected to have the same effect, (ii) adopt, approve, recommend, or publicly propose to adopt, approve or recommend, any Company Acquisition Proposal or Company Alternative Acquisition Agreement, (iii) fail to include the Company Board Recommendation in the Proxy Statement, (iv) in the event a tender offer that constitutes a Company Acquisition Proposal subject to Regulation 14D under the Exchange Act is commenced, fail to recommend against such Company Acquisition Proposal in any solicitation or recommendation statement made on Schedule 14D-9 within ten (10) Business Days of such commencement (and in no event later than one (1) Business Day prior to the date of the Company Stockholder Meeting, as it may be postponed or adjourned pursuant to Section 5.5(b)), or (v) if requested by Parent, fail to issue, within ten (10) Business Days after a Company Acquisition Proposal is publicly announced (and in no event later than one (1) Business Day prior to the date of the Company Stockholder Meeting, as it may be postponed or adjourned pursuant to Section 5.5(b)), a press release reaffirming the Company Board Recommendation (any of such action in clauses (i)-(v), an “Company Adverse Recommendation Change”), (vi) cause or permit the Company or any of its Subsidiaries to enter into or agree to any letter of intent, memorandum of understanding or similar document, agreement in principle, acquisition agreement, merger agreement, or other similar agreement or commitment (other than a confidentiality agreement referred to in Section 5.4(b) entered into in compliance with Section 5.4(b)) relating to any Company Acquisition Proposal (a “Company Alternative Acquisition Agreement”) or (vi) take any action to make the provisions of any anti-takeover or similar statute or regulation inapplicable to any Company Acquisition Proposal or counterparty thereto; provided, that delivery of a written notice to Parent as contemplated by clause (d) below, or public disclosure that such notice has been delivered to Parent, shall not be deemed to constitute an Company Adverse Recommendation Change or otherwise a violation of this clause (c).
(d) Notwithstanding anything to the contrary set forth in this Section 5.4, following receipt of a written Company Acquisition Proposal by the Company after the date of this Agreement that did not result from a breach of this Section 5.4 and has not been withdrawn the Company Board may, at any time prior to the Company Shareholders Meeting, make a Company Adverse Recommendation Change and authorize the Company to terminate this Agreement to enter into a Company Alternative Acquisition Agreement with respect to such Company Superior Proposal in accordance with Section 7.1(c)(ii), or authorize, resolve, agree or propose publicly to take any such action, if all of the following conditions are met prior to making such Company Adverse Recommendation Change:
(i) the Company Board determines in good faith, after consultation with the Company’s outside legal counsel and its financial advisor, that such Company Acquisition Proposal constitutes a Company Superior Proposal and that failure to take such action would reasonably be expected to be inconsistent with the Company Board’s fiduciary duties to its shareholders under applicable Law;
(ii) (A) the Company shall have provided to Parent five (5) Business Days’ prior written notice (the “Company Superior Proposal Notice”), which shall state expressly (1) that it has received a written Company Acquisition Proposal that constitutes a Company Superior Proposal, (2) an unredacted copy of such Company Acquisition Proposal (or, if not in writing, the material terms and conditions thereof, including the consideration offered therein and the identity of the Person or group making the Company Acquisition Proposal) and shall have contemporaneously provided an unredacted copy of the Company Alternative Acquisition Agreement and all other documents (other than immaterial documents) related to the Company Superior Proposal (it being understood and agreed that any amendment to the financial terms or any other material term or condition of such Company Superior Proposal shall require a new notice and an additional three (3) Business Day period) and (3) that, subject to clause (iii) below, the Company Board has determined to make a Company Adverse Recommendation Change or to terminate this Agreement in accordance with Section 7.1(c)(ii) in order to enter into the Company Alternative Acquisition Agreement, as applicable and (B) prior to making such Company Adverse Recommendation Change or terminating this Agreement in accordance with Section 7.1(c)(ii), as applicable, (x) the Company shall have used commercially reasonable efforts to engage in good faith with Parent (to the extent Parent wishes to engage) during such notice period commencing on the delivery of the Company Superior Proposal Notice, to consider any adjustments proposed by Parent to the terms and conditions of this Agreement such that the Company Alternative Acquisition Agreement ceases to constitute a Company Superior Proposal and (y) in determining whether to make an Company Adverse Recommendation Change or to effect a termination in accordance with Section 7.1(c)(ii), the Company Board shall have taken into account any changes to the terms of this Agreement proposed by Parent and any other information provided by Parent in response to such notice; and
(iii) following the end of such five (5) Business Day period (as such period may be extended in accordance with clause (ii) above), the Company Board shall have determined, in good faith, after consultation with its financial advisors and outside legal counsel, that, in light of such Company Superior Proposal and taking into account any revised terms proposed by Parent, such Company Superior Proposal continues to constitute a Company Superior Proposal and that the failure to make such Company Adverse Recommendation Change or to so terminate this Agreement in accordance with Section 7.1(c)(ii), as applicable, would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable Law.
(e) Notwithstanding anything to the contrary set forth in this Section 5.4, upon the occurrence of any Company Intervening Event, the Company Board may, at any time prior to the Company Shareholders Meeting, make a Company Adverse Recommendation Change that is not related to a Company Acquisition Proposal if all of the following conditions are met:
(i) prior to making such Company Adverse Recommendation Change, (1) the Company Board determines in good faith, after consultation with its outside legal counsel and its financial advisor, that, in light of such Company Intervening Event, a failure to effect a Company Adverse Recommendation Change would be reasonably expected to be inconsistent with the Company Board’s fiduciary duties to its shareholders under applicable Law, (2) the Company shall have (A) provided to Parent five (5) Business Days’ prior written notice, which shall (1) set forth in reasonable detail information describing the Company Intervening Event and the rationale for the Company Adverse Recommendation Change and (2) state expressly that, subject to clause (ii) below, the Company Board has determined to make an Company Adverse Recommendation Change and (B) prior to making such an Company Adverse Recommendation Change, used commercially reasonable efforts to engage in good faith with Parent (to the extent Parent wishes to engage) during such five (5) Business Day period to consider any adjustments proposed by Parent to the terms and conditions of this Agreement such that the failure of the Company Board to make an Company Adverse Recommendation Change in response to the Company Intervening Event in accordance with clause (ii) below would no longer reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable Law; and
(ii) following the end of such five (5) Business Day period, the Company Board shall have determined in good faith, after consultation with its outside legal counsel, that in light of such Company Intervening Event and taking into account any revised terms proposed by Parent, the failure to make a Company Adverse Recommendation Change would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable Law.
(f) The Company shall promptly (and in any event within twenty-four (24) hours) advise Parent orally and in writing of (i) any written or oral Company Acquisition Proposal, (ii) any request for non-public information relating to the Company or its Subsidiaries, other than requests for information not reasonably expected to be related to a Company Acquisition Proposal and (iii) any inquiry or request for discussion or negotiation regarding a Company Acquisition Proposal, including in each case the identity of the Person making any such Company Acquisition Proposal, inquiry or request and the material terms of such Company Acquisition Proposal, inquiry or request and thereafter shall keep Parent informed, on a current basis, of the status and terms of any such proposals or offers and the status of any such discussions or negotiations.
(g) Nothing set forth in this Agreement shall prevent the Company or the Company Board from (i) taking and disclosing to its shareholders a position contemplated by Rule 14e‑2(a), Rule 14d‑9 or Item 1012(a) of Regulation M-A promulgated under the Exchange Act (or any similar communication to its shareholders in connection with the making or amendment of a tender offer or exchange offer) or from (ii) making any required disclosure to the Company’s shareholders if, in the good faith judgment of the Company Board, after consultation with outside counsel, failure to disclose such information would reasonably be expected to violate its obligations under applicable Law; provided, however, that in the case of either clause (i) or clause (ii), no such communication or statement that would constitute a Company Adverse Recommendation Change shall be permitted, made or taken except in accordance with Section 5.4(d).
(h) Any breach of the restrictions contained in this Section 5.4 by any of the Company’s Subsidiaries, or any Representatives of the Company or any of its Subsidiaries, shall be deemed to be a breach of this Section 5.4 by the Company.
(i) As used in this Agreement:
(i)“ Company Acquisition Proposal” means any inquiry, proposal or offer from any Person or group of Persons other than Parent or one of its Subsidiaries for (A) a merger, reorganization, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving acquisition of the Company (or any Subsidiary or Subsidiaries of the Company whose business constitutes 20% or more of the net revenues, net income or assets of the Company and its Subsidiaries, taken as a whole) or (B) the acquisition in any manner, directly or indirectly, of over 20% of the Equity Interests, voting power or consolidated total assets of the Company and its Subsidiaries, in each case other than the Merger and the other transactions contemplated by this Agreement.
(ii)“ Company Intervening Event” means an Effect that arises following the date hereof that (A) (x) was not known to, or reasonably foreseeable by, the Company Board prior to the execution of this Agreement (or if known or reasonably foreseeable, the material consequences of which were not known or reasonably foreseeable), which Effect becomes known to, or reasonably foreseeable by, the Company Board prior to the Company Shareholders Meeting, and (y) is material to the Company and its Subsidiaries (taken as a whole), and (B) does not relate to (x) a Company Acquisition Proposal or a Company Superior Proposal or any inquiry or communications relating thereto, any matter relating thereto or consequences thereof, and (y) in each case in and of itself, any changes in the market price or trading volume of Company Shares or the fact that the Company meets, fails to meet or exceeds any internal or published projections, forecasts or estimates of its revenue, earnings or other financial performance or results of operations for any period (it being understood, however, that any underlying cause of any of the foregoing in this clause (y) may be a Company Intervening Event if not otherwise falling into the foregoing clauses (x) and (y) of this definition ).
(iii)“ Company Superior Proposal” means any bona fide written Company Acquisition Proposal (A) on terms which the Company Board determines in good faith, after consultation with the Company’s outside legal counsel and financial advisors, to be more favorable from a financial point of view (including taking into account payment by the Company of the Company Termination Fee) to the holders of Company Shares than the Merger and the other transactions contemplated by this Agreement (after giving effect to any revisions to the terms of the Agreement committed to in writing by Parent in response to such Company Acquisition Proposal pursuant to Section 5.4(d)), taking into account all the terms and conditions of such proposal, including the timing, likelihood of consummation, confidentiality, legal, financial, regulatory, financing and other aspects of such Company Acquisition Proposal, and this Agreement and (B) that the Company Board believes in good faith, after consultation with the Company’s outside legal counsel and financial advisors, is reasonably capable of being completed on the terms proposed, taking into account all financial, regulatory, legal and other aspects of such proposal; provided, that for purposes of the definition of “Company Superior Proposal,” the references to “20%” in the definition of Company Acquisition Proposal shall be deemed to be references to “50%.”
Section 5.5 Preparation of Form S-4 and Proxy Statement; Company Shareholders Meeting
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(a) As promptly as practicable after the date of this Agreement (and in any event within thirty (30) calendar days after the date hereof), (i) the Company and Parent shall prepare the Form S-4 and a proxy statement in preliminary form (as amended or supplemented from time to time, the “Proxy Statement”) to be sent to the shareholders of the Company relating to the special meeting of the Company’s shareholders (the “Company Shareholders Meeting” ) to be held to consider the adoption of this Agreement in accordance with the Company’s Organizational Documents, the TBCA and this Agreement, and (ii) Parent shall file with the SEC, the Form S-4, in which the Proxy Statement will be included as a prospectus, in connection with the registration under the Securities Act of the shares of Parent Common Stock subject to the Parent Stock Issuance. The parties shall consult each other in connection with setting a preliminary record date for the Company Shareholders Meeting and shall commence broker searches pursuant to Section 14a‑13 of the Exchange Act in connection therewith. Parent shall use its commercially reasonable efforts to have the Form S‑4 declared effective under the Securities Act as promptly as practicable after such filing and to keep the Form S‑4 effective as long as is necessary to consummate the Merger and the other transactions contemplated hereby. Parent shall also use its commercially reasonable efforts to take any action (other than qualifying to do business in any jurisdiction in which it is not now so qualified or filing a general consent to service of process) required to be taken under any applicable state securities or “blue sky” laws in connection with the Parent Stock Issuance and the Company shall furnish all information concerning the Company and the holders of Company Shares as may be reasonably requested in connection with any such action. The Company shall use commercially reasonable efforts to cause the Proxy Statement to be mailed to the Company’s shareholders as promptly as practicable after the Form S‑4 is declared effective under the Securities Act. No filing or mailing of, or amendment or supplement to, the Form S‑4 or the Proxy Statement, or any substantive correspondence (including all responses to SEC correspondence) will be made by Parent or the Company, as applicable, without (i) providing the other party a reasonable opportunity to review and comment thereon (which comments the receiving party will consider in good faith) and (ii) the other party’s prior approval (which shall not be unreasonably withheld). Parent or the Company, as applicable, will advise the other party promptly after it receives oral or written notice thereof, of the time when the Form S‑4 has become effective or any amendment or supplement thereto has been filed, the issuance of any stop order, the suspension of the qualification of the Parent Common Stock issuable in the Parent Stock Issuance for offering or sale in any jurisdiction or any oral or written request by the SEC or its staff for amendment of the Proxy Statement or the Form S‑4 or comments thereon and responses thereto or requests by the SEC or its staff for additional information, and will promptly provide the other with copies of any written communication from the SEC or its staff or any state securities commission and a reasonable opportunity to participate in the responses thereto. If at any time prior to the Effective Time the Company or Parent shall discover or become aware of any information relating to the Company or Parent, or any of their respective Affiliates, officers or directors that should be disclosed in an amendment or supplement to either of the Form S‑4 or the Proxy Statement, so that any of such documents would not contain any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not false or misleading, then such party that discovers or becomes aware of such information shall promptly notify the other parties hereto and an appropriate amendment or supplement describing such information shall promptly be filed with the SEC in accordance with this Section 5.5 and, to the extent required under applicable Law, disseminated to shareholders of the Company and Parent; provided that the delivery of such notice and the filing of any such amendment or supplement shall not affect or be deemed to modify any representation or warranty made by any party hereunder or otherwise affect the remedies available hereunder to any party.
(b) As promptly as practicable after the Form S‑4 has been declared effective or as the parties otherwise mutually determine to be appropriate, the Company shall cause the Company Shareholders Meeting to be held in accordance with applicable Law and the Company shall duly call, give notice of, convene and hold the Company Shareholders Meeting for the purpose of obtaining the Company Shareholder Approval and, if applicable, the advisory vote required by Rule 14a‑21(c) under the Exchange Act in connection therewith. The Company may postpone or adjourn the Company Shareholders Meeting solely (i) with the consent of Parent; (ii) if required by applicable Law or a request from the SEC, (iii) (A) due to the absence of a quorum necessary to conduct the business of the Company Shareholders Meeting or (B) if the Company has not received proxies representing a sufficient number of Company Shares for the Company Shareholder Approval, whether or not a quorum is present, to solicit additional proxies; or (iv) to the extent reasonably necessary to allow reasonable additional time for the filing and mailing of any supplemental or amended disclosure which the Company Board has determined in good faith after consultation with Parent and outside legal counsel is necessary under applicable Law and for such supplemental or amended disclosure to be disseminated and reviewed by the Company’s shareholders prior to the Company Shareholders Meeting; provided, without the prior written consent of Parent (not to be unreasonably withheld, in the cases of clauses (ii) and (iv)), (x) no single adjournment or postponement permitted hereunder (including by the immediately following sentence) shall be for more than five (5) Business Days, except as may be required by Law, (y) all such adjournments and postponements together shall not cause the date of the Company Stockholder Meeting to be more than twenty (20) Business Days after the date for which the Company Stockholder Meeting was originally scheduled or, in the case of clause (iii) above and the immediately following sentence, less than five (5) Business Days prior to the Termination Date. In addition to the foregoing, the Company shall, at the request of Parent, to the extent permitted by Law, postpone or adjourn the Company Shareholders Meeting to a date mutually agreed with Parent (subject to the limitations in the foregoing proviso, except as may be mutually agreed with Parent) for the absence of a quorum or if the Company has not received proxies representing a sufficient number of Company Shares for the Company Shareholder Approval; provided, that no such adjournment shall be required to be for a period exceeding ten (10) Business Days. Except in the case of a Company Adverse Recommendation Change specifically permitted by, and adopted pursuant to the procedures set forth in, Section 5.4, the Company, through the Company Board, shall (i) recommend to its shareholders that they adopt this Agreement and the transactions contemplated hereby and (ii) include such recommendation (including the Company Board Recommendation) in the Proxy Statement. Without limiting the generality of the foregoing, the Company agrees that, notwithstanding any Company Adverse Recommendation Change, unless this Agreement is terminated in accordance with its terms, (x) the Company shall use its commercially reasonable efforts to solicit proxies to obtain the Company Shareholder Approval and (y) the Company’s obligations pursuant to this Section 5.5(b) shall not be affected by the commencement, public proposal, public disclosure or communication to the Company or any other Person of any Company Acquisition Proposal or the occurrence of any Company Adverse Recommendation Change. The Company shall, on a daily basis during the ten (10) Business Days prior to the date of the Company Stockholder Meeting, advise Parent as to the aggregate number of Company Shares entitled to vote at the Company Stockholder Meeting for which proxies have been received by the Company with respect to the Company Shareholder Approval and the number of such proxies authorizing the holder thereof to vote in favor of the Company Shareholder Approval.
Section 5.6 Access to Information; Confidentiality
. Upon reasonable prior notice, each party shall, and shall cause each of its Subsidiaries to, afford to the other parties and their respective Representatives reasonable access during normal business hours, during the period prior to the Effective Time or the termination of this Agreement in accordance with its terms, to all their respective properties, assets, books, contracts, commitments, personnel and records and, during such period, each party shall, and shall cause each of its Subsidiaries to, furnish as promptly as reasonably practicable to the other parties all other information concerning its business, properties and personnel as the other parties may reasonably request for purposes of completing the Merger or for a bona fide business purpose (including Tax Returns filed and those in preparation and the work papers of its auditors); provided, however, that the foregoing shall not require any party to disclose any information (a) if providing such access would unreasonably disrupt such party’s operations, (b) that is a trade secret of a third party, competitively sensitive information, information concerning the valuation of the Company or any of its Subsidiaries, on the one hand, or Parent or any of its Subsidiaries, on the other hand, as applicable, or personal information that would expose the Company or Parent, as applicable, to the risk of liability (provided that in each such case the withholding party will inform the other party of the nature of the information being withheld, and use its commercially reasonable efforts to make alternative arrangements that would allow access to such information), (c) would violate the terms of a confidentiality agreement with a third party entered into prior to the date of this Agreement or entered into after the date of this Agreement in the ordinary course of business (provided, however, that the withholding party shall use its commercially reasonable efforts to obtain the required consent of such third party to such access or disclosure), (c) the disclosure of which would violate any Law applicable to such party or any of its Representatives (provided, however, that withholding party shall use its commercially reasonable efforts to make appropriate substitute arrangements to permit reasonable disclosure not in violation of any Law or duty), or (d) disclosure of which would jeopardize any attorney-client, attorney work product or other legal privilege (provided, however, that withholding party shall use its commercially reasonable efforts to allow for such access or disclosure to the maximum extent that does not result in a loss of any such attorney-client, attorney work product or other legal privilege, including by means of entry into a customary joint defense agreement that would alleviate the loss of such privilege); provided, further, that the foregoing shall not require the Company, Parent or any of their respective Subsidiaries to permit any environmental testing or sampling or subsurface investigations, including surface and subsurface soils and water, soil gas, air or building materials, on any of the properties owned, leased or operated by it or any of its respective Subsidiaries. All such information shall be held confidential in accordance with the terms of the Agreement Regarding Mutual Disclosure of Information between Parent and the Company, dated as of July 16, 2024 (the “Confidentiality Agreement”). No investigation pursuant to this Section 5.6 or information provided, made available or delivered to a party pursuant to this Agreement shall affect any of the representations, warranties, covenants, rights or remedies, or the conditions to the obligations of, the parties hereunder.
Section 5.7 Further Action; Efforts
. The parties shall use their commercially reasonable efforts to take or cause to be taken all appropriate action, and to do, or cause to be done, all things necessary to consummate and make effective the transactions contemplated hereby, including using their commercially reasonable efforts to obtain, or cause to be obtained, all waivers, permits, consents, approvals, authorizations, qualifications and orders of all Governmental Entities and parties to Contracts with the Company, Parent or any of their respective Subsidiaries that may be or become necessary for the performance of obligations pursuant to this Agreement and the consummation of the transactions contemplated hereby. The parties shall cooperate and assist one another in good faith (i) in connection with all actions to be taken pursuant to this Section 5.7, including the preparation and making of the filings referred to herein and, if requested, amending or furnishing additional information thereunder, and (ii) in seeking, as promptly as reasonably practicable, to obtain all such waivers, permits, consents, approvals, authorizations, qualifications and orders.
Section 5.8 Company 401(k) Plan
. Unless otherwise directed by Parent in a writing delivered to the Company following the date hereof and at least five (5) Business Days prior to the Closing Date, the Company shall take all necessary action (including the adoption of resolutions and plan amendments and the delivery of any required notices) to terminate, effective as of no later than the day before the Effective Time, the Brand House Collective 401(k) Plan (the “Company 401(k) Plan”). The Company shall provide Parent with a copy of the resolutions, plan amendments, notices and other documents prepared to effectuate the termination of the Company 401(k) Plan reasonably in advance and give Parent a reasonable opportunity to comment on such documents (which comments shall be considered in good faith), and prior to the Effective Time, the Company shall provide Parent with the final documentation evidencing that the Company 401(k) Plan has been terminated.
Section 5.9 Takeover Laws
. If any Takeover Law is or becomes applicable to this Agreement, the Merger or any of the other transactions contemplated hereby, each of the Company and the Company Board shall take all action necessary to ensure that the Merger and the other transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to eliminate or minimize the effect of such Takeover Law on this Agreement, the Merger and the other transactions contemplated hereby.
Section 5.10 Stock Exchange Listing
. Parent shall use its commercially reasonable efforts to cause the shares of Parent Common Stock to be issued in the Merger, and such other shares of Parent Common Stock to be reserved for issuance in connection with the Merger, to be approved for listing on the NYSE, subject to official notice of issuance, prior to the Effective Time.
Section 5.11 Stock Exchange Delisting
. To the extent requested by Parent, prior to the Closing Date, the Company shall cooperate with Parent and use its commercially reasonable efforts to take, or cause to be taken, all actions, and do or cause to be done all things, reasonably necessary, proper or advisable on its part under applicable Laws and rules and policies of Nasdaq to enable the delisting by the Surviving Corporation of the Company Shares from Nasdaq as promptly as practicable after the Effective Time and the deregistration of the Company Shares under the Exchange Act at the Effective Time.
Section 5.12 Indemnification, Exculpation and Insurance
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(a) Without limiting any additional rights that any employee may have under any agreement or Company Plan, from the Effective Time through the sixth (6th) anniversary of the date on which the Effective Time occurs, Parent shall, or shall cause the Surviving Corporation to, indemnify and hold harmless each present (as of the Effective Time) and former officer, director or employee of the Company and its Subsidiaries (the “Indemnified Parties”), against all claims, losses, liabilities, damages, judgments, inquiries, fines, amounts paid in settlement and reasonable fees, costs and expenses, including attorneys’ fees and disbursements incurred in connection with any pending or threatened Action, whether civil, criminal, administrative or investigative, arising out of, pertaining to or by reason of (i) the fact that the Indemnified Party is or was an officer, director, employee, fiduciary or agent of the Company or any of its Subsidiaries or, while a director, officer or employee of the Company or its Subsidiaries, is or was serving at the request of the Company or any of its Subsidiaries as a director, officer, employee or agent of another corporation or of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity or (ii) matters existing or occurring at or prior to the Effective Time (including this Agreement and the transactions and actions contemplated hereby), whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent permitted under applicable Law and the Company Charter and Company Bylaws as in effect on the date hereof or (iii) in connection with the enforcement of any Indemnified Party’s rights under this Section 5.12 by such Indemnified Party or his or her heirs or legal representatives. In the event of any such pending or threatened Action, including any such Action to enforce any Indemnified Party’s rights under this Section 5.12, (A) each Indemnified Party shall be entitled to advancement of expenses (including attorneys’ fees and expenses) incurred in connection with such Action from Parent and the Surviving Corporation to the fullest extent permitted under applicable Law and the Company Charter and Company Bylaws as of the date hereof; provided, that any Person to whom expenses are advanced provides an undertaking, if and only to the extent required by applicable law, the Company Charter or Company Bylaws, to repay such advances if it is ultimately determined that such Person is not entitled to indemnification under this Agreement or any Law, Contract or other source for which indemnification may be available, and (B) the Surviving Corporation shall cooperate in the defense of any such matter.
(b) Except as may be required by applicable Law, Parent and the Company agree that all rights to indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time and rights to advancement of expenses relating thereto now existing in favor of any Indemnified Party as provided in the Organizational Documents of the Company and its Subsidiaries or in any indemnification agreement in effect as of the date hereof between such Indemnified Party and the Company or any of its Subsidiaries (solely to the extent such agreement is set forth in Section 5.12(b) of the Company Disclosure Letter and a copy of which has been provided to Parent) shall survive the Merger and continue in full force and effect, and shall not be amended, repealed or otherwise modified in any manner that would adversely affect any right thereunder of any such Indemnified Party.
(c) At the Company’s option, the Company may purchase, prior to the Effective Time, a six (6)-year prepaid “tail policy” on terms and conditions (in both amount and scope) providing substantially equivalent benefits as the policies of directors’ and officers’ liability insurance and fiduciary liability insurance maintained by the Company and its Subsidiaries in effect as of the date hereof with respect to matters arising on or before the Effective Time, covering without limitation the transactions contemplated hereby; provided that the annual cost of such “tail policy” may not exceed the 300% of the last annual premium paid by the Company prior to the date hereof with respect to the Company’s existing directors’ and officers’ liability insurance and fiduciary liability insurance policies (the “Maximum Annual Premium”). If such tail prepaid policy has been obtained by the Company prior to the Effective Time, Parent shall cause such policy to be maintained in full force and effect, for its full term, and cause all obligations thereunder to be honored by the Surviving Corporation. If the Company has not purchased such tail policy prior to the Effective Time, for a period of six (6) years from the Effective Time, Parent shall either cause to be maintained in effect the current policies of directors’ and officers’ liability insurance and fiduciary liability insurance maintained by the Company and its Subsidiaries or cause to be provided substitute policies or purchase or cause the Surviving Corporation to purchase, a “tail policy,” in either case of at least the same coverage and amounts containing terms and conditions that are not less advantageous in the aggregate than such policy with respect to matters arising on or before the Effective Time; provided, that after the Effective Time, Parent shall not be required to pay with respect to such insurance policies in respect of any one (1) policy year annual premiums in excess of the Maximum Annual Premium in respect of the coverage required to be obtained pursuant hereto, but in such case shall purchase as much coverage as reasonably practicable for such amount; provided further, that if the Surviving Corporation purchases a “tail policy” and the coverage thereunder costs more than the Maximum Annual Premium, the Surviving Corporation shall purchase the maximum amount of coverage that can be obtained for the Maximum Annual Premium.
(d) Notwithstanding anything herein to the contrary, if any Action (whether arising before, at or after the Effective Time) is instituted against any Indemnified Party on or prior to the sixth (6th) anniversary of the Effective Time, the provisions of this Section 5.12 shall continue in effect until the final disposition of such Action.
(e) The indemnification, exculpation and rights to advancement provided for herein shall not be deemed exclusive of any other rights to which an Indemnified Party is entitled, whether pursuant to Law, Contract or otherwise. The provisions of this Section 5.12 shall survive the consummation of the Merger and, notwithstanding any other provision of this Agreement that may be to the contrary, expressly are intended to benefit, and shall be enforceable by, each of the Indemnified Parties and their respective heirs and legal representatives (and following the Effective Time may not be amended without their prior written consent).
(f) In the event that the Surviving Corporation or Parent or any of their respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or a majority of its properties and assets to any Person (by merger, consolidation, division, operation of law or otherwise), then, and in each such case, proper provision shall be made so that the successors and assigns of the Surviving Corporation or Parent, as the case may be, shall succeed to the obligations set forth in this Section 5.12.
Section 5.13 Rule 16b-3
. Prior to the Closing Date, the Company and Parent shall, as applicable, take such steps as may be reasonably necessary or advisable to cause (i) dispositions of Company equity securities (including derivative securities with respect to such equity securities) and warrants or (ii) acquisitions of Parent Common Stock pursuant to the transactions contemplated by this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act to be exempt under Rule 16b‑3 promulgated under the Exchange Act.
Section 5.14 Public Announcements
. The initial press release with respect to this Agreement and the transactions contemplated hereby shall be a joint release mutually agreed to by the Company and Parent. Thereafter, each of the Company and Parent agrees that no public release, statement, announcement, or other disclosure concerning the Merger and the other transactions contemplated hereby that is inconsistent with initial press release (or other release, statement, announcement or other disclosure made in accordance herewith) shall be issued by any party without (x) consulting with the other party prior to the issuance thereof and (y) providing the other party with the opportunity to review and comment upon such communication, except (i) as may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system, the rules or regulations of any applicable United States securities exchange, or any Governmental Entity to which the relevant party is subject (in which case the party making such disclosure shall use its commercially reasonable efforts to provide the other party with a meaningful opportunity to review and comment on such disclosure in advance, and shall give due consideration to all reasonable additions, deletions or changes suggested thereto by Parent or the Company, as applicable), or (ii) by the Company with respect to any Company Acquisition Proposal or Company Adverse Recommendation Change, in each case, in compliance with Section 5.4.
Section 5.15 Obligations of Merger Sub
. Parent shall take all action necessary to cause Merger Sub and the Surviving Corporation to perform their respective obligations under this Agreement.
Section 5.16 Notices of Certain Events
. Subject to applicable Law, the Company shall notify Parent and Merger Sub, and Parent and Merger Sub shall notify the Company, promptly of: (a) 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; (b) any notice or other communication from any Governmental Entity in connection with the transactions contemplated by this Agreement; and (c) any event, change, or effect between the date of this Agreement and the Effective Time which individually or in the aggregate causes or is reasonably likely to cause or constitute: (i) a material breach of any of its representations, warranties, or covenants contained herein, or (ii) the failure of any of the conditions set forth in Article VI of this Agreement to be satisfied; provided, that any failure to give notice in accordance with the foregoing shall not be deemed to constitute a violation of this Section 5.16 or the failure of any condition set forth in Article VI to be satisfied, or otherwise constitute a breach of this Agreement by the party failing to give such notice, in each case unless the underlying breach would independently result in a failure of the conditions set forth in Article VI to be satisfied; and provided, further, that the delivery of any notice pursuant to this Section 5.16 shall not cure any breach of, or noncompliance with, any other provision of this Agreement or limit the remedies available to the party receiving such notice.
Section 5.17 Stockholder Litigation
. The Company shall promptly advise Parent in writing after becoming aware of, and provide copies of all pleadings and material correspondence relating to, any Action commenced, or to the Company’s knowledge, threatened, against the Company or any of its directors by any stockholder of the Company (on their own behalf or on behalf of the Company) arising out of or relating to this Agreement or the transactions contemplated hereby (including the Merger and the other transactions contemplated hereby) and shall keep Parent reasonably informed on a prompt and current basis regarding any such Action. The Company shall: (a) give Parent the opportunity to participate in the defense and settlement or compromise of any such Action, (b) keep Parent reasonably apprised on a prompt and current basis of proposed strategy and other significant decisions with respect to any such Action, and provide Parent with the opportunity to consult with the Company regarding the defense of any such Action, which advice the Company shall consider in good faith, and (c) not settle or compromise any such Action without the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed, or conditioned).
Section 5.18 Certain Tax Matters
.
(a) Intended Tax Treatment.
(i) The parties hereto (A) intend that the Merger qualifies for the Intended Tax Treatment and (B) adopt this Agreement as a “plan of reorganization” for purposes of Treasury Regulations Section 1.368-2(g) and 1.368-3(a) to which the Parent, Merger Sub and the Company are parties under Section 368(b) of the Code.
(ii) Both prior to and following the Effective Time, Parent, Merger Sub and the Company shall use their respective commercially reasonable efforts, and shall cause their respective Subsidiaries to use their commercially reasonable efforts, to take or cause to be taken any action necessary for the Merger to qualify for the Intended Tax Treatment, including (A) reasonably refraining from any action that such party knows, or is reasonably expected to know, is reasonably likely to prevent the Intended Tax Treatment and (B) shall not take any Tax reporting position inconsistent with the Intended Tax Treatment for U.S. federal (and applicable state, local and non-U.S.) income Tax purposes, unless otherwise required by a change in applicable Tax Law after the date of this Agreement or a “determination” within the meaning of Section 1313(a)(1) of the Code (or any similar or corresponding provision of state, local, or non-U.S. Law).
(b) Transfer Taxes. Each of Parent and the Company shall pay fifty percent (50%) of all stock transfer, real estate transfer, documentary, stamp, recording and other similar Taxes incurred in connection with the consummation of the Merger. The parties hereto shall reasonably cooperate in the preparation, execution and filing of all Tax Returns, questionnaires or other documents with respect to such Taxes.
(c) FIRPTA Certificate. At the Closing, the Company shall deliver to Parent a certificate and notice prepared in accordance with the requirements of Treasury Regulations Section 1.897-2(h)(2) and 1.1445-2(c)(3) and dated as of the Closing Date, along with written authorization for Parent to deliver such certificate and notice to the IRS on behalf of the Company upon the Closing.
Section 5.19 Revolver Loan Credit Facility
; Financing Assistance.
(a) At the election of Parent (which election shall be made in writing delivered to the Company in accordance with Section 8.2 no later than fifteen (15) Business Days prior to the Effective Time), either (i) the Parent shall repay, on behalf of the Company and its Subsidiaries, on or before the Effective Time all amounts necessary to discharge in full all of the obligations of the Company and its Subsidiaries arising under that certain Third Amended and Restated Credit Agreement, dated as of March 31, 2023 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Facility”), by and among Kirkland’s Stores, Inc. and Kirkland’s Texas, LLC, as borrowers, the Company and Kirkland’s DC, Inc., as guarantors, and Bank of America, N.A., as administrative agent and collateral agent (the “Agent”) by wire transfer of immediately available funds to the accounts designated in the Payoff Letter (as defined below) and in connection therewith the Company shall have (A) delivered to Parent no less than three (3) Business Days prior to the Effective Time a customary fully executed and enforceable payoff letter (the “Payoff Letter”) with respect to the Credit Facility setting forth the aggregate amount required to repay in full all indebtedness evidenced thereunder, which Payoff Letter shall be in form and substance reasonably satisfactory to Parent and duly executed by the Agent, on behalf of the lenders party to the Credit Facility, and the Company and all of its Subsidiaries that are party to the Credit Facility and (B) arranged for the Agent to deliver all related UCC-3 terminations, possessory collateral, DACA terminations, landlord waiver terminations, possessory collateral and other documentation required to evidence the termination of all Liens securing the obligations arising under the Credit Facility to Parent as soon as practicable after the Effective Time (the transactions contemplated by this clause (i) in respect of such election, the “Debt Payoff”) or (ii) each of Parent and the Company shall use commercially reasonable efforts to, on or prior to the Effective Time, enter into a fully executed and enforceable amendment to the Credit Facility (the “Credit Facility Amendment”), in form and substance reasonably satisfactory to Parent and the Company duly executed by Agent and each of the requisite lenders under the Credit Facility (such lenders, the “Required Lenders”) which Credit Facility Amendment shall permit the consummation of the Merger and each of the other transactions contemplated by this Agreement. Notwithstanding the foregoing, all parties agree that it is Parent’s sole right, subject to reasonable consultation with the Company and its authorized representatives, to devise the strategy for requesting and communications in connection with any Payoff Letter and/or consent to the Credit Facility Amendment and the substance thereof, including material communications and negotiations with the Required Lenders. The Parties further acknowledge and agree, that notwithstanding anything herein to the contrary, Parent shall not be obligated by this Section 5.19 to accept any proposal, modification, amendment, revision, restatement or term in connection with the Credit Facility Amendment that is in any manner more adverse than the terms of the Credit Facility in the aggregate to the Company or Parent in Parent’s reasonable discretion or pay any commitment or other fee.
(b) Each of Parent and the Company shall use commercially reasonable efforts to provide, and, in the case of the Company, shall cause each Subsidiary of the Company to use commercially reasonable efforts to provide, all cooperation that is reasonably necessary and customary in connection with the arranging of the Debt Financing. In addition, prior to the Closing, the Company shall, and shall cause its Subsidiaries and their respective officers and employees to, and shall direct its Representatives to, upon reasonable advance notice, use commercially reasonable efforts to:
(i) as promptly as practicable (A) furnish Parent with the Required Financial Information and (B) inform Parent if the chief executive officer, chief financial officer or controller of the Company or any member of the audit committee of the Company Board shall have actual knowledge of any facts as a result of which a restatement of any financial statements (or portion thereof) included in or including the Required Financial Information is reasonably probable or required in order for such financial statements (or portion thereof) to comply with GAAP;
(ii) designate a member of senior management of the Company to execute customary authorization letters that authorize the distribution of information to prospective lenders, and identify any portion of such information that constitutes material, non-public information regarding the Company or its Subsidiaries or their securities, and cause members of senior management of the Company to participate, during normal business hours and upon reasonable advance notice, in a reasonable number of presentations, road shows, due diligence sessions, drafting sessions and sessions with ratings agencies in connection with the Debt Financing, which shall be telephonic or held by videoconference, including (A) direct contact between such senior management of the Company and Debt Financing Sources and other potential lenders and investors in the financing, (B) otherwise cooperating with the marketing efforts for any of the Debt Financing and (C) assisting Parent and the Debt Financing Sources with obtaining ratings as contemplated by the Debt Financing;
(iii) attend a reasonable number of accounting due diligence sessions and drafting sessions, which sessions shall be telephonic or held by videoconference;
(iv) assist in the preparation of, and execution and delivery of, definitive financing documents (including any guarantee, pledge and security documents, supplemental indentures, currency or interest rate hedging arrangement, other definitive financing documents or other certificates or documents) as may be reasonably requested by Parent or the Debt Financing Sources and the schedules and exhibits thereto, in each case subject to the occurrence of the Closing;
(v) (A) facilitate the pledging of collateral for the Debt Financing, including using commercially reasonable efforts to deliver any original stock certificates and related powers and any original promissory notes and related allonges and providing reasonable assistance with any documents that involve a third party, including landlord waivers, deposit account control agreements, blocked account arrangements, lock box arrangements or subordination agreements, if applicable and in each case subject to the occurrence of the Closing and (B) assist with obtaining release of the existing Liens and the delivery of any related possessory collateral; provided that such releases shall be subject to the occurrence of the Closing;
(vi) furnish Parent and the Debt Financing Sources with all documentation and other information required by Government Officials with respect to the Debt Financing under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended;
(vii) assist Parent with Parent’s preparation of pro forma financial information and pro forma financial statements to the extent reasonably requested by Parent or the Debt Financing Sources (provided, that the Company and its Subsidiaries shall not be responsible for the preparation of any pro forma financial statements or pro forma adjustments thereto and, for the avoidance of doubt, shall not be obligated to provide pro forma financial statements or any information regarding any post-Closing or pro forma cost savings, synergies, debt or equity capitalization, ownership or other post-Closing pro forma adjustments necessary or desired to be incorporated into such pro forma financial statements);
(viii) take all corporate actions, subject to the occurrence of the Closing, reasonably requested by Parent to permit the consummation of the Debt Financing;
(ix) cooperate in satisfying the conditions precedent set forth in any definitive document relating to the Debt Financing to the extent the satisfaction of such condition requires the cooperation of, or is within the control of, the Company and its Subsidiaries; and
(x) ensure that the Debt Financing Sources and their advisors and consultants shall have reasonable access to the Company and its Subsidiaries to evaluate the Company’s and its Subsidiaries’ current assets, inventory, cash management and accounting systems, policies and procedures relating thereto for the purposes of establishing collateral arrangements as of the Closing, and assist with other collateral audits, collateral appraisals and due diligence examinations.
(c) Notwithstanding anything to the contrary in this Section 5.19:
(i) nothing in this Section 5.19 will require any cooperation to the extent the same would (A) unreasonably interfere with the ongoing operations of the Company or its Subsidiaries, (B) cause any officer or employee of the Company or any of its Subsidiaries or any of its or their Representatives to incur any personal liability, (C) without limiting the scope of its obligations pursuant to Sections 5.19(b)(ii) and (vi), require the Company or any of its Subsidiaries to prepare pro forma financial statements or change any fiscal period, or (D) reasonably be expected to conflict with, violate, breach or otherwise contravene (I) any Law and/or (II) any Company Material Contract;
(ii) neither the Company nor any of its Subsidiaries shall be required to (A) pay any commitment or other fee or have any liability or obligation, including any indemnification obligation, under any agreement or any document related to any Debt Financing prior to the Closing Date, or (B) incur any cost or expense unless such cost or expense is promptly reimbursed by Parent to the Company or any designee of the Company (and in any event no later than the termination of this Agreement in accordance with Article VII); and
(iii) neither the Company nor any of its Subsidiaries or any of their respective Representatives shall be required to execute, deliver or enter into, or perform any agreement, document or instrument, including any definitive financing document (except any authorization letters delivered pursuant to Section 5.19(b)(ii) or any certificate, document, instrument or agreement provided in accordance with Section 5.19(b)(ii)), with respect to the Debt Financing or adopt resolutions approving the agreements, documents and/or instruments pursuant to which the Debt Financing is obtained or pledge any collateral with respect to the Debt Financing that is not contingent upon the Closing or that would be effective prior to the Closing.
(d) The Company hereby consents, on behalf of itself and its Subsidiaries, to the use of the Company’s and its Subsidiaries’ logos in connection with any Debt Financing; provided, that such logos are used in a manner that is not intended to or reasonably likely to harm or disparage the Company’s or its Subsidiaries’ reputation or goodwill.
(e) The Company shall, and shall cause its Subsidiaries, to periodically update any Required Financial Information provided to Parent as may be reasonably requested by any Debt Financing Source. For the avoidance of doubt, Parent may, to most effectively access the financing markets, request the cooperation of the Company and its Subsidiaries under this Section 5.19 at any time, and from time to time and on multiple occasions, between the date of this Agreement and the Closing.
(f) Parent shall keep the Company informed on a reasonably current basis of the status of its efforts to arrange the Debt Financing (including providing the Company with copies of all definitive agreements or arrangements related to the Financing Transaction).
Section 5.20 Existing Agreements
. The parties hereby acknowledge and agree that each of Parent and the Company are parties to, among other mutual agreements, that certain Amended and Restated Collaboration Agreement, dated as of May 7, 2025 (as amended, restated, supplemented or otherwise modified from time to time, the “Collaboration Agreement”), that certain Trademark License Agreement, entered into as of October 21, 2024 (as amended, restated, supplemented or otherwise modified from time to time, the “License Agreement”), and that certain Amended and Restated Term Loan Credit Agreement, dated as of May 7, 2025 (as amended, restated, supplemented or otherwise modified from time to time, the “Term Loan Credit Facility”; and collectively with the Collaboration Agreement and the License Agreement, the “Mutual Agreements”). From and after the date hereof, until earlier of the Effective Time and the valid termination of this Agreement in accordance with Section 7.1, each of Parent and the Company shall continue perform their respective obligations under the Mutual Agreements in all material respects and in a manner consistent with past practice.
Section 5.21 Director Resignations
. Prior to the Closing Date, the Company shall cause to be delivered to Parent resignations, in form and substance reasonably satisfactory to Parent, executed by each director of the Company in office as of immediately prior to the Effective Time, in each case, conditioned and effective upon the Effective Time.
Section 5.22 280G Analysis
. The Company shall deliver to Parent, within twenty (20) Business Days after the date of this Agreement, a preliminary analysis with respect to any and all potential “parachute payments” (as defined in Section 280G of the Code) to be made or provided to each “disqualified individual” (as defined in Section 280G of the Code) in connection with the transactions contemplated by this Agreement, together with supporting calculations in reasonable detail (collectively, the “280G Analysis”). The Company shall deliver an updated 280G Analysis no later than two (2) Business Days prior to the Closing Date.
Section 5.23 Parent Support Agreement
.
(a) As of the date hereof, Parent is the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act, which meaning will apply for all purposes of this Agreement whenever the terms “beneficial owner,” “beneficial ownership” or “own beneficially” are used) of the number of Company Shares set forth on Section 5.23 of the Parent Disclosure Letter (with respect to Parent, the “Owned Shares”; the Owned Shares and any additional Company Shares or other voting securities of the Company of which Parent acquires record or beneficial ownership after the date hereof, the “Covered Shares”).
(b) Prior to the Termination Date, Parent, in its capacity as a shareholder of the Company, irrevocably and unconditionally agrees that at any Company Shareholders Meeting Parent shall (i) when such meeting is held, appear at such meeting or otherwise cause the Covered Shares to be counted as present thereat for the purpose of establishing a quorum, if any and (ii) vote, or cause to be voted at such meeting, all Covered Shares owned as of the record date for such meeting of the shareholders in favor of the Merger, the approval of this Agreement and the other transactions contemplated hereby.
(c) Parent hereby represents, covenants and agrees that, except as contemplated by this Section 5.23, Parent (i) has not entered into, and shall not enter into at any time prior to the Termination Date, any voting agreement or voting trust with respect to any Covered Shares and (ii) has not granted any currently effective proxy or power of attorney with respect to any Covered Shares, and shall not grant at any time prior to the Termination Date any proxy or power of attorney with respect to any Covered Shares, in either case, which is inconsistent with Parent’s obligations under this Section 5.23, provided that nothing herein shall restrict or otherwise prohibit Parent from selling or otherwise divesting the Covered Shares in Parent’s sole discretion at any time following the record date for the Company Stockholder Meeting and prior to the Termination Date.
ARTICLE VI
&NBSP;&NBSP;&NBSP;&NBSP;CONDITIONS PRECEDENT
Section 6.1 Conditions to Each Party’s Obligation to Effect the Merger
. The obligation of each party to effect the Merger and the transactions contemplated hereby is subject to the satisfaction or waiver (where permissible pursuant to applicable law) at or prior to the Closing of the following conditions:
(a) Shareholder Approval. The Company Shareholder Approval shall have been obtained.
(b) No Injunctions or Legal Restraints; Illegality. No restraining order, injunction, or other judgment, order or decree issued by any court of competent jurisdiction shall be in effect, and no Law shall have been enacted, entered, promulgated or enforced by any Governmental Entity that, in any case, remains in effect and prevents, prohibits or makes illegal the consummation of the Merger or the other transactions contemplated by this Agreement (any such Law, order, injunction, judgment, order or decree, a “Relevant Legal Restraint”).
(c) Parent Stock Issuance. The Parent Common Stock to be issued in connection with the Merger shall have been approved for listing on the NYSE, subject to official notice of issuance.
(d) Effectiveness of Form S-4. The Form S-4 shall have become effective under the Securities Act and shall not be the subject of any stop order that remains in effect or any proceedings (commenced or threatened in writing by the SEC) seeking a stop order that have not been withdrawn.
(e) Credit Facility Amendment or Payoff. Subject to Parent’s election pursuant to Section 5.19, (i) the parties shall have entered into a validly executed Credit Facility Amendment, or (ii) the Debt Payoff shall have occurred.
Section 6.2 Conditions to the Obligations of the Company
. The obligation of the Company to effect the Merger is also subject to the satisfaction, or waiver by the Company, at or prior to the Closing of the following conditions:
(a) Representations and Warranties. (i) The representations and warranties of Parent and Merger Sub set forth in Section 4.1(a)-(b), Section 4.2(b)-(d) Section 4.3, Section 4.4(a)(i) and Section 4.11 shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as if made as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date), (ii) the representations and warranties of Parent and Merger Sub set forth in Section 4.2(a) shall be true and correct in all (other than de minimis inaccuracies) respects as of the date of this Agreement and as of the Closing Date as if made as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date), (iii) the representation and warranty of Parent and Merger Sub set forth in Section 4.8 shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as if made as of the Closing Date and (iv) the other representations and warranties of Parent and Merger Sub set forth in this Agreement shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as though made as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date), except in the case of this clause (iv) where the failure of such representations and warranties to be so true and correct that, individually or in the aggregate, has not constituted or resulted in, and would not reasonably be expected to constitute or result in, a Parent Material Adverse Effect; provided, that, for purposes of determining the accuracy of the representations and warranties referenced in this Section 6.2(a) in connection with the satisfaction of the condition herein, all materiality, “Parent Material Adverse Effect” and similar qualifiers set forth in such representations and warranties shall be disregarded and not given effect.
(b) Performance of Obligations of Parent and Merger Sub. Parent and Merger Sub shall have complied with performed in all material respects all obligations and covenants required to be performed or complied with by them under this Agreement at or prior to the Closing.
(c) No Parent Material Adverse Effect. Since the date of this Agreement, there shall not have been any Effect that, individually or in the aggregate, together with all other Effects, has constituted or resulted in, or would reasonably be expected to constitute or result in, a Parent Material Adverse Effect that is continuing.
(d) Officers’ Certificate. The Company shall have received a certificate signed by an executive officer of Parent certifying as to the matters set forth in Sections 6.2(a), 6.2(b) and 6.2(c).
Section 6.3 Conditions to the Obligations of Parent and Merger Sub
. The obligation of Parent and Merger Sub effect the Merger is also subject to the satisfaction, or waiver by Parent, at or prior to the Closing of the following conditions:
(a) Representations and Warranties. (i) The representations and warranties of the Company set forth in Section 3.1(a)-(c), Section 3.3, Section 3.4(a)(i), and Section 3.23 shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as if made as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date), (ii) the representations and warranties of the Company set forth in Section 3.2 shall be true and correct in all (other than de minimis inaccuracies) respects as of the date of this Agreement and as of the Closing Date as if made as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date), (iii) the representation and warranty of the Company set forth in Section 3.8(b) shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as if made as of the Closing Date, and (iv) the other representations and warranties of the Company set forth in this Agreement shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as though made as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date) except in the case of this clause (iv) where the failure of such representations and warranties to be so true and correct that, individually or in the aggregate, has not constituted or resulted in, and would not reasonably be expected to constitute or result in, a Company Material Adverse Effect; provided, that, or purposes of determining the accuracy of the representations and warranties referenced in this Section 6.3(a) in connection with the satisfaction of the condition herein, all materiality, “Company Material Adverse Effect” and similar qualifiers set forth in such representations and warranties shall be disregarded and not given effect.
(b) Performance of Obligations of the Company. The Company shall have complied with and performed in all material respects all obligations and covenants required to be performed or complied with by it under this Agreement at or prior to the Effective Time.
(c) No Company Material Adverse Effect. Since the date of this Agreement, there shall not have been any Effect that, individually or in the aggregate, together with all other Effects, has constituted or resulted in, or would reasonably be expected to constitute or result in, a Company Material Adverse Effect that is continuing.
(d) Officers’ Certificate. Parent shall have received a certificate signed by an executive officer of the Company certifying as to the matters set forth in Sections 6.3(a), 6.3(b) and 6.3(c).
Section 6.4 Frustration of Closing Conditions
. None of Parent, Merger Sub or the Company may rely on the failure of any condition set forth in this Article VI to be satisfied if such failure was principally caused by such party’s material breach of this Agreement, such party’s failure to act in good faith or such party’s failure to perform its obligations under Sections 5.19.
ARTICLE VII
&NBSP;&NBSP;&NBSP;&NBSP;TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination
. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the Company Shareholder Approval has been obtained except as noted below (with any termination by Parent also being an effective termination by Merger Sub):
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated on or before the date that is six (6) months after the date hereof (the “Termination Date”); provided, further, that if the satisfaction of the last to be satisfied or waived of the conditions set forth in Article IV (other than those conditions that by their nature are to be satisfied at the Closing, so long as such conditions are reasonably capable of being satisfied if the Closing were to occur on the Termination Date) occurs less than three (3) Business Days prior to the Termination Date, the Termination Date shall be deemed extended to the extent necessary to permit the Closing to occur; provided, further, that neither party shall have the right to terminate this Agreement pursuant to this Section 7.1(b)(i) if any action of such party or failure of such party to perform or comply with the covenants and agreements of such party set forth in this Agreement shall have primarily caused or resulted in the failure of the Merger to be consummated by the Termination Date and such action or failure to perform constitutes a material breach of this Agreement;
(ii) if any Relevant Legal Restraint permanently restraining, enjoining or otherwise prohibiting or making illegal any of the transactions contemplated by this Agreement shall have become final and nonappealable; provided, that the party seeking to terminate this Agreement pursuant to this Section 7.1(b)(ii) shall have used commercially reasonable efforts to contest, appeal and remove such judgment, order, injunction, rule, decree, ruling or other action in accordance with Section 5.7; and provided, further, that a party shall not be permitted to terminate this Agreement pursuant to this Section 7.1(b)(ii) if such party has failed in any material respect to comply with any of such party’s obligations under Section 5.7; or
(iii) if the Company Shareholder Approval shall not have been obtained at the Company Shareholders Meeting duly convened therefor (as such Company Shareholder Meeting may be adjourned or postponed from time to time in accordance with terms hereof) at which a vote on the adoption of this Agreement was taken;
(c) by the Company:
(i) if Parent or Merger Sub shall have breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement, which breach or failure to perform (A) would result in the failure of a condition set forth in Section 6.2(a) or (b) and (B) cannot be cured by the Termination Date; provided, that the Company shall have given Parent written notice, delivered at least 30 days prior to such termination (or promptly, if such notice is given within 30 days of the Termination Date), stating the Company’s intention to terminate this Agreement pursuant to this Section 7.1(c)(i) and the basis for such termination, and the Company may not terminate the Agreement pursuant to this Section 7.1(c)(i) unless such inaccuracy or breach shall remain uncured for the duration of such 30 day period; provided further, that the Company shall not have the right to terminate this Agreement pursuant to this Section 7.1(c)(i) if it is then in breach of any of its covenants or agreements set forth in this Agreement which breach would give rise to the failure of a condition set forth in Section 6.3(a) or (b); or
(ii) at any time prior to obtaining the Company Shareholder Approval if, (A) the Company Board authorizes the Company, to the extent permitted by and subject to the Company’s compliance with the terms of Section 5.4, to enter into a Company Alternative Acquisition Agreement with respect to a Company Superior Proposal, (B) concurrently with the termination of this Agreement, the Company, subject to complying with the terms of Section 5.4(d), enters into a Company Alternative Acquisition Agreement providing for a Company Superior Proposal, and (C) prior to or substantially concurrently with such termination, the Company pays to Parent in immediately available funds any fees required to be paid pursuant to Section 7.3(b);
(d) by Parent:
(i) if the Company shall have breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement, which breach or failure to perform (A) would result in the failure of a condition set forth in 6.3(a) or (b) and (B) cannot be cured by the Termination Date; provided, that Parent shall have given the Company written notice, delivered at least 30 days prior to such termination (or promptly, if such notice is given within 30 days of the Termination Date), stating Parent’s intention to terminate this Agreement pursuant to this Section 7.1(d)(i) and the basis for such termination, and Parent may not terminate the Agreement pursuant to this Section 7.1(d)(i) unless such inaccuracy or breach shall remain uncured for the duration of such 30 day period; provided further, that Parent shall not have the right to terminate this Agreement pursuant to this Section 7.1(d)(i) if Parent or Merger Sub is then in breach of any of its covenants or agreements set forth in this Agreement which breach would give rise to the failure of a condition set forth in Section 6.2(a) or (b); or
(ii) if prior to receipt of the Company Shareholder Approval, the Company Board shall have effected a Company Adverse Recommendation Change.
The party desiring to terminate this Agreement pursuant to this Section 7.1 (other than pursuant to Section 7.1(a)) shall give written notice of such termination to the other party, specifying the provision of this Agreement pursuant to which such termination is effected.
Section 7.2 Effect of Termination
. In the event of termination of the Agreement, this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of Parent, Merger Sub or the Company or any of its Representatives, except that the Confidentiality Agreement and the penultimate sentence of Section 5.6, this Section 7.2, Section 7.3 (Fees and Expenses), and Article VIII of this Agreement (and any related definitions contained in such Sections or provisions) shall survive the termination hereof; provided, that none of Parent, Merger Sub or the Company shall be released from any liabilities or damages arising out of fraud or any Willful Breach of this Agreement.
Section 7.3 Fees and Expenses
.
(a) Except as otherwise provided in this Section 7.3, all fees and expenses incurred in connection with this Agreement, the Merger and the other transactions contemplated hereby shall be paid by the party incurring such fees or expenses, whether or not the Merger are consummated.
(b) In the event that:
(i) (A) this Agreement is terminated (1) by Parent pursuant to Section 7.1(d)(i) (Company Breach) or (2) by the Company or Parent pursuant to Section 7.1(b)(i) (Termination Date) at a time when this Agreement could have been terminated pursuant to Section 7.1(b)(iii) or Section 7.1(d)(i), (B) at any time after the date of this Agreement and prior to the taking of a vote to adopt this Agreement at the Company Shareholders Meeting or any adjournment or postponement thereof (in the case of a termination pursuant to Section 7.1(b)(iii)) or at or prior to the time of the applicable breach by the Company (in the case of a termination pursuant to Section 7.1(d)(i)), a Company Acquisition Proposal shall have been communicated to the senior management of the Company or the Company Board or shall have been publicly disclosed or announced or publicly made known to the shareholders of the Company, or any Person shall have publicly announced an intention to make a Company Acquisition Proposal, and in each case such Company Acquisition Proposal or intention to make a Company Acquisition Proposal is not publicly withdrawn without qualification prior to the date that is five (5) Business Days prior to such vote to adopt this Agreement, and (C) within 12 months after such termination, the Company shall have consummated or entered into a definitive agreement with respect to any Company Acquisition Proposal (provided, that for purposes of this Section 7.3(b)(i), the references to “20% or more” in the definition of Company Acquisition Proposal shall be deemed to be references to “more than 75%”);
(ii) this Agreement is terminated by the Company pursuant to Section 7.1(c)(ii) (Superior Proposal); or
(iii) (A) this Agreement is terminated by Parent pursuant to Section 7.1(d)(ii) (Adverse Recommendation Change) or (B) by either Parent or the Company pursuant to Section 7.1(b)(i) (Termination Date) or Section 7.1(b)(iii) (Failure to Obtain Stockholder Approval), in each case, at a time when this Agreement could have been terminated pursuant to Section 7.1(d)(ii), then, in any such case, the Company shall pay Parent a termination fee of $1,025,300 (the “Company Termination Fee”), it being understood that in no event shall the Company be required to pay the Company Termination Fee on more than one occasion.
(c) If either Parent or the Company terminates this Agreement pursuant to Section 7.1(b)(iii) (Failure to Obtain Stockholder Approval), then the Company shall pay to Parent $341,800 (the “Parent Expense Reimbursement”) to the account or accounts designated by Parent no later than two (2) Business Days following such termination; provided, that the payment by the Company of the Parent Expense Reimbursement pursuant to this Section 7.3(c) shall not relieve the Company of any subsequent obligation to pay the Company Termination Fee (less any Parent Expense Reimbursement previously paid to Parent by the Company).
(d) Payment of the Company Termination Fee, if applicable, shall be made by wire transfer of immediately available funds to the account or accounts designated by Parent (i) on the earlier of (A) the consummation of any transaction contemplated by a Company Acquisition Proposal and (B) the entry into a definitive agreement with respect to a Company Acquisition Proposal payable pursuant to Section 7.3(b)(i), (ii) concurrently with, or prior to, termination, in the case of a Company Termination Fee payable pursuant to Section 7.3(b)(ii) or (iii) as promptly as reasonably practicable (and in any event within two (2) Business Days) after termination, in the case of a Company Termination Fee payable pursuant to Section 7.3(b)(iii). In the event that Parent or its designee shall receive full payment pursuant to Section 7.3(b), as applicable, the receipt of the Company Termination Fee shall be deemed to be liquidated damages for any and all losses or damages suffered or incurred by Parent, Merger Sub, any of their respective Affiliates or any other Person in connection with this Agreement (and the termination hereof), the transactions herein (and the abandonment thereof) or any matter forming the basis for such termination, and none of Parent or Merger Sub, any of their respective Affiliates or any other Person shall be entitled to bring or maintain any claim, action or proceeding against the Company or any of its Affiliates arising out of or in connection with this Agreement, any of the transactions contemplated herein or any matters forming the basis for such termination; provided, that nothing contained herein shall relieve any party from liability for any fraud.
(e) The Company and Parent each acknowledges that the agreements contained in this Section 7.3 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, the Company, Parent, and Merger Sub would not enter into this Agreement; accordingly, if the Company fails to timely pay any amounts due pursuant to this Section 7.3, and, in order to obtain such payment, Parent commences a suit that results in a judgment against the Company for the amounts set forth in this Section 7.3, the Company shall pay to Parent its costs and expenses (including reasonable attorneys’ fees and expenses) in connection with such suit, together with interest on the amounts due pursuant to this Section 7.3 from the date such payment was required to be made until the date of payment at the prime lending rate as published in The Wall Street Journal in effect on the date such payment was required to be made (which interest shall be payable in connection with any late payment, regardless of whether any such suit is brought). The parties acknowledge and agree that the right to receive the Company Termination Fee under this Agreement shall not limit or otherwise affect any party’s right to specific performance as provided in Section 8.10, but for the avoidance of doubt, under no circumstances shall Parent, directly or indirectly, be permitted or entitled to receive both a grant of specific performance that results in the Closing, on the one hand, and the payment of the Company Termination Fee, or any other damages, on the other hand; provided, that nothing contained herein shall relieve any party from liability for any fraud or Willful Breach.
Section 7.4 Amendment or Supplement
. This Agreement may be amended, modified or supplemented by the parties prior to the Effective Time by written agreement signed by each of the parties hereto, whether before or after the Company Shareholder Approval has been obtained; provided, that after the Company Shareholder Approval has been obtained, no amendment may be made that pursuant to applicable Law requires further approval or adoption by the shareholders of the Company without such further approval or adoption. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each of the parties in interest at the time of the amendment.
Section 7.5 Extension of Time; Waiver
. At any time prior to the Effective Time, the parties may (a) extend the time for the performance of any of the obligations or acts of the other parties, (b) waive any inaccuracies in the representations and warranties of the other parties set forth in this Agreement or any document delivered pursuant hereto or (c) unless prohibited by applicable Law, waive compliance with any of the agreements or conditions of the other parties contained herein; provided, that after the Company Shareholder Approval has been obtained, no waiver may be made that pursuant to applicable Law requires further approval or adoption by the shareholders of the Company without such further approval or adoption. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in a written instrument executed and delivered by a duly authorized officer on behalf of such party. No failure or delay of any party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power.
ARTICLE VIII
&NBSP;&NBSP;&NBSP;&NBSP;GENERAL PROVISIONS
Section 8.1 Nonsurvival of Representations and Warranties and Pre-Closing Covenants
. None of the representations, warranties, covenants, obligations or agreements of the parties in this Agreement or in any instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants, obligations or agreements shall survive the Effective Time, other than those covenants or agreements of the parties contained in this Article VIII and those otherwise contained herein which by their terms apply, or are to be performed in whole or in part, after the Effective Time.
Section 8.2 Notices
. All notices and other communications hereunder shall be in writing and shall be deemed duly given on (a) the date of delivery if delivered personally, or if by e‑mail, on the date of transmittal (provided that the transmission of the email is promptly confirmed by telephone or response email), (b) the second (2nd) Business Day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or (c) upon confirmed receipt if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:
(i) if to Parent or Merger Sub, to:
Bed Bath & Beyond, Inc.
433 W Ascension Way, Suite 300,
Murray, UT 84123
Attention: Adrianne Lee; Legal Department
E-mail: alee@beyond.com; legal@beyond.com
with a copy (which shall not constitute notice) to:
Latham & Watkins LLP
330 N Wabash Ave, Ste 2800
Chicago, Illinois 60611
Attention: Zachary Judd; Jack DeMeulenaere
Email: zachary.judd@lw.com; jack.demeulenaere@lw.com
(ii) if to the Company, to:
The Brand House Collective, Inc.
5310 Maryland Way
Brentwood, Tennessee 37027
Attention: Michael W. Sheridan,
SVP, General Counsel & Corporate Secretary
E-mail: Michael.Sheridan@brandhouseco.com
with a copy (which shall not constitute notice) to:
Bass, Berry & Sims PLC
21 Platform Way South, Suite 3500
Nashville, Tennessee 37203
Attention: Mitch Walker; John Fuller
Email: MWalker@bassberry.com; JFuller@bassberry.com
Section 8.3 Certain Definitions
. For purposes of this Agreement:
(a)“ Affiliate” of any 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 first Person;
(b)“ Business Day” means any day other than a Saturday, a Sunday or a day on which the SEC or banks in New York, New York are authorized or required by applicable Law to be closed;
(c)“ Company Closing Price” means the closing price per share of the Company’s common stock on the trading day immediately prior to the Closing Date, unless otherwise agreed by Parent and the Company in writing;
(d)“ Company Intellectual Property” means the Intellectual Property owned by or licensed to the Company and its Subsidiaries;
(e)“ Company Material Adverse Effect” means any state of facts, circumstance, condition, event, change, development, occurrence, result, effect, action or omission (each an “Effect”) that, individually or in the aggregate with any one or more other Effects, (x) that has had, would reasonably be expected to have or results in a material adverse effect on the business, properties, assets, liabilities, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole, or (y) does or would reasonably be expected to prevent, materially impair, materially impede or materially delay the consummation of the Merger and the other transactions contemplated hereby on a timely basis and in any event on or before the Termination Date; provided, that with respect to clause (x) only, no Effect to the extent arising out of or related to the following, shall, to such extent, be deemed (individually or in the aggregate) to constitute, or be taken into account in determining whether there has been or would or could be, a Company Material Adverse Effect: (1) general economic or business conditions or in the financial, debt, banking, capital, credit or securities markets, or in interest or exchange rates, in each case, generally affecting any of the industries in which the Company or its Subsidiaries operate, (2) any adoption, implementation, modification, repeal, interpretation, proposal of or other changes after the date hereof in any applicable Laws or any changes after the date hereof in GAAP or other applicable accounting regulations or principles, or in interpretations of any of the foregoing, (3) any change in the price or trading volume of the Company Shares, in and of itself (provided, that the facts or occurrences giving rise to or contributing to such change that are not otherwise excluded from the definition of “Company Material Adverse Effect” may be taken into account in determining whether there has been a Company Material Adverse Effect), (4) any failure by the Company to meet internal or published projections, forecasts or revenue or earnings predictions, in and of itself (provided, that the facts or occurrences giving rise to or contributing to such failure that are not otherwise excluded from the definition of “Company Material Adverse Effect” may be taken into account in determining whether there has been a Company Material Adverse Effect), (5) political, geopolitical, social, legislative, or regulatory conditions, including any outbreak, continuation or escalation of any military conflict, declared or undeclared war, armed hostilities, civil unrest, government shutdown, public demonstrations or acts of foreign or domestic terrorism or sabotage (including hacking, ransomware or any other electronic attack), trade wars or tariffs, securities, credit, financial, debt or other capital market conditions, or any escalation or worsening of any such conditions, (6) any natural or manmade disasters or calamities, weather conditions including hurricanes, floods, tornados, tsunamis, earthquakes and wild fires, cyber outages, or other force majeure events, or any escalation or worsening of such conditions, (7) any epidemic, pandemic or outbreak of disease, or any escalation or worsening of such conditions, (8) the announcement of this Agreement and the transactions contemplated hereby, including any termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with any customers, suppliers, distributors, partners or employees of the Company and its Subsidiaries due to the announcement and consummation of the transactions contemplated hereby or the identity of the parties to this Agreement, or the consummation of the transactions contemplated hereby (provided that this clause (8) shall be disregarded for purposes of the definition of Company Material Adverse Effect as used in (x) any representation or warranty in Section 3.4 to the extent that the purpose of such representation or warranty is to address the consequences resulting from the execution and delivery of this Agreement or the consummation of the Merger, (y) to the extent related to such representations and warranties identified in the preceding clause (x), the condition set forth in Section 6.3(a), and (z) any action or omission by the Company, any Subsidiary of the Company or their respective Representatives in order to comply with the Company’s obligations under Section 5.1), (9) any action taken by the Company, or which the Company causes to be taken by any of its Subsidiaries, in each case which is expressly required by this Agreement or which is otherwise expressly disclosed in the Company Disclosure Letter, (10) any actions taken (or omitted to be taken) at the express written request of Parent, (11)(A) any action taken by Parent, Merger Sub or any of their controlled Affiliates that results in a breach of or default by Parent or Merger Sub under this Agreement or (B) the omission of an action that was required to be taken by Parent, Merger Sub or any of their respective Affiliates pursuant to this Agreement; provided, that in the case of clauses (1), (2), (5), (6), and (7), to the extent the impact of such Effect is not disproportionately adverse to the Company and its Subsidiaries, taken as a whole, as compared to other companies operating in the industry in which the Company and its Subsidiaries conduct business (and provided further, that in such event, only the incremental disproportionate adverse impact shall be taken into account when determining whether there has been a “Company Material Adverse Effect”);
(f)“ Company Owned Intellectual Property” means the Intellectual Property owned by the Company and its Subsidiaries;
(g)“ Company Shareholder Approval” means (i) the adoption and approval of this Agreement by the affirmative vote of holders of at least a majority in combined voting power of the Company Shares issued and outstanding on the record date for the Company Stockholder Meeting and entitled to vote on the proposal to adopt this Agreement, and (ii) the affirmative vote of a majority of the votes cast by Disinterested Shareholders at the Company Stockholder Meeting;
(h)“ control” (including the terms “controlled,” “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise;
(i)“ Disinterested Shareholder” means shareholders of the Company other than Parent, any Affiliate of Parent, or any director, officer or employee of Parent or its Subsidiaries; provided that, for the avoidance of doubt, the Company shall not be deemed to be an Affiliate of Parent for purposes of this definition;
(j)“ Debt Financing” means either (i) the replacement debt financing in respect of the Credit Facility arranged and entered into by Parent in connection with the transactions contemplated by this agreement or (ii) the Credit Facility Amendment with the consent of the Required Lenders;
(k)“ Debt Financing Sources” means any financial institution or Person that provides any Debt Financing;
(l)“ Encumbrance” means any charge, claim, mortgage, hypothec, lien, option, pledge, imperfection of title, encroachment, lease, license, easement, servitude, right-of-way, covenant, condition, restriction, adverse claim, other encumbrance or lien, security interest or other restriction of any kind;
(m)“ Equity Interest” means any share, capital stock, partnership, member, membership, limited liability company or similar interest in any Person, and any option, warrant, right or security (including debt securities) convertible, exchangeable or exercisable thereto or therefor;
(n)“ Exchange Ratio” means 0.1993;
(o)“ Intellectual Property” means all intellectual property rights worldwide, including (i) trademarks, service marks, trade names, business marks, brand names, certification marks, trade dress, logos, corporate names, trade styles, and other indications of origin, and the goodwill associated with the foregoing (“Trademarks”), (ii) domain names, (iii) patents and patent applications (including any national or multinational statutory invention registrations, utility models, and certificates of invention) and all substitutions, divisionals, continuations, continuations-in-part, reissues, extensions, and reexaminations thereof, (iv) copyrights and other intellectual property rights in literary, pictorial and graphic works, software, and other works of authorship, (v) trade secrets and other intellectual rights in confidential or proprietary information, including know-how, data, and databases, and (vii) registrations and applications for the registration or issuance of any of the foregoing;
(p)“ knowledge of Parent” means the actual knowledge, after reasonable inquiry, of the individuals listed on Section 8.3(p) of the Parent Disclosure Letter;
(q)“ knowledge of the Company” means the actual knowledge, after reasonable inquiry, of the individuals listed on Section 8.3(q) of the Company Disclosure Letter;
(r)“ Organizational Documents” shall mean, with respect to any Person that is not a natural person: (a) if such Person is a corporation, such Person’s certificate or articles of incorporation, by-laws and similar organizational documents, as amended; (b) if such Person is a limited liability company, such Person’s certificate or articles of formation and operating agreement, as amended; and (c) if such Person is a limited partnership, such Person’s certificate or articles of formation and limited partnership agreement, as amended;
(s)“ Parent Closing Price” means the closing price per share of Parent Common Stock on the trading day immediately prior to the Closing Date, unless otherwise agreed by Parent and the Company in writing;
(t)“ Parent Material Adverse Effect” means any Effect that, individually or in the aggregate with any one or more other Effects, (x) results in a material adverse effect on the business, condition (financial or otherwise) or results of operations of Parent and its Subsidiaries, taken as a whole or (y) prevents, materially impairs, materially impedes or materially delays the consummation of the Merger and the other transactions contemplated hereby on a timely basis and in any event on or before the Termination Date; provided, that with respect to clause (x) only, no Effect to the extent arising out of the following, shall, to such extent, be deemed to constitute, or be taken into account in determining whether there has been or would or could be, a Parent Material Adverse Effect: (1) general economic or business conditions or in the financial, debt, banking, capital, credit or securities markets, or in interest or exchange rates, in each case, generally affecting any of the industries in which Parent or its Subsidiaries operate, (2) any adoption, implementation, modification, repeal, interpretation, proposal of or other changes after the date hereof in any applicable Laws or any changes after the date hereof in applicable accounting regulations or principles, or in interpretations of any of the foregoing, (3) any change in the price or trading volume of Parent’s stock, in and of itself (provided, that the facts or occurrences giving rise to or contributing to such change that are not otherwise excluded from the definition of “Parent Material Adverse Effect” may be taken into account in determining whether there has been a Parent Material Adverse Effect), (4) any failure by Parent to meet internal or published projections, forecasts or revenue or earnings predictions, in and of itself (provided, that the facts or occurrences giving rise to or contributing to such failure that are not otherwise excluded from the definition of “Parent Material Adverse Effect” may be taken into account in determining whether there has been a Parent Material Adverse Effect), (5) political, geopolitical, social or regulatory conditions, including any outbreak, continuation or escalation of any military conflict, declared or undeclared war, armed hostilities, civil unrest, public demonstrations or acts of foreign or domestic terrorism or sabotage (including hacking, ransomware or any other electronic attack), or any escalation or worsening of any such conditions, (6) any natural or manmade disasters or calamities, weather conditions including hurricanes, floods, tornados, tsunamis, earthquakes and wild fires, cyber outages, or other force majeure events, or any escalation or worsening of such conditions, (7) any epidemic, pandemic or outbreak of disease, or any escalation or worsening of such conditions, (8) the announcement of this Agreement and the transactions contemplated hereby, including any termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with any customers, suppliers, distributors, partners or employees of Parent and its Subsidiaries due to the announcement and consummation of the transactions contemplated hereby or the identity of the parties to this Agreement, or the consummation of the transactions contemplated hereby (provided that this clause (8) shall be disregarded for purposes of the definition of Parent Material Adverse Effect as used in (y) any representation or warranty in Section 4.4 to the extent that the purpose of such representation or warranty is to address the consequences resulting from the execution and delivery of this Agreement or the consummation of the Merger, and (z) to the extent related to such representations and warranties identified in the preceding clause (y), the condition set forth in Section 6.2(a)), (9) any action taken by Parent, or which Parent causes to be taken by any of its Subsidiaries, in each case which is expressly required by this Agreement, (10) any actions taken (or omitted to be taken) at the express written request of the Company, (11)(A) any action taken by the Company, its Subsidiaries or any of their controlled Affiliates that results in a breach of or default by the Company or its Subsidiaries under this Agreement or (B) the omission of an action that was required to be by the Company, its Subsidiaries or any of their controlled Affiliates pursuant to this Agreement; provided, that in the case of clauses (1), (2), (5), (6), and (7), to the extent the impact of such Effect is not disproportionately adverse to Parent and its Subsidiaries, taken as a whole, as compared to other companies operating in the industry in which Parent and its Subsidiaries conduct business (and provided further, that in such event, only the incremental disproportionate adverse impact shall be taken into account when determining whether there has been a “Parent Material Adverse Effect”);
(u)“ Permitted Encumbrance” means (i) liens for current Taxes not yet due or payable or the validity or amount of which is being contested in good faith by appropriate proceedings and for which appropriate reserves have been established in accordance with GAAP, (ii) mechanics’, materialmen’s, carriers’, workers’, repairers’ and other similar liens arising or incurred in the ordinary course of business for amounts that are not yet delinquent, or the validity or amount of which is being contested in good faith by appropriate proceedings and for which appropriate reserves have been established in accordance with GAAP, (iii) zoning, entitlement, building, conservation restriction and other land use and environmental regulations promulgated by Governmental Entities; (iv) all exceptions, restrictions, covenants, conditions, encroachments, easements, imperfections of title, charges, rights-of-way, existing utility access or other easements or other matter matters of record affecting the Company Leased Real Property that do not or would not materially interfere with the present use, occupancy or value of such Company Real Property; (v) non-exclusive licenses of Intellectual Property entered into in the ordinary course of business; (vi) other Encumbrances that do not or would not materially interfere with the present use, occupancy or value of such asset of the Company and its Subsidiaries; (vii) any matter that would be disclosed by an accurate survey or physical inspection of the Company Leased Real Property or any part thereof that does not or would not materially interfere with the present use, occupancy or value of such Company Real Property; (viii) with respect to the Company Leased Real Property, Encumbrances which encumber only the fee interest in such property; and (ix) any Encumbrance pursuant to the Credit Facility in existence as of the date hereof;
(v)“ Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including any Governmental Entity;
(w)“ Personal Information” means information in any form that (i) is by itself, or in combination with other information, capable, directly or indirectly, of being associated with, related to or linked to, or used to identify, describe, contact or locate, a natural Person; or (ii) is considered “personally identifiable information,” “personal information,” “personal data,” or any similar term by any applicable Laws and/or Privacy Requirements;
(x)“ Privacy Laws” means, in each case, to the extent applicable to the Company or any of its Subsidiaries, all Laws, guidance, guidelines and standards relating to privacy, data security, the Processing of Personal Information, data breach notification, website and mobile application privacy policies and practices regarding Personal Information, consumer protection, the Processing and security of payment card information (including the Payment Card Industry Data Security Standard and other applicable card association rules), restrictions on access to Personal Information or other protected information, wiretapping, the interception of electronic communications, the tracking or monitoring of online activity, data- or web-scraping, advertising or marketing, and email, text message, or telephone communications;
(y)“ Process”, “Processed”, or “Processing” means any operation or set of operations which is performed on information, including Personal Information, such as the use, collection, processing, storage, recording, organization, adaption, alteration, transfer, retrieval, consultation, disclosure, dissemination, combination or disposal of such information, and/or is considered “processing” by any applicable Privacy Requirements;
(z)“ Prohibited Person” means any (x) Person who is identified on the U.S. Treasury Department’s Office of Foreign Assets Control’s (“OFAC”) List of Specially Designated Nationals and Blocked Persons or any other applicable list of sanctioned persons administered by OFAC, (y) any legal entity that is 50%-or-more owned by one or more Persons identified in the foregoing clause or (z) the government of any country or region that itself is the subject or target of a comprehensive embargo under export controls (currently, Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine, and the so-called Donetsk People’s Republic and Luhansk People’s Republic regions of Ukraine);
(aa)“ Required Financial Information” means (i) all financial statements, financial data, audit reports and other information regarding the Company and its Subsidiaries of the type and form that is customarily provided in debt financings and (ii) such other pertinent and customary information regarding the Company and its Subsidiaries as may be reasonably requested by Parent (or any Debt Financing Sources);
(bb)“ Security Incident” means any (i) accidental, unlawful or unauthorized access, use, loss, exfiltration, disclosure, alteration, destruction, encryption, compromise, or other Processing of Personal Information and/or confidential information; (ii) accidental, unlawful or unauthorized occurrence or series of related occurrences on or conducted through the Company’s IT Systems that jeopardizes or impacts the confidentiality, integrity, or availability of the Company’s IT Systems or any Personal Information or confidential information stored or otherwise Processed therein; or (iii) occurrence that constitutes a “data breach,” “security breach,” “personal data breach,” “security incident,” “cybersecurity incident,” or any similar term under any applicable Law;
(cc)“ Subsidiary” means, with respect to any Person, any other Person of which stock or other equity interests having ordinary voting power to elect more than 50% of the board of directors or other governing body are owned, directly or indirectly, by such first Person (and notwithstanding anything to the contrary herein, the Company makes no representation, warranty, covenant or agreement in this Agreement with respect to any third party equity holder of any joint venture or any securities held by such Person); and
(dd)“ Willful Breach” means willful and intentional breach of this Agreement.
Section 8.4 Interpretation
. When a reference is made in this Agreement to a Section, Article, Exhibit or Schedule such reference shall be to a Section, Article, Exhibit or Schedule of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement or in any Exhibit or Schedule are for convenience of reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein shall have the meaning as defined in this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth herein. The word “including” and words of similar import when used in this Agreement will mean “including, without limitation,” unless otherwise specified. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to the Agreement as a whole and not to any particular provision in this Agreement. The term “or” is not exclusive. The word “will” shall be construed to have the same meaning and effect as the word “shall.” The phrase “ordinary course of business” means an action taken, or omitted to be taken, in the ordinary course of business, consistent with past practice. References to days mean calendar days unless otherwise specified. If the last day of a period by which an act is to be done under this Agreement is a non-Business Day, the period in question shall end on the next succeeding Business Day. Any document or item will be deemed “delivered”, “provided” or “made available” within the meaning of this Agreement if such document or item (a) is included in the electronic data room to which the receiving party has access and is available to such party, or (b) actually delivered or provided to the receiving party or its representatives, in each case, at least two (2) days prior to the date hereof or the Closing, as applicable.
Section 8.5 Entire Agreement
. This Agreement (including the Exhibits hereto), the Company Disclosure Letter, the Parent Disclosure Letter and the Confidentiality Agreement constitute the entire agreement, and supersede all prior written agreements, arrangements, communications and understandings and all prior and contemporaneous oral agreements, arrangements, communications and understandings among the parties with respect to the subject matter hereof and thereof.
Section 8.6 Parties in Interest
. This Agreement is not intended to, and shall not, confer upon any other Person other than the parties and their respective successors and permitted assigns any rights or remedies hereunder, except (a) with respect to Section 5.12 which shall inure to the benefit of the Persons benefiting therefrom who are intended to be third party beneficiaries thereof and (b) if the Effective Time occurs, the right of the Company shareholders to receive the Merger Consideration, any dividends or other distributions payable pursuant to Section 2.2(i) and cash in lieu of any fractional shares payable pursuant to (a), in accordance with the terms and conditions of this Agreement. The representations and warranties in this Agreement are the product of negotiations among the parties hereto. In some instances, the representations and warranties in this Agreement may represent an allocation among the parties hereto of risks associated with particular matters regardless of the knowledge of any of the parties hereto. Consequently, Persons other than the parties hereto may not rely upon the representations and warranties in this Agreement or the characterization of actual facts or circumstances as of the date of this Agreement or as of any other date.
Section 8.7 Governing Law
. This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Delaware.
Section 8.8 Submission to Jurisdiction
. Each of the parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement brought by any party or its Affiliates against any other party or its Affiliates shall be brought and determined in the Court of Chancery of the State of Delaware; provided, that if jurisdiction is not then available in the Court of Chancery of the State of Delaware, then any such legal action or proceeding may be brought in any federal court located in the State of Delaware or any other Delaware state court. Each of the parties hereby irrevocably submits to the jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby, including the Merger. Each of the parties agrees not to commence any action, suit or proceeding relating thereto except in the courts described above in Delaware, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in Delaware as described herein. Each of the parties further agrees that notice as provided herein shall constitute sufficient service of process and the parties further waive any argument that such service is insufficient. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, including the Merger, (a) any claim that it is not personally subject to the jurisdiction of the courts in Delaware as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
Section 8.9 Assignment; Successors
. Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of law or otherwise, by any party without the prior written consent of the other parties, and any such assignment without such prior written consent shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.
Section 8.10 Specific Performance
. The parties acknowledge and agree that irreparable damage would occur and that the parties would not have any adequate remedy at law (i) for any actual or threatened breach of the provisions of this Agreement or (ii) in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms. Accordingly, each of the Company (on behalf of itself and on behalf of the holders of Company Shares as third party beneficiaries under Section 8.6), Parent and Merger Sub agrees that each such party shall be entitled to specific performance of the terms hereof, including an injunction or injunctions to prevent breaches or threatened breaches of this Agreement and to enforce specifically the performance of the terms and provisions of this Agreement, this being in addition to any other remedy to which such party is entitled at law or in equity, and that such relief may be granted without the requirement that the party seeking such relief offer proof of actual damages. Each of the parties hereby further irrevocably waives (a) any defense in any action for specific performance that a remedy at law would be adequate (and agrees that it shall not oppose the granting of such relief by reason of there being an adequate remedy at law) and (b) any requirement under any Law to post security as a prerequisite to obtaining equitable relief. The Company’s or Parent’s pursuit of specific performance at any time will not be deemed an election of remedies or waiver of the right to pursue any other right or remedy to which such party may be entitled, including the right to pursue remedies for liabilities or damages incurred or suffered by the other party in the case of a Willful Breach.
Section 8.11 Currency
. All references to “dollars” or “$” or “US$” in this Agreement refer to United States dollars, which is the currency used for all purposes in this Agreement.
Section 8.12 Severability
. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein.
Section 8.13 Waiver of Jury Trial
. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 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 8.13.
Section 8.14 Counterparts
. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.
Section 8.15 Facsimile or .pdf Signature
. This Agreement may be executed by facsimile, electronic mail (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com) or .pdf signature, and any signature so delivered shall be deemed to have been duly and validly delivered and be valid and effective, and constitute an original, for all purposes.
Section 8.16 No Presumption Against Drafting Party
. Each of Parent, Merger Sub and the Company acknowledges that each party to this Agreement has been represented by counsel in connection with this Agreement and the transactions contemplated by this Agreement. Accordingly, any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the drafting party has no application and is expressly waived.
Section 8.17 Non-Recourse
. Each party hereto agrees, on behalf of itself and its former, current and future holders of any equity, controlling persons, directors, officers, employees, agents, attorneys, controlled Affiliates, members, managers, general or limited partners, stockholders and assignees of it and its controlled Affiliates, that all Action, claims, obligations, liabilities, or causes of action (whether in contract or in tort, in law or in equity or otherwise, or granted by statute or otherwise, whether by or through attempted piercing of the corporate, limited partnership, limited liability company or other entity veil or any other theory or doctrine, including alter ego or otherwise) that may be based upon, in respect of, arise under, out or by reason of, be connected with, or relate in any manner to: (a) this Agreement or any other agreement referenced herein or contemplated hereby or the transactions contemplated hereunder or thereunder, (b) the negotiation, execution or performance of this Agreement or any other agreement referenced herein or contemplated hereby (including any representation or warranty made in, in connection with, or as an inducement to, this Agreement or such other agreement), and (c) any breach or violation of this Agreement or any other agreement referenced herein or contemplated hereby, in each case, may be made only against (and are those solely of) the Persons that are expressly identified as parties in the preamble to this Agreement (or any other agreement referenced herein or contemplated hereby, as applicable) and in accordance with, and subject to the terms of, this Agreement (or any other agreement referenced herein or contemplated hereby, in each case as applicable).
[The remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above by their respective duly authorized signatories.
THE BRAND HOUSE COLLECTIVE, INC.
By: /s/ Amy Sullivan
Name: Amy Sullivan
Title: Chief Executive Officer
BED BATH & BEYOND, INC.
By: /s/ Marcus Lemonis
Name: Marcus Lemonis
Title: Executive Chairman
KNIGHT MERGER SUB II, INC.
By: /s/ Adrianne Lee
Name: Adrianne Lee
Title: President & Treasurer
Exhibit A
Form of Certificate of Merger
CERTIFICATE OF MERGER
OF
KNIGHT MERGER SUB II, INC.
(a Delaware corporation)
WITH AND INTO
THE BRAND HOUSE COLLECTIVE, INC.
(a Tennessee corporation)
* * * * * * * * * *
In accordance with the provisions of §252 of the
General Corporation Law of the
State of Delaware
* * * * * * * * * *
The undersigned corporation, The Brand House Collective, Inc., a Tennessee corporation (the "Corporation"), does hereby certify the following information relating to the merger (the "Merger") of Knight Merger Sub II, Inc., a Delaware corporation ("Merger Sub"), with and into the Corporation:
FIRST: The name and state of incorporation of each constituent corporation of the Merger are as follows:
| NAME | STATE OF INCORPORATION |
|---|---|
| Knight Merger Sub II, Inc. | Delaware |
| The Brand House Collective, Inc. | Tennessee |
SECOND: The Agreement and Plan of Merger (the "Merger Agreement") setting forth the terms and conditions of the Merger has been approved, adopted, certified, executed and acknowledged by each of the Corporation and Merger Sub, in accordance with the requirements of §252 of the General Corporation Law of the State of Delaware.
THIRD: The Corporation shall be the surviving corporation of the Merger and the name of the surviving corporation of the Merger is The Brand House Collective, Inc., a Tennessee corporation (the "Surviving Corporation").
FOURTH: The Articles of Incorporation of the Corporation as in effect at the effective time of the Merger shall be the Articles of Incorporation of the Surviving Corporation.
FIFTH: An executed copy of the Merger Agreement is on file at the principal place of business of the Surviving Corporation, [ ? ], and a copy of the Merger Agreement will be furnished by the Surviving Corporation, upon request and without cost, to any stockholder of any constituent corporation.
SIXTH: The Surviving Corporation agrees that it may be served with process in the State of Delaware in any proceeding for enforcement of any obligation of the Surviving Corporation arising from this Merger, including any suit or other proceeding to enforce the rights of any stockholders as determined in appraisal proceedings pursuant to the provisions of §252 of the General Corporation Law of the State of Delaware, and irrevocably appoints the Secretary of State of Delaware as its agent to accept services of process in any such suit or proceeding. The Secretary of State shall mail any such process to the Surviving Corporation at [ ? ].
SEVENTH: The Merger shall become effective on [ ? ].
* * * * *IN WITNESS WHEREOF, the surviving corporation has caused this certificate to be signed by an authorized officer this ___ day of [ ? ], [ ? ].
THE BRAND HOUSE COLLECTIVE, INC.,
a Tennessee corporation
By:
Name: [ ? ]
Title: [ ? ]
Exhibit B
Form of Articles of Merger
ARTICLES OF MERGER
OF
KNIGHT MERGER SUB II, INC.
WITH AND INTO
THE BRAND HOUSE COLLECTIVE, INC.
Pursuant to the provisions of Section 48-21-107 of the Tennessee Business Corporation Act (the “TBCA”), the undersigned corporations hereby submit these Articles of Merger and certify as follows:
| 1. | Parties. The parties to the merger are Knight Merger Sub II, Inc., a Delaware corporation (the “Merging Corporation”) and The Brand House Collective, Inc., a Tennessee corporation (the “Surviving Corporation”). The Surviving Corporation will be the surviving corporation in the merger. |
|---|---|
| 2. | Effective Date. The merger shall be effective on the date these Articles of Merger are filed with the Tennessee Secretary of State. |
| --- | --- |
| 3. | Amended and Restated Charter of the Surviving Corporation. The charter of the Surviving Corporation is hereby amended and restated in its entirety to read as set forth in Exhibit A attached hereto and, as so amended and restated, shall be the charter of the Surviving Corporation until it is amended or restated in the manner provided by the TBCA. |
| --- | --- |
| 4. | Approval of Plan of Merger. Approval of the plan of merger (the “Plan”) by the sole stockholder of the Merging Corporation and the shareholders of the Surviving Corporation is required under the TBCA. The Plan was duly approved by the sole stockholder of the Merging Corporation on November [23], 2025, and by the affirmative vote of a majority of all votes entitled to be cast on the Plan by the shareholders of the Surviving Corporation on [•], 2026. |
| --- | --- |
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned corporations have caused these Articles of Merger to be executed by their respective duly authorized officers as of this ____ day of _______, 2026.
SURVIVING CORPORATION:
THE BRAND HOUSE COLLECTIVE, INC.
| By: | |
|---|---|
| Name: | [•] |
| Title: | [•] |
MERGING CORPORATION:
KNIGHT MERGER SUB II, INC.
| By: | |
|---|---|
| Name: | [•] |
| Title: | [•] |
EXHIBIT A
AMENDED AND RESTATED CHARTER OF THE SURVIVING CORPORATION
AMENDED AND RESTATED CHARTER
OF
THE BRAND HOUSE COLLECTIVE, INC.
ARTICLE I
The name of the corporation is The Brand House Collective, Inc. (the “Corporation”).
ARTICLE II
The name and complete address of the Corporation’s initial registered agent and office located in the State of Tennessee is:
[•]
ARTICLE III
The complete address of the Corporation’s principal office is:
5310 Maryland Way
Brentwood, Tennessee 37027
ARTICLE IV
The Corporation is for profit.
ARTICLE V
The duration of the Corporation is perpetual.
ARTICLE VI
The Corporation is organized to do any and all things and to exercise any and all powers, rights and privileges that a corporation may now or hereafter be organized to do or exercise under the Tennessee Business Corporation Act (the “TBCA”), as amended from time to time.
ARTICLE VII
The Corporation is authorized to issue a total of 100 shares of common stock (the “Common Stock”). All shares of Common Stock shall be one and the same class and when issued shall have equal rights of participation in dividends and assets of the Corporation and shall be fully paid and nonassessable. Each outstanding share of Common Stock shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders. There shall be no cumulative voting of the Common Stock.
ARTICLE VIII
No shareholder of the Corporation shall have, solely by reason of being a shareholder, any preemptive or preferential right or subscription right to any stock of the Corporation or to any obligations convertible into stock of the Corporation, or to any warrant or option for the purchase thereof. However, such rights may be provided by written agreement with the Corporation.
ARTICLE IX
Any action required or permitted to be taken by the shareholders of the Corporation may be effected at a duly called annual or special meeting of the shareholders of the Corporation or by a written resolution in lieu of a meeting signed by shareholders representing the number of affirmative votes required for such action at a meeting, in accordance with Section 48-17-104 of the TBCA.
ARTICLE X
In further and not in limitation of the powers conferred by statute, the bylaws of the Corporation may be made, altered, amended or repealed by the shareholders of the Corporation or by a majority of the Corporation’s Board of Directors.
ARTICLE XI
| a. | Limitation of Liability. To the fullest extent permitted by the TBCA as in effect on the date hereof any person who is or was a director of the Corporation shall have no liability to the Corporation or its shareholders for monetary damages for breach of fiduciary duty as a director provided that this Article XII shall not eliminate or limit liability of a director. If the TBCA or any successor statute is amended or other Tennessee law is enacted after adoption of this provision to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of a director or officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the TBCA, as so amended from time to time, or such successor statute or other Tennessee law. Any repeal or modification of this Article XII or subsequent amendment of the TBCA or enactment of other applicable Tennessee law shall not affect adversely any right or protection of a director of the Corporation existing at the time of such repeal, modification, amendment or enactment or with respect to events occurring prior to such time. |
|---|---|
| b. | Indemnification and Advancement of Expenses. The Corporation shall indemnify every person who is or was a party or is or was threatened to be made a party to any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, including without limitation any action, suit or proceeding by or in right of the Corporation, by reason of the fact that he or she is or was a director or officer or is or was serving at the request of the Corporation as a director, officer, employee, manager, agent, or trustee of another corporation or of a partnership, limited liability company, joint venture, trust, employee benefit plan, or other enterprise, including service on a committee formed for any purpose (and, in each case, his or her heirs, executors, and administrators), against all expense, liability, and loss (including counsel fees, judgments, fines, excise taxes related to the Employee Retirement Income Security Act of 1974, penalties, and amounts paid in settlement) actually and reasonably incurred or suffered in connection with such action, suit, or proceeding, to the fullest extent permitted by applicable law, as in effect on the date hereof and as hereafter amended, except to the extent that any such person was grossly negligent or engaged in intentional misconduct. Such indemnification shall include advancement of expenses in advance of final disposition of such action, suit, or proceeding, subject to the provision of any applicable statute. |
| --- | --- |
| c. | Non-Exclusivity of Rights. The indemnification and advancement of expenses provisions of this Article XII shall not be exclusive of any other right that any person (and his or her heirs, executors, and administrators) may have or hereafter acquire under any statute, this Charter, the Corporation’s bylaws, resolution adopted by the shareholders, resolution adopted by the Corporation’s Board of Directors, agreement, or insurance, purchased by the Corporation or otherwise, both as to action in his or her official capacity and as to action in another capacity. The Corporation is hereby authorized to provide for indemnification and advancement of expenses through its bylaws, resolution of shareholders, resolution of the Corporation’s Board of Directors, or agreement, in addition to that provided by this Charter. |
| --- | --- |
ex_897049.htm
EXHIBIT 10.11
AMENDED AND RESTATED TRADEMARK LICENSE AGREEMENT
This Amended and Restated Trademark License Agreement (this “Agreement”) is entered into as of August 15, 2025 (the “A&R Effective Date”) by and between Beyond, Inc., a Delaware corporation (“Licensor”), and The Brand House Collective, Inc., a Tennessee corporation (f/k/a Kirkland’s Inc., a Tennessee corporation, “Licensee”) (each a “Party”, and together, the “Parties”).
WHEREAS, Licensor and Licensee are party to that certain Trademark License Agreement, dated as of October 21, 2024 (the “Original Trademark License Agreement”), which was entered into concurrently with that certain Collaboration Agreement dated as of October 21, 2024 (as amended and restated on May 7, 2025, as further amended and restated as of the date hereof, and as may be further amended, restated, amended and restated, supplemented, or otherwise modified from time to time, the “Collaboration Agreement”);
WHEREAS the Parties entered into the Collaboration Agreement for the purpose of engaging in various collaborative efforts and services regarding their respective business operations, including Licensee’s operation of retail concept stores under Licensor’s Trademarks identified on Schedule A (“Licensed Marks”), as may be modified by the Parties, upon the terms and conditions herein
WHEREAS, on May 7, 2025, Kirkland’s Stores, Inc., a Tennessee corporation and a subsidiary of Licensee (“Borrower”), and Licensor entered that certain Amended and Restated Term Loan Credit Agreement, dated as of May 7, 2025 (as may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Amended Beyond Credit Agreement”) pursuant to which, on the terms and subject to the conditions set forth therein, Licensor made additional term loans to Borrower in the aggregate principal amount of $5,232,405.54;
WHEREAS, in connection with and as a condition to the consummation of the transactions contemplated by the Amended Beyond Credit Agreement, the Parties amended the Original Trademark License Agreement by a letter agreement, dated May 7, 2025 (the “May 2025 Letter Amendment”), and agreed to thereafter amend and restate the Original Trademark License Agreement to further memorialize the amendments set forth in the May 2025 Letter Amendment; and accordingly, the Parties desire to amend and restate the Original Trademark License Agreement in its entirety, such amendment being effective as of May 7, 2025.
NOW, THEREFORE, in consideration of the foregoing, the mutual conditions and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:
1. DEFINITIONS
As used herein, the following terms shall have the following meanings:
“Affiliate” of any Person means any Person, directly or indirectly, Controlling, Controlled by or under common Control with such Person.
US-DOCS\159929668.7
“Business Day” means any day other than a Saturday, a Sunday or any day on which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or be closed.
“Control” (including its correlative meanings “under common Control with” and “Controlled by”) means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through ownership of securities or partnership or other interests, by contract or otherwise.
“Licensor Products” means those products that are sourced by or on behalf of Licensor for retail sale on Licensor’s Bed, Bath & Beyond e-commerce site, overstock.com and such other branded retail channels as further described in the Collaboration Agreement.
“Person” means an individual, corporation, partnership, limited liability company, joint venture, trust or unincorporated organization or a government or agency or political subdivision thereof.
“Shop-within-a-Shop” means a space within a Licensee-branded brick-and-mortar retail store that is branded with the Licensed Marks and reflects branding elements associated with the Licensed Marks and in which Licensee promotes, features and sells solely Licensor Products. A “Shop-within-a-Shop” may take the form of a pop-up shop, semi-permanent shop-within-a-shop, designated merchandised or branded areas within stores, end-caps or other merchandising and promotional settings, in each case, as mutually agreed to in writing by the Parties.
“Trademark” means all trademarks, brand names, trade dress, logos and other identifiers of source, together with all registrations and applications for registration thereof.
2. LICENSE GRANTS
2.1 Neighborhood Format Brick-and-Mortar Stores. Subject to the terms and conditions of this Agreement, and subject to Licensee’s obligation to pay the Collaboration Fees pursuant to the Collaboration Agreement, Licensor hereby grants to Licensee, during the term of this Agreement, a non-exclusive (except as set forth in Section 2.2), non-transferable, non-sublicensable license to operate brick-and-mortar retail stores branded under the Licensed Marks, in each case, in an in-store format ranging from 7,000 to 15,000 sq. ft. per store location, (which shall, for avoidance of doubt, exclude Shop-within-a-Shops) (such format, a “Neighborhood Format”), pursuant to the Collaboration Agreement or otherwise approved in writing by Licensor from time to time (“Licensed Stores”), including the advertising, marketing and promotion of such Licensed Stores; provided that the aesthetics of the Licensed Stores, the assortment of products therein and the concentration of the vendors of such products shall be substantially consistent with the historical practice of Licensor and its Affiliates and its or their predecessors in connection with their operation of retail stores under the Licensed Marks, unless Licensee obtains Licensor’s prior written consent to sell other products, which may be given or withheld in Licensor’s sole and absolute discretion.
2.2 Exclusivity. During the term of this Agreement, directly or indirectly, Licensor shall not, and shall not grant a license or right to any Affiliate or third party to, operate any BED BATH & BEYOND,
2
BED BATH & BEYOND HOME, BABY AND BEYOND or BUYBUYBABY branded brick-and-mortar retail stores in the Neighborhood Format in the United States.
2.3 Shop-within-a-Shops. Subject to the terms and conditions of this Agreement, and subject to Licensee’s obligation to pay the Collaboration Fees pursuant to the Collaboration Agreement, Licensor hereby grants to Licensee, during the term of this Agreement, a non‐exclusive, non-transferable, non-sublicensable, license to use the BED BATH & BEYOND marks and associated branding elements owned by Licensor to create and operate a Shop-within-a-Shop at the locations and in the size and format mutually agreed upon by the Parties in writing from time to time, and to advertise, market and promote such Shop-within-a-Shops; provided that, in each Shop-within-a-Shop, Licensee shall solely promote, feature and sell Licensor Products as mutually agreed upon.
2.4 Subsidiaries. The licenses and rights set forth above and other rights set forth herein shall extend to each Licensee Affiliate set forth on Schedule B, but only for so long as they remain Affiliates of Licensee. Licensee shall be responsible for each such Licensee Affiliate’s compliance with the terms of this Agreement.
2.5 New Trademarks. Schedule A may be updated by the Parties from time to time upon the Parties’ mutual written agreement to reflect (i) a Trademark that uses, incorporates or modifies a Licensed Mark, and (ii) a Trademark acquired by Licensor and under which Licensee has the right to sell Licensed Products pursuant to Section 8 of the Collaboration Agreement.
3. OWNERSHIP AND USE RESTRICTIONS
3.1 Ownership, Goodwill and Reservation of Rights. Any rights not expressly granted in this Agreement are expressly reserved for Licensor. Licensor reserves all rights to the Licensed Marks except as specifically granted herein to Licensee and Licensor may exercise such rights at any time. Any and all goodwill arising from Licensee’s and its sublicensees’ use of the Licensed Marks shall inure solely to the benefit of Licensor. Licensee agrees that nothing in this Agreement shall give Licensee any right, title or interest in the Licensed Marks other than the right to use the Licensed Marks in accordance with this Agreement. Licensee is only licensed to use the Licensed Marks, and not any variations, adaptations, translations, abbreviations, localizations or derivatives thereof without the prior written consent of Licensor.
3.2 No Inconsistent Action. Licensee shall not take any action or fail to take any action that would reasonably be expected, in any material respect, to impair or reduce the value or strength of any Licensed Mark, the reputation of Licensor or any of its Affiliates, or the goodwill associated with or symbolized by any Licensed Mark.
3.3 Restrictions. Licensee acknowledges the validity and Licensor’s sole and exclusive ownership of the Licensed Marks, and shall not, directly or indirectly, (a) assert any claim of ownership or right in the Licensed Marks, other than the rights expressly granted pursuant to the license hereunder, (b) interfere with, oppose, cancel or otherwise challenge Licensor’s or its Affiliates’ registrations or applications for registration of the Licensed Marks (including domain name registrations), (c) apply for, or participate with or cause any other entity to apply for, the registration of any Licensed Marks or any logo, symbol, trademark, service mark, company or corporate name, product name, domain name or commercial slogan that comprises or is
3
confusingly similar to any of the Licensed Marks, or (d) challenge the ownership or use of the Licensed Marks by Licensor or its Affiliates or its or their licensees. For avoidance of doubt, except in connection with advertising and promotional campaigns using the Licensed Marks to promote the Licensor Products in the Neighborhood Format or Shop-within-a-Shops locations as approved by the Review Committee on a case-by-case basis, Licensee shall not have the right to use the Licensed Marks in any domain name or on or in connection with any online, mobile or other electronic stores or social media accounts. Any violation of the foregoing shall be deemed a material and uncurable default hereunder.
3.4 Confusing Use. Licensee shall not use the Licensed Marks in any manner likely to
cause confusion or doubt in the mind of the public as to the ownership and control thereof or in any manner that does not make clear that the Licensed Marks are owned and controlled exclusively by Licensor. In addition, except to the extent approved in writing by Licensor, Licensee shall not use or co-mingle with the Licensed Marks any other trademarks, characters or properties, whether owned by Licensee or another, so as to suggest that such other trademarks, etc. may have been created or may be owned, controlled, licensed or approved by Licensor or that they are in any way related to the Licensed Marks or Licensor.
3.5 Customer Complaints. Licensee shall, in connection with its duty to use the
Licensed Marks so as to promote the continuing goodwill thereof, give immediate attention and take necessary action to satisfy all legitimate customer complaints brought against Licensee in connection with the Licensed Stores or Shop-within-a-Shops or products or services provided therein. Licensee shall give Licensor notice within five (5) days of receipt of all complaints that might reasonably be expected to affect the good standing of the Licensed Marks or the reputation of Licensor and also of all complaints that might reasonably be expected to result in legal action between Licensor and any third party, and cooperate with Licensor upon request to achieve as good a reputation and press for the Licensed Marks as possible.
4. REGISTRATION, INFRINGEMENT AND ENFORCEMENT
4.1 Registration. Licensor shall, in its reasonable discretion, prosecute and maintain the
applications and registrations for the Licensed Marks during the term of this Agreement at Licensor’s sole cost and expense. Licensor may, in its discretion, seek to apply for the registration of New Trademarks in any jurisdiction. Licensee shall not seek to apply for the registration of the Licensed Marks or any New Trademarks.
4.2 Infringement; Enforcement. Licensee shall promptly inform Licensor in writing of
any infringement, dilution, or other violation of a Licensed Mark of which Licensee becomes aware and shall reasonably cooperate with Licensor, at Licensor’s reasonable expense, in the protection and defense of the Licensed Marks. Licensor shall, in its reasonable discretion, defend and enforce the Licensed Marks. For avoidance of doubt, Licensor shall have the sole and exclusive right, but not the obligation, to defend and enforce the Licensed Marks.
5. QUALITY CONTROL
5.1 Branding Guidelines. The Review Committee (as defined in the Collaboration
Agreement) shall manage all matters that require the Parties’ cooperation or consultation with each other under this Agreement. Licensee shall use the Licensed Marks in accordance with (a) the
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specifications set forth on Schedule A and (b) in a manner that is consistent with the branding guidelines provided by Licensor to Licensee in writing from time to time (the “Branding Guidelines”). Licensor agrees to consider in good faith any revisions to the Branding Guidelines that are proposed by the Review Committee; however, Licensor shall have the right to accept or reject any such proposals in its sole discretion. Licensee shall obtain Licensor’s prior written approval or approval of the Review Committee for all advertising, marketing and promotional materials bearing the Licensed Marks, which approval shall not be unreasonably withheld, conditioned or delayed.
5.2 Quality Standards. The quality of the goods and services sold, provided or otherwise commercialized by Licensee in the Licensed Stores and Shop-within-a-Shops will be of the same or higher quality as the goods and services sold, provided, or otherwise commercialized by Licensor and its Affiliates and its or their predecessors in connection with the Licensed Marks at its or their brick-and-mortar stores historically, and at least of a quality so as to maintain the value, reputation and goodwill of Licensor, its Affiliates and the Licensed Marks. Licensee agrees to undertake any actions that Licensor may reasonably request to assist Licensor in inspecting and monitoring the quality of the goods and services offered in the Licensed Stores and Shop-within-a-Shops and the use of the Licensed Marks in connection with such goods and services.
5.3 Compliance with Law. Licensee shall only use the Licensed Marks in compliance with applicable laws, and shall comply with all applicable laws and obtain all appropriate governmental approvals pertaining to (a) the operation of Licensee’s business, (b) the sale, provision, or other commercialization of goods and services in the Licensed Stores and Shop-within-a-Shops, and (c) any other activities conducted by Licensee in association with the Licensed Marks.
5.4 Notices and Legends. In all uses of the Licensed Marks, Licensee shall include all notices and legends with respect to the Licensed Marks as reasonably requested by Licensor, and, to the extent practical, shall place the symbols “®”, “TM” or “SM”, as applicable, or other designations legally required or useful for enforcement of trademark or service mark rights, next to the Licensed Marks consistent with the same manner in which Licensor and its Affiliates use such symbols or other designations.
6. BOOKS AND RECORDS; AUDITS.
Licensor and its duly authorized representatives, may, during regular business hours at times agreed upon by the Parties and with at least thirty (30) days prior written notice, for the duration of this Agreement and for three (3) years thereafter, examine all documents and materials in the possession or under the control of Licensee as necessary to verify Licensee’s compliance with its obligations under this Agreement; and Licensor shall have free and full access thereto for said purposes and for the purpose of making abstracts therefrom and copies thereof. All copies and information accessed, produced or obtained in connection with such audit is the Confidential Information of Licensee and shall be protected as such under Section 4 of the Collaboration Agreement. Any such audit commenced within such period may continue through completion in the ordinary course; provided, that such audit is conducted in a manner designed to minimize disruption to Licensee’s business. All such records and documents, including computer records, shall be kept available by Licensee for at least three (3) years (or such longer period as required
5
by law) after the end of the term of this Agreement and through the completion of any audit commenced prior to the end of such period.
7. TERM AND TERMINATION
7.1 Term. The term of this Agreement commenced on October 21, 2024 and, subject to earlier termination under Section 7.2, will continue until the later of (a) the expiration or termination of the Collaboration Agreement, or (b) the expiration of the then-existing term or initial term (not to exceed five (5) years), as applicable, of the lease(s) for all Licensed Stores.
7.2 Termination for Breach. Without limiting any of Licensor’s other remedies at law or in equity, Licensor may terminate this Agreement:
(a) on seven (7) Business Days’ prior written notice (such notice effective upon expiration of the seven (7) Business Day notice period) if Licensee fails to timely pay the Collaboration Fee pursuant to the terms of the Collaboration Agreement, such notice of termination shall become effective unless, within such seven (7) Business Day period, Licensee shall completely remedy the breach and furnish the required payments;
(b) on thirty (30) days’ prior written notice (such termination effective upon expiration of the thirty (30) day notice period) for any other material breach of this Agreement by Licensee, in the event that Licensee fails to cure such breach within such thirty (30) day period; or
(c) if, in Licensor’s reasonable opinion, Licensee’s ability to perform under this Agreement is or will be impaired due to Licensee’s financial inability to comply with its anticipated obligations under this Agreement; a petition in bankruptcy is filed by or against Licensee; Licensee is adjudicated bankrupt or insolvent, or makes an assignment for the benefit of creditors or an arrangement pursuant to any bankruptcy law; Licensee discontinues its business; or a receiver is appointed for Licensee or Licensee’s business and such receiver is not discharged within thirty (30) days.
7.3 Bankruptcy.
(a) No assignee for the benefit of creditors, custodian, receiver, trustee in bankruptcy, sheriff or any other officer of the court or official charged with taking over custody of Licensee’s assets or business may continue this Agreement or exploit or in any way use the Licensed Marks if Licensor terminates this Agreement pursuant to Section 7.2(c).
(b) In the event of a Licensee bankruptcy proceeding, the Parties acknowledge and agree that: (i) this Agreement is an executory contract within the meaning of Section 365 of Bankruptcy Code; and (ii) as set forth in Section 13.2 below, Licensor, in its interest to safeguard its valuable interests (including, without limitation, the Licensed Marks), has relied on the particular identity, skill and knowledge of the Licensee and, as a result, this Agreement: (A) is personal in nature to the Licensee; (B) is an agreement of the type described by Sections 365(c)(1) and 365(e)(2)(A) of the Bankruptcy Code; and (C) may not be assumed or assigned.
7.4 Effect of Termination. Upon expiration or termination of this Agreement, the licenses granted by this Agreement shall immediately and automatically terminate, and Licensee
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shall cease and desist from all use of the Licensed Marks. Notwithstanding the foregoing, if Licensee is not in breach of this Agreement as of the date of termination or expiration (it being understood and agreed that a breach of Licensee’s obligation to pay the Collaboration Fees under the Collaboration Agreement shall be deemed to be a breach of this Agreement), upon request from Licensee, Licensor will grant Licensee an additional six (6) month period to transition off the use of the Licensed Marks (the “Transition Period”), provided that Licensor determines, in its reasonable discretion, that there is no material risk of Licensee failing to pay the Collaboration Fees on applicable revenue generated during the Transition Period. This Agreement shall remain in effect during any such Transition Period. The following provisions shall survive termination or expiration of this Agreement (or the Transition Period, if applicable): Sections 1, 3, 6 (for the time period set forth therein), 7.3, 7.4, 8, 9, 10, 11, 12, (for the time period set forth therein) and 13.
8. REPRESENTATIONS AND WARRANTIES
Each Party represents and warrants to the other Party that: (a) it has the full right, power, and authority to enter into this Agreement, to grant the rights and licenses granted hereunder, and to perform its obligations hereunder; and (b) when executed and delivered by such Party, this Agreement will constitute the legal, valid, and binding obligation of such Party, enforceable against such Party in accordance with its terms.
9. DISCLAIMER OF WARRANTIES
LICENSEE ACKNOWLEDGES AND AGREES THAT THE LICENSED MARKS ARE LICENSED “AS IS”, WITHOUT WARRANTY OF ANY KIND, AND THAT LICENSOR DOES NOT MAKE, AND SPECIFICALLY DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE LICENSED MARKS, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE (INCLUDING ANY IMPLIED WARRANTY OF NONINFRINGEMENT, SUFFICIENCY, QUALITY, USEFULNESS, COMMERCIAL UTILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE).
10. INDEMNIFICATION
10.1 Indemnification by Licensor. Licensor shall indemnify, defend and hold harmless Licensee and its Affiliates and its and their respective officers, directors, equityholders, employees and agents (“Licensee Indemnitees”) from and against any and all damages, losses, liabilities, costs, expenses and other payments (“Losses”) resulting from a demand, claim, lawsuit, or action asserted by any third Person against any of the Licensee Indemnitees to the extent such Losses arise out of or are in connection with allegations that Licensee’s use of a Licensed Mark in compliance with this Agreement infringes, dilutes or otherwise violates the intellectual property rights of a third Person.
10.2 Indemnification by Licensee. Licensee shall indemnify, defend and hold harmless Licensor and its Affiliates and its and their respective officers, directors, equityholders, employees and agents (“Licensor Indemnitees”) from and against any and all Losses resulting from a demand, claim, lawsuit, or action asserted by any third Person against any of the Licensor Indemnitees to the extent such Losses arise out of or are in connection with (a) Licensee’s operation of the
7
Licensed Stores or Shop-within-a-Shops, including the sale, distribution and other commercialization of products and services through the Licensed Stores or Shop-within-a-Shops, with the exception of claims for which Licensor is required to indemnify the Licensee Indemnitees pursuant to Section 10.1, or (b) Licensee’s breach of this Agreement.
10.3 Indemnity Procedures. If any claim or action is asserted against any Licensee Indemnitee or Licensor Indemnitee (each, an “Indemnified Party”) that would entitle such Indemnified Party to indemnification pursuant to this Section 10 (a “Proceeding”), the Indemnified Party will give prompt written notice thereof to the other party (the “Indemnifying Party”); provided, however, that the failure of any Indemnified Party to give timely notice hereunder will not affect its rights to indemnification hereunder, except to the extent that the Indemnifying Party demonstrates actual damage caused by such failure. The Indemnifying Party may elect to direct the defense or settlement of any such Proceeding by giving written notice to the Indemnified Party, which election will be effective immediately upon receipt by the Indemnified Party of such written notice of election. The Indemnifying Party will have the right to employ counsel reasonably acceptable to the Indemnified Party to defend any such Proceeding, or to compromise, settle or otherwise dispose of the same, if the Indemnifying Party deems it advisable to do so, all at the expense of the Indemnifying Party; provided that the Indemnifying Party will not settle, or consent to any entry of judgment in, any Proceeding without obtaining either: (a) an unconditional release of the Indemnified Party from all liability with respect to all claims underlying such Proceeding; or (b) the prior written consent of the Indemnified Party. An Indemnified Party will not settle, or consent to any entry of judgment, in any Proceeding without obtaining the prior written consent of the Indemnifying Party. Each Indemnifying Party and Indemnified Party will fully cooperate with each other in any such Proceeding and will make available to each other any books or records useful for the defense of any such Proceeding.
11. LIMITATION OF LIABILITY
WITH THE EXCEPTION OF LICENSOR’S INDEMNIFICATION OBLIGATIONS UNDER SECTION 10 AND LIABILITY ARISING FROM LICENSOR’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, TO THE MAXIMUM EXTENT PERMITTED BY LAW, LICENSOR SHALL NOT BE LIABLE UNDER THIS AGREEMENT TO LICENSEE OR ANY OTHER PERSON FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, RELIANCE OR PUNITIVE DAMAGES OR LOST OR IMPUTED PROFITS, OR COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, WHETHER LIABILITY IS ASSERTED IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT PRODUCT LIABILITY) OR CONTRIBUTION, AND IRRESPECTIVE OF WHETHER LICENSOR OR ANY RELATED ENTITY HAS BEEN ADVISED OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE.
12. INSURANCE
Simultaneously with the execution of this Agreement, Licensee shall promptly obtain and maintain in full force and effect at all times during the term of this Agreement and for at least three (3) years thereafter, at its own cost and expense, commercial general liability insurance on a per occurrence form, including broad form coverage for contractual liability, property damage, products liability and personal injury liability (including bodily injury and death), waiving
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subrogation, all which is satisfactory to Licensor, in the amount of $5,000,000 of primary and umbrella coverage from one or more insurance companies, each with a Best’s rating of “A” or better, and qualified to transact business in the territories where the Licensed Stores and Shop-within-a-Shops are located. Licensee also agrees to maintain in full force and effect at all times while this Agreement is in effect such Worker’s Compensation Insurance as is required by applicable law and Employer’s Liability Insurance with coverage as is customary for similarly situated companies. All insurance shall be primary and not contributory. All of said insurance shall: (a) provide for coverage resulting from claims reported after the policy period; (b) name Licensor as an additional insured; and (c) provide for at least thirty (30) days’ prior written notice to Licensor of any cancellation, modification, surrender, or any other action that would affect Licensor’s status or benefits thereunder. During the term of this Agreement, Licensee shall promptly furnish or cause to be furnished to Licensor evidence, in form and substance satisfactory to Licensor, of the maintenance and renewal of the insurance required herein, including copies of policies with applicable riders and endorsements, certificates of insurance, and continuing certificates of insurance. Contemporaneously with the execution and delivery of this Agreement, evidence of the full force and effect of the insurance required herein shall be delivered to Licensor. In all events, Licensor shall under no circumstances operate any Licensed Stores or Shop-within-a-Shops at any time or times when Licensee knows or should know that the insurance required herein has not been acquired, has been cancelled or for any other reason is not in full force and effect. Nothing contained in this Section 12 shall be deemed to limit in any way the indemnification provisions of Section 10.
- MISCELLANEOUS
13.1 Independent Contractor. Neither Party is and shall not represent itself to be a
subsidiary, affiliate, legal representative, agent, employee, or partner of the other Party or otherwise connected with the other Party, except Licensee as an independent distributor of the Licensor Products in Shop-within-a-Shops, and neither Party shall have the authority to assume, create or incur any obligation or liability on behalf of the other Party.
13.2 Assignment. Nothing herein shall restrict Licensor from assigning or transferring
any Licensed Marks to any Person; provided that any such transfer shall have no effect on the license granted to Licensee hereunder, and the Licensed Marks shall remain subject to this Agreement. This Agreement is personal to Licensee, and neither this Agreement nor any of the rights of Licensee hereunder shall be sold, transferred or assigned by Licensee by operation of law or otherwise, without the prior written consent of the Licensor. Any assignment, transfer, hypothecation, pledge or encumbrance of this Agreement by Licensee in violation of the foregoing shall be void from the beginning and constitute a material breach of this Agreement. Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors (whether by contract, operation of law or otherwise) and permitted assigns.
13.3 Notices. All notices, requests, consents, claims, demands, waivers, and other
communications hereunder (each, a “Notice”) shall be in writing and addressed to the Parties at the addresses set forth below (or to such other address that may be designated by the receiving Party from time to time in accordance herewith). All Notices shall be delivered by personal delivery, nationally recognized overnight courier (with all fees pre-paid), or certified or registered
9
mail (in each case, return receipt requested, postage pre-paid). Except as otherwise provided in this Agreement, a Notice is effective only: (a) upon receipt by the receiving Party; and (b) if the Party giving the Notice has complied with the requirements of this Section.
Licensor shall send notices to Licensee as follows:
The Brand House Collective, Inc.
5310 Maryland Way
Brentwood, Tennessee 37027
Attn: Amy Sullivan, President, Chief Executive Officer
With a copy to:
The Brand House Collective, Inc.
5310 Maryland Way
Brentwood, Tennessee 37027
Attn: General Counsel
Licensee shall send notices to Licensor as follows:
Beyond, Inc.
799 W. Coliseum Way
Midvale, UT 84047
Attention: Melissa Smith, General Counsel
13.4 Governing Law; Forum; Waiver of Jury Trial. This Agreement shall be governed by the laws of the State of Delaware, without giving effect to the conflict of law provisions of Delaware, and any action or proceeding arising out of, or related to, this Agreement, shall only be brought in an appropriate state or federal court in Delaware. The Parties expressly consent to venue in Delaware and to the personal jurisdiction of the Delaware courts. EACH PARTY HERETO, FOR ITSELF AND ITS AFFILIATES, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE ACTIONS OF THE PARTIES HERETO OR THEIR RESPECTIVE AFFILIATES PURSUANT TO THIS AGREEMENT OR IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
13.5 Waiver. Failure of either Party to enforce or exercise any of its rights with respect
to any provisions hereof against the other Party shall not constitute a waiver thereof nor shall it in any way affect the validity of this Agreement or act as a bar to such Party’s subsequent enforcement or exercise of any right created hereby. The exercise or enforcement by either Party of any of its rights hereunder shall not preclude or prejudice such Party from thereafter exercising the same or any other right which it may have under this Agreement.
13.6 Headings; Construction. The headings of Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All words used in this
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Agreement will be construed to be of such gender or number as the context requires. The word “including” shall be read as “including but not limited to” and otherwise shall be considered illustrative and non-limiting. All references to dollars or “$” in this Agreement will be to U.S. dollars. The language used in this Agreement will be construed, in all cases, according to its fair meaning, and not for or against either Party hereto. The Parties acknowledge that each Party has reviewed this Agreement and that rules of construction to the effect that any ambiguities are to be resolved against the drafting Party will not be available in the interpretation of this Agreement.
13.7 Successors and Assigns. This Agreement is entered into solely between, and may
be enforced only by, the Parties and their permitted successors and assigns, and except as expressly set forth herein, this Agreement shall not be deemed to create any rights in third parties, including, without limitation, suppliers and customers of a Party, or to create any obligations of a Party to any such third parties.
13.8 Severability. If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, inoperative, or unenforceable, the remainder of this Agreement shall not be affected by such determination, and the remainder of this Agreement shall be given effect as if the invalid, inoperative, or unenforceable provision had not been included in this Agreement.
13.9 Equitable Relief; Cumulative Remedies. Licensee acknowledges that a breach of this Agreement by Licensee may cause Licensor irreparable damages, for which an award of damages would not be adequate compensation. In the event of such breach or threatened breach, Licensor will be entitled to seek equitable relief against Licensee without the obligation to post a bond or other security. Except as expressly set forth in this Agreement, the right and remedies under this Agreement are cumulative and in addition to any other rights or remedies available at law or in equity or otherwise.
13.10 Entire Agreement and Modification. Except as otherwise set forth herein, the Parties agree that this Agreement contains the entire agreement between the Parties and there are no other oral statements, representations, warranties or other agreements between the Parties. This Agreement can only be modified, amended or supplemented in writing signed by authorized representatives of both Parties.
13.11 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different Parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement constitutes the entire contract between the Parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. This Agreement shall become effective when it shall have been executed by each of Parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy, pdf or other electronic transmission shall be as effective as delivery of a manually executed counterpart of this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective authorized officers as of the A&R Effective Date.
LICENSOR:
BEYOND, INC.
By:
Name: Marcus Lemonis
Title: Executive Chairman
LICENSEE:
THE BRAND HOUSE COLLECTIVE, INC.
By:
Name: Amy Sullivan
Title: President, Chief Executive Officer
[Signature Page to Amended and Restated Trademark License Agreement]
SimplyAgree Sign signature packet ID: 4e67ca36-f909-405e-99ce-a7d857af0b7d
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective authorized officers as of the A&R Effective Date.
LICENSOR:
BEYOND, INC.
By:
Name: Marcus Lemonis
Title: Executive Chairman
LICENSEE:
THE BRAND HOUSE COLLECTIVE, INC.
By:
Name: Amy Sullivan
Title: President, Chief Executive Officer
[Signature Page to Amended and Restated Trademark License Agreement]
SCHEDULE A
Licensed Marks*
Registration Numbers Trademarks
Services
Retail store, mail order and computer on-line retail services featuring linen products, home furnishings, toys, books, furniture, housewares, house plants, kitchen appliances, office supplies, knapsacks, luggage, lamps, soaps, lotions, toothbrushes, kitchen accessories, bathroom accessories, novelty items, picture frames, candles, aromatherapy products, potpourri, desktop electronics, umbrellas, and apparel.
IC
2510262 BED BATH & BEYOND
35
BED BATH &
BEVONCIP
Retail store services in the field of linen products, housewares and home furnishings.
1830725
42
Retail store services in the field of linen products, housewares and home furnishings.
1831709 BED BATH & BEYOND
42
retail store, mail order and computer on-line retail services featuring linen products, home furnishings, toys, books, furniture, housewares, house plants, kitchen appliances, office supplies,
knapsacks, luggage, lamps, soaps, lotions, toothbrushes, kitchen 35
accessories, bathroom accessories, novelty items, picture frames, candles, aromatherapy products, potpourri, desktop electronics, umbrellas, and apparel.
lq IIIATI I Y. BEYOND".
2831985
retail store, mail order and computer on-line retail services featuring linen products, home furnishings, toys, books, furniture, housewares, house plants, kitchen appliances, office supplies,
knapsacks, luggage, lamps, soaps, lotions, toothbrushes, kitchen 35
accessories, bathroom accessories, novelty items, picture frames, candles, aromatherapy products, potpourri, desktop electronics, umbrellas, and apparel.
BED BATH &
BEYOND
2831986
BED BATH &
BEYOND
Retail store services and on-line retail store services featuring a wide variety of consumer goods of others
6895084
35
Retail store services and on-line retail store services featuring a wide variety of consumer goods of others
35
BED BATH & BEYOND
| Trademarks | Registration/Serial Nos. | Services |
|---|---|---|
| OVERSTOCK.COM | 2939764 | On-line wholesale and retail store services featuring general consumer merchandise, namely, clothing, shoes, bath and body products, jewelry, electronics, cookware, housewares, appliances, furniture, linens, pillows, decorative accessories, office furniture and accessories, toys, games, sporting goods, tools, outdoor lawn and garden equipment, pet supplies and paper products |
| BABY AND BEYOND | 98373503 (pending) | On-line retail store services featuring baby furniture, pillows, mattresses, sheets, changing pads and covers, swaddle wraps, baby carriers and wraps, nursing cover, bottle warmer, clothes, shoes, toys, bags, car seats, towels, breast pump accessories, baby food makers, baby tableware, pack n plays; gift registry services; retail store services featuring baby furniture, pillows, mattresses, sheets, changing pads and covers, swaddle wraps, baby carriers and wraps, nursing cover, bottle warmer, clothes, shoes, toys, bags, car seats, towels, breast pump accessories, baby food makers, baby tableware, pack n plays |
| Overstock.com Your Online Outlet | 3069011 | Online wholesale and retail discount store services in the field of general consumer merchandise |
 |
98452509 | Online retail services featuring general consumer merchandise |
| BUY BUY BABY | 2171479 | Retail stores featuring baby furniture, clothes, accessories and supplies |
 |
3855752 | Retail store services and computerized on-line retail store services featuring a wide variety of consumer goods of others |
 |
3855753 | Retail store services and computerized on-line retail store services featuring a wide variety of consumer goods of others |
| BED BATH & BEYOND HOME | 99154965 (pending) | Retail store, and on-line retail store services featuring general consumer merchandise |
*Licensee acknowledges and agrees (i) that Licensee’s rights are limited to the Licensed Marks set forth above in this Schedule A and (ii) that Licensee shall only use the Licensed Marks in the exact form as listed above (including any logos and/or artwork files provided by Licensor, if any), unless otherwise approved in writing by Licensor. Licensee further acknowledges and agrees that this Agreement does not grant, and Licensee shall not have, any rights with respect to any other trademark, label, logo, or the like, owned or used by Licensor, all of which are expressly reserved to Licensor.
SCHEDULE B Licensee Affiliates
1. Kirkland’s DC, Inc., a Tennessee corporation
2. Kirkland’s Stores, Inc., a Tennessee corporation
3. Kirkland’s Texas, LLC, a Tennessee limited liability company
ex_897185.htm
EXHIBIT 10.12
SECOND AMENDED AND RESTATED TRADEMARK LICENSE AGREEMENT
This Second Amended and Restated Trademark License Agreement (this “Agreement”) is entered into as of September 12, 2025 (the “Second A&R Effective Date”) by and between Bed Bath & Beyond, Inc. (f/k/a Beyond, Inc.), a Delaware corporation (“Licensor”), and The Brand House Collective, Inc., a Tennessee corporation (f/k/a Kirkland’s Inc.), a Tennessee corporation (“Licensee”) (each a “Party”, and together, the “Parties”).
WHEREAS, Licensor and Licensee are party to that certain Trademark License Agreement, dated as of October 21, 2024 (the “Original Trademark License Agreement”), which was entered into concurrently with that certain Collaboration Agreement dated as of October 21, 2024 (as amended and restated on May 7, 2025, as further amended and restated August 15, 2025, and as may be further amended, restated, amended and restated, supplemented, or otherwise modified from time to time, the “Collaboration Agreement”);
WHEREAS the Parties entered into the Collaboration Agreement for the purpose of engaging in various collaborative efforts and services regarding their respective business operations, including Licensee’s operation of retail concept stores under Licensor’s Trademarks identified on Schedule A (“Beyond Licensed Marks”), as may be modified by the Parties, upon the terms and conditions herein;
WHEREAS, on May 7, 2025, Kirkland’s Stores, Inc., a Tennessee corporation and a subsidiary of Licensee (“Borrower”), and Licensor entered that certain Amended and Restated Term Loan Credit Agreement, dated as of May 7, 2025 (as may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Amended Beyond Credit Agreement”) pursuant to which, on the terms and subject to the conditions set forth therein, Licensor made additional term loans to Borrower in the aggregate principal amount of $5,232,405.54;
WHEREAS, in connection with the consummation of the transactions contemplated by the Amended Beyond Credit Agreement, the Parties amended and restated the Original Trademark License Agreement on August 15, 2025, such amendment being effective as of May 7, 2025 (the “A&R Trademark License Agreement”);
WHEREAS, pursuant to the Collaboration Agreement, the Parties have entered into that certain Asset Purchase Agreement, dated as of May 7, 2025 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”), pursuant to which Licensee agreed to sell to Licensor, and Licensor agreed to purchase from Licensee, certain assets, including the “Kirkland” Trademarks identified on Schedule C (“Kirkland Licensed Marks” and together with the Beyond Licensed Marks, the “Licensed Marks”); and
WHEREAS, in connection with the consummation of the sale of the Kirkland Licensed Marks to Licensor pursuant to the Purchase Agreement, Licensor agreed, in accordance with Section 2(i) of the Collaboration Agreement, to amend this Agreement to provide for the license of the Kirkland Licensed Marks by Licensor to Licensee, and in contemplation thereof the Parties increased the Collaboration Fee from 0.25% to 0.5%, and in furtherance thereof, the Parties desire to amend and restate the A&R Trademark License Agreement, effective as of Second A&R Effective Date.
NOW, THEREFORE, in consideration of the foregoing, the mutual conditions and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:
| 1. | DEFINITIONS |
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As used herein, the following terms shall have the following meanings:
“Affiliate” of any Person means any Person, directly or indirectly, Controlling, Controlled by or under common Control with such Person.
“Business Day” means any day other than a Saturday, a Sunday or any day on which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or be closed.
“Control” (including its correlative meanings “under common Control with” and “Controlled by”) means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through ownership of securities or partnership or other interests, by contract or otherwise.
“Kirkland Exclusivity Term” means the period beginning on the Second A&R Effective Date and ending on the earlier of (i) the date on which all brick-and-mortar Kirkland Licensed Stores have either been rebranded or closed, and (ii) two (2) years following the Second A&R Effective Date.
“Licensor Products” means those products that are sourced by or on behalf of Licensor for retail sale on Licensor’s Bed Bath & Beyond e-commerce site, overstock.com and such other branded retail channels as further described in the Collaboration Agreement.
“Person” means an individual, corporation, partnership, limited liability company, joint venture, trust or unincorporated organization or a government or agency or political subdivision thereof.
“Shop-within-a-Shop” means a space within a Licensee-branded brick-and-mortar retail store that is branded with the Licensed Marks and reflects branding elements associated with the Licensed Marks and in which Licensee promotes, features and sells solely Licensor Products. A “Shop-within-a-Shop” may take the form of a pop-up shop, semi-permanent shop-within-a-shop, designated merchandised or branded areas within stores, end-caps or other merchandising and promotional settings, in each case, as mutually agreed to in writing by the Parties.
“Trademark” means all trademarks, brand names, trade dress, logos and other identifiers of source, together with all registrations and applications for registration thereof.
| 2. | LICENSE GRANTS |
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2.1 Neighborhood Format Brick-and-Mortar Stores. Subject to the terms and conditions of this Agreement, and subject to Licensee’s obligation to pay the Collaboration Fees pursuant to the Collaboration Agreement, Licensor hereby grants to Licensee, during the term of this Agreement, a non-exclusive (except as set forth in Section 2.2), non-transferable, non-sublicensable license to operate brick-and-mortar retail stores branded under the Beyond Licensed Marks, in each case, in an in-store format ranging from 7,000 to 15,000 sq. ft. per store location, (which shall, for avoidance of doubt, exclude Shop-within-a-Shops) (such format, a “Neighborhood Format”), pursuant to the Collaboration Agreement or otherwise approved in writing by Licensor from time to time (“Licensed Stores”), including the advertising, marketing and promotion of such Licensed Stores; provided that the aesthetics of the Licensed Stores, the assortment of products therein and the concentration of the vendors of such products shall be substantially consistent with the historical practice of Licensor and its Affiliates and its or their predecessors in connection with their operation of retail stores under the Beyond Licensed Marks, unless Licensee obtains Licensor’s prior written consent to sell other products, which may be given or withheld in Licensor’s sole and absolute discretion.
2.2 Exclusivity.
| (a) | During the term of this Agreement, directly or indirectly, Licensor shall not, and shall not grant a license or right to any Affiliate or third party to, operate any BED BATH & BEYOND, BED BATH & BEYOND HOME, BABY AND BEYOND or BUYBUYBABY branded brick-and-mortar retail stores in the Neighborhood Format in the United States. |
|---|---|
| (b) | During the Kirkland Exclusivity Term, directly or indirectly, Licensor shall not, and shall not grant a license or right to any Affiliate or third party to, operate any brick-and-mortar retail store in the Neighborhood Format under the name KIRKLAND’S or any Kirkland Licensed Mark in the United States. |
| --- | --- |
2.3 Shop-within-a-Shops. Subject to the terms and conditions of this Agreement, and subject to Licensee’s obligation to pay the Collaboration Fees pursuant to the Collaboration Agreement, Licensor hereby grants to Licensee, during the term of this Agreement, a non-exclusive, non-transferable, non-sublicensable, license to use the BED BATH & BEYOND marks and associated branding elements owned by Licensor to create and operate a Shop-within-a-Shop at the locations and in the size and format mutually agreed upon by the Parties in writing from time to time, and to advertise, market and promote such Shop-within-a-Shops; provided that, in each Shop-within-a-Shop, Licensee shall solely promote, feature and sell Licensor Products as mutually agreed upon.
2.4 Subsidiaries. The licenses and rights set forth above and other rights set forth herein shall extend to each Licensee Affiliate set forth on Schedule B, but only for so long as they remain Affiliates of Licensee. Licensee shall be responsible for each such Licensee Affiliate’s compliance with the terms of this Agreement.
2.5 New Trademarks. Schedule A may be updated by the Parties from time to time upon the Parties’ mutual written agreement to reflect (i) a Trademark that uses, incorporates or modifies a Beyond Licensed Mark, and (ii) a Trademark acquired by Licensor and under which Licensee has the right to sell Licensed Products pursuant to Section 8 of the Collaboration Agreement.
2.6 License to Kirkland Licensed Marks. Subject to the terms and conditions of this Agreement, and subject to Licensee’s obligation to pay the Collaboration Fees pursuant to the Collaboration Agreement, Licensor hereby grants to Licensee, during the term of this Agreement, a non-exclusive (except as set forth in Section 2.2), non-transferable, non-sublicensable license to (i) operate the brick-and-mortar retail stores and e-commerce websites which are branded under the Kirkland Licensed Marks and operated by Licensee, in each case as of the Second A&R Effective Date (and excluding, for the avoidance of doubt, any Kirkland-branded e-commerce websites operated by Licensor), and any other retail stores or e-commerce websites approved by Licensor in its sole and absolute discretion (collectively the “Kirkland Licensed Stores”), including the advertising, marketing and promotion of the Kirkland Licensed Stores; provided that the aesthetics of the Kirkland Licensed Stores, the assortment of products therein and the concentration of the vendors of such products shall be substantially consistent with the historical practice of Licensee and its Affiliates and its or their predecessors in connection with their operation of retail stores and e-commerce websites under the Kirkland Licensed Marks, unless Licensee obtains Licensor’s prior written consent to sell other products, which may be given or withheld in Licensor’s sole and absolute discretion; and (ii) continue to manufacture, market, distribute and sell under the Kirkland Licensed Marks all other goods and services that Licensee and its Affiliates and its or their predecessors manufactured, marketed, distributed and sold historically under the Kirkland Licensed Marks (collectively the “Kirkland Licensed Products”), it being understood and agreed that Licensee shall continue to manufacture, market distribute and sell all such other goods and services during the term of such license, and shall do so in substantially the same manner and through the substantially the same channels (including wholesale distribution of products) as Licensee did during the one-year period prior to the Second A&R Effective Date. The license for Kirkland Licensed Stores shall terminate upon expiration of the Kirkland Exclusivity Term, and Licensor may terminate the license for Kirkland Licensed Products on thirty (30) days’ prior written notice following the expiration of the Kirkland Exclusivity Term (such termination effective upon expiration of the thirty (30) day notice period).
| 3. | OWNERSHIP AND USE RESTRICTIONS |
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3.1 Ownership, Goodwill and Reservation of Rights. Any rights not expressly granted in this Agreement are expressly reserved for Licensor. Licensor reserves all rights to the Licensed Marks except as specifically granted herein to Licensee and Licensor may exercise such rights at any time. Any and all goodwill arising from Licensee’s and its sublicensees’ use of the Licensed Marks shall inure solely to the benefit of Licensor. Licensee agrees that nothing in this Agreement shall give Licensee any right, title or interest in the Licensed Marks other than the right to use the Licensed Marks in accordance with this Agreement. Licensee is only licensed to use the Licensed Marks, and not any variations, adaptations, translations, abbreviations, localizations or derivatives thereof without the prior written consent of Licensor.
3.2 No Inconsistent Action. Licensee shall not take any action or fail to take any action that would reasonably be expected, in any material respect, to impair or reduce the value or strength of any Licensed Mark, the reputation of Licensor or any of its Affiliates, or the goodwill associated with or symbolized by any Licensed Mark.
3.3 Restrictions. Licensee acknowledges the validity and Licensor’s sole and exclusive ownership of the Licensed Marks, and shall not, directly or indirectly, (a) assert any claim of ownership or right in the Licensed Marks, other than the rights expressly granted pursuant to the license hereunder, (b) interfere with, oppose, cancel or otherwise challenge Licensor’s or its Affiliates’ registrations or applications for registration of the Licensed Marks (including domain name registrations), (c) apply for, or participate with or cause any other entity to apply for, the registration of any Licensed Marks or any logo, symbol, trademark, service mark, company or corporate name, product name, domain name or commercial slogan that comprises or is confusingly similar to any of the Licensed Marks, or (d) challenge the ownership or use of the Licensed Marks by Licensor or its Affiliates or its or their licensees. For avoidance of doubt, (x) except in connection with advertising and promotional campaigns using the Licensed Marks to promote the Licensor Products in the Neighborhood Format or Shop-within-a-Shops locations as approved by the Review Committee on a case-by-case basis, Licensee shall not have the right to use the Beyond Licensed Marks in any domain name or on or in connection with any online, mobile or other electronic stores or social media accounts, and (y) except in connection with the operation of the ecommerce websites included in the Kirkland Licensed Stores, Licensee shall not have the right to use the Kirkland Licensed Marks in any domain name or on or in connection with any online, mobile or other electronic stores or social media accounts. Any violation of the foregoing shall be deemed a material and uncurable default hereunder.
3.4 Confusing Use. Licensee shall not use the Licensed Marks in any manner likely to cause confusion or doubt in the mind of the public as to the ownership and control thereof or in any manner that does not make clear that the Licensed Marks are owned and controlled exclusively by Licensor. In addition, except to the extent approved in writing by Licensor, Licensee shall not use or co-mingle with the Licensed Marks any other trademarks, characters or properties, whether owned by Licensee or another, so as to suggest that such other trademarks, etc. may have been created or may be owned, controlled, licensed or approved by Licensor or that they are in any way related to the Licensed Marks or Licensor.
3.5 Customer Complaints. Licensee shall, in connection with its duty to use the Licensed Marks so as to promote the continuing goodwill thereof, give immediate attention and take necessary action to satisfy all legitimate customer complaints brought against Licensee in connection with the Kirkland Licensed Products, Licensed Stores, Shop-within-a-Shops, or Kirkland Licensed Stores, or products or services provided therein. Licensee shall give Licensor notice within five (5) days of receipt of all complaints that might reasonably be expected to affect the good standing of the Licensed Marks or the reputation of Licensor and also of all complaints that might reasonably be expected to result in legal action between Licensor and any third party, and cooperate with Licensor upon request to achieve as good a reputation and press for the Licensed Marks as possible.
| 4. | REGISTRATION, INFRINGEMENT AND ENFORCEMENT |
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4.1 Registration. Licensor shall, in its reasonable discretion, prosecute and maintain the applications and registrations for the Licensed Marks during the term of this Agreement at Licensor’s sole cost and expense. Licensor may, in its discretion, seek to apply for the registration of New Trademarks in any jurisdiction. Licensee shall not seek to apply for the registration of the Licensed Marks or any New Trademarks.
4.2 Infringement; Enforcement. Licensee shall promptly inform Licensor in writing of any infringement, dilution, or other violation of a Licensed Mark of which Licensee becomes aware and shall reasonably cooperate with Licensor, at Licensor’s reasonable expense, in the protection and defense of the Licensed Marks. Licensor shall, in its reasonable discretion, defend and enforce the Licensed Marks. For avoidance of doubt, Licensor shall have the sole and exclusive right, but not the obligation, to defend and enforce the Licensed Marks.
| 5. | QUALITY CONTROL**&NBSP;** |
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5.1 Branding Guidelines.
(a) In General. The Review Committee (as defined in the Collaboration Agreement) shall manage all matters that require the Parties’ cooperation or consultation with each other under this Agreement. Licensee shall use the Licensed Marks in accordance with (a) the specifications set forth on Schedule A or Schedule C, as applicable, and (b) in a manner that is consistent with the branding guidelines provided by Licensor to Licensee in writing from time to time (the “Branding Guidelines”). Licensor agrees to consider in good faith any revisions to the Branding Guidelines that are proposed by the Review Committee; however, Licensor shall have the right to accept or reject any such proposals in its sole discretion. Licensee shall obtain Licensor’s prior written approval or approval of the Review Committee for all advertising, marketing and promotional materials bearing the Licensed Marks, which approval shall not be unreasonably withheld, conditioned or delayed.
(b) Kirkland Licensed Marks. Except to the extent otherwise provided in the Branding Guidelines, Licensee shall use the Kirkland Licensed Marks in the same manner and in connection with the same goods and services as Licensee used the Kirkland Licensed Marks during the one-year period prior to the Second A&R Effective Date.
5.2 Quality Standards.
(a) Beyond Licensed Marks. The quality of the goods and services sold, provided or otherwise commercialized by Licensee in the Licensed Stores and Shop-within-a-Shops will be of the same or higher quality as the goods and services sold, provided, or otherwise commercialized by Licensor and its Affiliates and its or their predecessors in connection with the Beyond Licensed Marks at its or their brick-and-mortar retail stores historically, and at least of a quality so as to maintain the value, reputation and goodwill of Licensor, its Affiliates and the Beyond Licensed Marks. Licensee agrees to undertake any actions that Licensor may reasonably request to assist Licensor in inspecting and monitoring the quality of the goods and services offered in the Licensed Stores and Shop-within-a-Shops and the use of the Beyond Licensed Marks in connection with such goods and services.
(b) Kirkland Licensed Marks. The quality of the goods and services sold, provided or otherwise commercialized by Licensee under the Kirkland Licensed Marks or in the Kirkland Licensed Stores will be of the same or higher quality as the goods and services sold, provided, or otherwise commercialized by Licensee and its Affiliates and its or their predecessors in connection with the Kirkland Licensed Marks at its or their brick-and-mortar retail stores and e-commerce websites historically, as applicable, and at least of a quality so as to maintain the value, reputation and goodwill of Licensor, its Affiliates and the Kirkland Licensed Marks. Licensee agrees to undertake any actions that Licensor may reasonably request to assist Licensor in inspecting and monitoring the quality of the goods and services offered under the Kirkland Licensed Marks or any other products and services offered in the Kirkland Licensed Stores and the use of the Kirkland Licensed Marks in connection with such goods and services.
5.3 Compliance with Law. Licensee shall only use the Licensed Marks in compliance with applicable laws, and shall comply with all applicable laws and obtain all appropriate governmental approvals pertaining to (a) the operation of Licensee’s business, (b) the sale, provision, or other commercialization of the Kirkland Licensed Products, or any goods and services in the Licensed Stores, Shop-within-a-Shops, and Kirkland Licensed Stores, and (c) any other activities conducted by Licensee in association with the Licensed Marks.
5.4 Notices and Legends. In all uses of the Licensed Marks, Licensee shall include all notices and legends with respect to the Licensed Marks as reasonably requested by Licensor, and, to the extent practical, shall place the symbols “®”, “™” or “℠”, as applicable, or other designations legally required or useful for enforcement of trademark or service mark rights, next to the Licensed Marks consistent with the same manner in which Licensor and its Affiliates use such symbols or other designations.
| 6. | BOOKS AND RECORDS; AUDITS. |
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Licensor and its duly authorized representatives, may, during regular business hours at times agreed upon by the Parties and with at least thirty (30) days prior written notice, for the duration of this Agreement and for three (3) years thereafter, examine all documents and materials in the possession or under the control of Licensee as necessary to verify Licensee’s compliance with its obligations under this Agreement; and Licensor shall have free and full access thereto for said purposes and for the purpose of making abstracts therefrom and copies thereof. All copies and information accessed, produced or obtained in connection with such audit is the Confidential Information of Licensee and shall be protected as such under Section 4 of the Collaboration Agreement. Any such audit commenced within such period may continue through completion in the ordinary course; provided, that such audit is conducted in a manner designed to minimize disruption to Licensee’s business. All such records and documents, including computer records, shall be kept available by Licensee for at least three (3) years (or such longer period as required by law) after the end of the term of this Agreement and through the completion of any audit commenced prior to the end of such period.
| 7. | TERM AND TERMINATION |
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7.1 Term. The term of this Agreement commenced on October 21, 2024 and, subject to earlier termination under Section 7.2, will continue until the later of (a) the expiration or termination of the Collaboration Agreement, or (b) the expiration of the then-existing term or initial term (not to exceed five (5) years), as applicable, of the lease(s) for all Licensed Stores.^^
7.2 Termination for Breach. Without limiting any of Licensor’s other remedies at law or in equity, Licensor may terminate this Agreement:
(a) on seven (7) Business Days’ prior written notice (such notice effective upon expiration of the seven (7) Business Day notice period) if Licensee fails to timely pay the Collaboration Fee pursuant to the terms of the Collaboration Agreement, such notice of termination shall become effective unless, within such seven (7) Business Day period, Licensee shall completely remedy the breach and furnish the required payments;
(b) on thirty (30) days’ prior written notice (such termination effective upon expiration of the thirty (30) day notice period) for any other material breach of this Agreement by Licensee, in the event that Licensee fails to cure such breach within such thirty (30) day period; or
(c) if, in Licensor’s reasonable opinion, Licensee’s ability to perform under this Agreement is or will be impaired due to Licensee’s financial inability to comply with its anticipated obligations under this Agreement; a petition in bankruptcy is filed by or against Licensee; Licensee is adjudicated bankrupt or insolvent, or makes an assignment for the benefit of creditors or an arrangement pursuant to any bankruptcy law; Licensee discontinues its business; or a receiver is appointed for Licensee or Licensee’s business and such receiver is not discharged within thirty (30) days.
7.3 Bankruptcy.
(a) No assignee for the benefit of creditors, custodian, receiver, trustee in bankruptcy, sheriff or any other officer of the court or official charged with taking over custody of Licensee’s assets or business may continue this Agreement or exploit or in any way use the Licensed Marks if Licensor terminates this Agreement pursuant to Section 7.2(c).
(b) In the event of a Licensee bankruptcy proceeding, the Parties acknowledge and agree that: (i) this Agreement is an executory contract within the meaning of Section 365 of Bankruptcy Code; and (ii) as set forth in Section 13.2 below, Licensor, in its interest to safeguard its valuable interests (including, without limitation, the Licensed Marks), has relied on the particular identity, skill and knowledge of the Licensee and, as a result, this Agreement: (A) is personal in nature to the Licensee; (B) is an agreement of the type described by Sections 365(c)(1) and 365(e)(2)(A) of the Bankruptcy Code; and (C) may not be assumed or assigned.
7.4 Effect of Termination. Upon expiration or termination of this Agreement, the licenses granted by this Agreement shall immediately and automatically terminate, and Licensee shall cease and desist from all use of the Licensed Marks. Notwithstanding the foregoing, if Licensee is not in breach of this Agreement as of the date of termination or expiration (it being understood and agreed that a breach of Licensee’s obligation to pay the Collaboration Fees under the Collaboration Agreement shall be deemed to be a breach of this Agreement), upon request from Licensee, Licensor will grant Licensee an additional six (6) month period to transition off the use of the Licensed Marks (the “Transition Period”), provided that Licensor determines, in its reasonable discretion, that there is no material risk of Licensee failing to pay the Collaboration Fees on applicable revenue generated during the Transition Period. This Agreement shall remain in effect during any such Transition Period. The following provisions shall survive termination or expiration of this Agreement (or the Transition Period, if applicable): Sections 1, 3, 6 (for the time period set forth therein), 7.3, 7.4, 8, 9, 10, 11, 12, (for the time period set forth therein) and 13.
| 8. | REPRESENTATIONS AND WARRANTIES |
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Each Party represents and warrants to the other Party that: (a) it has the full right, power, and authority to enter into this Agreement, to grant the rights and licenses granted hereunder, and to perform its obligations hereunder; and (b) when executed and delivered by such Party, this Agreement will constitute the legal, valid, and binding obligation of such Party, enforceable against such Party in accordance with its terms.
| 9. | DISCLAIMER OF WARRANTIES |
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LICENSEE ACKNOWLEDGES AND AGREES THAT THE LICENSED MARKS ARE LICENSED “AS IS”, WITHOUT WARRANTY OF ANY KIND, AND THAT LICENSOR DOES NOT MAKE, AND SPECIFICALLY DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE LICENSED MARKS, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE (INCLUDING ANY IMPLIED WARRANTY OF NONINFRINGEMENT, SUFFICIENCY, QUALITY, USEFULNESS, COMMERCIAL UTILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE).
| 10. | INDEMNIFICATION |
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10.1 Indemnification by Licensor. Licensor shall indemnify, defend and hold harmless Licensee and its Affiliates and its and their respective officers, directors, equityholders, employees and agents (“Licensee Indemnitees”) from and against any and all damages, losses, liabilities, costs, expenses and other payments (“Losses”) resulting from a demand, claim, lawsuit, or action asserted by any third Person against any of the Licensee Indemnitees to the extent such Losses arise out of or are in connection with allegations that Licensee’s use of a Beyond Licensed Mark in compliance with this Agreement infringes, dilutes or otherwise violates the intellectual property rights of a third Person.
10.2 Indemnification by Licensee. Licensee shall indemnify, defend and hold harmless Licensor and its Affiliates and its and their respective officers, directors, equityholders, employees and agents (“Licensor Indemnitees”) from and against any and all Losses resulting from a demand, claim, lawsuit, or action asserted by any third Person against any of the Licensor Indemnitees to the extent such Losses arise out of or are in connection with (a) Licensee’s operation of the Licensed Stores, Shop-within-a-Shops, or Kirkland Licensed Stores, including the sale, distribution and other commercialization of products and services through the Licensed Stores, Shop-within-a-Shops, or Kirkland Licensed Stores, with the exception of claims for which Licensor is required to indemnify the Licensee Indemnitees pursuant to Section 10.1, (b) Licensee’s sale, distribution and other commercialization of the Kirkland Licensed Products, or (c) Licensee’s breach of this Agreement.
10.3 Indemnity Procedures. If any claim or action is asserted against any Licensee Indemnitee or Licensor Indemnitee (each, an “Indemnified Party”) that would entitle such Indemnified Party to indemnification pursuant to this Section 10 (a “Proceeding”), the Indemnified Party will give prompt written notice thereof to the other party (the “Indemnifying Party”); provided, however, that the failure of any Indemnified Party to give timely notice hereunder will not affect its rights to indemnification hereunder, except to the extent that the Indemnifying Party demonstrates actual damage caused by such failure. The Indemnifying Party may elect to direct the defense or settlement of any such Proceeding by giving written notice to the Indemnified Party, which election will be effective immediately upon receipt by the Indemnified Party of such written notice of election. The Indemnifying Party will have the right to employ counsel reasonably acceptable to the Indemnified Party to defend any such Proceeding, or to compromise, settle or otherwise dispose of the same, if the Indemnifying Party deems it advisable to do so, all at the expense of the Indemnifying Party; provided that the Indemnifying Party will not settle, or consent to any entry of judgment in, any Proceeding without obtaining either: (a) an unconditional release of the Indemnified Party from all liability with respect to all claims underlying such Proceeding; or (b) the prior written consent of the Indemnified Party. An Indemnified Party will not settle, or consent to any entry of judgment, in any Proceeding without obtaining the prior written consent of the Indemnifying Party. Each Indemnifying Party and Indemnified Party will fully cooperate with each other in any such Proceeding and will make available to each other any books or records useful for the defense of any such Proceeding.
| 11. | LIMITATION OF LIABILITY |
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WITH THE EXCEPTION OF LICENSOR’S INDEMNIFICATION OBLIGATIONS UNDER SECTION 10 AND LIABILITY ARISING FROM LICENSOR’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, TO THE MAXIMUM EXTENT PERMITTED BY LAW, LICENSOR SHALL NOT BE LIABLE UNDER THIS AGREEMENT TO LICENSEE OR ANY OTHER PERSON FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, RELIANCE OR PUNITIVE DAMAGES OR LOST OR IMPUTED PROFITS, OR COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, WHETHER LIABILITY IS ASSERTED IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT PRODUCT LIABILITY) OR CONTRIBUTION, AND IRRESPECTIVE OF WHETHER LICENSOR OR ANY RELATED ENTITY HAS BEEN ADVISED OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE.
| 12. | INSURANCE |
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Simultaneously with the execution of this Agreement, Licensee shall promptly obtain and maintain in full force and effect at all times during the term of this Agreement and for at least three (3) years thereafter, at its own cost and expense, commercial general liability insurance on a per occurrence form, including broad form coverage for contractual liability, property damage, products liability and personal injury liability (including bodily injury and death), waiving subrogation, all which is satisfactory to Licensor, in the amount of $5,000,000 of primary and umbrella coverage from one or more insurance companies, each with a Best’s rating of “A” or better, and qualified to transact business in the territories where the Licensed Stores, Shop-within-a-Shops and Kirkland Licensed Stores are located and the Kirkland Licensed Products are manufactured, distributed or sold. Licensee also agrees to maintain in full force and effect at all times while this Agreement is in effect such Worker’s Compensation Insurance as is required by applicable law and Employer’s Liability Insurance with coverage as is customary for similarly situated companies. All insurance shall be primary and not contributory. All of said insurance shall: (a) provide for coverage resulting from claims reported after the policy period; (b) name Licensor as an additional insured; and (c) provide for at least thirty (30) days’ prior written notice to Licensor of any cancellation, modification, surrender, or any other action that would affect Licensor’s status or benefits thereunder. During the term of this Agreement, Licensee shall promptly furnish or cause to be furnished to Licensor evidence, in form and substance satisfactory to Licensor, of the maintenance and renewal of the insurance required herein, including copies of policies with applicable riders and endorsements, certificates of insurance, and continuing certificates of insurance. Contemporaneously with the execution and delivery of this Agreement, evidence of the full force and effect of the insurance required herein shall be delivered to Licensor. In all events, Licensor shall under no circumstances operate any Licensed Stores, Shop-within-a-Shops, or Kirkland Licensed Stores or manufacture, distribute or sell any Kirkland Licensed Products at any time or times when Licensee knows or should know that the insurance required herein has not been acquired, has been cancelled or for any other reason is not in full force and effect. Nothing contained in this Section 12 shall be deemed to limit in any way the indemnification provisions of Section 10.
| 13. | MISCELLANEOUS |
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13.1 Independent Contractor. Neither Party is and shall not represent itself to be a subsidiary, affiliate, legal representative, agent, employee, or partner of the other Party or otherwise connected with the other Party, except Licensee as an independent distributor of the Licensor Products in Shop-within-a-Shops, and neither Party shall have the authority to assume, create or incur any obligation or liability on behalf of the other Party.
13.2 Assignment. Nothing herein shall restrict Licensor from assigning or transferring any Licensed Marks to any Person; provided that any such transfer shall have no effect on the license granted to Licensee hereunder, and the Licensed Marks shall remain subject to this Agreement. This Agreement is personal to Licensee, and neither this Agreement nor any of the rights of Licensee hereunder shall be sold, transferred or assigned by Licensee by operation of law or otherwise, without the prior written consent of the Licensor. Any assignment, transfer, hypothecation, pledge or encumbrance of this Agreement by Licensee in violation of the foregoing shall be void from the beginning and constitute a material breach of this Agreement. Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors (whether by contract, operation of law or otherwise) and permitted assigns.
13.3 Notices. **** All notices, requests, consents, claims, demands, waivers, and other communications hereunder (each, a “Notice”) shall be in writing and addressed to the Parties at the addresses set forth below (or to such other address that may be designated by the receiving Party from time to time in accordance herewith). All Notices shall be delivered by personal delivery, nationally recognized overnight courier (with all fees pre-paid), or certified or registered mail (in each case, return receipt requested, postage pre-paid). Except as otherwise provided in this Agreement, a Notice is effective only: (a) upon receipt by the receiving Party; and (b) if the Party giving the Notice has complied with the requirements of this Section.
Licensor shall send notices to Licensee as follows:
The Brand House Collective, Inc.
5310 Maryland Way
Brentwood, Tennessee 37027
Attn: Amy Sullivan, President, Chief Executive Officer
With a copy to:
The Brand House Collective, Inc.
5310 Maryland Way
Brentwood, Tennessee 37027
Attn: General Counsel
Licensee shall send notices to Licensor as follows:
Bed Bath & Beyond, Inc.
433 W. Ascension Way, 3rd Floor
Murray, UT 84123
Attention: Melissa Smith, General Counsel
13.4 Governing Law; Forum; Waiver of Jury Trial. This Agreement shall be governed by the laws of the State of Delaware, without giving effect to the conflict of law provisions of Delaware, and any action or proceeding arising out of, or related to, this Agreement, shall only be brought in an appropriate state or federal court in Delaware. The Parties expressly consent to venue in Delaware and to the personal jurisdiction of the Delaware courts. EACH PARTY HERETO, FOR ITSELF AND ITS AFFILIATES, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE ACTIONS OF THE PARTIES HERETO OR THEIR RESPECTIVE AFFILIATES PURSUANT TO THIS AGREEMENT OR IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
13.5 Waiver. Failure of either Party to enforce or exercise any of its rights with respect to any provisions hereof against the other Party shall not constitute a waiver thereof nor shall it in any way affect the validity of this Agreement or act as a bar to such Party’s subsequent enforcement or exercise of any right created hereby. The exercise or enforcement by either Party of any of its rights hereunder shall not preclude or prejudice such Party from thereafter exercising the same or any other right which it may have under this Agreement.
13.6 Headings; Construction. The headings of Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All words used in this Agreement will be construed to be of such gender or number as the context requires. The word “including” shall be read as “including but not limited to” and otherwise shall be considered illustrative and non-limiting. All references to dollars or “$” in this Agreement will be to U.S. dollars. **** The language used in this Agreement will be construed, in all cases, according to its fair meaning, and not for or against either Party hereto. The Parties acknowledge that each Party has reviewed this Agreement and that rules of construction to the effect that any ambiguities are to be resolved against the drafting Party will not be available in the interpretation of this Agreement.
13.7 Successors and Assigns. This Agreement is entered into solely between, and may be enforced only by, the Parties and their permitted successors and assigns, and except as expressly set forth herein, this Agreement shall not be deemed to create any rights in third parties, including, without limitation, suppliers and customers of a Party, or to create any obligations of a Party to any such third parties.
13.8 Severability. If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, inoperative, or unenforceable, the remainder of this Agreement shall not be affected by such determination, and the remainder of this Agreement shall be given effect as if the invalid, inoperative, or unenforceable provision had not been included in this Agreement.
13.9 Equitable Relief; Cumulative Remedies. Licensee acknowledges that a breach of this Agreement by Licensee may cause Licensor irreparable damages, for which an award of damages would not be adequate compensation. In the event of such breach or threatened breach, Licensor will be entitled to seek equitable relief against Licensee without the obligation to post a bond or other security. Except as expressly set forth in this Agreement, the right and remedies under this Agreement are cumulative and in addition to any other rights or remedies available at law or in equity or otherwise.
13.10 Entire Agreement and Modification. Except as otherwise set forth herein, the Parties agree that this Agreement contains the entire agreement between the Parties and there are no other oral statements, representations, warranties or other agreements between the Parties. This Agreement can only be modified, amended or supplemented in writing signed by authorized representatives of both Parties.
13.11 Counterparts; Integration; Effectiveness
13.12 . This Agreement may be executed in counterparts (and by different Parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement constitutes the entire contract between the Parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. This Agreement shall become effective when it shall have been executed by each of Parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy, pdf or other electronic transmission shall be as effective as delivery of a manually executed counterpart of this Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective authorized officers as of the Second A&R Effective Date.
LICENSOR:
BED BATH & BEYOND, INC.
By:____________________________
Name:
Title:
LICENSEE:
THE BRAND HOUSE COLLECTIVE, INC.
By:____________________________
Name:
Title:
SCHEDULE A
Licensed Marks*
| Trademarks | Registration/Serial Nos. | Services |
|---|---|---|
| OVERSTOCK.COM | 2939764 | On-line wholesale and retail store services featuring general consumer merchandise, namely, clothing, shoes, bath and body products, jewelry, electronics, cookware, housewares, appliances, furniture, linens, pillows, decorative accessories, office furniture and accessories, toys, games, sporting goods, tools, outdoor lawn and garden equipment, pet supplies and paper products |
| BABY AND BEYOND | 98373503 (pending) | On-line retail store services featuring baby furniture, pillows, mattresses, sheets, changing pads and covers, swaddle wraps, baby carriers and wraps, nursing cover, bottle warmer, clothes, shoes, toys, bags, car seats, towels, breast pump accessories, baby food makers, baby tableware, pack n plays; gift registry services; retail store services featuring baby furniture, pillows, mattresses, sheets, changing pads and covers, swaddle wraps, baby carriers and wraps, nursing cover, bottle warmer, clothes, shoes, toys, bags, car seats, towels, breast pump accessories, baby food makers, baby tableware, pack n plays |
| Overstock.com Your Online Outlet | 3069011 | Online wholesale and retail discount store services in the field of general consumer merchandise |
 |
98452509 | Online retail services featuring general consumer merchandise |
| BUY BUY BABY | 2171479 | Retail stores featuring baby furniture, clothes, accessories and supplies |
 |
3855752 | Retail store services and computerized on-line retail store services featuring a wide variety of consumer goods of others |
 |
3855753 | Retail store services and computerized on-line retail store services featuring a wide variety of consumer goods of others |
| BED BATH & BEYOND HOME | 99154965 (pending) | Retail store, and on-line retail store services featuring general consumer merchandise |
*Licensee acknowledges and agrees (i) that Licensee’s rights are limited to the Licensed Marks set forth above in this Schedule A and (ii) that Licensee shall only use the Licensed Marks in the exact form as listed above (including any logos and/or artwork files provided by Licensor, if any), unless otherwise approved in writing by Licensor. Licensee further acknowledges and agrees that this Agreement does not grant, and Licensee shall not have, any rights with respect to any other trademark, label, logo, or the like, owned or used by Licensor, all of which are expressly reserved to Licensor.
SCHEDULE B
Licensee Affiliates
| 1. | Kirkland’s DC, Inc., a Tennessee corporation |
|---|---|
| 2. | Kirkland’s Stores, Inc., a Tennessee corporation |
| --- | --- |
| 3. | Kirkland’s Texas, LLC, a Tennessee limited liability companySCHEDULE C |
| --- | --- |
Kirkland Licensed Marks
| Trademark | Application Number | Application Date | Registration Number | Registration Date | Status | Owner |
|---|---|---|---|---|---|---|
| SIMPLE THINGS BY KIRKLAND’S | 88282928 | 30-JAN-2019 | 5979530 | 04-FEB-2020 | Registered | The Brand House Collective, Inc. |
 <br><br> <br>K (and Design) |
87902340 | 01-MAY-2018 | 5747217 | 07-MAY-2019 | Registered | The Brand House Collective, Inc. |
| BRING HAPPINESS HOME. | 87884456 | 19-APR-2018 | 5875131 | 01-OCT-2019 | Registered | The Brand House Collective, Inc. |
| KIRKLAND’S | 85169225 | 04-NOV-2010 | 3992852 | 12-JUL-2011 | Registered | The Brand House Collective, Inc. |
| KIRKLAND’S HOME | 78152914 | 09-AUG-2002 | 2769247 | 30-SEP-2003 | Registered | The Brand House Collective, Inc. |
| KIRKLAND’S OUTLET | 78152920 | 09-AUG-2002 | 2819618 | 02-MAR-2004 | Registered | The Brand House Collective, Inc. |
| THE KIRKLAND COLLECTION | 75425158 | 29-JAN-1998 | 2312426 | 25-JAN-2000 | Registered | The Brand House Collective, Inc. |
 <br><br> <br>KIRKLAND’S (and Design) |
73628849 | 06-NOV-1986 | 1450144 | 28-JUL-1987 | Registered | The Brand House Collective, Inc. |
| KIRKLAND’S HOME | 99173572 | 07-MAY-2025 | Pending | The Brand House Collective, Inc. | ||
| KIRKLAND’S HOME | 99171620 | 06-MAY-2025 | Pending | The Brand House Collective, Inc. |
Trade Names:
| 1. | Kirkland's Briar Patch |
|---|---|
| 2. | Kirkland's Home |
| --- | --- |
| 3. | Kirkland's Outlet |
| --- | --- |
| 4. | The Kirkland Collection |
| --- | --- |
| 5. | Kirklands.com |
| --- | --- |
| 6. | Kirkland's Texas Retail, LLC |
| --- | --- |
Common Law Trademarks:
| 1. | Briar Patch |
|---|---|
| 2. | Kirkland's, Inc. |
| --- | --- |
| 3. | Kirkland's Stores, Inc. |
| --- | --- |
| 4. | kirkland's.com,inc. |
| --- | --- |
| 5. | kirkland's.com |
| --- | --- |
| 6. | Kirkland's - For Your Home |
| --- | --- |
| 7. | Holiday by Kirkland's |
| --- | --- |
| 8. | Tuscan Gardens by Kirkland's |
| --- | --- |
All other Acquired Trademarks assigned to Licensor pursuant to the Purchase Agreement.
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48236064.5
ex_897050.htm
EXHIBIT 10.16
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of October 20, 2025, by and between LISA FOLEY, a resident of Nashville, Tennessee (the “Executive”), and THE BRAND HOUSE COLLECTIVE, INC., a Tennessee corporation with principal offices in Brentwood, Tennessee (the “Company”).
RECITALS
WHEREAS, the Company desires to employ the Executive as its Senior Vice President and Chief Marketing Officer, and the Executive desires to serve in such capacity pursuant to the terms of this Agreement;
NOW, THEREFORE, in consideration of the premises and the parties’ mutual covenants, it is agreed:
1. Definitions**.**
(a) “Affiliate” means any person or entity controlling, controlled by or under common control with the Company.
(b) “Base Salary” means Executive’s current annual base salary as defined in Section 4(a).
(c) “Board” means the Board of Directors of the Company.
(d) “Cause” means the occurrence of any of the following, as determined in good faith by the Board: (i) alcohol abuse or use of controlled drugs (other than in accordance with a physician’s prescription) by Executive; (ii) illegal conduct or gross misconduct of Executive which is materially and demonstrably injurious to the Company or its Affiliates including, without limitation, fraud, embezzlement, theft or proven dishonesty; (iii) Executive’s conviction of a misdemeanor involving moral turpitude or a felony; (iv) Executive’s entry of a guilty or nolo contendere plea to a misdemeanor involving moral turpitude or a felony; (v) Executive’s material breach of any agreement with, or duty owed to, the Company or its Affiliates; or (vi) Executive’s failure, refusal or inability to perform, in any material respect, Executive’s duties to the Company or its Affiliates, which failure continues for more than fifteen (15) days after written notice thereof from the Company.
(e) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
(f) “Committee” means the Compensation Committee of the Board of Directors.
(g) “Confidential Information” means all information respecting the business and activities of the Company, or any Affiliate, including, without limitation, the terms and provisions of this Agreement, information relating to vendor and supplier relations, inventory procurement and management, inventory distribution, marketing and sales, store operations, clients, customers, suppliers, employees, consultants, computer or other files, projects, products, computer disks or other media, computer hardware or computer software programs, marketing plans, financial information, methodologies, know-how, processes, practices, approaches, projections, forecasts, formats, systems, data gathering methods and/or strategies of the Company or any Affiliate. Notwithstanding the immediately preceding sentence, Confidential Information shall not include any information that is, or becomes, generally available to the public (unless such availability occurs as a result of Executive’s breach of any portion of Section 7(a) of this Agreement).
(h) “Disability” means Executive’s termination of employment with the Company as a result of Executive’s incapacity due to reasonably documented physical or mental illness that is reasonably expected to prevent Executive from performing Executive’s duties for the Company on a full-time basis for more than six (6) consecutive months; provided, however, that no such incapacity will be deemed to be a “Disability” unless Executive would also be deemed to be “Disabled” under Code Section 409A.
(i) “Good Reason” means the occurrence of any of the following: (i) the assignment to Executive of any duties inconsistent with Executive’s position, authority, duties or responsibilities, or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities; (ii) a reduction by the Company in Executive’s annual salary, provided that if the salaries of substantially all of the Company’s senior executive officers (including the Company’s President and Chief Executive Officer) are contemporaneously and proportionately reduced, a reduction in Executive’s salary will not constitute “Good Reason” hereunder; (iii) the failure by the Company, without Executive’s consent, to pay to her any portion of her current compensation, except pursuant to a compensation deferral elected by Executive, or other than an isolated and inadvertent failure which is remedied by the Company promptly after receipt thereof given by Executive; (iv) the relocation of the Company’s principal executive offices to a location more than thirty-five (35) miles from the location of such offices on the Effective Date, or the Company’s requiring Executive to be based anywhere other than the Company’s principal executive offices, except for required travel on the Company’s business; or (v) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement.
Notwithstanding the foregoing, Good Reason shall not be deemed to exist unless Executive gives the Company written notice within ninety (90) days after the occurrence of the event which Executive believes constitutes the basis for Good Reason, specifying the particular act or failure to act which Executive believes constitutes the basis for Good Reason. If the Company fails to cure such act or failure to act, within thirty (30) days after receipt of such notice, Executive may terminate employment for Good Reason within thirty (30) days following the end of that cure period. For the avoidance of doubt, if such act is not curable, Executive may terminate employment for Good Reason upon providing such notice.
(j) “Invention” means any invention, discovery, improvement or innovation with regard to any facet of the business of the Company or its Affiliates, whether or not patentable, made, conceived, or first actually reduced to practice by Executive, alone or jointly with others, in the course of, in connection with, or as a result of service as an employee of the Company or any of its Affiliates, including any art, method, process, machine, manufacture, design or composition of matter, or any improvement thereof. Each Invention shall be the sole and exclusive property of the Company.
(k) “Restricted Non-Competition Period” means, subject to the Company’s ability to extend the Restricted Non-Competition Period as described in Section 8(d) below, twelve(12) months after any termination of Executive’s employment hereunder, provided that the Restricted Non-Competition Period shall be extended for the period, if any, that Executive is in default under the restrictions contained in Section 7(d).
(1) “Restricted Non-Solicitation Period” means twenty-four (24) months after any termination of Executive’s employment hereunder, provided that the Restricted Non Solicitation Period shall be extended for the period, if any, that Executive is in default under the restrictions contained in Section 7(e).
2. Employment; Scope of Duties. The Company hereby employs Executive, and Executive accepts employment, as the Company’s Chief Marketing Officer. During the term of this Agreement, Executive shall report to the Company’s Chief Executive Officer, and shall perform those duties as may be, from time to time, assigned.
3. Term. The term of this Agreement will commence on October 20, 2025 (the “Effective Date”), and shall continue until terminated as provided herein.
4. Compensation and Benefits.
(a) Base Salary. As base compensation for the services rendered hereunder to the Company, Executive shall be paid an annual base salary of three hundred seventy-five thousand and no/100ths dollars ($375,000.00), payable in accordance with the Company’s standard payroll practices as in effect from time to time. The Committee will review Executive’s base salary on an annual basis and such base salary shall be subject to upward (but not downward) adjustment, as determined in the discretion of the Committee.
(b) Annual Bonus. For each fiscal year ending during Executive’s employment, Executive will be eligible to earn an annual bonus. The target amount of that bonus will be fifty (50%) percent of Executive’s Base Salary for the applicable fiscal year. The actual bonus payable with respect to a particular year will be determined by the Committee, in its discretion, based on the achievement of corporate and individual performance objectives established by the Committee. Any bonus payable under this section will be paid within two and one-half (2½) months following the end of the applicable fiscal year and will only be paid if Executive remains continuously employed by the Company through the actual bonus payment date.
(c) Equity Incentives. Equity incentives may be granted to Executive from time to time pursuant to the terms and conditions of the Amended and Restated 2002 Equity Incentive Plan (the “Plan”) at the discretion of the Committee.
(d) Benefit Plans. Executive shall be eligible to participate in and be covered on the same basis as other senior management of the Company, under all employee benefit plans and programs maintained by the Company, including without limitation retirement, health insurance and life insurance.
(e) Paid Time Off. Executive will be entitled to paid time off each year in accordance with the policies of the Company, as in effect from time to time.
5. Expense Reimbursement. Executive shall be reimbursed for those reasonable expenses (as determined by the Company in accordance with then existing policies) necessarily incurred by Executive in the performance of the duties herein as are specifically approved by the Company and as verified by vouchers, receipts, or other evidence of expenditure and business necessity as from time to time required by the Company. All reimbursements provided under this Agreement shall be made or provided in accordance with the requirements of Code Section 409A to the extent that such reimbursements are subject to Code Section 409A, including, where applicable, the requirements that (i) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (ii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred, and (iii) the right to reimbursement is not subject to set off or liquidation or exchange for any other benefit.
6. Other Employment; Conduct. Executive agrees to devote all working time and efforts to performing the duties required hereunder. Executive shall not engage in other employment or become involved in other business ventures requiring Executive’s time, absent the prior written consent of the Chief Executive Officer, which consent may be withheld or denied in the sole discretion of the Chief Executive Officer. Executive shall at all times conduct such duties and Executive’s personal affairs in a manner that is satisfactory to the Company and so as to not in any manner injure the reputation of or unfavorably reflect upon the Company or third persons or entities connected therewith.
7. Restrictive Covenants. To induce the Company to enter into this Agreement and in recognition of the compensation to be paid to Executive pursuant to this Agreement, Executive agrees to be bound by the provisions of this Section 7 (the “Restrictive Covenants”). These Restrictive Covenants will apply without regard to whether any termination or cessation of Executive’s employment is initiated by the Company or Executive, and without regard to the reason for that termination or cessation. All provisions of this Section 7 shall survive the termination of this Agreement.
(a) Confidentiality. Executive shall not, during the term of this Agreement and at any time thereafter, without the prior express written consent of the Company, directly or indirectly divulge, disclose or make available or accessible any Confidential Information to any person, firm, partnership, corporation, trust or any other entity or third party (other than when required to do so in good faith to perform Executive’s duties and responsibilities or when required to do so by a lawful order of a court of competent jurisdiction, any governmental authority or agency, or any recognized subpoena power). In addition, Executive shall not create any derivative work or other product based on or resulting from any Confidential Information (except in the good faith performance of her duties under this Agreement). Executive shall also proffer to the Board’s designee, no later than the effective date of any termination of Executive’s employment with the Company for any reason, and without retaining any copies, notes or excerpts thereof, all memoranda, computer disks or other media, computer programs, diaries, notes, records, data, customer or client lists, marketing plans and strategies, and any other documents consisting of or containing Confidential Information that are in Executive’s actual or constructive possession or which are subject to her control at such time.
(b) Ownership of Inventions. Each Invention made, conceived or first actually reduced to practice by Executive, whether alone or jointly with others, during the term of this Agreement and each Invention made, conceived or first actually reduced to practice by Executive, within one (1) year after the termination of this Agreement, which relates in any way to work performed for the Company or its Affiliates during the term of this Agreement, shall be promptly disclosed in writing to the Board. Such report shall be sufficiently complete in technical detail and appropriately illustrated by sketch or diagram to convey to one skilled in the art of which the invention pertains, a clear understanding of the nature, purpose, operations, and, to the extent known, the physical, chemical, biological or other characteristics of the Invention. Executive agrees to execute an assignment to the Company or its nominee of Executive’s entire right, title and interest in and to any Invention, without compensation beyond that provided in this Agreement. Executive further agrees, upon the request of the Company and at its expense, that Executive will execute any other instrument and document necessary or desirable in applying for and obtaining patents in the United States and in any foreign country with respect to any Invention. Executive further agrees, whether or not Executive is then an employee of the Company, to cooperate to the extent and in the manner reasonably requested by the Company in the prosecution or defense of any claim involving a patent covering any Invention or any litigation or other claim or proceeding involving any Invention covered by this Agreement, but all expenses thereof shall be paid by the Company.
(c) Works for Hire. Executive also acknowledges and agrees that all works of authorship, in any format or medium, created wholly or in part by Executive, whether alone or jointly with others, in the course of performing Executive’s duties for the Company or any of its Affiliates, or while using the facilities, money or other resources of the Company or any of its Affiliates, whether or not during Executive’s work hours, are works made for hire (“Works”), as defined under United States copyright law, and that the Works (and all copyrights arising in the Works) are owned exclusively by the Company. To the extent any such Works are not deemed to be works made for hire, Executive agrees, without compensation beyond that provided in this Agreement, to execute an assignment to the Company or its nominee of all right, title and interest in and to such Work, including all rights of copyright arising in or related to the Works.
(d) Restrictive Non-Competition Covenant. Executive agrees that during the term of this Agreement and for the Restricted Non-Competition Period, Executive will not, directly or indirectly, own, manage, operate, control, be employed by, participate in, lend money, advise or furnish services or information of any kind (including consulting services) to, be compensated in any manner by, or be connected in any way with the management, ownership, operation or control of any of the entities list on Exhibit A hereto. Executive understands and acknowledges that the type of retail business conducted by the Company is national in scope. Executive further acknowledges that these restrictions are reasonable and necessary to protect the legitimate interests of the Company and its Affiliates and that the duration and geographic scope of these restrictions are reasonable given the nature of this Agreement and the position Executive will hold within the Company. Executive further acknowledges that these restrictions are included herein in order to induce the Company to employ Executive pursuant to this Agreement and in connection with the increased compensation and benefits provided hereunder and that the Company would not have entered into this Agreement, increased Executive’s compensation and other benefits or otherwise employed Executive in the absence of these restrictions.
During the term of this Agreement and for the Restricted Non-Competition Period, Executive agrees to (i) notify any prospective employer of the existence of this restrictive non competition covenant, and (ii) notify the Company of Executive’s commencement of employment with any other employer, along with the identity of such new employer.
(e) Restrictive Non-Solicitation Covenant.
1. Covenant Not to Solicit Company Employees. During the term of this Agreement and for the Restricted Non-Solicitation Period, Executive agrees that Executive shall not directly or indirectly on Executive’s own behalf or on behalf or any other employer solicit any present employee of the Company to terminate their employment relationship with the Company.
2. Covenant Not to Solicit Customers. During the term of this Agreement and for the Restricted Non-Solicitation Period, Executive shall not (except on the Company’s behalf), directly or indirectly, on Executive’s own behalf or on behalf of any other person, firm, partnership, corporation or other entity, contact, solicit, divert, induce, call on, take away, do business or otherwise harm the Company’s relationship, or attempt to contact, solicit, divert, induce, call on, take away, do business or otherwise harm the Company’s relationship, with any past, present or prospective customer of the Company or any of its Affiliates (each, a “Customer”). Following the term of this Agreement, a past or prospective Customer shall be limited to such Customer measured within the two (2) year period prior to the date of termination hereunder.
8. Termination.
(a) Termination Rights. The Company may terminate Executive’s employment hereunder at any time either for any or no reason, and Executive may terminate Executive’s employment hereunder for Good Reason or upon thirty (30) days advance notice without Good Reason. Upon any such termination, Executive shall and shall be deemed to have immediately resigned from any and all officer, director and other positions she then holds with the Company and its Affiliates (and this Agreement shall act as notice of resignation by Executive without any further action required by Executive). Upon any such termination, Executive shall be entitled only to such compensation and benefits described in this Section 8.
(b) Company Terminates Executive Without Cause or Executive Resigns for Good Reason. If the Company terminates Executive’s employment without Cause or if Executive resigns for Good Reason, the Company shall, subject to Section 8(e) below, pay the Executive one
(1) times Executive’s Base Salary for the year in which such termination shall occur in regular payroll cycles.
(c) Other Terminations. If Executive’s employment with the Company ceases for any reason other than as described in Section 8(b) above (including but not limited to termination (a) by the Company for Cause, (b) as a result of Executive’s death, (c) as a result of Executive’s Disability or (d) by Executive without Good Reason), then the Company’s obligation to Executive will be limited solely to the payment of accrued and unpaid base salary through the date of such cessation. All compensation and benefits will cease at the time of such cessation and, except as otherwise provided by COBRA, the Company will have no further liability or obligation by reason of such termination.
(d) Extension of Restricted Non-Competition Period. At any time during the sixty (60) day period immediately following Executive’s termination of employment hereunder for any reason, the Company may elect to extend the Restricted Non-Competition Period for up to an additional twelve (12) month period (or such lesser period, as determined in accordance with the Company’s election). In the event that the Company provides written notice to Executive that the Restricted Non-Competition Period will be extended pursuant to this Section 8(d), in addition to any amounts owed to executive under Section 8(b), Executive will be entitled to receive her Base Salary in substantially equal monthly installments for the number of months that the Company elects to extend the applicable Restricted Non-Competition Period. Such payments will commence on the first anniversary of Executive’s termination of employment and continue monthly for the duration of any such Restricted Non-Competition Period.
(e) Severance Conditioned Upon Release. Notwithstanding any other provision of this Agreement, no amount will be paid or benefit provided under Section 8(b) hereof unless Executive executes and delivers to the Company a release substantially identical to that attached hereto as Exhibit B (a “Release”) that becomes irrevocable within thirty (30) days following Executive’s separation from service. Subject to satisfaction of the foregoing Release requirement and to any delay required by the next paragraph, the payments described in Section 8(b) above will commence on the 30th day following Executive’s separation from service. Notwithstanding any other provision of this Agreement, the Company’s refusal to provide severance benefits under Section 8(b) due to Executive’s failure or refusal to execute and deliver the Release in accordance with this paragraph, or due to Executive’s breach or purported revocation of that Release, will not relieve Executive of any obligation under Section 7 of this Agreement. Rather, in such a case, Executive’s obligations under Section 7 will apply as though such severance benefits had been provided.
(f) Compliance with Code Section 409A. If the termination giving rise to the payments described in Section 8(b) is not a “Separation from Service” within the meaning of Treas. Reg.§ 1.409A-l(h)(l) (or any successor provision), then the amounts otherwise payable pursuant to that section will instead be deferred without interest and will not be paid until Executive experiences a Separation from Service. In addition, to the extent compliance with the requirements of Treas. Reg. § 1.409A-3(i)(2) (or any successor provision) is necessary to avoid the application of an additional tax under Code Section 409A to payments due to Executive upon or following Separation from Service, then notwithstanding any other provision of this Agreement (or any otherwise applicable plan, policy, agreement or arrangement), any such payments that are otherwise due within six months following Executive’s Separation from Service (taking into account the preceding sentence of this paragraph) will be deferred without interest and paid to Executive in a lump sum immediately following that six month period. This paragraph should not be construed to prevent the application of Treas. Reg. § l.409A-l(b)(9)(iii)(or any successor provision) to amounts payable hereunder. For purposes of the application of Treas. Reg.§ 1.409A l(b)(4)(or any successor provision), each payment in a series of payments will be deemed a separate payment.
(g) Compliance with Code Section 280G. If any payment or distribution by the Company to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement or the lapse or termination of any restriction on or the vesting or exercisability of any payment or benefit (each a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Code (or any successor provision thereto) or to any similar tax imposed by state or local law (such tax or taxes are hereafter collectively referred to as the “Excise Tax”), then the aggregate amount of Payments payable to Executive shall be reduced to the aggregate amount of Payments that may be made to Executive without incurring an excise tax (the “Safe-Harbor Amount”) in accordance with the immediately following sentence; provided that such reduction shall only be imposed if the aggregate after-tax value of the Payments retained by Executive (after giving effect to such reduction) is equal to or greater than the aggregate after tax value (after giving effect to the Excise Tax) of the Payments to Executive without any such reduction. Any such reduction shall be made in the following order: (i) first, any future cash payments (if any) shall be reduced (if necessary, to zero); (ii) second, any current cash payments shall be reduced (if necessary, to zero); (iii) third, all non-cash payments (other than equity or equity derivative related payments) shall be reduced (if necessary, to zero); and (iv) fourth, all equity or equity derivative payments shall be reduced.
9. Injunctive Relief. Executive understands and agrees that any breach by Executive of the Restrictive Covenants will cause continuing and irreparable injury to the Company for which monetary damages would not be an adequate remedy. Executive shall not, in any action or proceeding to enforce any of the provisions of this Agreement, assert the claim or defense that such an adequate remedy at law exists. In the event of such breach by Executive, the Company shall have the right to enforce the Restrictive Covenants by seeking injunctive or other relief in any court and this Agreement shall not in any way limit remedies of law or in equity otherwise available to the Company.
10. Waiver of Breach. Any waiver by the Company of a breach of any provision hereof shall not operate as or constitute a waiver of any of the terms hereof with regard to any subsequent breach.
11. Assignment. Neither this Agreement nor any rights or obligations hereunder may be assigned except by the Company to a business entity which is a successor to the Company by merger, stock exchange, consolidation, or other reorganization, or to an entity which results from a purchase or sale or other transfer or transaction involving third parties, or except to an entity owned or controlled by the principals of the Company. This Agreement (and all rights and benefits hereunder) is for Executive’s personal services and is, therefore, not assignable by Executive.
12. Entire Agreement; Modification. This Agreement is the entire agreement of the parties with regard to Executive’s employment and all other agreements and understandings, whether written or oral, if prior hereto, are merged herein so that the provisions of any prior agreement(s) are void and of no further force and effect. This Agreement may not be modified except by a writing signed by both parties.
13. Applicable Law; Venue. This Agreement shall be construed in accordance with the laws of the State of Tennessee, without regard to the principles of conflicts of law, even if Employee executed this Agreement outside Tennessee or Davidson County, Tennessee, and even if some or all of Executive’s services are to be rendered outside Tennessee. All legal disputes between the parties shall have a venue in the courts of Davidson County, Tennessee.
14. Notices. Any notice or communication required or permitted under this Agreement will be made in writing and (a) sent by overnight courier, (b) mailed by overnight U.S. express mail, return receipt requested or (c) sent by telecopier. Any notice or communication to Executive will be sent to the address contained in Executive’s personnel file. Any notice or communication to the Company will be sent to the Company’s principal executive offices, to the attention of its Vice President, Human Resources. Notwithstanding the foregoing, either party may change the address for notices or communications hereunder by providing written notice to the other in the manner specified in this Section.
15. Provisions Severable. Any provision hereof adjudged void or voidable by a court of competent jurisdiction shall be deemed severable such that the remaining provisions are in full force and effect. To the extent that any provision hereof is adjudged to be overly broad, then such provision shall be deemed automatically replaced by a similar provision as near to the original provision as possible but still enforceable.
16. Section Headings. The headings of sections and paragraphs of this Agreement are inserted for convenience only and will not in any way affect the meaning or construction of any provision of this Agreement.
17. Parties Bound. This Agreement shall bind the parties’ respective heirs, legal representatives, successors and permitted assigns.
18. Other Agreements. Executive represents and warrants to the Company that there are no restrictions, agreements or understandings whatsoever to which Executive is party (or by which Executive is otherwise bound) that would prevent or make unlawful Executive’s execution of this Agreement or employment by the Company, or that would in any way prohibit, limit or impair (or purport to prohibit, limit or impair) Executive’s provision of services to the Company.
19. Counterparts: Facsimile. This Agreement may be executed in multiple counterparts (including by facsimile signature), each of which will be deemed to be an original, but all of which together will constitute but one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
20. Clawback. Executive acknowledges and agrees that Executive’s rights, payments and benefits with respect to any incentive compensation (in the form of cash or equity) shall be subject to any reduction, cancellation, forfeiture or recoupment, in whole or in part, upon the occurrence of certain specified events, as may be required by any rule or regulation or as set forth in a separate “clawback” policy as may be adopted from time to time by the Board or its Compensation Committee.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and Executive has executed this Agreement, in each case as of the date first above written.
Lisa Foley
THE BRAND HOUSE COLLECTIVE, INC.
By:
Printed Name: Amy E. Sullivan
Title: President and Chief Executive Officer
ex_897051.htm
EXHIBIT 10.17
AMENDMENT NO. 1 TO
AMENDED AND RESTATED TERM LOAN CREDIT AGREEMENT
This AMENDMENT NO. 1 TO AMENDED AND RESTATED TERM LOAN CREDIT AGREEMENT (this “Amendment”), dated as of September 12, 2025 (the “Amendment Date”), is entered into by and among KIRKLAND’S STORES, INC., a Tennessee corporation (“Lead Borrower), the other Loan Parties party hereto, the lenders party hereto (the “Lenders”) and BED BATH & BEYOND, INC., a Delaware corporation (f/k/a Beyond, Inc., a Delaware corporation), as the Administrative Agent and Collateral Agent (in such capacities, the “Agent”). Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Amended Credit Agreement (as defined below).
RECITALS
A. Lead Borrower, the other Loan Parties party thereto, the Lenders party thereto and the Agent are party to that certain Amended and Restated Term Loan Credit Agreement, dated as of May 7, 2025 (as amended, restated, supplemented or otherwise modified in writing prior to the date hereof, the “Credit Agreement”).
B. The Loan Parties have requested that the Agent and the Lenders amend, and the Agent and the Lenders have agreed to amend, the Credit Agreement on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the terms, covenants and conditions contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Amendments to Credit Agreement. Subject to the satisfaction of the conditions precedent set forth in Section 3 below, and in reliance on the representations, warranties, covenants and other agreements of the Loan Parties contained herein, the Loan Parties, Agent and the Lenders party hereto agree that the Credit Agreement is hereby amended as follows (the Credit Agreement as so amended, the “Amended Credit Agreement”):
(a) the Credit Agreement shall be amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in the document attached as Exhibit A hereto; and
(b) Schedule 2.01 of the Credit Agreement shall be amended to add the Delayed Draw Term Loan Commitments and the related Applicable Percentages specified on Exhibit B hereto.
SECTION 2. Representations and Warranties of the Loan Parties. In order to induce the Agent and the Lenders to enter into this Amendment, each of the Loan Parties represent and warrant that:
(a) Each Loan Party (a) is a corporation, limited liability company, partnership or limited partnership, duly incorporated, organized or formed, validly existing and, where applicable, in good standing under the Laws of the jurisdiction of its incorporation, organization or formation, (b) has all requisite power and authority and all requisite governmental licenses, permits, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under this Amendment and to perform its obligations under the Amended Credit Agreement, and (c) is duly qualified and is licensed and, where applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.
(b) The execution, delivery and performance of this Amendment and the performance of the Amended Credit Agreement by each Loan Party has been duly authorized by all necessary corporate or other organizational action, and does not and will not (a) contravene the terms of any of such Loan Party’s Organization Documents; (b) conflict with or result in any breach, termination, or contravention of, or constitute a default under, or require any payment to be made under (i) any Material Contract or any Material Indebtedness to which such Loan Party is a party or affecting such Loan Party or the properties of such Loan Party or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Loan Party or its property is subject; (c) result in or require the creation of any Lien upon any asset of any Loan Party (other than Liens in favor of the Agent under the Security Documents); or (d) violate any Law.
(c) No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Amendment or the Amended Credit Agreement (as the case may be), except for such as have been obtained or made and are in full force and effect.
(d) This Amendment has been duly executed and delivered by each Loan Party that is party hereto. This Amendment and the Amended Credit Agreement each constitutes a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
(e) All of the representations and warranties of the Loan Parties under this Amendment and the other Loan Documents are true and correct in all material respects (in each case, without duplication of any materiality qualifier contained herein or therein, as applicable) as of the date hereof (or if, any such representation or warranty relates to an earlier date, such earlier date), immediately before and immediately after giving effect to this Amendment, the Amended Credit Agreement and the transactions contemplated herein and therein.
(f) There shall not exist any Default or Event of Default, in each case immediately before and after giving effect to this Amendment, the Amended Credit Agreement and the transactions contemplated herein and therein.
(g) Since February 1, 2025, there has occurred no event which has had or would reasonably be expected to have a Material Adverse Effect.
SECTION 3. Effectiveness. This Amendment shall be effective at the time that each of the conditions precedent set forth in this Section 3 shall have been met (such date, the “Effective Date”):
(a) Amendment. The Agent shall have received duly executed counterparts of this Amendment signed by the Loan Parties and the Lenders.
(b) Payment of Legal Fees and Expenses. The Loan Parties shall have paid all reasonable and documented out-of-pocket costs and expenses of the Agent and its professional advisors (including, without limitation, Latham & Watkins LLP) incurred in connection with this Amendment and the other documents related thereto.
(c) Representations and Warranties. The representations and warranties contained herein shall be true, correct and complete in all respects.
(d) No Default, Event of Default. There shall exist no Default or Event of Default, in each case, immediately before and after giving effect to this Amendment, the Amended Credit Agreement and the transactions contemplated herein and therein.
(e) Closing/Solvency Certificate. The Agent shall have received a certificate of a Responsible Officer of the Lead Borrower certifying as to (i) the satisfaction of the conditions precedent set forth in Sections 3(c) and (d) of this Amendment, (ii) the Solvency of the Loan Parties as of the Effective Date after giving effect to the Amendment, the Amended Credit Agreement and the transactions contemplated herein and therein, and (iii) either that (A) no consents, licenses or approvals are required in connection with the execution, delivery and performance of this Amendment and the performance of the Amended Credit Agreement by such Loan Party and the enforceability against such Loan Party of the Amendment and the Amended Credit Agreement, or (B) that all such consents, licenses and approvals have been obtained and are in full force and effect.
(f) Secretary’s Certificate. The Agent shall have received such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Agent may require certifying (i) the authority of such Loan Party to enter into this Amendment and to perform its obligations hereunder and under the Amended Credit Agreement, (ii) the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Amendment and the Amended Credit Agreement, (iii) (A) that attached thereto are true, correct and complete copies of such Loan Party’s Organization Documents and that such Organization Documents are in full force and effect as of the Effective Date or (B) that there have been no changes to the Organizational Documents of such Loan Party since true, correct and complete copies of the same were delivered to the Agent on the Original Closing Date (as defined in the Amended Credit Agreement),and (iv) that such Loan Party is validly existing, in good standing and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to so qualify in such jurisdiction could not reasonably be expected to have a Material Adverse Effect (as evidenced by Certificates of Good Standing (or equivalent documents) issued on a recent date by the Secretary of State (or equivalent Person) in the jurisdiction of formation of such Loan Party.
(g) Notes. The Agent shall have received Delayed Draw Term Loan Notes in favor of each Lender requesting an Amendment No. 1 Term Loan Note.
(h) IP Purchase. The Closing (as defined in the Intellectual Property Purchase Agreement) shall have occurred and the Administrative Agent shall have received all material documents entered into in connection therewith (including, for the avoidance of doubt, all documentation evidencing the BofA Closing Consent (as defined in the Intellectual Property Purchase Agreement)).
(i) Opinion. The Agent shall have received a favorable opinion of Bass, Berry & Sims PLC, counsel to the Loan Parties, addressed to the Agent and each Lender and addressing such matters concerning the Loan Parties, the Amendment and the Amended Credit Agreement as the Agent may reasonably request;
(j) Intercreditor Agreement Amendment. The Agent shall have received an amendment to the ABL Intercreditor Agreement, in form and substance acceptable to the Agent and duly executed by the persons party thereto.
(k) ABL Credit Agreement Amendment. The Agent shall have received an amendment to the ABL Credit Agreement (which, for the avoidance of doubt includes a consent to this Amendment), in form and substance acceptable to the Agent and duly executed by the persons party thereto.
(l) Lien Searches. The Agent shall have received Lien search results with respect to the Loan Parties from all jurisdictions and filing offices reasonably requested by the Agent disclosing no Liens with priority senior to the Liens on the assets of the Loan Parties granted or to be granted pursuant to the Security Documents, except Liens permitted under Section 7.01 of the Amended Credit Agreement.
SECTION 4. Reference to and Effect upon the Loan Documents.
(a) Except as expressly modified hereby, all terms, conditions, covenants, representations and warranties contained in the Amended Credit Agreement and the other Loan Documents, and all rights of the Lenders and all of the Obligations, shall remain in full force and effect. Each of the Loan Parties hereby confirms that the Amended Credit Agreement and the other Loan Documents are in full force and effect and that, as of the Effective Date, no Loan Party has any right of setoff, recoupment or other offset or any defense, claim or counterclaim with respect to any of the Obligations, the Amended Credit Agreement or any other Loan Document.
(b) The execution, delivery and effectiveness of this Amendment shall not directly or indirectly (i) constitute a consent or waiver of any past, present or future violations of any provisions of the Amended Credit Agreement, this Amendment or any other Loan Document or (ii) except as expressly provided herein, amend, modify or operate as a waiver of any provision of the Amended Credit Agreement or any other Loan Documents or any right, power or remedy of any of the Lenders.
(c) From and after the Effective Date, (i) the term “Agreement” in the Amended Credit Agreement, and all references to the Credit Agreement in any Loan Document, shall mean the Amended Credit Agreement and (ii) the term “Loan Documents” in the Amended Credit Agreement and the other Loan Documents shall include, without limitation, this Amendment and any agreements, instruments and other documents executed and/or delivered in connection herewith.
(d) Neither the Agent nor any other Lender has waived, is by this Amendment waiving or has any intention of waiving (regardless of any delay in exercising such rights and remedies) any Default or Event of Default which may be continuing on the Effective Date or any Default or Event of Default which may occur after the Effective Date, and neither the Agent nor any Lender has agreed to forbear with respect to any of its rights or remedies concerning any Defaults or Events of Default, which may have occurred or are continuing as of the Effective Date, or which may occur after the Effective Date.
(e) This Amendment shall not be deemed or construed to be a satisfaction, reinstatement, novation or release of the Amended Credit Agreement or any other Loan Document.
SECTION 5. Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement
SECTION 6. Costs and Expenses. As provided in Section 10.04 of the Amended Credit Agreement, the Loan Parties agree to reimburse the Agent for all reasonable out-of-pocket costs and expenses, including the reasonable fees and disbursements of counsel, incurred by the Agent in connection with this Amendment.
SECTION 7. Governing Law; Submission to Jurisdiction; Waiver of Venue; Service of Process; Actions Commenced by Loan Parties.. Section 10.14 of the Amended Credit Agreement is incorporated herein by reference as if separately set forth in full herein.
SECTION 8. Headings. Headings used in this Amendment are for convenience only and shall not affect the interpretation of any provision hereof.
SECTION 9. Loan Document. This Amendment shall constitute a Loan Document. For the avoidance of doubt, any breach of the representations, warranties and covenants contained in this Amendment shall be an Event of Default under the Amended Credit Agreement.
SECTION 10. Reaffirmation. Each of the Loan Parties as debtor, grantor, pledgor, guarantor, assignor, or in other any other similar capacity in which such Loan Party grants liens or security interests in its property, proxy rights with respect to its owned or issued equity or otherwise acts as accommodation party, indemnitor or guarantor, as the case may be, hereby (i) acknowledges, ratifies and reaffirms that all Obligations constitute valid and existing “Obligations” under the Amended Credit Agreement (including all of its payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which it is a party (after giving effect hereto)) and (ii) to the extent such Loan Party pledged, granted liens on or security interests in (or any other similar rights) any of its property pursuant to any such Loan Document as security for or otherwise guaranteed the Borrowers’ Obligations under or with respect to the Loan Documents, acknowledges, ratifies and reaffirms such guarantee and grant of security interests and liens and confirms and agrees that such pledges, security interests, liens and other similar rights remain in full force and effect notwithstanding the effectiveness of this Amendment to secure all of the Obligations arising under or pursuant to and as defined in the Amended Credit Agreement. Without limiting the generality of the foregoing, each Loan Party further agrees (A) that any reference to “Obligations” contained in any Loan Documents shall include, without limitation, the “Obligations” as such term is defined in the Amended Credit Agreement and (B) that the related guarantees and grants of security contained in such Loan Documents shall include and extend to such Obligations. Each of the Loan Parties hereby consents to this Amendment and acknowledges that each of the Loan Documents remains in full force and effect and is hereby ratified and reaffirmed. The execution of this Amendment shall not operate as a waiver of any right, power or remedy of the Agent or Lenders, constitute a waiver of any provision of any of the Loan Documents or serve to effect a novation of the Obligations.
SECTION 11. Severability. Section 10.12 of the Amended Credit Agreement is incorporated herein by reference as if separately set forth in full herein.
SECTION 12. Counterparts; Integration; Effectiveness. Section 10.10 of the Amended Credit Agreement is incorporated herein by reference as if separately set forth in full herein.
SECTION 13. Release of Claims. In consideration of the Lenders’ agreements contained in this Amendment, each Loan Party signatory hereby irrevocably releases and forever discharges the Lenders and the Agent and their affiliates, subsidiaries, successors, assigns, directors, officers, employees, agents, consultants and attorneys (each, a “Released Person”) of and from any and all claims, suits, actions, investigations, proceedings or demands, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law of any kind or character, known or unknown, which any such Loan Party ever had or now has against the Agent, any Lender or any other Released Person which relates, directly or indirectly, to any acts or omissions of any Agent, any Lender or any other Released Person relating to the Amended Credit Agreement or any other Loan Document on or prior to the date hereof.
SECTION 14. Assignments; No Third Party Beneficiaries. This Amendment shall be binding upon and inure to the benefit of the Agent, the Borrowers, the other Loan Parties, each Lender and their respective successors and permitted assigns. No Person other than the Borrowers, the other Loan Parties, the Lenders and in the case of Section 13, the Released Persons, shall have any rights hereunder or be entitled to rely on this Amendment and all third-party beneficiary rights (other than the rights of the Released Persons under Section 13 hereof) are hereby expressly disclaimed.
SECTION 15. Post-Closing Obligations. The Borrowers shall deliver to Agent, within five (5) Business Days after the Effective Date, evidence in form and substance reasonably acceptable to Agent that ABL Agent’s Liens encumbering the Acquired Assets (as defined in the Intellectual Property Purchase Agreement) have been released.
[Signature pages to follow]
IN WITNESS WHEREOF, each of the undersigned has caused this Amendment to be duly executed and delivered as of the date first above written.
| BORROWERS: |
|---|
| KIRKLAND’S STORES, INC., as Lead Borrower and as a Borrower<br><br> <br>By: <br> Name:<br><br> <br>Title:<br><br> <br>KIRKLAND’S TEXAS, LLC, as a Borrower<br><br> <br>By: <br> Name:<br><br> <br>Title:<br><br> <br>OTHER LOAN PARTIES<br><br> <br>THE BRAND HOUSE COLLECTIVE, INC. (f/k/a Kirkland’s, Inc.), as Parent and as a Guarantor<br><br> <br>By: <br> Name:<br><br> <br>Title:<br><br> <br>KIRKLAND’S DC, INC., as a Guarantor<br><br> <br>By: <br> Name:<br><br> <br>Title: |
| BED BATH & BEYOND, INC. (f/k/a Beyond Inc.), as Administrative Agent, Collateral Agent and a Lender<br><br> <br>By: <br> Name:<br> Title: |
| --- |
Exhibit A
Amended Credit Agreement
[Attached]
Exhibit B
Supplement to Schedule 2.01 to Credit Agreement
| Lender | Delayed Draw Term Loan Commitment | Applicable Percentage of Delayed Draw Term Loan Commitments |
|---|---|---|
| Bed Bath & Beyond, Inc., f/k/a Beyond, Inc. | $20,000,000 | 100.000000000% |
| Total | $20,000,000 | 100.000000000% |
ex_897052.htm
EXHIBIT 10.18
AMENDMENT NO. 2 TO
AMENDED AND RESTATED TERM LOAN CREDIT AGREEMENT
This AMENDMENT NO. 2 TO AMENDED AND RESTATED TERM LOAN CREDIT AGREEMENT (this “Amendment”), dated as of November 24, 2025 (the “Amendment Date”), is entered into by and among KIRKLAND’S STORES, INC., a Tennessee corporation (“Lead Borrower), the other Loan Parties party hereto, the lenders party hereto (the “Lenders”) and BED BATH & BEYOND, INC., a Delaware corporation (f/k/a Beyond, Inc., a Delaware corporation), as the Administrative Agent and Collateral Agent (in such capacities, the “Agent”). Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Amended Credit Agreement (as defined below).
RECITALS
A. Lead Borrower, the other Loan Parties party thereto, the Lenders party thereto and the Agent are party to that certain Amended and Restated Term Loan Credit Agreement, dated as of May 7, 2025 (as amended by that certain Amendment No. 1 to Amended and Restated Term Loan Credit Agreement, dated as of September 15, 2025 and as further amended, restated, supplemented or otherwise modified in writing prior to the date hereof, the “Credit Agreement”).
B. The Loan Parties have requested that the Agent and the Lenders amend, and the Agent and the Lenders have agreed to amend, the Credit Agreement on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the terms, covenants and conditions contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Amendments to Credit Agreement. Subject to the satisfaction of the conditions precedent set forth in Section 3 below, and in reliance on the representations, warranties, covenants and other agreements of the Loan Parties contained herein, the Loan Parties, Agent and the Lenders party hereto agree that the Credit Agreement is hereby amended as follows (the Credit Agreement as so amended, the “Amended Credit Agreement”):
(a) The recitals of the Credit Agreement shall be amended by amending and restating the third recital in its entirety as set forth below:
“WHEREAS, the Borrowers have requested and the Lenders have agreed to, (i) on the Amendment No. 1 Effective Date, amend this Agreement to establish Delayed Draw Term Loan Commitments (as defined below) in an aggregate principal amount of $20,000,000 (the term loans made in satisfaction of the Delayed Draw Term Loan Commitments, the “Delayed Draw Term Loans”; and the Delayed Draw Term Loans, together with the Existing Term Loans (as hereinafter defined) and the Additional Term Loans, collectively, the “Term Loans” and each individually, a “Term Loan”), subject to the satisfaction of certain conditions set forth in Amendment No. 1 and herein and (ii) on the Amendment No. 2 Effective Date, amend this Agreement to increase the Delayed Draw Term Loan Commitments to an aggregate principal amount of $30,000,000, subject to the satisfaction of certain conditions set forth in Amendment No. 2 and herein; and”;
(b) Section 1.01 of the Credit Agreement shall be amended by adding the following definitions in the correct alphabetical order:
““Amendment No. 2” means that certain Amendment No. 2 to Amended and Restated Term Loan Credit Agreement, dated as of November 24, 2025, by and among the Lead Borrower, the other Loan Parties party thereto, the Lenders party thereto and the Agent.”
““Amendment No. 2 Effective Date” shall mean the “Effective Date” as defined in Amendment No. 2.”;
(c) Section 1.01 of the Credit Agreement shall be amended by amending and restating the definition of “Delayed Draw Term Loan Commitments” in its entirety as set forth below:
““Delayed Draw Term Loan Commitments” means the commitment of each Lender to make a Delayed Draw Term Loan to the Borrower pursuant to Section 2.01(e) of this Agreement in an amount equal to the amount set forth opposite the name of such Lender on Schedule 2.01 attached hereto, and in an aggregate amount for all of the Lenders of $30,000,000.”; and
(d) Schedule 2.01 of the Credit Agreement shall be amended and restated and replaced with Exhibit A hereto.
SECTION 2. Representations and Warranties of the Loan Parties. In order to induce the Agent and the Lenders to enter into this Amendment, each of the Loan Parties represent and warrant that:
(a) Each Loan Party (a) is a corporation, limited liability company, partnership or limited partnership, duly incorporated, organized or formed, validly existing and, where applicable, in good standing under the Laws of the jurisdiction of its incorporation, organization or formation, (b) has all requisite power and authority and all requisite governmental licenses, permits, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under this Amendment and to perform its obligations under the Amended Credit Agreement, and (c) is duly qualified and is licensed and, where applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.
(b) The execution, delivery and performance of this Amendment and the performance of the Amended Credit Agreement by each Loan Party has been duly authorized by all necessary corporate or other organizational action, and does not and will not (a) contravene the terms of any of such Loan Party’s Organization Documents; (b) conflict with or result in any breach, termination, or contravention of, or constitute a default under, or require any payment to be made under (i) any Material Contract or any Material Indebtedness to which such Loan Party is a party or affecting such Loan Party or the properties of such Loan Party or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Loan Party or its property is subject; (c) result in or require the creation of any Lien upon any asset of any Loan Party (other than Liens in favor of the Agent under the Security Documents); or (d) violate any Law.
(c) No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Amendment or the Amended Credit Agreement (as the case may be), except for such as have been obtained or made and are in full force and effect.
(d) This Amendment has been duly executed and delivered by each Loan Party that is party hereto. This Amendment and the Amended Credit Agreement each constitutes a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
(e) All of the representations and warranties of the Loan Parties under this Amendment and the other Loan Documents are true and correct in all material respects (in each case, without duplication of any materiality qualifier contained herein or therein, as applicable) as of the date hereof (or if, any such representation or warranty relates to an earlier date, such earlier date), immediately before and immediately after giving effect to this Amendment, the Amended Credit Agreement and the transactions contemplated herein and therein.
(f) There shall not exist any Default or Event of Default, in each case immediately before and after giving effect to this Amendment, the Amended Credit Agreement and the transactions contemplated herein and therein.
(g) Since February 1, 2025, there has occurred no event which has had or would reasonably be expected to have a Material Adverse Effect.
SECTION 3. Effectiveness. This Amendment shall be effective at the time that each of the conditions precedent set forth in this Section 3 shall have been met (such date, the “Effective Date”):
(a) Amendment. The Agent shall have received duly executed counterparts of this Amendment signed by the Loan Parties and the Lenders.
(b) Payment of Legal Fees and Expenses. The Loan Parties shall have paid all reasonable and documented out-of-pocket costs and expenses of the Agent and its professional advisors (including, without limitation, Latham & Watkins LLP) incurred in connection with this Amendment and the other documents related thereto.
(c) Representations and Warranties. The representations and warranties contained herein shall be true, correct and complete in all respects.
(d) No Default, Event of Default. There shall exist no Default or Event of Default, in each case, immediately before and after giving effect to this Amendment, the Amended Credit Agreement and the transactions contemplated herein and therein.
(e) Closing/Solvency Certificate. The Agent shall have received a certificate of a Responsible Officer of the Lead Borrower certifying as to (i) the satisfaction of the conditions precedent set forth in Sections 3(c) and (d) of this Amendment, (ii) the Solvency of the Loan Parties as of the Effective Date after giving effect to the Amendment, the Amended Credit Agreement and the transactions contemplated herein and therein, and (iii) either that (A) no consents, licenses or approvals are required in connection with the execution, delivery and performance of this Amendment and the performance of the Amended Credit Agreement by such Loan Party and the enforceability against such Loan Party of the Amendment and the Amended Credit Agreement, or (B) that all such consents, licenses and approvals have been obtained and are in full force and effect.
(f) Secretary’s Certificate. The Agent shall have received such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Agent may require certifying (i) the authority of such Loan Party to enter into this Amendment and to perform its obligations hereunder and under the Amended Credit Agreement, (ii) the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Amendment and the Amended Credit Agreement, (iii) (A) that attached thereto are true, correct and complete copies of such Loan Party’s Organization Documents and that such Organization Documents are in full force and effect as of the Effective Date or (B) that there have been no changes to the Organizational Documents of such Loan Party since true, correct and complete copies of the same were delivered to the Agent on the Original Closing Date (as defined in the Amended Credit Agreement), and (iv) that such Loan Party is validly existing, in good standing and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to so qualify in such jurisdiction could not reasonably be expected to have a Material Adverse Effect (as evidenced by Certificates of Good Standing (or equivalent documents) issued on a recent date by the Secretary of State (or equivalent Person) in the jurisdiction of formation of such Loan Party.
(g) Notice of Borrowing. The Agent shall have received a Notice of Borrowing/Continuation/Conversion for a borrowing of $10,000,000 of Delayed Draw Term Loans, in accordance with the requirements of Sections 2.02(a)(i) and 4.02 of the Credit Agreement.
(h) Merger Agreement. The Agent shall have received the executed and effective Agreement and Plan of Merger, dated as of the date hereof, by and among Bed Bath & Beyond, Inc., a Delaware corporation, Knight Merger Sub II, Inc., a Delaware corporation and a wholly-owned subsidiary of Bed Bath & Beyond, Inc., and The Brand House Collective, Inc., a Tennessee corporation (the “Merger Agreement”), and all material documents entered into in connection therewith.
(i) Opinion. The Agent shall have received a favorable opinion of Bass, Berry & Sims PLC, counsel to the Loan Parties, addressed to the Agent and each Lender and addressing such matters concerning the Loan Parties, the Amendment and the Amended Credit Agreement as the Agent may reasonably request.
(j) Intercreditor Agreement Amendment. The Agent shall have received an amendment to the ABL Intercreditor Agreement (which, for the avoidance of doubt includes a consent to this Amendment), in form and substance acceptable to the Agent and duly executed by the persons party thereto.
(k) ABL Credit Agreement Amendment. The Agent shall have received an amendment to the ABL Credit Agreement, in form and substance acceptable to the Agent and duly executed by the persons party thereto.
(l) ABL Credit Agreement Waiver Letter. The Agent shall have received a waiver letter with respect to the ABL Credit Agreement, which includes a consent to entry into the Merger Agreement, in form and substance acceptable to the Agent and duly executed by the persons party thereto.
SECTION 4. Reference to and Effect upon the Loan Documents.
(a) Except as expressly modified hereby, all terms, conditions, covenants, representations and warranties contained in the Amended Credit Agreement and the other Loan Documents, and all rights of the Lenders and all of the Obligations, shall remain in full force and effect. Each of the Loan Parties hereby confirms that the Amended Credit Agreement and the other Loan Documents are in full force and effect and that, as of the Effective Date, no Loan Party has any right of setoff, recoupment or other offset or any defense, claim or counterclaim with respect to any of the Obligations, the Amended Credit Agreement or any other Loan Document.
(b) The execution, delivery and effectiveness of this Amendment shall not directly or indirectly (i) constitute a consent or waiver of any past, present or future violations of any provisions of the Amended Credit Agreement, this Amendment or any other Loan Document or (ii) except as expressly provided herein, amend, modify or operate as a waiver of any provision of the Amended Credit Agreement or any other Loan Documents or any right, power or remedy of any of the Lenders.
(c) From and after the Effective Date, (i) the term “Agreement” in the Amended Credit Agreement, and all references to the Credit Agreement in any Loan Document, shall mean the Amended Credit Agreement and (ii) the term “Loan Documents” in the Amended Credit Agreement and the other Loan Documents shall include, without limitation, this Amendment and any agreements, instruments and other documents executed and/or delivered in connection herewith.
(d) Neither the Agent nor any other Lender has waived, is by this Amendment waiving or has any intention of waiving (regardless of any delay in exercising such rights and remedies) any Default or Event of Default which may be continuing on the Effective Date or any Default or Event of Default which may occur after the Effective Date, and neither the Agent nor any Lender has agreed to forbear with respect to any of its rights or remedies concerning any Defaults or Events of Default, which may have occurred or are continuing as of the Effective Date, or which may occur after the Effective Date.
(e) This Amendment shall not be deemed or construed to be a satisfaction, reinstatement, novation or release of the Amended Credit Agreement or any other Loan Document.
SECTION 5. Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement
SECTION 6. Costs and Expenses. As provided in Section 10.04 of the Amended Credit Agreement, the Loan Parties agree to reimburse the Agent for all reasonable out-of-pocket costs and expenses, including the reasonable fees and disbursements of counsel, incurred by the Agent in connection with this Amendment.
SECTION 7. Governing Law; Submission to Jurisdiction; Waiver of Venue; Service of Process; Actions Commenced by Loan Parties.. Section 10.14 of the Amended Credit Agreement is incorporated herein by reference as if separately set forth in full herein.
SECTION 8. Headings. Headings used in this Amendment are for convenience only and shall not affect the interpretation of any provision hereof.
SECTION 9. Loan Document. This Amendment shall constitute a Loan Document. For the avoidance of doubt, any breach of the representations, warranties and covenants contained in this Amendment shall be an Event of Default under the Amended Credit Agreement.
SECTION 10. Reaffirmation. Each of the Loan Parties as debtor, grantor, pledgor, guarantor, assignor, or in other any other similar capacity in which such Loan Party grants liens or security interests in its property, proxy rights with respect to its owned or issued equity or otherwise acts as accommodation party, indemnitor or guarantor, as the case may be, hereby (i) acknowledges, ratifies and reaffirms that all Obligations constitute valid and existing “Obligations” under the Amended Credit Agreement (including all of its payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which it is a party (after giving effect hereto)) and (ii) to the extent such Loan Party pledged, granted liens on or security interests in (or any other similar rights) any of its property pursuant to any such Loan Document as security for or otherwise guaranteed the Borrowers’ Obligations under or with respect to the Loan Documents, acknowledges, ratifies and reaffirms such guarantee and grant of security interests and liens and confirms and agrees that such pledges, security interests, liens and other similar rights remain in full force and effect notwithstanding the effectiveness of this Amendment to secure all of the Obligations arising under or pursuant to and as defined in the Amended Credit Agreement. Without limiting the generality of the foregoing, each Loan Party further agrees (A) that any reference to “Obligations” contained in any Loan Documents shall include, without limitation, the “Obligations” as such term is defined in the Amended Credit Agreement and (B) that the related guarantees and grants of security contained in such Loan Documents shall include and extend to such Obligations. Each of the Loan Parties hereby consents to this Amendment and acknowledges that each of the Loan Documents remains in full force and effect and is hereby ratified and reaffirmed. The execution of this Amendment shall not operate as a waiver of any right, power or remedy of the Agent or Lenders, constitute a waiver of any provision of any of the Loan Documents or serve to effect a novation of the Obligations.
SECTION 11. Severability. Section 10.12 of the Amended Credit Agreement is incorporated herein by reference as if separately set forth in full herein.
SECTION 12. Counterparts; Integration; Effectiveness. Section 10.10 of the Amended Credit Agreement is incorporated herein by reference as if separately set forth in full herein.
SECTION 13. Release of Claims. In consideration of the Lenders’ agreements contained in this Amendment, each Loan Party signatory hereby irrevocably releases and forever discharges the Lenders and the Agent and their affiliates, subsidiaries, successors, assigns, directors, officers, employees, agents, consultants and attorneys (each, a “Released Person”) of and from any and all claims, suits, actions, investigations, proceedings or demands, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law of any kind or character, known or unknown, which any such Loan Party ever had or now has against the Agent, any Lender or any other Released Person which relates, directly or indirectly, to any acts or omissions of any Agent, any Lender or any other Released Person relating to the Amended Credit Agreement or any other Loan Document on or prior to the date hereof.
SECTION 14. Assignments; No Third Party Beneficiaries. This Amendment shall be binding upon and inure to the benefit of the Agent, the Borrowers, the other Loan Parties, each Lender and their respective successors and permitted assigns. No Person other than the Borrowers, the other Loan Parties, the Lenders and in the case of Section 13, the Released Persons, shall have any rights hereunder or be entitled to rely on this Amendment and all third-party beneficiary rights (other than the rights of the Released Persons under Section 13 hereof) are hereby expressly disclaimed.
[Signature pages to follow]
IN WITNESS WHEREOF, each of the undersigned has caused this Amendment to be duly executed and delivered as of the date first above written.
| BORROWERS: |
|---|
| [KIRKLAND’S STORES, INC., as Lead Borrower and as a Borrower<br><br> <br>By: <br> Name:<br><br> <br>Title:<br><br> <br>KIRKLAND’S TEXAS, LLC, as a Borrower<br><br> <br>By: <br> Name:<br><br> <br>Title:<br><br> <br>OTHER LOAN PARTIES<br><br> <br>THE BRAND HOUSE COLLECTIVE, INC. (f/k/a Kirkland’s, Inc.), as Parent and as a Guarantor<br><br> <br>By: <br> Name:<br><br> <br>Title:<br><br> <br>KIRKLAND’S DC, INC., as a Guarantor<br><br> <br>By: <br> Name:<br><br> <br>Title: ] |
| BED BATH & BEYOND, INC. (f/k/a Beyond Inc.), as Administrative Agent, Collateral Agent and a Lender<br><br> <br>By: <br> Name:<br> Title: |
| --- |
Exhibit A
Schedule 2.01
COMMITMENTS AND APPLICABLE PERCENTAGES
| Lender | Existing Term Loan Commitment | Additional Term Loan Commitment | Applicable Percentage of Convertible Term Loan Commitment | Applicable Percentage of Non-Convertible Term Loan Commitment |
|---|---|---|---|---|
| Bed Bath & Beyond, Inc., f/k/a Beyond, Inc. | $8,500,000.00 | $5,232,405.54 | 100.000000000% | 100.000000000% |
| TOTAL | $8,500,000.00 | $5,232,405.54 | 100% | 100% |
| Lender | Delayed Draw Term Loan Commitment | Applicable Percentage of Delayed Draw Term Loan Commitments | ||
| --- | --- | --- | ||
| Bed Bath & Beyond, Inc., f/k/a Beyond, Inc. | $30,000,000 | 100.000000000% | ||
| Total | $30,000,000 | 100.000000000% |
ex_897053.htm
EXHIBIT 10.19
FIFTH AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
FIFTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) dated as of November 24, 2025 (the “Fifth Amendment Effective Date”) among:
KIRKLAND’S STORES, INC., a Tennessee corporation (the “Lead Borrower”);
The other Borrowers party thereto (together with the Lead Borrower, individually, a “Borrower”, and collectively, the “Borrowers”);
The Guarantors party hereto;
the Lenders party hereto; and
BANK OF AMERICA, N.A., as Administrative Agent and Collateral Agent (in such capacities, the “Agent”);
in consideration of the mutual covenants herein contained and benefits to be derived herefrom.
W I T N E S S E T H:
WHEREAS, the Borrowers, the Guarantors, the Lenders and the Agent, among others, have entered into a certain Third Amended and Restated Credit Agreement dated as of March 31, 2023 (as amended by that certain First Amendment to Third Amended and Restated Credit Agreement, dated as of January 25, 2024, that certain Second Amendment to Third Amended and Restated Credit Agreement, dated as of October 21, 2024, that certain Third Amendment to Third Amended and Restated Credit Agreement, dated as of May 7, 2025, that certain Fourth Amendment to Third Amended and Restated Credit Agreement, dated as of September 15, 2025, and as further amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Existing Credit Agreement”);
WHEREAS, the Loan Parties, the Agent and the Lenders have agreed, subject to the terms and conditions set forth herein, to amend certain provisions of the Existing Credit Agreement, as more particularly set forth herein (the Existing Credit Agreement, as amended by this Amendment and as the same may be further amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).
NOW THEREFORE, in consideration of the mutual promises and agreements herein contained, the parties hereto hereby agree as follows:
| 1. | Incorporation of Defined Terms. All capitalized terms not otherwise defined herein shall have the same meaning as in the Credit Agreement, as applicable. |
|---|---|
| 2. | Representations and Warranties. Each of the Loan Parties hereby represents and warrants that as of the date hereof, (a) no Default or Event of Default exists under the Credit Agreement or under any other Loan Document, and (b) all representations and warranties contained in the Credit Agreement and in any other Loan Document, or which are contained in any document furnished at any time under or in connection with the Credit Agreement or any other Loan Document are true and correct in all material respects, except (i) to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, (ii) in the case of any representation and warranty qualified by materiality, they shall be true and correct in all respects and (iii) for purposes of this Amendment, the representations and warranties contained in subsections (a) and (b) of Section 5.05 of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 of the Credit Agreement. |
| --- | --- |
| 3. | Ratification and Reaffirmation of Loan Documents. The Credit Agreement, as hereby amended, and all other Loan Documents, are hereby ratified and re-affirmed in all respects and shall continue in full force and effect, and each of the Loan Parties hereby affirms its absolute and unconditional promise to pay to the Lenders, the L/C Issuer, and the Agent, as applicable, the Revolving Loans, the Swing Line Loans, other Credit Extensions, reimbursement obligations and all other amounts due or to become due and payable to the Lenders, the L/C Issuer and the Agent, as applicable, under the Credit Agreement, as amended hereby, and it is the intent of the parties hereto that nothing contained herein shall constitute a novation or accord and satisfaction. Except as expressly amended hereby, the Credit Agreement shall continue in full force and effect. |
| --- | --- |
| 4. | Amendments to Credit Agreement. Agent and the Loan Parties hereby agree that from and after the Fifth Amendment Effective Date: |
| --- | --- |
| a. | Section 1.01 of the Existing Credit Agreement is hereby amended by adding the following definitions in the correct alphabetical order: |
| --- | --- |
“Fifth Amendment” means the Fifth Amendment to Third Amended and Restated Credit Agreement, dated as of the Fifth Amendment Effective Date, by and among, the Loan Parties, the Lenders party thereto, and the Agent.
“Fifth Amendment Effective Date” means November 24, 2025.
| b. | Section 1.01 of the Existing Credit Agreement is hereby amended by deleting the definition of “Accelerated Borrowing Base Delivery Event”, “EBITDA Test” and “Required Availability Amount” appearing therein. |
|---|---|
| c. | Section 1.01 of the Existing Credit Agreement is hereby amended by amending and restating clause (b) of the definition of “Borrowing Base” appearing therein in its entirety as set forth below: |
| --- | --- |
“(b) the product of (i) 85% multiplied by (ii) the Appraised Value of Eligible Inventory of the Loan Parties, net of Inventory Reserves, multiplied by (iii) the Cost of Eligible Inventory of the Loan Parties;”
| d. | Section 6.02 of the Existing Credit Agreement is hereby amended by amending and restating clause (b) appearing therein in its entirety as set forth below: |
|---|
“(b) on the Thursday of each week (or, if Thursday is not a Business Day, on the next succeeding Business Day), (i) a Borrowing Base Certificate showing the Borrowing Base as of the close of business on the immediately preceding Saturday, each Borrowing Base Certificate to be certified as complete and correct by a Responsible Officer of the Lead Borrower, and (ii) an accounts payable report as of the close of business on the immediately preceding Saturday, in each case, accompanied by such supporting detail, documentation and information as the Agent shall reasonably request;”
| e. | Section 6.02 of the Existing Credit Agreement is hereby amended by amending and restating clause (m) appearing therein in its entirety as set forth below: |
|---|
“(m) commencing with the Fifth Amendment Effective Date and on a weekly basis, by not later than 5:00 pm (ET) on Thursday of each week (or, if Thursday is not a Business Day, on the next succeeding Business Day), a 13-week cash flow forecast (the “Cash Flow Forecast”) in form and substance reasonably satisfactory to the Agent, reflecting the Loan Parties’ (i) good faith projections of all weekly cash receipts and disbursements on a line item basis in connection with the operation of their businesses for the following 13-week period, and (ii) calculations of the Borrowing Base, Inventory receipts and Availability for each week of such 13-week period.”
| f. | Section 6.10 of the Existing Credit Agreement is hereby amended by amending and restating clause (c) appearing therein in its entirety as set forth below: |
|---|
“(c) Upon the request of the Agent after reasonable prior notice, permit the Agent or professionals (including appraisers) retained by the Agent to conduct appraisals of the Collateral, including, without limitation, the assets included in the Borrowing Base. The Loan Parties shall pay the reasonable fees and expenses of the Agent and such professionals with respect to (i) from and after the Fifth Amendment Effective Date, monthly desktop appraisals, and (ii) up to two (2) appraisals in any twelve month period. Notwithstanding the foregoing, the Agent may cause additional appraisals to be undertaken (i) as it in its discretion deems necessary or appropriate, at its own expense or, (ii) if required by Law or if a Default or Event of Default shall have occurred and be continuing, at the expense of the Loan Parties.”
| g. | Section 7.15 of the Existing Credit Agreement is hereby amended by deleting the text “Permit Availability, at any time, to be less than the Required Availability Amount” appearing therein and inserting the text “Permit Availability, at any time, to be less than the greater of (x) 10% of the Loan Cap and (y) $8,000,000” in lieu thereof. |
|---|---|
| 5. | Conditions to Effectiveness. This Amendment shall not be effective until each of the following conditions precedent has been fulfilled to the satisfaction of the Agent, unless otherwise waived in writing by the Agent: |
| --- | --- |
| a. | This Amendment shall have been duly executed and delivered by the Loan Parties and the Lenders. The Agent shall have received a fully executed original or pdf copy hereof. |
| --- | --- |
| b. | The Agent shall have received an amendment to the Term Loan Intercreditor Agreement, in form and substance satisfactory to the Agent. |
| --- | --- |
| c. | The Agent shall have received a Cash Flow Forecast in form and substance reasonably satisfactory to the Agent. |
| --- | --- |
| d. | The Loan Parties shall have received proceeds of Term Loans (under and as defined in the Term Loan Credit Agreement) in an amount not less than $10,000,000. |
| --- | --- |
| e. | The Agent shall have received a Borrowing Base Certificate, dated as of the Fifth Amendment Effective Date. |
| --- | --- |
| f. | All action on the part of the Loan Parties necessary for the valid execution, delivery and performance by the Loan Parties of this Amendment shall have been duly and effectively taken. |
| --- | --- |
| g. | There shall not have occurred since September 15, 2025,^^any event or condition that has had or could be reasonably expected, either individually or in the aggregate, to have a Material Adverse Effect. |
| --- | --- |
| h. | After giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing. |
| --- | --- |
| 6. | Binding Effect. The terms and provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their heirs, representatives, successors and assigns. |
| --- | --- |
| 7. | Expenses. The Borrowers shall reimburse the Agent for all reasonable out-of-pocket costs and expenses of the Agent, including, reasonable attorneys’ fees pursuant to Section 10.04 of the Credit Agreement. |
| --- | --- |
| 8. | Multiple Counterparts. This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Amendment by telecopy, pdf or other electronic transmission shall be as effective as delivery of a manually executed counterpart of this Amendment. |
| --- | --- |
| 9. | Governing Law. THIS AMENDMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AMENDMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. |
| --- | --- |
| 10. | Release by the Loan Parties. Each Loan Party for and on behalf of itself and its legal representatives, successors and assigns, fully, unconditionally, and irrevocably waives, releases, relinquishes and forever discharges the Agent, the Lenders and each of their parents, subsidiaries, and affiliates, its and their respective past, present and future directors, officers, managers, agents, employees, insurers, attorneys, representatives and all of their respective heirs, successors and assigns, (collectively, the “Released Parties”), of and from any and all manner of action or causes of action, suits, claims, liabilities, losses, costs, expenses, demands, judgments, damages (including compensatory and punitive damages), levies and executions of whatsoever kind, nature and/or description arising on or before the Fifth Amendment Effective Date, in each case whether known or unknown, asserted or unasserted, liquidated or unliquidated, joint or several, fixed or contingent, direct or indirect, contractual or tortious, which the Loan Parties, or their legal representatives, successors or assigns, ever had or now has or may claim to have against any of the Released Parties, that relate to the Loan Documents, the administration of any Loan Documents, the negotiations relating to this Amendment and the other Loan Documents executed in connection herewith and any other instruments and agreements executed by the Loan Parties in connection therewith or herewith, arising on or before the Fifth Amendment Effective Date. |
| --- | --- |
[remainder of page intentionally left blank; signature pages follow] IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by each of the parties hereto as of the date first above written.
BORROWERS:
KIRKLAND’S STORES, INC., as Lead Borrower and as a Borrower
By: ___________________________
Name: ___________________________
Title: ___________________________
KIRKLAND’S TEXAS, LLC, as a Borrower
By: ___________________________
Name: ___________________________
Title: ___________________________
GUARANTORS:
THE BRAND HOUSE COLLECTIVE, INC., as Parent and as a Guarantor
By: ___________________________
Name: ___________________________
Title: ___________________________
KIRKLAND’S DC, INC., as a Guarantor
By: ___________________________
Name: ___________________________
Title: ___________________________
BANK OF AMERICA, N.A., as Administrative Agent, as Collateral Agent and as a Lender
By: ___________________________
Name: ___________________________
Title: ___________________________
48805094.4
ex_897054.htm
EXHIBIT 10.20
SECOND AMENDED AND RESTATED COLLABORATION AGREEMENT
This Second Amended and Restated Collaboration Agreement (this “Agreement”), dated August 15, 2025, and effective as of May 7, 2025 (the “Effective Date”), is entered into by and between Kirkland’s, Inc., a Tennessee corporation (“Kirkland’s”), and Beyond, Inc., a Delaware corporation (“Beyond”) (each a “Party”, and together, the “Parties”).
RECITALS
WHEREAS, Kirkland’s and Beyond are party to that certain Amended and Restated Collaboration Agreement, dated as of May 7, 2025 (the “A&R Collaboration Agreement”), which amended and restated that certain Collaboration Agreement, dated as of October 21, 2024 (the “Original Collaboration Agreement”) entered into for the purpose of engaging in various collaborative efforts and services regarding their respective business operations;
WHEREAS, on May 7, 2025, Kirkland’s Stores, Inc., a Tennessee corporation and a subsidiary of Kirkland’s (“Borrower”), and Beyond entered that certain Amended and Restated Term Loan Credit Agreement, dated as of May 7, 2025 (as may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Amended Beyond Credit Agreement”) pursuant to which, on the terms and subject to the conditions set forth therein, Beyond have made additional term loans to Borrower in the aggregate principal amount of $5,232,405.54; and
WHEREAS, in connection with and as a condition to the consummation of the transactions contemplated by the Amended Beyond Credit Agreement, the Parties further amended the A&R Collaboration Agreement by a letter agreement, dated May 7, 2025 (the “May 2025 Letter Amendment”), and agreed to amend and restate the A&R Collaboration Agreement to further memorialize the amendments set forth in the May 2025 Letter Amendment, and in furtherance thereof, the Parties desire to further amend and restate the A&R Collaboration Agreement in its entirety, such amendment being effective as of May 7, 2025.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby amend and restate the A&R Collaboration Agreement as follows:
1.INTENT TO COLLABORATE. The Parties acknowledge and agree that each Party has entered into this Agreement for the purpose of engaging in collaborative efforts and business arrangements intended to be mutually beneficial to each Party and its respective Affiliates. Consistent with and for the express purpose of carrying out the foregoing, each Party shall have the rights and obligations set forth in this Agreement. Except as expressly set forth in this Agreement or any exhibit hereto, the arrangements set forth herein shall be non-exclusive and each Party shall be free to contract and associate with other parties for similar arrangements. For purposes of this Agreement, (a) an “Affiliate” of a Person shall mean any Person directly or indirectly Controlling, Controlled by, or under common Control with such Person, (b) “Control” (including its correlative meanings “under common Control with” and “Controlled by”), 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 ownership of securities or partnership or other interests, by contract or otherwise, and (c) “Person” means an individual, corporation, partnership, limited liability company, joint venture, trust or unincorporated organization or a government or agency or political subdivision thereof.
2.OPERATING ARRANGEMENTS. During the Term, each Party shall engage in each of the following collaborative efforts (collectively, the “Operating Arrangements”):
(a)Collaboration and Joint Marketing: To the extent permitted by applicable law, the Parties shall engage in joint marketing, cross-marketing and other collaborative marketing efforts set forth on Exhibit A hereto and otherwise agreed to from time to time by the Parties in writing (the “Marketing Activities”). In furtherance thereof, each Party will provide the other Party reasonable access to certain mutually agreed upon Customer Information (as such term is defined in Exhibit A-1) related to their respective customers, to the extent permitted by the Parties’ respective privacy policies and applicable Privacy Laws (as such term is defined in Exhibit A-1). The Parties may also enter into similar customer data sharing arrangements with other third Persons, and the Parties, together with the third Persons sharing their Customer Information with the Parties, shall have access to and be permitted to use all of the shared Customer Information for the limited and specific purposes of the Marketing Activities, subject to applicable Privacy Laws and the terms and conditions of the Data Processing Addendum attached hereto as Exhibit A-1. To the extent either Party is not permitted by its privacy policy or Privacy Laws to share Customer Information immediately following the Effective Date, such Party shall use commercially reasonable efforts to amend such privacy policy and/or take all steps necessary under Privacy Laws in order to allow such Customer Information sharing as soon as reasonably practicable. The Parties shall cooperate and consult with each other in good faith with respect to the determination of whether a Party is permitted under its applicable privacy policies and Privacy Laws to share any or all of its Customer Information as contemplated by this Agreement. Any dispute between the Parties as to whether such sharing is permitted under applicable Privacy Laws or the steps that must be taken thereunder shall be submitted to a mutually agreed upon independent third-party for review and advice; provided, that such advice will be non-binding on the Parties.
(b)E-Commerce Support and Consulting: Kirkland’s may request Beyond to provide consulting services in support of and other support services in respect of Kirkland’s e-commerce platforms (in addition to those Beyond has otherwise agreed to provide pursuant to this Agreement). Beyond will consider in good faith any such request, and will use commercially reasonable efforts to provide such services to Kirkland’s in good faith subject to the availability of qualified personnel and in accordance with terms mutually agreed by the Parties. Such services may include various degrees of collaboration, coordination, and cross-functional design regarding warehousing, product distribution and fulfillment, including engagement and management of drop-shop partners, integration of pick and pack technology, inventory integration with retail stores for BOPIS, and may include the assumption by Beyond of operational responsibilities for Kirkland’s e-commerce websites which would occur, if applicable, on mutually agreed terms and will include reasonably collaboration by Beyond with Kirkland’s leadership team in connection with its operation of the e-commerce websites.
(c)Sale of Kirkland’s Products via BBB E-Commerce Channel: The Parties shall make available for sale on Beyond’s “Bed Bath & Beyond” online retail platform (currently located at https://www.bedbathandbeyond.com/) (“BBB E-Commerce Channel”) all Kirkland’s Products, including home décor, home furnishings, and gift products, on the terms and conditions set forth on Exhibit B-1 and Exhibit B-2 hereto. In the event of any conflict between the terms and conditions on Exhibit B-1 or Exhibit B-2 and the terms of this Agreement, the terms of this Agreement shall supersede and control with respect to such conflicting terms. For purposes of this Agreement, “Kirkland’s Products” shall mean any and all products sourced by Kirkland’s for retail sale by a Kirkland’s-branded retail store or on any online marketplace under a Kirkland’s label or on-line store designation, provided that the foregoing shall not include de minimis miscellaneous products or de minimis limited run items designated by Kirkland’s for in-store only distribution.
(d)Neighborhood Retail Stores; License Agreement: The Parties shall continue to carry out the pilot program initiated pursuant to the Original Collaboration Agreement for the conversion of certain existing Kirkland’s retail stores to “Bed, Bath & Beyond,” and “Overstock Outlet and Returns” retail locations (and also to “Bed, Bath & Beyond Home,” and “buybuyBABY” retail locations pursuant to the May 2025 Letter Amendment) on the terms set forth on Exhibit C-1 hereto. The Parties acknowledge that, in accordance with the Original Collaboration Agreement, they entered into a Trademark License Agreement dated October 21, 2024, which has been amended and restated as set forth in that certain Amended and Restated Trademark License Agreement, dated as of the date hereof, a copy of which is attached hereto as Exhibit C-2 (the “License Agreement”), pursuant to which Beyond has granted Kirkland’s (i) an exclusive right and license to operate licensed retail locations in an in-store format ranging from 7,000 to 15,000 sq. ft. per store location (which shall, for avoidance of doubt, exclude any “shop-within-a-shop”) (such format, a “Neighborhood Format”) under the “Bed, Bath & Beyond,” “Bed, Bath & Beyond Home,” “Baby and Beyond” and “buybuyBABY brands; and (ii) a non-exclusive right and license to operate licensed retail locations in a Neighborhood Format for “overstock.com”, in each case as further set forth in the License Agreement.
(e)Use of Beyond Marks for Shop-within-a-Shops in Kirkland’s Retail Stores: In accordance with the License Agreement, Kirkland’s shall have the right to utilize “Bed, Bath & Beyond” and certain other related brand elements for the purpose of creating “Bed, Bath & Beyond” shop-within-a-shops in certain Kirkland’s retail locations mutually selected by the Parties, and in the size and format mutually agreed by the Parties, which may include a pop-up-shop, semi-permanent shop in shop, designated merchandised or branded areas within stores, and end-caps. Kirkland’s will be permitted to accept the applicable “Bed, Bath & Beyond” or similarly branded coupons issued or approved by Beyond (if any) within its stores for Licensor Products (as defined in the License Agreement) or Kirkland’s Products sold through Kirkland’s “Bed, Bath & Beyond” branded retail stores. Beyond shall use commercially reasonable efforts to facilitate introductions to Kirkland’s of manufacturers or authorized distributors of any products sold by Licensor through the BBB E-Commerce Channel or otherwise sold by Beyond under the “Bed-Bath and Beyond” brand, to the extent that Kirkland’s is not an authorized retailer of such products.
(f)Surplus Sales of Kirkland’s Products – Online Retail: The Parties shall make available for sale certain aged or surplus Kirkland’s Products through Beyond’s affiliated online retail marketplace Overstock.com (currently located at https://www.overstock.com/) on the terms and conditions set forth on Exhibit D hereto. In furtherance thereof, Kirkland’s agrees to make available for sale on Overstock.com all of its inventory of Kirkland Products that are surplus or over 180 days of age. Kirkland’s shall not. directly or indirectly, offer for sale on any other online retail marketplace or e-commerce channel any such aged or surplus Kirkland’s Products unless Beyond declines to place them for sale on Overstock.com. For purposes of this paragraph and Exhibit D, “Kirkland’s Products” shall also include any product sourced by Kirkland’s for retail sale in a Neighborhood Format licensed store brand. In the event of any conflict between the terms and conditions on Exhibit D and the terms and conditions of this Agreement, this Agreement shall supersede and control.
(g)Sourcing Support: **** Beyond may request Kirkland’s to provide Beyond with sourcing support services in support of Beyond’s e-commerce platforms (currently Overstock.com and the BBB E-Commerce Channel). Kirkland’s will consider in good faith any such request, will use commercially reasonable efforts to provide such sourcing support services to Beyond in good faith subject to the availability of qualified personnel, and in accordance with terms mutually agreed by the Parties.
(h)Inventory: The Parties acknowledge and agree that Beyond currently holds, and may in the future hold, inventory (“Beyond Inventory”) that the Parties determine could be sold by Kirkland’s, whether in a Neighborhood Format retail location established by Kirkland’s hereunder, in an existing Kirkland’s branded retail location, or otherwise by Kirkland’s via e-commerce or omni channel method. At any time, and from time to time during the term of the Collaboration Agreement, Kirkland’s may request to take title to and possession of Beyond Inventory mutually identified by Kirkland’s and Beyond for sale in a Kirkland’s retail channel (including any Neighborhood Format location established hereunder), and Beyond may elect, in its sole discretion, to transfer title to and possession of such Beyond Inventory to Kirkland’s on terms and conditions as the Parties may mutually agree. In all cases, to the extent title is transferred to Kirkland’s, such transfer of Beyond Inventory shall be free and clear of all liens and restrictions in favor of third-parties, including any restrictions on Kirkland’s’ ability to advertise and market the sale of, and sell through, such Beyond Inventory (for the avoidance of doubt, nothing in this Section 2(h) shall release, impair or otherwise modify any liens or restrictions arising under the Amended Beyond Credit Agreement or in favor of the ABL Lender arising under the ABL Credit Agreement (each as defined in the Amended Beyond Credit Agreement)), such that Kirkland’s is permitted to sell such Beyond Inventory in the ordinary course of business, consistent with past practice, unless otherwise mutually agreed in writing.
(i)Agreement to Purchase Kirkland Trademarks: Concurrent with the execution of this Agreement, the Parties shall enter into a purchase agreement (the “Purchase Agreement”) in the form attached hereto as Exhibit G, pursuant to which the Parties have agreed that Beyond will purchase from Kirkland’s all of Kirkland’s right, title and interest in and to its trademarks and domain names comprised of or containing the element KIRKLAND (the “Kirkland’s Brand”), for a price of Five Million Dollars ($5,000,000), the consummation of which is conditioned upon the release of all liens on the Kirkland’s Brand (other than the liens held by Beyond). Upon the closing of the transactions contemplated by the Purchase Agreement and the assignment of the Kirkland’s Brand to Beyond, the License Agreement shall be amended, such that Beyond shall license the Kirkland’s Brand to Kirkland’s in connection with Kirkland’s operation of its then existing, Kirkland’s-branded retail stores and e-commerce websites (except to the extent that any such e-commerce websites are then operated by Beyond), and any other retail stores or e-commerce websites approved by Beyond in its sole discretion.
(j)Business Improvement and Branding: The Parties agree to collaborate with each other and to implement improvements to Kirkland’s business operations and brand in accordance with Exhibit E hereto.
(k)Other Collaboration: The Parties acknowledge and agree that the foregoing Operating Arrangements are not intended to be exhaustive and each Party and its Affiliates may engage with the other Party and its Affiliates with respect to other collaborative measures as may be mutually agreed from time to time. As part of such other collaboration activities Beyond shall use commercially reasonable efforts to introduce Kirkland’s to Beyond’s product and business vendors. Upon Kirkland’s request, Beyond will consider in good faith and discuss with Kirkland’s opportunities for further collaboration between the Parties with respect to other e-commerce retail operations or brands owned or controlled from Beyond and not included in the Operating Arrangements at such time. In addition, from and after the Effective Date and during the Term, upon request by Beyond, Kirkland’s shall make available certain merchandising services, including product sourcing, selection, supply chain and inventory management for the support of BBB E-Commerce Channel, on terms and conditions, including compensation and reimbursement, to be mutually agreed upon by the Parties in good faith upon such request from Beyond, which terms shall be memorialized by amendment to this Agreement or any exhibit hereto. In connection with and in furtherance of the foregoing, including with respect to the opening of Neighborhood Format retail locations as set forth herein, the Parties agree to collaborate together to improve efficiency, expand common vendor relationships, reduce costs and improve operating results particularly in areas of marketing, merchandising and omni channel customer experience.
(l)Product Availability: The Parties acknowledge that the Operating Arrangements set forth herein are subject to product availability and, except as may otherwise be agreed in writing with respect to any particular purchase order or other document, do not constitute commitments or guarantees of supply by one Party to the other.
(m)Kirkland’s and Beyond Joint Business Planning: To assist in planning and support execution of the Operating Arrangements, Kirkland’s and Beyond senior leadership along with the Review Committee (as defined below) or designees thereof will meet at a cadence mutually agreed to by the Parties to discuss progress of this Agreement, including without limitation progress and review of the Operating Arrangements, joint marketing programs and requirements and other material terms related to the Operating Arrangements set forth in this Agreement.
(n)Review Meetings: The Parties will establish a calendar of regular meetings between representatives of each Party (each, a “Review Meeting”). Each Review Meeting will be comprised of three (3) individual representatives of each respective Party (collectively, the “Review Committee”) or such other number of individual representatives of each Party as is mutually agreed by the Parties. The Review Committee shall assist and be responsible for oversight and planning with respect to each Operating Arrangement and for reviewing and resolving any Business Issues (as defined in Section 2(o)(i) below) with respect to this Agreement in accordance with its role as set forth in Section 2(o). The Review Committee may develop and establish guidelines and governance rules for management and resolution of matters within its responsibility, and delegate such matters to subcommittees that the Review Committee appoints from time to time. Each Party’s Review Committee appointees will be chosen by that Party in its sole discretion. The Review Committee shall hold in-person, telephonic or virtual meetings at least quarterly at times, dates, and locations (if in-person) to be mutually agreed upon in advance by the Review Committee members at the immediately preceding Review Meeting. To the extent commercially practicable, the Parties agree to alternate the in-person meeting locations between the office locations of each of the Parties. In addition, meetings of the Review Committee may be called by either Party at any time upon written notice delivered to the other Party at least fifteen (15) days prior to the proposed meeting date; provided that: (A) it has submitted in writing to the other Party a description of the matters it would like to discuss during such ad hoc meeting; and (B) the other Party agrees these matters should be discussed ahead of the next regularly scheduled meeting of the Review Committee. While the Parties may mutually agree to commit their Review Committee members to attend the meetings in person, all Review Meetings also may be held, and individual Review Committee members may attend, by audio or video teleconference or similar communications equipment by means of which all persons participating in the meeting can hear each other. Each Party shall be responsible for all of its own expenses in participating in any Review Meetings.
(o)Business Issue Resolution:
(i) The Review Committee shall use commercially reasonable efforts to resolve any dispute between the Parties with respect to the Operating Arrangements or otherwise arising under this Agreement and impact thereof on the respective Parties, including material unforeseeable changes in the marketplace for each Party’s respective products, limitations on availability of such products, material marketing program terms and requirements, and any modifications to the Operating Arrangements as permitted or otherwise contemplated herein as a result of any of the foregoing (each, a “Business Issue”). The members of the Review Committee will consult and negotiate with each other in good faith to find a mutually agreeable solution.
(ii) If the Review Committee cannot resolve such Business Issue within thirty (30) days after such Business Issue has been presented to the Review Committee, then any Review Committee member may present the Business Issue to an appropriate member of Beyond’s senior leadership team, or such member’s designee, and an appropriate member of Kirkland’s senior leadership team, or such member’s designee, who shall consult and negotiate with each other in good faith to find a mutually agreeable solution. If such members of the Parties’ senior leadership team or their designees are unable to resolve the Business Issue within an additional thirty (30) day period from the date of presentation to them, they may submit the Business Issue to the Chief Executive Officer of Kirkland’s and the Executive Chairman of Beyond **** for resolution. No recommendations of the Review Committee shall be binding on either Party. If a Business Issue has been referred to the Chief Executive Officer of Kirkland’s and the Executive Chairman of Beyond **** for resolution, then the Chief Executive Officer of Kirkland’s and the Executive Chairman of Beyond **** will meet, consult, and negotiate with the other in good faith to resolve such Business Issue. If they are unable to agree upon a resolution of the Business Issue within ten (10) days of the date of presentation to them, the Business Issue, either Party may seek to resolve such Business Issue in accordance with Section 9(d).
3.COLLABORATION FEES.
(a)Collaboration Fee: Kirkland’s will pay to Beyond a quarterly fee in arrears equal to 0.50% of Kirkland’s’ retail brick-and-mortar revenue (excluding e-commerce) as determined in accordance with GAAP for each fiscal quarter (the “Collaboration Fee”) (provided that with respect Collaboration Fees accrued during the period running from February 2, 2025 through May 3, 2025, the Collaboration Fee percentage is 0.25%). The Collaboration Fee shall continue to accrue from the date set forth in the Original Collaboration Agreement (such accrual having begun on February 2, 2025), with the initial Collaboration Fee due to be paid following the date hereof within 60 days following the end of the fiscal quarter ending August 2, 2025. Kirkland’s obligation to pay the Collaboration Fee shall be automatically extended for two additional years following the effective date of expiration or termination of this Agreement if any of the promissory notes issued under the Amended Beyond Credit Agreement remain outstanding and unpaid as of the expiration or termination of this Agreement.
(b)Incentive Fee: In addition to the Collaboration Fee, Kirkland’s shall pay Beyond an incentive fee (the “Incentive Fee”) on a monthly basis equal to 1.5% of the amount by which Kirkland’s last twelve months’ (LTM) e-commerce revenue (defined for this purpose as online sales originated and processed through Kirklands.com, including BOPIS) as determined in accordance with GAAP, as of the last day of any fiscal month exceeds the Company’s LTM e-commerce revenue for the LTM period most recently ended on the immediately preceding fiscal month-end prior to the date of this Agreement. For illustrative purposes, an illustration of the calculation of the Incentive Fee is attached hereto as Exhibit F. Kirkland’s obligation to pay the Incentive Fee shall thereafter remain in effect through the Term.
(c)Payment: The Collaboration Fee payment shall be due and payable by Kirkland’s not later than 60 days following the immediately preceding fiscal quarter with respect to which a Collaboration Fee is payable. The Incentive Fee shall be due and payable by Kirkland’s not later than 60 days following the immediately preceding fiscal month with respect to which an Incentive Fee is payable.
(d)Late Payments. Each Party shall pay interest on any amounts owed by it but not paid by the applicable due date at a rate equivalent to the lesser of the applicable Prime Rate per annum or the maximum rate of interest allowable under applicable law, accruing from the date due to the date paid. For purposes herein, the “Prime Rate” shall mean the consensus prime rate of U.S. commercial banks in effect for the applicable period, as published in The Wall Street Journal (or, if more than one such rate is published, the average of such rates).
(e)Amounts Added to Credit Facility. Concurrently with the effectiveness of this Agreement, $232,405.54 of fees and other amounts accrued through May 3, 2025 pursuant to the Original Collaboration Agreement and not yet paid were converted to Additional Term Loans outstanding pursuant to the Amended Beyond Credit Agreement and thereafter are subject to and payable in accordance with the terms and conditions contained therein. Without limiting Beyond’s review and audit rights under Section 3(g) below, the Parties acknowledge and agree that for purposes of this Agreement, the foregoing amount added to the borrowings under such credit facility shall be deemed to have been paid to Beyond hereunder as of such date.
(f)Review and Audit: Each Party will prepare and maintain throughout the Term and for 3 years thereafter, as applicable and in such manner as will allow its accountants to audit same in accordance with generally accepted accounting principles, separate, complete and accurate books of accounts and records sufficient to support and verify the calculation of the Collaboration Fee and the Incentive Fee, and otherwise covering all transactions arising out of or relating to this Agreement. Such books and records may be inspected by a duly authorized representative of the other Party no more than twice in any calendar year (or more frequently, if an underpayment is found) for verification of such payments or of compliance with other aspects of this Agreement. The auditing Party representative will treat as confidential all relevant books and records. In the event such audit reveals an underpayment by a Party, such Party will within thirty (30) days’ pay the amount in excess of the fees actually paid together with interest accrued from the date such amounts were originally due in accordance with Section 3(d) above. In the event an audit reveals an overpayment by a Party, then such Party may reduce any future payment due to the other Party under this Agreement or the License Agreement by an amount equal to such overpayment. If the overpayment is not recouped within three (3) months, such Party may request reimbursement of any remaining overpaid amounts from the other Party, in which case, the other Party may make such payment within thirty (30) days following the request.
(g)Fiscal Periods: References to fiscal periods herein with respect to a Party shall mean such periods as reported within such Party’s audited financial statements.
4.CONFIDENTIAL INFORMATION.
(a)Confidentiality Restrictions. All non-public, confidential information of either Party (“Confidential Information”), including, but not limited to, such information about such Party’s business affairs, plans, forecasts, products, services, software, equipment, designs, prices, reports, processes, methodologies, confidential intellectual property, trade secrets, third-party confidential information, customer lists, marketing materials, and any other business information, in any form, disclosed by one Party (the “Disclosing Party”) to the other Party (the “Receiving Party”), whether disclosed orally or disclosed or accessed in written, electronic, or other form or media, or otherwise learned by the Receiving Party, in connection with this Agreement, and whether or not marked, designated, or otherwise identified as “confidential,” shall be maintained as confidential by the Receiving Party, be used solely as necessary in performing the Receiving Party’s obligations or exercising the Receiving Party’s rights this Agreement and may not be disclosed or copied by the Receiving Party unless authorized by the Disclosing Party in writing. The Receiving Party will limit dissemination of any such Confidential Information (i) within its own organization to individuals whose duties justify the need to know such information; and (ii) to such other third parties and/or subcontractors of the Receiving Party, required in the Receiving Party’s performance, necessarily requiring any such Confidential Information. The Receiving Party shall be responsible for any disclosure or misuse of Confidential Information by any person to whom or to which the Receiving Party makes Confidential Information available. The Receiving Party shall not use the Confidential Information of the Disclosing Party for its own use nor for any third party (other than as designated by the Disclosing Party in writing) for any purpose whatsoever except in the performance of the Receiving Party’s obligations or exercise of the Receiving Party’s rights under this Agreement. The Receiving Party shall protect and safeguard the confidentiality of the Disclosing Party’s Confidential Information with at least the same degree of care as the Receiving Party would protect its own Confidential Information, but in no event with less than a reasonable degree of care. Confidential Information does not include any information that: (i) is or becomes generally available to the public other than as a result of the Receiving Party’s breach of this Agreement; (ii) is obtained by the Receiving Party on a non-confidential basis from a third-party that was not legally or contractually restricted from disclosing such information; (iii) was in its possession prior to the Disclosing Party’s disclosure hereunder without a duty of confidentiality; or (iv) was or is independently developed by the Receiving Party without using or referencing any of the Disclosing Party’s Confidential Information.
(b)Compelled Disclosures. If the Receiving Party is compelled by applicable law to disclose any of the Disclosing Party’s Confidential Information, then, to the extent permitted by applicable law, the Receiving Party shall: (a) promptly, and prior to such disclosure, notify the Disclosing Party in writing of such requirement so that the Disclosing Party can seek a protective order or other remedy; and (b) provide reasonable assistance to the Disclosing Party, at the Disclosing Party’s sole cost and expense, in opposing such disclosure or seeking a protective order or other limitations on disclosure. If the Disclosing Party waives compliance or, after providing the notice and assistance required under this Section, the Receiving Party remains required by law to disclose any Confidential Information, the Receiving Party shall disclose only that portion of the Confidential Information that the Receiving Party is legally required to disclose and shall use commercially reasonable efforts to obtain assurances that confidential treatment will be given to such information.
(c)Continuing Obligations. The Receiving Party shall be responsible for any breach of this Section 4 caused by any of its employees, contractors, agents, or representatives. Each Party’s obligations under this Section 4 will survive termination or expiration of this Agreement until the later of (i) five (5) years or (ii) two (2) years following the last to expire of the Operating Arrangements, except for Confidential Information that constitutes a trade secret under any applicable law, in which case, such obligations shall survive for as long as such Confidential Information remains a trade secret under such law.
5.REPRESENTATIONS AND WARRANTIES; DISCLAIMERS.
(a)Mutual. Each Party represents and warrants to the other Party that: (a) it has the full right, power, and authority to enter into this Agreement, to grant the rights and licenses granted hereunder, and to perform its obligations hereunder; and (b) when executed and delivered by such Party, this Agreement will constitute the legal, valid, and binding obligation of such Party, enforceable against such Party in accordance with its terms.
(b)Limited Warranties: Neither Party makes any guarantee, warranty or representation with respect to its products or services on behalf of the other Party to such other Party’s customers or other persons. All warranty claims for a Party’s products and services received by the other Party shall be processed in accordance with Kirkland’s or Beyond’s warranty procedures, as applicable.
(c)Disclaimer of Warranties:
(i) EXCEPT AS EXPLICITLY SET FORTH ABOVE OR IN ANY EXHIBIT HERETO, NEITHER KIRKLAND’S, NOR ANY PERSON ON KIRKLAND’S BEHALF, HAS MADE OR MAKES FOR BEYOND’S BENEFIT ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WHATSOEVER, INCLUDING ANY WARRANTIES OF (I) MERCHANTABILITY; (II) FITNESS FOR A PARTICULAR PURPOSE; (III) TITLE; OR (IV) NON-INFRINGEMENT, WHETHER ARISING BY LAW, COURSE OF DEALING, COURSE OF PERFORMANCE, USAGE OF TRADE OR OTHERWISE, ALL OF WHICH ARE EXPRESSLY DISCLAIMED. BEYOND ACKNOWLEDGES THAT IT HAS NOT RELIED ON ANY REPRESENTATION OR WARRANTY MADE BY KIRKLAND’S, OR ANY OTHER PERSON ON KIRKLAND’S BEHALF.
(ii) EXCEPT AS EXPLICITLY SET FORTH ABOVE, NEITHER BEYOND, NOR ANY PERSON ON BEYOND’S BEHALF, HAS MADE OR MAKES FOR BEYOND’S BENEFIT ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WHATSOEVER, INCLUDING ANY WARRANTIES OF (I) MERCHANTABILITY; (II) FITNESS FOR A PARTICULAR PURPOSE; (III) TITLE; OR (IV) NON-INFRINGEMENT, WHETHER ARISING BY LAW, COURSE OF DEALING, COURSE OF PERFORMANCE, USAGE OF TRADE OR OTHERWISE, ALL OF WHICH ARE EXPRESSLY DISCLAIMED. KIRKLAND’S ACKNOWLEDGES THAT IT HAS NOT RELIED ON ANY REPRESENTATION OR WARRANTY MADE BY BEYOND, OR ANY OTHER PERSON ON BEYOND’S BEHALF.
6.&NBSP;&NBSP;&NBSP;&NBSP;LIMITATION OF LIABILITY. WITHOUT LIMITING EACH PARTY’S LIABILITY UNDER THE LICENSE AGREEMENT OR ANY OTHER ANCILLARY AGREEMENT ENTERED INTO BY THE PARTIES ON CONNECTION WITH THE OPERATING ARRANGEMENTS, EXCEPT FOR LIABILITY FOR BREACH OF CONFIDENTIALITY OBLIGATIONS IN SECTION 4, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY LOSS OF USE, BUSINESS, REVENUE, OR PROFIT OR FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, EXEMPLARY, SPECIAL, OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT, WHETHER ARISING OUT OF BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE), OR OTHERWISE, REGARDLESS OF WHETHER SUCH DAMAGE WAS FORESEEABLE AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
7.TERM, TERMINATION AND EFFECT THEREOF.
(a)Effective Date and Term: This Agreement shall become effective on the Effective Date, and shall continue for an initial term of seven (7) years from the effective date of the Original Collaboration Agreement, which was October 21, 2024 (“Initial Term”). Upon completion of the Initial Term, this Agreement may be extended on mutually agreed terms for successive periods (any such period, a “Renewal Term” and collectively, the “Term”).
(b)No Termination without Cause: The Parties agree that this Agreement may not be terminated without cause, other than by the mutual agreement of the Parties.
(c)Termination for Cause: If a Party commits a material breach of this Agreement, the other Party may terminate this Agreement by giving notice of said breach and termination to the breaching Party, such termination to be effective thirty (30) days following receipt of such notice delivered in the manner set forth in Section 9(c) below. During such thirty (30) day period, the breaching Party shall have the opportunity to cure its breach. If the breaching Party cures its breach to the reasonable satisfaction of the non-breaching Party, any such cure will operate to cancel the non-breaching Party’s termination notice. Moreover, if a Party materially breaches this Agreement on two or more occasions, regardless of cure thereof, and invokes its right to cure a third material breach hereof, the non-breaching Party may reasonably refuse to accept the breaching Party’s tender of its cure.
(d)Effect of Termination: Upon termination of this Agreement, except as otherwise mutually agreed in connection with such termination, each Party shall immediately and without delay cease and desist from holding itself out to the public in any fashion or manner as in active collaboration with the other, shall thereupon promptly remove and cease to utilize each other’s trademark or name in connection with their respective business, signs or advertising materials of any kind, except as otherwise permitted in the License Agreement.
(e)Bankruptcy; Change of Control: Either Party may terminate this Agreement upon written notice to the other Party upon (i) insolvency of such other Party; (ii) assignment by such other Party for the benefit of creditors; (iii) institution of proceedings by or against such Party in bankruptcy or reorganization; (iv) appointment of a receiver of either Party; or (v) transfer or sale of all or substantially all of such other Party’s business or assets or any change in the ownership of more than fifty percent (50%) of the voting capital stock of such other Party. The Parties acknowledge and agree that in the event either Party commences a proceeding under Title 11 of the United States Code (the “Bankruptcy Code”), this Agreement (i) shall be deemed to be an executory contract within the meaning of Section 365 of Bankruptcy Code, (ii) is personal to each of the Parties and an agreement of the type described by Sections 365(c)(1) and 365(e)(2)(A) of the Bankruptcy Code; and (iii) as set forth in Section 9(b) below may not be assumed or assigned.
8.RIGHT OF FIRST OFFER; RIGHT OF FIRST REFUSAL. From and after the Effective Date and during the Term, in the event Beyond acquires the right to operate any other retail store brand not presently owned or operated by Beyond as of the Effective Date, and (i) Beyond desires that such store brand would be operated on a Neighborhood Format basis, Beyond shall provide Kirkland’s notice of Beyond’s intent to initiate in-store sales under such retail store brand and Kirkland’s shall have the first option, exercisable within sixty (60) days of such notice, to become Beyond’s exclusive brick-and-mortar partner for licensed in-store retail locations in a Neighborhood Format on such terms and conditions as the Parties may mutually agree (any such agreement to be on market terms that are negotiated in good faith); and (ii) at any other time, Kirkland’s shall have the right to request to operate such retail store brand within a Neighborhood Format store owned and operated by Kirkland’s, which shall be considered by Beyond in good faith, on such terms and conditions as the Parties may mutually agree (any such agreement to be on market terms that are negotiated in good faith).
9.MISCELLANEOUS PROVISIONS.
(a)Independent Contractor: Neither Party is and shall not represent itself to be a subsidiary, affiliate, legal representative, agent, employee, or partner of the other Party or otherwise connected with the other Party, except as an independent distributor of the Kirkland’s Products and Licensor Products, respectively, and neither Party shall have the authority to assume, create or incur any obligation or liability on behalf of the other Party.
(b)Assignment: This Agreement shall not be assigned by either Party and any assignment or attempted assignment by the other Party in violation of the foregoing shall be void.
(c)Notices: **** All notices, requests, consents, claims, demands, waivers, and other communications hereunder (each, a “Notice”) shall be in writing and addressed to the Parties at the addresses set forth below (or to such other address that may be designated by the receiving Party from time to time in accordance herewith). All Notices shall be delivered by personal delivery, nationally recognized overnight courier (with all fees pre-paid), or certified or registered mail (in each case, return receipt requested, postage pre-paid). Except as otherwise provided in this Agreement, a Notice is effective only: (a) upon receipt by the receiving Party; and (b) if the Party giving the Notice has complied with the requirements of this Section.
Beyond shall send notices to Kirkland’s as follows:
Kirkland’s, Inc.
5310 Maryland Way
Brentwood, Tennessee 37027
Attn: Amy Sullivan, President, Chief Executive Officer
With a copy to:
Kirkland’s, Inc.
5310 Maryland Way
Brentwood, Tennessee 37027
Attn: General Counsel
Kirkland’s shall send notices to Beyond as follows:
Beyond, Inc.
433 W Ascension Way Suite 300
Murray, UT 84123
Attention: Melissa Smith, General Counsel and Corporate Secretary
(d)Governing Law; Forum; Waiver of Jury Trial: This Agreement shall be governed by the laws of the State of Delaware, without giving effect to the conflict of law provisions of Delaware, and any action or proceeding arising out of, or related to, this Agreement or the Products, including any action or proceeding related to any Business Issue that remains unresolved following compliance with the dispute resolution mechanism of Section 2(o) with respect to Business Issues, shall only be brought in an appropriate state or federal court in Delaware. The Parties expressly consent to venue in Delaware and to the personal jurisdiction of the Delaware courts. EACH PARTY HERETO, FOR ITSELF AND ITS AFFILIATES, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE ACTIONS OF THE PARTIES HERETO OR THEIR RESPECTIVE AFFILIATES PURSUANT TO THIS AGREEMENT OR IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
(e)Waiver: Failure of either Party to enforce or exercise any of its rights with respect to any provisions hereof against the other Party shall not constitute a waiver thereof nor shall it in any way affect the validity of this Agreement or act as a bar to such Party’s subsequent enforcement or exercise of any right created hereby. The exercise or enforcement by either Party of any of its rights hereunder shall not preclude or prejudice such Party from thereafter exercising the same or any other right which it may have under this Agreement.
(f)Headings; Construction: The headings of Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All words used in this Agreement will be construed to be of such gender or number as the context requires. The word “including” shall be read as “including but not limited to” and otherwise shall be considered illustrative and non-limiting. All references to dollars or “$” in this Agreement will be to U.S. dollars. **** The language used in this Agreement will be construed, in all cases, according to its fair meaning, and not for or against either Party hereto. The Parties acknowledge that each Party has reviewed this Agreement and that rules of construction to the effect that any ambiguities are to be resolved against the drafting Party will not be available in the interpretation of this Agreement.
(g)Successors and Assigns: This Agreement is entered into solely between, and may be enforced only by, the Parties and their successors and permitted assigns, and this Agreement shall not be deemed to create any rights in third parties, including, without limitation, suppliers and customers of a Party, or to create any obligations of a Party to any such third parties.
(h)Severability: If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, inoperative, or unenforceable, the remainder of this Agreement shall not be affected by such determination, and the remainder of this Agreement shall be given effect as if the invalid, inoperative, or unenforceable provision had not been included in this Agreement.
(i)Survival: The provisions of Sections 4, 5, 6, 7(d), and 9, and any other provisions in this Agreement or any exhibit hereto that are expressly stated to survive, or by implication are intended to survive, shall survive the expiration or termination of this Agreement for any reason. Termination or expiration of this Agreement shall not relieve either Party of any liability or obligation which accrued hereunder prior to the effective date of such termination or expiration nor preclude either Party from pursuing all rights and remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement nor prejudice either Party’s right to obtain performance of any obligation.
(j)Cumulative Remedies. In the event of such breach or threatened breach, the other Party will be entitled to seek equitable relief. Except as expressly set forth in this Agreement, the right and remedies under this Agreement are cumulative and in addition to any other rights or remedies available at law or in equity or otherwise.
(k)Entire Agreement and Modification: Except as otherwise set forth herein, the Parties agree that this Agreement, including the Exhibits hereto, contains the entire agreement between the Parties and there are no other oral statements, representations, warranties or other agreements between the Parties. This Agreement can only be modified, amended or supplemented in writing signed by authorized representatives of both Parties. In the event of a conflict between the terms and conditions set forth in the body of this Agreement and the terms and conditions set forth in any Exhibit hereto, the terms and conditions set forth in the Exhibit shall govern and control.
(l)Effect of Amendment. For the avoidance of doubt this Agreement is effective between the Parties from and after the Effective Date, and nothing herein waives or modifies any rights or obligations of the Parties under the Original Collaboration Agreement that accrued prior to the Effective Date hereof (including with respect to any fees or amounts owed by any Party thereunder prior to the Effective Date), other than the addition of certain amounts owed under the Original Collaboration Agreement to amounts outstanding under the Amended Beyond Credit Agreement, in lieu of payment thereof hereunder, in accordance with Section 3(b).
(m)Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different Parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement constitutes the entire contract between the Parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. This Agreement shall become effective when it shall have been executed by each of Parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy, pdf or other electronic transmission shall be as effective as delivery of a manually executed counterpart of this Agreement.
(Signature page follows)
IN WITNESS WHEREOF, the Parties have executed this Agreement on the Effective Date.
| KIRKLAND’S, INC.<br><br> <br>By<br><br> <br>(Signature)<br><br> <br>Amy Sullivan<br><br> <br>(Print)<br><br> <br>Title President, Chief Executive Officer<br><br> <br>Address of Principal Place of Business:<br><br> <br>5310 Maryland Way<br><br> <br>Brentwood, Tennessee 37027 | BEYOND, INC.<br><br> <br>By<br><br> <br>(Signature)<br><br> <br>(Print)<br><br> <br>Title<br><br> <br>Address of Principal Place of Business:<br><br> <br>433 W Ascension Way Suite 300<br><br> <br>Murray, Utah 84123 |
|---|
EXHIBIT A
Collaboration and Joint Marketing
The Parties agree to engage in Marketing Activities during the Term, in a manner permitted by applicable law, and as reasonably agreed in good faith by the Parties following the Effective Date.
Kirkland’s will drive creative process and both Parties will work together to share resources for social media across the brands.
EXHIBIT A-1
Data Processing Addendum
This Data Processing Addendum (this “DPA”) forms part of and is incorporated into the Agreement and sets forth each Party’s rights and obligations to the extent Customer Information is disclosed by one Party (the “Disclosing Party”) to the other Party (the “Receiving Party”). In the event of any conflicts between this DPA and the Agreement, this DPA will govern to the extent of the conflict.
1.DEFINITIONS . For the purposes of this DPA, the following terms shall have the meanings set out below. Capitalized terms used but not defined in this DPA shall have the meanings given in the Agreement. All other terms in this DPA not otherwise defined in the Agreement shall have the corresponding meanings given to them in Privacy Laws.
(a)“Customer Information” means any information that identifies or relates to an identified or identifiable individual, and/or is defined as “personal data,” “personal information,” “personally identifiable information,” or any similar term under any Privacy Law.
(b)“Privacy Laws” means all applicable laws, rules, regulations, and binding guidelines, in each case as amended, consolidated, re-enacted or replaced from time to time, relating to the privacy, security, or processing of Customer Information, including without limitation, the California Consumer Privacy Act, as amended by the California Privacy Rights Act of 2020 (Cal. Civ. Code §§ 1798.100 - 1798.199) (the “CCPA”).
(c)“Security Incident” means any (i) accidental, unlawful or unauthorized access, use, loss, exfiltration, disclosure, alteration, destruction, encryption, compromise, or other processing of Customer Information, or (ii) occurrence that otherwise constitutes a “data breach,” “security breach,” “personal data breach,” “security incident,” “cybersecurity incident,” or any similar term with respect to Customer Information under any Privacy Law.
(d)“Sensitive Customer Information” **** means Customer Information that is defined as “sensitive,” “special category,” or any similar term under any Privacy Laws, including, but not limited to: (i) social security, driver’s license, state identification card, passport number, or other unique identification number; (ii) account log-in, financial account, debit card, or credit card number in combination with any required security or access code, password, or credentials allowing access to an account; (iii) precise geolocation; (iv) racial or ethnic origin, citizenship or immigration status, religious or philosophical beliefs, or union membership; (v) health information, biometric information, genetic information, sex life, or sexual orientation; and (vi) information regarding children under 16.
2.PRIVACY AND CONFIDENTIALITY.
(a) The Disclosing Party represents and warrants that: (i) all Customer Information it discloses to the Receiving Party is collected and is disclosed in compliance with all Privacy Laws, including with respect to any applicable obligations to provide notice to and/or obtain consent from individuals; and (ii) no Customer Information provided to the Receiving Party includes any Sensitive Customer Information.
(b) Receiving Party shall only process Customer Information disclosed to it by Disclosing Party under this DPA for the purposes for which it is disclosed, and at all times in compliance with this DPA and all Privacy Laws, including providing the same level of data protection as required by such Privacy Laws.
(c) Receiving Party shall limit access to Customer Information to authorized personnel who have demonstrated a need to know such Customer Information for the purposes for which it is disclosed and are obligated to maintain the privacy, security, and confidentiality of such Customer Information. Receiving Party shall not disclose any Customer Information to any third party without Disclosing Party’s express written permission, and only where such third party is bound by contractual obligations to maintain the privacy, security, and confidentiality of such Customer Information at least as restrictive as those set forth herein.
(d) Receiving Party shall maintain and periodically review access logs with respect to Customer Information and Disclosing Party may request quarterly reports summarizing access logs from the Receiving Party, including details of any access granted to third-party vendors or external parties.
(e) Receiving Party is prohibited from selling Customer Information or disclosing/processing it for targeted advertising purposes, unless the applicable individual has received explicit notice and is provided an opportunity to exercise the right to opt-out of such selling or disclosure/processing pursuant to Privacy Laws.
(f) Upon being notified by Disclosing Party that an individual has made a request pursuant to their rights under Privacy Laws with respect to Customer Information disclosed to Receiving Party, Receiving Party shall promptly comply with such request and otherwise reasonably assist Disclosing Party in fulfilling its obligations to comply with such request, including by forwarding the request to any other parties to whom Receiving Party has disclosed the Customer Information. Disclosing Party may require Receiving Party to provide reasonable documentation that verifies that Receiving Party no longer retains or uses the Customer Information of individuals who have requested the deletion of their Customer Information (unless an exemption to a deletion request applies), opted out of the selling of their Customer Information, or opted out of the disclosure/processing of their Customer Information for targeted advertising purposes.^^
3.CALIFORNIA RESIDENT CUSTOMER INFORMATION. This Section 3 shall only apply to the extent Disclosing Party makes available to Receiving Party Customer Information of California residents that is subject to the CCPA, and where such disclosure constitutes a sale or share under the CCPA. For purposes of this Section 3, the terms “sell,” “share,” “consumer,” “business,” and “third party” shall have the corresponding meaning given to them in the CCPA.
(a) The Parties agree that for purposes of the CCPA, Disclosing Party is a business and Receiving Party is a third party, and the disclosure of Customer Information is made for the limited and specific purpose of the Marketing Activities, as outlined in Exhibit A.
(b) Receiving Party shall only use the Customer Information for the specific and limited purpose identified above, comply with applicable obligations under the CCPA and provide the same level of privacy protection as is required of businesses by the CCPA, and notify Disclosing Party without undue delay if Receiving Party makes a determination that it can no longer meet its obligations under the CCPA.
(c) Receiving Party shall grant Disclosing Party the right to (i) take reasonable and appropriate steps to help ensure that Receiving Party uses the Customer Information in a manner consistent with Disclosing Party’s obligations under the CCPA, and (ii) upon reasonable notice, take reasonable and appropriate steps to stop and remediate any unauthorized use of the Customer Information.
4.DATA SECURITY. Receiving Party shall implement and maintain reasonable and appropriate physical, technical, and organizational safeguards to protect Customer Information disclosed to it by Disclosing Party against Security Incidents. Such safeguards shall include, at a minimum: (a) data encryption protocols, both in transit and at rest, as mutually agreed by the Parties and in accordance with industry standards; (b) an incident response plan.
5.SECURITY INCIDENTS. **** Receiving Party will notify Disclosing Party in writing within 48 hours after Receiving Party becomes aware of a Security Incident, and such notice shall include, at a minimum: (i) a description of the Security Incident, including the types of Customer Information impacted by the Security Incident and other material information reasonably requested by Disclosing Party; and (ii) steps Receiving Party has taken and will take to mitigate the impact of the Security Incident and remediate the causes of the Security Incident. The Parties will reasonably cooperate with one another on additional remediation efforts, including with respect to notifying impacted individuals and authorities.
6.DELETION OF CUSTOMER INFORMATION. At Disclosing Party’s choice and direction, Receiving Party shall delete or return all Customer Information to Disclosing Party as requested upon termination of the Agreement, unless retention of the Customer Information is required by law, in which case, Receiving Party shall notify Disclosing Party without undue delay of such legal requirement and shall upon the expiration of such retention obligation immediately delete or return the Customer Information, at Disclosing Party’s choice and direction. Upon completing the deletion of any Customer Information at the direction of Disclosing Party, Receiving Party shall provide Disclosing Party with written certification of such deletion. ****
7.INDEMNIFICATION OBLIGATIONS. Each Party (“Indemnifying Party”) shall indemnify, defend, and hold harmless the other Party and its officers, directors, employees, agents, affiliates, successors, and permitted assigns (“Indemnified Party”) against any and all losses, damages, liabilities, deficiencies, claims, actions, judgments, settlements, interest, awards, penalties, fines, costs, or expenses of whatever kind, including reasonable attorneys’ fees and costs (collectively, “Losses”), arising out of or resulting from any claim of a third party arising out of or occurring in connection with any breach of this DPA or any Security Incident resulting from the Indemnifying Party’s willful, fraudulent or negligent acts or omissions.
EXHIBIT B-1
Form of Marketplace Agreement
[see attached]
EXHIBIT B-2
Additional BBB E-Commerce Channel Terms
Kirkland’s Product Selection
Kirkland’s shall make available all Kirkland’s Products for online retail sale on the BBB E-Commerce Channel.
Pricing
Kirkland’s shall have sole discretion regarding pricing applicable to end customers for any Kirkland’s Product listed for online retail sale on any BBB E-Commerce Channel.
Purchasing, Forecasting and Seasonal Planning
The Parties shall regularly review the results of the sale of Kirkland’s Products on BBB E-Commerce Channel and collaborate with respect to purchasing, forecasting and seasonal planning.
Joint Marketing
The Parties shall engage in mutual and joint marketing programs intended to increase awareness and traffic to Kirkland’s Products hosted on the BBB E-Commerce Channel in accordance with Section 2(a) of the Agreement.
Fees and Commissions
For Kirkland’s Products sold through BBB E-Commerce Channel, Beyond will receive an eighteen percent (18%) commission on all revenue derived from the sale of Kirkland’s Products sold at retail price which may be further set forth in separate purchase orders or addenda hereto entered into by the Parties from time to time during the Term.
Taxes
Each party agrees to pay, collect, calculate, remit and be responsible for its respective applicable sales, use, valued-added, income, excise, privilege, property transfer, franchise and any other taxes (“Taxes”) arising out of this agreement. Beyond shall be responsible for the collection of all taxes due in respect of online sales of Kirkland’s Products through Beyond E-Commerce Channels, which sales taxes will be remitted by Beyond to the proper taxing authority.
Shipping
The Parties shall work together and collaborate to determine and implement processes for the collection and payment of all shipping charges in connection with the online sales of Kirkland’s Products through Beyond E-Commerce Channels and for shipping of such products to the customer/purchaser consistent with the Master Services Agreement in place between the Parties as of the Effective Date.
EXHIBIT C-1
Terms of Neighborhood Retail Pilot
| 1. | First Neighborhood Retail Pilot |
|---|
Store Identification & Conversion Plans
The Parties will continue to implement the store conversion and development plans that were established during the 90 day period following the effective date of the Original Collaboration Agreement (the “Planning Period”), during which the Parties had mutually identified up to ten (10) locations at which a Neighborhood Format Bed, Bath & Beyond retail location would be established for five locations and a Neighborhood Format Overstock Outlet and Returns would be established for five retail locations, all as part of a branding, merchandising and operational testing pilot program, which retail locations would be operated by Kirkland’s pursuant to the terms of the License Agreement and as otherwise set forth in the Agreement. These may have included or may include the conversion of current Kirkland’s retail locations or newly identified real estate locations.
The Parties will continue to implement the store conversion or development plans that were established during the Planning Period, which were inclusive of signage, advertising and marking plans (including print, mail, e-mail, social media and other customary or alternative channels), fixture and store merchandising selections, point-of-sale equipment and other retail store operating requirements.
Construction and Conversion Costs
Store conversion costs will be borne by Kirkland’s. Kirkland’s will use commercially reasonable efforts to seek landlord contributions to capital conversion costs. Beyond will reasonably cooperate in any landlord discussions, waivers or negotiations necessary to enable the store conversions.
First Pilot Term
The “First Pilot Term” (i.e., the time period during which the Parties will select and convert stores into Neighborhood Format Bed Bath & Beyond or Overstock Outlet and Returns branded Licensed Stores (as defined in the License Agreement)) will continue for the period that is not more than eighteen (18) months following the effective date of the Original Collaboration Agreement. The Parties will work in good faith to open at least one pilot Bed, Bath & Beyond Neighborhood Format retail location and at least one pilot “Overstock Outlet and Returns” retail location prior to the date that is 180 days following the effective date of the Original Collaboration Agreement.
Information Sharing and Reporting
During the First Pilot Term Kirkland’s shall actively monitor customer traffic, conversion and other sales metrics and report such metrics to Beyond on a regular reporting basis.
End of Pilot Term and Expansion
If at any time following the Effective Date, the Parties mutually agree upon the success of the first pilot program, the Parties may agree to expand the conversion program to additional stores.
| 2. | Second Neighborhood Retail Pilot |
|---|
Store Identification & Conversion Plans
Within 90 days following the Effective Date (the “Second Planning Period”), the Parties shall mutually identify up to five (5) locations at which a Neighborhood Format Bed, Bath & Beyond Home retail location would be established, and up to five (5) locations at which a Neighborhood Format buybuyBABY retail location would be established, all as part of a branding, merchandising and operational testing pilot program, which retail locations would be operated by Kirkland’s pursuant to the terms of the License Agreement and as otherwise set forth in the Agreement. These may include the conversion of current Kirkland’s retail locations or newly identified real estate locations.
During the Second Planning Period, the Parties will establish store conversion or development plans for such retail locations, which shall be inclusive of signage, advertising and marking plans (including print, mail, e-mail, social media and other customary or alternative channels), fixture and store merchandising selections, point-of-sale equipment and other retail store operating requirements.
Construction and Conversion Costs
Store conversion costs will be borne by Kirkland’s. Kirkland’s will use commercially reasonable efforts to seek landlord contributions to capital conversion costs. Beyond will reasonably cooperate in any landlord discussions, waivers or negotiations necessary to enable the store conversions.
Second Pilot Term
The “Second Pilot Term” (i.e., the time period during which the Parties will select and convert stores into Neighborhood Format Bed, Bath & Beyond Home or buybuyBABY branded Licensed Stores (as defined in the License Agreement)) will continue for the period that is not more than eighteen (18) months following the Effective Date. The Parties will work in good faith to open at least one pilot Bed, Bath & Beyond Home Neighborhood Format retail location and at least one pilot buybuyBABY retail location prior to the date that is 180 days following the Effective Date.
Information Sharing and Reporting
During the Second Pilot Term, Kirkland’s shall actively monitor customer traffic, conversion and other sales metrics for such retail locations and report such metrics to Beyond on a regular reporting basis.
End of Pilot Term and Expansion
If at any time following the Effective Date, the Parties mutually agree upon the success of the second pilot program, the Parties may agree to expand the conversion program to additional stores.
EXHIBIT C-2
Execution Copy of License Agreement
[see attached]
EXHIBIT D
Form of Overstock.com First Cost Supplier Agreement
[see attached]
EXHIBIT E
Business Improvement and Branding; Other Collaboration
Manufacturing and Licensing Partners: Kirkland’s agrees to use commercially reasonable efforts to expeditiously secure manufacturing and licensing partners for Kirkland’s or Kirkland’s home-branded furniture, patio, rugs, textiles, and similar products; provided that all manufacturing and licensing arrangements shall be subject to Beyond’s review and written approval. In the event that Beyond acquires the Kirkland’s Brand, all such agreements (including the right to receive all royalties and other revenues under such agreements) shall be assigned to Beyond as of the closing of the acquisition.
Assistance with Synergies and Efficiency: Beyond will provide the Company with resources to collaborate with the Company to identify and implement measures for the Company to reduce costs and operate more efficiently. Such efforts may include, among other things, store consolidation, the identification and exploitation of synergies in connection the collaboration under this Agreement, including financial planning and analysis, and resource sharing where permissible.
Re-branding / Re-Positioning: Kirkland’s, in collaboration with Beyond, agrees to reposition itself as a brick-and-mortar retail platform representing small format store concepts (including Neighborhood Format stores), and potentially implement a name change for its stores. The small-store format may include:
| A. | Kirkland’s core stores |
|---|---|
| B. | Kirkland’s home stores (modified in-store offering) |
| --- | --- |
| C. | Kirkland’s outlet/return center stores |
| --- | --- |
| D. | Bed Bath & Beyond small format |
| --- | --- |
| E. | Bed Bath & Beyond outlet stores |
| --- | --- |
| F. | Bed Bath & Beyond Home small format |
| --- | --- |
| G. | Bed Bath & Beyond Home outlet stores |
| --- | --- |
| H. | Overstock stores |
| --- | --- |
| I. | buy buy baby small format stores |
| --- | --- |
| J. | buy buy baby outlet centers |
| --- | --- |
Kirkland’s leadership will be primarily responsible for determining product assortment, store aesthetics and layout, and other standards for the stores, in collaboration with JLL (Jones Lang LaSalle Incorporated), which has already been engaged, and in any event shall be subject to Beyond’s review and written approval. Kirkland’s will coordinate with Beyond’s executive team to ensure consistent messaging and consistent negotiating with partners and vendors among all of the Beyond and Kirkland’s stores.
Large Store Franchising / Licensing: Beyond reserves the right to negotiate franchise and license agreements with respect to the Kirkland’s Brand for retail stores larger than 15,000 square feet, or for stores of any size in markets that Kirkland’s does not, as of the Effective Date, operate any retail stores. Kirkland’s shall enter into the agreements negotiated by Beyond on its behalf (assuming that Kirkland’s owns the Kirkland’s Brand), and such agreements shall be assigned by Kirkland’s to Beyond in connection with Beyond’s acquisition of the Kirkland’s Brand.
Leasing and Accounts Payable: Beyond shall have the right to work with Kirkland’s management to evaluate its current lease portfolio, to renegotiate leases and trade payable terms and conditions. Beyond reserves right to work with Gordon Brothers or other third-party advisors with respect to the lease portfolio. Kirkland’s will not enter into or renew any new store leases or long term vendor contracts without Beyond’s written approval.
Unprofitable Store Locations: Kirkland’s will create an action plan to close, convert or terminate store locations that have 4-wall negative EBITDA contribution including imputing cost of capital allocation for inventory at ABL lender cost of capital. The Parties have identified approximately 50 such locations to date. Kirkland’s reserves the right to do the same for locations they identify in excess of the identified negative construction locations.
Vendors: Kirkland’s shall not contractually obligate itself to any one specific vendor, or expand any existing relationship with such a vendor, in each case without Beyond’s prior written consent. Promptly following the Effective Date, Kirkland’s will review its current import agent deal and discuss with Beyond whether any improvements or efficiencies can be reasonably obtained.
Staffing: Kirkland’s shall ensure proper staffing for branding, store operations, and merchandising, and shall use concerted efforts to grow its business location by location through local activation, email strategy in coordination with Beyond, and digital strategy with proof points around return.
Additional Cost-Saving Measures / Shared Resources: Kirkland’s will promptly implement all cost-saving measures identified by Kirkland’s CEO to simplify its organization. In additional Beyond and Kirkland will promptly identify supply-chain personnel to use as a shared resource, and to promptly establish shared resources for social media execution.
EXHIBIT F
Illustration of Incentive Fee Calculation
47762597.2
ex_897055.htm
EXHIBIT 10.21
September 15, 2025
The Brand House Collective, Inc.
5310 Maryland Way
Brentwood, Tennessee 37027
Attn: Amy Sullivan, President, Chief Executive Officer
W. Michael Madden, Executive Vice President and Chief Financial Officer
Re: Amendment No. 1 to Asset Purchase Agreement
Ladies and Gentlemen:
Reference is hereby made to that certain Asset Purchase Agreement, dated as of May 7, 2025 (the “Purchase Agreement”), by and between Bed Bath & Beyond, Inc. (f/k/a Beyond, Inc.), a Delaware corporation (“Purchaser”), and The Brand House Collective Inc., a Tennessee corporation (f/k/a Kirkland’s Inc.) (the “Seller”) (each a “Party”, and together, the “Parties”). Capitalized terms used but not defined herein shall have their respective meaning in the Purchase Agreement.
The Parties hereby acknowledge and agree as follows:
- Amendment to the Purchase Agreement. Pursuant to and in accordance with Section 10.4 of the Purchase Agreement, notwithstanding anything to the contrary set forth in the Purchase Agreement:
| a) | “Cash “Payment” as such term is used in the Purchase Agreement shall mean $10,000,000.00; and |
|---|---|
| b) | Section 1.1(a) of the Purchase Agreement is hereby deleted in its entirety and<br> replaced with the following: the Trademarks, Trademark registrations, and Trademark applications set forth on Schedule 1.1(a), as well as all other Trademarks, Trademark registrations and Trademark applications owned by Seller and its Affiliates that are comprised of or contain the element “Kirkland” or any abbreviation, translation, or derivation thereof, together with all statutory and common law rights in any and all of the foregoing, all registrations and applications therefor and all renewals thereof (collectively, the “Acquired Trademarks”), all goodwill associated with, or symbolized by, such Trademarks, and all other rights, priorities and privileges arising therefrom or pertaining thereto, throughout the world |
| --- | --- |
US-DOCS\163929690.5
| 2. | Seller Disclosure Schedules. The disclosure schedules required to be delivered by Seller pursuant to the Purchase Agreement and attached hereto as Exhibit A shall constitute the “Seller Disclosure Schedules” for all purposes under the Purchase Agreement. |
|---|---|
| 3. | Effect on the Purchase Agreement: This amendment (“Amendment”) constitutes an amendment to the Purchase Agreement, and the Parties hereby agree and acknowledge that this amendment is made in accordance with the requirements thereof. Throughout the Purchase Agreement, references to “Agreement” or similar phrases shall be deemed to refer to the Purchase Agreement, as amended and supplemented by this Amendment. Except as set forth in this Amendment, the Purchase Agreement shall continue in full force and effect in accordance with its terms. If there is conflict between this Amendment and the Purchase Agreement, the terms of this Amendment will prevail. |
| --- | --- |
The validity, interpretation, construction, and enforcement of this Amendment shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to conflict of laws principles. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile, .pdf or other electronic transmission shall be as effective as delivery of a manually executed counterpart of this Amendment.
[remainder of page intentionally left blank]
[Signature Page to Amendment No. 1 to Asset Purchase Agreement]
If this Amendment correctly states our mutual understanding and agreement, please indicate your approval and agreement by executing this Amendment below, as of the date first set forth above, and returning a fully executed copy to the undersigned.
Very truly yours,
Accepted and agreed to as of the date first above written:
THE BRAND HOUSE COLLECTIVE, INC.
By:
Name:
Title:
[Signature Page to Amendment No. 1 to Asset Purchase Agreement]
SimplyAgree Sign signature packet ID: b1af8b7b-e8fd-4b30-9215-79fd21757a8d
Accepted and agreed to as of the date first above written:
THE BRAND HOUSE COLLECTIVE, INC.
By:
Name: Andrea K. Courtois
Title: Senior Vice President and Chief Financial Officer
[Signature Page to Amendment No. 1 to Asset Purchase Agreement]
Exhibit A
Seller Disclosure Schedule
[Attached.]
SELLER DISCLOSURE SCHEDULE TO THE
ASSET PURCHASE AGREEMENT
DATED AS OF MAY 7, 2025
BY AND BETWEEN
BED BATH & BEYOND, INC. (F/K/A BEYOND, INC.), AS PURCHASER,
AND
THE BRAND HOUSE COLLECTIVE, INC. (F/K/A KIRKLAND’S INC.), AS SELLER
Schedule 1.1
Purchase and Sale of Acquired Assets
(a)
| Trademark | Application Number | Application Date | Registration Number | Registration <br> Date | Status | Owner |
|---|---|---|---|---|---|---|
| SIMPLE THINGS BY KIRKLAND’S | 88282928 | 30-JAN-2019 | 5979530 | 04-FEB-2020 | Registered | The Brand House<br> Collective, Inc. |
| K (and Design) | 87902340 | 01-MAY-2018 | 5747217 | 07-MAY-2019 | Registered | The Brand House<br> Collective, Inc. |
| BRING HAPPINESS HOME. | 87884456 | 19-APR-2018 | 5875131 | 01-OCT-2019 | Registered | The Brand House<br> Collective, Inc. |
| KIRKLAND’S | 85169225 | 04-NOV-2010 | 3992852 | 12-JUL-2011 | Registered | The Brand House<br> Collective, Inc. |
| KIRKLAND’S HOME | 78152914 | 09-AUG-2002 | 2769247 | 30-SEP-2003 | Registered | The Brand House<br> Collective, Inc. |
| KIRKLAND’S OUTLET | 78152920 | 09-AUG-2002 | 2819618 | 02-MAR-2004 | Registered | The Brand House<br> Collective, Inc. |
| THE<br><br> <br>KIRKLAND COLLECTION | 75425158 | 29-JAN-1998 | 2312426 | 25-JAN-2000 | Registered | The Brand House<br> Collective, Inc. |
| KIRKLAND’S (and Design) | 73628849 | 06-NOV-1986 | 1450144 | 28-JUL-1987 | Registered | The Brand House<br> Collective, Inc. |
| KIRKLAND’S HOME | 99173572 | 07-MAY-2025 | Pending | The Brand House<br> Collective, Inc. | ||
| KIRKLAND’S HOME | 99171620 | 06-MAY-2025 | Pending | The Brand House<br> Collective, Inc. |
Trade Names:
1. Kirkland's Briar Patch
2. Kirkland's Home
3. Kirkland's Outlet
4. The Kirkland Collection
5. Kirklands.com
6. Kirkland's Texas Retail, LLC
Common Law Trademarks:
1. Briar Patch
2. Kirkland's, Inc.
3. Kirkland's Stores, Inc.
4. kirkland's.com,inc.
5. kirkland's.com
6. Kirkland's - For Your Home
7. Holiday by Kirkland's
8. Tuscan Gardens by Kirkland's
(b)
1. www.kirklands.com
2. www.kirklandshome.com
3. www.my.kirklands.com
4. www.ir.kirklands.com
Schedule 3.3 Conflicts
None.
Schedule 3.4
Consents
| 1. | The BofA Closing Consent. |
|---|---|
| 2. | Consents required under the Amended and Restated Term Loan Credit Agreement, by and among<br> Kirkland’s Stores, Inc., Purchaser and certain other parties named therein (the “Beyond Credit Agreement”). |
| --- | --- |
Schedule 3.5
Title to Properties
1. Encumbrances arising under the Agreement.
2. Encumbrances arising under or in connection with the BofA Credit Agreement
3. Encumbrances arising under or in connection with the Beyond Credit Agreement
Schedule 3.6
Contracts
| 1. | The Amended and Restated Collaboration Agreement, dated as of May 7, 2025, by and between Seller and Purchaser, together with all exhibits and attachments entered into in connection therewith (the “Collaboration Agreement”). |
|---|---|
| 2. | In the ordinary course of business, Seller may grant to third party manufacturers and marketing vendors the non-exclusive, limited purpose, right to use or reproduce certain of the Acquired Assets for manufacturing and marketing purposes. |
| --- | --- |
Schedule 3.9
Intellectual Property
(a)
| Trademark | Application Number | Application Date | Registration Number | Registration <br> Date | Status | Owner |
|---|---|---|---|---|---|---|
| SIMPLE THINGS BY KIRKLAND’S | 88282928 | 30-JAN-2019 | 5979530 | 04-FEB-2020 | Registered | The Brand House<br> Collective, Inc. |
| K (and Design) | 87902340 | 01-MAY-2018 | 5747217 | 07-MAY-2019 | Registered | The Brand House<br> Collective, Inc. |
| BRING HAPPINESS HOME. | 87884456 | 19-APR-2018 | 5875131 | 01-OCT-2019 | Registered | The Brand House<br> Collective, Inc. |
| KIRKLAND’S | 85169225 | 04-NOV-2010 | 3992852 | 12-JUL-2011 | Registered | The Brand House<br> Collective, Inc. |
| KIRKLAND’S HOME | 78152914 | 09-AUG-2002 | 2769247 | 30-SEP-2003 | Registered | The Brand House<br> Collective, Inc. |
| KIRKLAND’S OUTLET | 78152920 | 09-AUG-2002 | 2819618 | 02-MAR-2004 | Registered | The Brand House<br> Collective, Inc. |
| THE<br><br> <br>KIRKLAND COLLECTION | 75425158 | 29-JAN-1998 | 2312426 | 25-JAN-2000 | Registered | The Brand House<br> Collective, Inc. |
| KIRKLAND’S (and Design) | 73628849 | 06-NOV-1986 | 1450144 | 28-JUL-1987 | Registered | The Brand House<br> Collective, Inc. |
| KIRKLAND’S HOME | 99173572 | 07-MAY-2025 | Pending | The Brand House<br> Collective, Inc. | ||
| KIRKLAND’S HOME | 99171620 | 06-MAY-2025 | Pending | The Brand House<br> Collective, Inc. |
(c)
1. Encumbrances arising under the Agreement.
2. Encumbrances arising under or in connection with the BofA Credit Agreement
3. Encumbrances arising under or in connection with the Beyond Credit Agreement
(d)
None.
(f)
1. The Agreement.
2. The Collaboration Agreement.
3. Encumbrances arising under the Agreement.
4. Encumbrances arising under or in connection with the BofA Credit Agreement
5. Encumbrances arising under or in connection with the Beyond Credit Agreement
(f)(ii)
None.
Schedule 5.1
Conduct of Business of Seller
None.
Schedule 11.1(b)
Permitted Encumbrances
1. Encumbrances arising under the Agreement.
2. Encumbrances arising under or in connection with the BofA Credit Agreement
3. Encumbrances arising under or in connection with the Beyond Credit Agreement
ex_897056.htm
EXHIBIT 10.22
FOURTH AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) dated as of [____], 2025 (the “Fourth Amendment Effective Date”) among:
KIRKLAND’S STORES, INC., a Tennessee corporation (the “Lead Borrower”);
The other Borrowers party thereto (together with the Lead Borrower, individually, a “Borrower”, and collectively, the “Borrowers”);
The Guarantors party hereto;
the Lenders party hereto; and
BANK OF AMERICA, N.A., as Administrative Agent and Collateral Agent (in such capacities, the “Agent”);
in consideration of the mutual covenants herein contained and benefits to be derived herefrom.
W I T N E S S E T H:
WHEREAS, the Borrowers, the Guarantors, the Lenders and the Agent, among others, have entered into a certain Third Amended and Restated Credit Agreement dated as of March 31, 2023 (as amended by that certain First Amendment to Third Amended and Restated Credit Agreement, dated as of January 25, 2024, that certain Second Amendment to Third Amended and Restated Credit Agreement, dated as of October 21, 2024, that certain Third Amendment to Third Amended and Restated Credit Agreement, dated as of May 7, 2025, and as further amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Existing Credit Agreement”);
WHEREAS, the Lead Borrower has informed the Agent of the Lead Borrower’s intent to amend the Term Loan Credit Agreement on the date hereof (the “Term Loan Amendment”);
WHEREAS, the Lead Borrower has requested that the Agent and the Lenders agree to amend the Credit Agreement to (i) permit the Term Loan Amendment and certain other transactions contemplated thereby, and (ii) amend certain provisions of the Existing Credit Agreement, in each case subject to the terms and conditions set forth herein; and
WHEREAS, the Loan Parties, the Agent and the Lenders have agreed, subject to the terms and conditions set forth herein, to (i) permit the Loan Parties to enter into the Term Loan Amendment and certain other transactions contemplated thereby, and (ii) amend certain provisions of the Existing Credit Agreement, as more particularly set forth herein (the Existing Credit Agreement, as amended by this Amendment and as the same may be further amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).
NOW THEREFORE, in consideration of the mutual promises and agreements herein contained, the parties hereto hereby agree as follows:
| 1. | Incorporation of Defined Terms. All capitalized terms not otherwise defined herein shall have the same meaning as in the Credit Agreement, as applicable. |
|---|---|
| 2. | Representations and Warranties. Each of the Loan Parties hereby represents and warrants that as of the date hereof, (a) no Default or Event of Default exists under the Credit Agreement or under any other Loan Document, and (b) all representations and warranties contained in the Credit Agreement and in any other Loan Document, or which are contained in any document furnished at any time under or in connection with the Credit Agreement or any other Loan Document are true and correct in all material respects, except (i) to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, (ii) in the case of any representation and warranty qualified by materiality, they shall be true and correct in all respects and (iii) for purposes of this Amendment, the representations and warranties contained in subsections (a) and (b) of Section 5.05 of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 of the Credit Agreement. |
| --- | --- |
| 3. | Ratification and Reaffirmation of Loan Documents. The Credit Agreement, as hereby amended, and all other Loan Documents, are hereby ratified and re-affirmed in all respects and shall continue in full force and effect, and each of the Loan Parties hereby affirms its absolute and unconditional promise to pay to the Lenders, the L/C Issuer, and the Agent, as applicable, the Revolving Loans, the Swing Line Loans, other Credit Extensions, reimbursement obligations and all other amounts due or to become due and payable to the Lenders, the L/C Issuer and the Agent, as applicable, under the Credit Agreement, as amended hereby, and it is the intent of the parties hereto that nothing contained herein shall constitute a novation or accord and satisfaction. Except as expressly amended hereby, the Credit Agreement shall continue in full force and effect. |
| --- | --- |
| 4. | Amendments to Credit Agreement. Agent and the Loan Parties hereby agree that from and after the Fourth Amendment Effective Date: |
| --- | --- |
| a. | Section 1.01 of the Existing Credit Agreement is hereby amended by adding the following definitions in the correct alphabetical order: |
| --- | --- |
“Fourth Amendment” means the Fourth Amendment to Third Amended and Restated Credit Agreement, dated as of the Fourth Amendment Effective Date, by and among, the Loan Parties, the Lenders party thereto, and the Agent.
“Fourth Amendment Effective Date” means September [__], 2025.
| b. | Section 1.01 of the Existing Credit Agreement is hereby amended by amending and restating clause (a) appearing therein in its entirety as set forth below: |
|---|
“(a) the face amount of Eligible Credit Card Receivables multiplied by, 90%;”
| c. | Section 1.01 of the Existing Credit Agreement is hereby amended by amending and restating the definition of “Change of Control” in its entirety as set forth below: |
|---|
““Change of Control” means an event or series of events by which:
(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of 25% or more of the Equity Interests of the Parent entitled to vote for members of the board of directors or equivalent governing body of the Parent on a fully-diluted basis (and taking into account all such Equity Interests that such “person” or “group” has the right to acquire pursuant to any option right); provided, however, that the Term Loan Agent and its Affiliates may be the “beneficial owner”, directly or indirectly, of an amount of Equity Interests of the Parent not to exceed 75% in the aggregate so long as a majority of the members of the board of directors or equivalent governing body of the Parent is comprised of members approved by shareholders other than the Term Loan Agent and its Affiliates; or
(b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Parent cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by (x) individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (y) subject to the proviso set forth below, the Term Loan Agent or any of its Affiliates, or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body; provided, however, that the Term Loan Agent and its Affiliates shall not elect or nominate to the board of directors or other equivalent governing body of the Parent a majority of the members thereof and at all times, a majority of the members of the board of directors or other equivalent body of the Parent shall be comprised of members approved by shareholders other than the Term Loan Agent and its Affiliates; or
(c) any Person or two or more Persons acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation thereof, will result in its or their acquisition of the power to exercise, directly or indirectly, control over the Equity Interests of the Parent entitled to vote for members of the board of directors or equivalent governing body of the Parent on a fully-diluted basis (and taking into account all such securities that such Person or Persons have the right to acquire pursuant to any option right) representing 25% or more of the combined voting power of such securities; provided, however, that the Term Loan Agent and its Affiliates may acquire by contract or otherwise, and may enter into a contract or arrangement that, upon consummation thereof, will result in its or their acquisition of the power to exercise, directly or indirectly, control over an amount of Equity Interests of the Parent entitled to vote for members of the board of directors or equivalent governing body of the Parent on a fully-diluted basis (and taking into account all such securities that such Person or Persons have the right to acquire pursuant to any option right) not to exceed 75% in the aggregate of the combined voting power of such securities, so long as a majority of the members of the board of directors or equivalent governing body of the Parent is comprised of members approved by shareholders other than the Term Loan Agent and its Affiliates; or
(d) any “change in control” or “sale” or “disposition” or similar event as defined in any Organizational Document of any Loan Party or any document governing Material Indebtedness of any Loan Party; or
(e) the Parent fails at any time to own, directly or indirectly, 100% of the Equity Interests of each other Loan Party free and clear of all Liens (other than the Liens in favor of the Agent), except where such failure is as a result of a transaction permitted by the Loan Documents.”
| d. | Section 1.01 of the Existing Credit Agreement is hereby amended by amending and restating the definition of “Fee Letter” in its entirety as set forth below: |
|---|
““Fee Letter” means, collectively, (v) the fee letter, dated the Third Restatement Date, among the Borrowers and the Agent, (w) the fee letter, dated the First Amendment Effective Date among the Borrowers and the Agent, (x) the Second Amendment Fee Letter, (y) the fee letter, dated the Third Amendment Effective Date among the Borrowers and the Agent and (z) the fee letter, dated the Fourth Amendment Effective Date among the Borrowers and the Agent.”
| e. | Section 1.01 of the Existing Credit Agreement is hereby amended by amending and restating the definition of “Required Availability Amount” in its entirety as set forth below: |
|---|---|
| f. | ““Required Availability Amount” means (a) from the Fourth Amendment Effective Date through but not including February 1, 2026, the greater of (x) 10% of the Loan Cap and (y) $5,000,000, (b) from February 1, 2026 through but not including March 1, 2026, the greater of (x) 10% of the Loan Cap and (y) $6,000,000, (c) from March 1, 2026 through but not including April 1, 2026, the greater of (x) 10% of the Loan Cap and (y) $7,000,000 and (d) on April 1, 2026 and thereafter, the greater of (x) 10% of the Loan Cap and (y) $8,000,000; provided, that in the case of clauses (a), (b) and (c) above, in the event Consolidated EBITDA for the Parent and its Subsidiaries for the trailing three (3) month period immediately preceding such calculation date is not at least 85% of the amount set forth in the forecasts delivered pursuant to Section 6.01(c) for projected Consolidated EBITDA (the “EBITDA Test”), the Required Availability Amount shall be deemed to be the greater of (x) 10% of the Loan Cap and (y) $8,000,000 at all times hereunder regardless of any later satisfaction of the EBITDA Test. With respect to any determination of the Required Availability Amount, in the event the financial statements required to be delivered pursuant to Section 6.01(b) are not delivered within two (2) Business Days of the time periods set forth therein, the Required Availability Amount shall be deemed to be the greater of (x) 10% of the Loan Cap and (y) $8,000,000 until such financial statements are delivered. Solely for purposes of calculating compliance with the EBITDA Test, Consolidated EBITDA shall be calculated excluding any components thereof not set forth in the forecasts delivered pursuant to Section 6.01(c).” |
| --- | --- |
| 5. | Conditions to Effectiveness. This Amendment shall not be effective until each of the following conditions precedent has been fulfilled to the satisfaction of the Agent, unless otherwise waived in writing by the Agent: |
| --- | --- |
| a. | This Amendment shall have been duly executed and delivered by the Loan Parties and the Lenders. The Agent shall have received a fully executed original or pdf copy hereof. |
| --- | --- |
| b. | The Agent shall have received an amendment to the Term Loan Intercreditor Agreement, in form and substance satisfactory to the Agent. |
| --- | --- |
| c. | The Agent shall have received a certificate from a Responsible Officer of the Lead Borrower attaching a true, correct and complete copy of the Term Loan Amendment and all material agreements related thereto. |
| --- | --- |
| d. | The Fee Letter dated as of the date hereof shall have been duly executed and delivered by the Borrowers. |
| --- | --- |
| e. | All action on the part of the Loan Parties necessary for the valid execution, delivery and performance by the Loan Parties of this Amendment shall have been duly and effectively taken. |
| --- | --- |
| f. | There shall not have occurred since May 7, 2025,^^any event or condition that has had or could be reasonably expected, either individually or in the aggregate, to have a Material Adverse Effect. |
| --- | --- |
| g. | After giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing. |
| --- | --- |
| 6. | Consent to Intellectual Property Sale. Effective as of the Fourth Amendment Effective Date, in express reliance upon the terms and conditions of this Amendment, including without limitation, the Loan Parties’ representations and warranties herein, and subject to the terms and conditions of this Amendment, the Agent hereby consents to the sale of the Intellectual Property as set forth in the Term Loan IP Purchase Agreement as required pursuant to Section 7.05 of the Existing Credit Agreement. It is agreed that the consent set forth herein in this Section 6 shall be limited expressly as set forth herein and shall not (i) constitute a modification or waiver of any other provision of the Credit Agreement or the other Loan Documents or the obligations of the Loan Parties thereunder, each of which remains in full force and effect, (ii) impair, modify, abrogate or limit any other provision of the Loan Documents, or (iii) constitute a waiver of any Default or Event of Default. |
| --- | --- |
| 7. | Binding Effect. The terms and provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their heirs, representatives, successors and assigns. |
| --- | --- |
| 8. | Expenses. The Borrowers shall reimburse the Agent for all reasonable out-of-pocket costs and expenses of the Agent, including, reasonable attorneys’ fees pursuant to Section 10.04 of the Credit Agreement. |
| --- | --- |
| 9. | Multiple Counterparts. This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Amendment by telecopy, pdf or other electronic transmission shall be as effective as delivery of a manually executed counterpart of this Amendment. |
| --- | --- |
| 10. | Governing Law. THIS AMENDMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AMENDMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. |
| --- | --- |
| 11. | Release by the Loan Parties. Each Loan Party for and on behalf of itself and its legal representatives, successors and assigns, fully, unconditionally, and irrevocably waives, releases, relinquishes and forever discharges the Agent, the Lenders and each of their parents, subsidiaries, and affiliates, its and their respective past, present and future directors, officers, managers, agents, employees, insurers, attorneys, representatives and all of their respective heirs, successors and assigns, (collectively, the “Released Parties”), of and from any and all manner of action or causes of action, suits, claims, liabilities, losses, costs, expenses, demands, judgments, damages (including compensatory and punitive damages), levies and executions of whatsoever kind, nature and/or description arising on or before the Fourth Amendment Effective Date, in each case whether known or unknown, asserted or unasserted, liquidated or unliquidated, joint or several, fixed or contingent, direct or indirect, contractual or tortious, which the Loan Parties, or their legal representatives, successors or assigns, ever had or now has or may claim to have against any of the Released Parties, that relate to the Loan Documents, the administration of any Loan Documents, the negotiations relating to this Amendment and the other Loan Documents executed in connection herewith and any other instruments and agreements executed by the Loan Parties in connection therewith or herewith, arising on or before the Fourth Amendment Effective Date. |
| --- | --- |
[remainder of page intentionally left blank; signature pages follow] IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by each of the parties hereto as of the date first above written.
BORROWERS:
KIRKLAND’S STORES, INC., as Lead Borrower and as a Borrower
By: ___________________________
Name: ___________________________
Title: ___________________________
KIRKLAND’S TEXAS, LLC, as a Borrower
By: ___________________________
Name: ___________________________
Title: ___________________________
GUARANTORS:
THE BRAND HOUSE COLLECTIVE, INC., as Parent and as a Guarantor
By: ___________________________
Name: ___________________________
Title: ___________________________
KIRKLAND’S DC, INC., as a Guarantor
By: ___________________________
Name: ___________________________
Title: ___________________________
BANK OF AMERICA, N.A., as Administrative Agent, as Collateral Agent and as a Lender
By: ___________________________
Name: ___________________________
Title: ___________________________
ex_863203.htm
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Amy E. Sullivan, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of The Brand House Collective, Inc. (“registrant”); |
|---|---|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| --- | --- |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| --- | --- |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| --- | --- |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| --- | --- |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| --- | --- |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| --- | --- |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| --- | --- |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| --- | --- |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| --- | --- |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| --- | --- |
| Date: December 16, 2025 | /s/ Amy E. Sullivan |
| --- | --- |
| Amy E. Sullivan | |
| President, Chief Executive Officer and Director |
ex_863204.htm
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Andrea K. Courtois, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of The Brand House Collective, Inc. (“registrant”); |
|---|---|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| --- | --- |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| --- | --- |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| --- | --- |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| --- | --- |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| --- | --- |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| --- | --- |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| --- | --- |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| --- | --- |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| --- | --- |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| --- | --- |
| Date: December 16, 2025 | /s/ Andrea K. Courtois |
| --- | --- |
| Andrea K. Courtois | |
| Senior Vice President and Chief Financial Officer |
ex_863205.htm
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
In connection with the Quarterly Report of The Brand House Collective, Inc. (the “Company”) on Form 10-Q for the third quarter ended November 1, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Amy E. Sullivan, President, Chief Executive Officer and Director of the Company, certify, to my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|---|---|
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report. |
| --- | --- |
| /s/ Amy E. Sullivan | |
| --- | |
| President, Chief Executive Officer and Director | |
| December 16, 2025 |
ex_863206.htm
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
In connection with the Quarterly Report of The Brand House Collective, Inc. (the “Company”) on Form 10-Q for the third quarter ended November 1, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrea K. Courtois, Senior Vice President and Chief Financial Officer of the Company, certify, to my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|---|---|
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report. |
| --- | --- |
| /s/ Andrea K. Courtois | |
| --- | |
| Senior Vice President and Chief Financial Officer | |
| December 16, 2025 |