KLESTADT WINTERS JURELLER SOUTHARD & STEVENS, LLP … · New York, New York 10036-7203 Tel: 212-972-3000 [email protected] BUCHALTER A Professional Corporation Bernard D. Bollinger,

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KLESTADT WINTERS JURELLER

SOUTHARD & STEVENS, LLP

Tracy L. Klestadt 200 West 41st Street, 17th Floor New York, New York 10036-7203 Tel: 212-972-3000 [email protected] BUCHALTER

A Professional Corporation Bernard D. Bollinger, Jr. Paul S. Arrow 1000 Wilshire Blvd., Suite 1500 Los Angeles, California 90017 Tel: 213-891-0700 [email protected] [email protected] Counsel to Ashford Textiles, LLC

UNITED STATES BANKRUPTCY COURT Hearing Date:

SOUTHERN DISTRICT OF NEW YORK July 22, 2020 at 2:00 pm --------------------------------------------------------------X : In re: : Chapter 11 : THE NORTHWEST COMPANY, LLC, et al.1 : Case No.: 20-10990 (MEW) : Debtors. : (Jointly Administered) --------------------------------------------------------------X

ASHFORD TEXTILES, LLC’S OPPOSITION TO DEBTOR’S SALE PROCEDURE

MOTION, INCLUDING SUBMISSION OF COMPETING STALKING HORSE BID

Ashford Textiles, LLC (“Ashford”) submits this Opposition To Debtors Motion For

Entry Of (I) An Order (A) Approving Bidding Procedures For The Sale Of Substantially All Of

Debtor’s Assets, etc. (the “Sale Procedure Motion”) [Dk. No. 184]. This Opposition to the Sale

Procedures Motion includes Ashford’s competing Stalking Horse Bid and demonstrates that its

terms dramatically increase the likelihood and amount of the proposed sale’s return to Debtor’s

estate.

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are: The Northwest Company, LLC (8132) (“Northwest”) and The Northwest.com LLC (1339) (the “Debtors”). The location of the Debtors’ service address is: 49 Bryant Avenue, Roslyn, New York 11576.

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PRELIMINARY STATEMENT

1. On Friday, July 17 Ross Auerbach was effectively removed from management of

Debtors and his ability to influence the parameters of the sale process was eliminated sufficiently

to permit Ashford to participate without fear of reprisal. Now Ashford is able to present Debtors

estate with a Letter of Intent (the “Ashford LOI”) that markedly increases the sale price and

maximizes the likelihood of a return to creditors. This Opposition provides an analysis of the

Ashford LOI and demonstrates that it is in the best interests of Debtors’ estates to approve Ashford

as the stalking horse on the terms delineated in the Ashford LOI.

2. Ashford is by far Debtor’s largest creditor, with claims nearly double the amount

of claims asserted by CIT and all the members of the unsecured creditors’ committee combined.

A leading manufacturer and wholesaler of textile goods that provides textile printing, dying,

weaving, knitting, cutting, quality-control and packaging services to its customers, Ashford began

providing product to Northwest approximately 15 years ago. Now Northwest’s largest supplier of

finished goods for resale to its customers, Ashford’s expertise and knowledge of Debtors’ business

makes it an obvious potential purchaser.

3. The Trustee Motion, filed on May 12, 2020, described how Auerbach’s self-dealing

required a change of management to protect the interests of unsecured creditors and the likelihood

that an unbiased sales process could not be conducted without his removal. The Trustee Motion

was hotly contested over the course of the last two months, with substantial evidence of self-

dealing ultimately leading to an agreement for the appointment of Craig Jalbert as an independent

manager for Debtors with full and exclusive decision-making authority in the continued operation

of Debtors’ business (subject to the requirements of the Bankruptcy Code). This Court’s Order

resolving the Trustee Motion was entered on July 17, 2020. [Docket No. 197]. The replacement


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of Debtors’ management suggests that it was not unreasonable for Ashford to believe the business

judgment standard necessary to select sales procedures would likely have been previously skewed.

4. During the pendency of the Trustee Motion, Debtors retained investment bankers

and initiated a “broad, robust and fair” marketing process that included “a “buyer list” of 90 parties,

of which 83 were directly contacted.” Sales Procedure Motion at pg. 6, para. 13. Yet Ashford, an

obvious potential purchaser, 2 was not among the parties directly contacted. Concurrently filed

Declaration of Jack Burns at para. 6.

ARGUMENT

5. The Guidelines for the Conduct of Asset Sales set forth in General Order M-383 of

the United States Bankruptcy Court for the Southern District of New York (the “Sale Guidelines”)

permit this Court to entertain a motion for approval, in a Sale Procedures Order, of proposed

bidding procedures if such procedures are, “as a matter of reasonable business judgment, likely to

maximize the sale price.” Sale Guidelines at pg. 4, para. 4(b). Ashford contends that it was

previously precluded from an unbiased decision to select it as a the stalking horse bidder and that

now the exercise of reasonable business judgment can only lead to the conclusion that Ashford’s

proposed increased purchase price and modified bid procedures described below are more likely

to maximize the sale price than the sale procedures proposed by the Debtor.

6. The Proposed Modified Sale Procedures And Their Impact the Sales Price.

Ashford has highlighted its proposed revisions to the sale procedures by submitting its own Letter

of Intent (the “Ashford LOI”) redlined against Cathay’s LOI. The Ashford LOI is fully executed

by Ashford and, because it only contains modifications of economic benefit to Debtor, can be acted

upon by Debtor without delaying the timelines described in the Sale Procedure Motion. A copy

2 While Ashford was obviously aware of the on-going sale process, it was constrained from participating due to the likelihood of bias while Mr. Aeurbach remained in control of Northwest.


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of the Ashford LOI is attached to the Burns Declaration as Exhibit 1. A copy of a redline

comparison showing the changes between the Ashford LOI and the Cathay LOI is attached to the

Burns Declaration as Exhibit 2. The following describes each of those proposed economic

revisions and the manner that those provisions maximize the sales price:

• Purchase Price Increase: An increase of the purchase price by $1.1 million in cash at

closing, with the remainder of the purchase price provisions of the LOI unchanged. This

direct $1.1 million increase in cash consideration flows directly to the benefit Debtors

creditors.

• Deposit Increase: The increase in Ashford’s deposit amount to $1.5 million represents a

$500,000 increase over the amount required of Cathay.3 This increase provides additional

protection to the Debtor’s estates and demonstrates Ashford’s good faith intention to

promptly close the proposed transaction. The Ashford LOI also leaves unchanged the

provisions concerning the Good Faith Deposit amount required to become a qualified

bidder, so it has no impact upon the potential for competitive bidders at the sale.

• Break Up Fee: The proposed break-up fee of 3% has been reduced by half, resulting in

the reduction of this amount from $775,800 (3 percent of $25.86 million) to $404,400 (1.5

percent of $26.96 million).4 This reduction of $371,400 is a direct benefit to Debtors’

estates and commensurately reduces the amount of the Initial Overbid required of a

competing bidder (see below), thereby increasing the likelihood of competitive bidding.

3 As described in the accompanying Declaration of Jack Burns in support of this Opposition, the $1.5 million deposit has been posted to the trust account of Ashford’s counsel and can be delivered immediately upon further instruction. 4 This calculation assumes the sale closes with payment of the entire $6,000,000 cure amount and the estimated additional cure amount of $1,460,000 due the NFL under contract #51363, as the definition of break-up fee in the LOI is based upon the “cash component of the Purchase Price” and the LOI specifies that all three components constitute “cash at closing.” If instead the BreakUp Fee is to be calculated only upon the cash at closing paid for the Purchased Assets, the reduction resulting from the Ashford LOI is $259,500 (the difference between 3% of $18.4 million and 1.5% of 19.5 million).


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• Expense Reimbursement: In order to prevent Cathay from being deprived of its

expectation that fees it incurred will be compensated from the proceeds of the sale, the

Ashford LOI provides that Cathay will be paid its actual, out of pocket costs, including legal,

accounting and other expenses incurred in connection with the proposed transaction

contemplated by the Stalking Horse Agreement, up to a cap of $150,000. Additionally,

Ashford will forego any such expense reimbursement. While this does not represent a direct

savings to the Debtors’ estates, it prevents Cathay from having to bear costs that it otherwise

had an expectation of being paid.5

• Initial Overbid Amount: The Ashford LOI includes a significant reduction in the Initial

Overbid Amount, thereby increasing the likelihood that other bidders will participate in the

sales process. By reducing the additional cash component of the Initial Overbid Amount

from $250,000 to $150,000, Debtors’ estates directly benefit by $100,000. This reduction

of the cash component of the Initial Overbid Amount, when combined with the reduction

in the break-up fee, represents an overall reduction of nearly $500,0006 of the amount that

a competing bidder would need to increase the Purchase Price in order to initiate the

bidding process.

7. Ashford Is The Most Qualified Potential Bidder and is Ready, Willing and

Able to Close. There is little question that Ashford has both the financial and technical ability to

close the proposed acquisition, as its long relationship with the Debtor, industry expertise and

financial wherewithal are all beyond reproach. The Ashford LOI contains a detailed description

5 Alternatively, this issue could be addressed by permitting Cathay to file a substantial contribution claim for reimbursement of expenses up to $150,000 upon the close of the sale contemplated by the LOI, but this would require modification of the Bid Procedures described in the Sale Procedure Motion as those procedures currently prohibit substantial contribution claims by bidders. See Sale Procedure Motion at pg. 13. 6 The precise amount of the reduction of the Initial Overbid Amount is either $471,400 or $359,500 depending upon the interpretation of how the break-up fee is to be calculated. See Footnote 4.


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of these technical capabilities, as does the contemporaneously filed Declaration of Jack Burns that

also includes evidence of Ashford’s financial wherewithal. The following highlights those

capabilities.

• Ashford is a highly specialized manufacturer of all textiles needed to fulfill the needs of

Debtors’ business operations. Its manufacturing capabilities are enhanced by state-of-the-

art machinery that permits Ashford to print the world’s most recognized licensed products.

• The facility used by Ashford in China is ISO-9001 compliant, routinely inspected by major

retailers, such as Walmart, Academy Sports and others using third party inspection

companies with a history of full compliance. In addition to retail approval, this facility has

a long-standing history and vendor approval status from Disney, Realtree, major sports

leagues, colleges and various other major licensors. These approvals significantly reduce

the potential for delay associated with any need to obtain third party approvals to

consummate the sale.

• Ashford’s art department is highly regarded for its deep knowledge of licensed art, art

preparation and color separation, and intellectual property protection. Ashford has

produced top selling, licensed SKU’s found in most major retailers for a variety of licensors

for nearly 15 years.

• The 90 acre production campus includes a world-class warehouse and fulfillment center

capable of providing FOB shipments, in-time inventory system, ocean container

consolidation, and timely exportation directly to retail distribution.

• Ashford has expanded its print operations in the United States at its Los Angeles

headquarters, where Ashford services ecommerce requirements of quickly growing on-

demand personalized and custom print programs. The Los Angeles headquarters consists


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of sales, customer service, product development, accounting, and digital printing, a product

showroom, cross dock, shipping, and warehousing.

8. Ashford is fully financially capable of closing the contemplated transaction, and

accordingly, the Ashford LOI contains no financing contingency. Attached to the Burns

Declaration as Exhibit 3 is a complete and accurate copy of correspondence from East West Bank

confirming that Ashford has not less than $25,500,000 in readily available funds. In addition, on

July 21, 2020 Ashford wired $1,500,000 representing the proposed deposit under the Ashford LOI

into the Buchalter client trust account so that it will be immediately available upon approval of

Ashford as the stalking horse.

CONCLUSION

9. Now that the Ashford LOI can be viewed in an unbiased manner by all involved in

Debtors’ cases, it is clear that the sales procedures proposed by Ashford maximize the sales price

and increase the potential for competitive bidding without any delay nor an increase of risk. As

such, the Ashford LOI and the sales procedures contained therein should be approved by this Court

as in the best interests of Debtors estates.

/s/ Tracy L. Klestadt Tracy L. Klestadt KLESTADT WINTERS JURELLER SOUTHARD & STEVENS, LLP 200 West 41st Street, 17th Floor New York, New York 10036-7203 Tel: 212-972-3000 [email protected] -and-


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/s/ Bernard D. Bollinger, Jr.

Bernard D. Bollinger, Jr. Paul S. Arrow BUCHALTER, A Professional Corporation 1000 Wilshire Blvd., Suite 1500 Los Angeles, California 90017 Tel: 213-891-0700 [email protected] [email protected] Counsel to Ashford Textiles, LLC


1

KLESTADT WINTERS JURELLER SOUTHARD & STEVENS, LLP Tracy L. Klestadt 200 West 41st Street, 17th Floor New York, New York 10036-7203 Tel: 212-972-3000 [email protected] BUCHALTER A Professional Corporation Bernard D. Bollinger, Jr. Paul S. Arrow 1000 Wilshire Blvd., Suite 1500 Los Angeles, California 90017 Tel: 213-891-0700 [email protected] [email protected] Counsel to Ashford Textiles, LLC UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------------X : In re: : Chapter 11 : THE NORTHWEST COMPANY, LLC, et al.1 : Case No.: 20-10990 (MEW) : Debtors. : (Jointly Administered) --------------------------------------------------------------X

DECLARATION OF JACK BURNS IN SUPPORT OF ASHFORD TEXTILES, LLC’S OPPOSITION TO DEBTOR’S SALE PROCEDURE MOTION, INCLUDING

SUBMISSION OF COMPETING STALKING HORSE BID

I, Jack Burns, declare:

1. I co-founded Ashford2 in 1999 and have been a managing member of Ashford

since that time. I make this Declaration in support of the Objection.

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are: The Northwest Company, LLC (8132) (“Northwest”) and The Northwest.com LLC (1339) (the “Debtors”). The location of the Debtors’ service address is: 49 Bryant Avenue, Roslyn, New York 11576. 2 Terms defined in the Opposition to Debtor’s Sale Procedure Motion, Including Submission of Competing Stalking Horse Bid are used here with the same meaning and sense (the “Objection”).

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2

2. Ashford is a vertically integrated manufacturer and importer of specialty

sustainable fabrics, performance apparel, and a highly specialized producer of value-added home

textiles. Ashford maintains extensive vertical manufacturing capabilities in China including

knitting, printing, dying, cutting and sewing of fleece blankets, a variety of throws, comforters,

sheeting, bedding, and more. The 3 million sq. /ft. manufacturing facility has years of expertise

and experience printing the world’s most recognized Licensed products via state of the art

European made digital printers, as well as flat panel and rotary printers. This facility is ISO-9001

compliant, routinely inspected by major retailers, such as Walmart, Academy Sports and others

using third party inspection companies with a history of full compliance. In addition to retail

approval, this facility has a long-standing history and vendor approval status from Disney,

Realtree, major sports leagues, colleges and various other major licensors.

3. Ashford’s art department is highly regarded for its deep knowledge of licensed

art, art preparation and color separation, and intellectual property protection. The art team has

years of experience adapting art to a variety of home textiles and overcoming challenges during

product development. Ashford has produced top selling, licensed SKU’s found in most major

retailers for a variety of licensors for nearly 15 years. The 90 acre production campus includes a

world-class warehouse and fulfillment center capable of providing FOB shipments, in-time

inventory system, ocean container consolidation, and timely exportation directly to retail

distribution.

4. Ashford’s sister company in Xiamen holds a Chinese export license, bringing full

vertical integration to the export operation. In addition to China, Ashford has manufacturing

relationships in Vietnam, Cambodia, Mexico, and is expanding print operations in the United

States at its Los Angeles headquarters. This US expansion services ecommerce requirements of

quickly growing on-demand personalized and custom print programs. The Los Angeles


3

headquarters consists of sales, customer service, product development, accounting, and digital

printing, a product showroom, cross dock, shipping, and warehousing. The company recently

added an ocean container tracking and logistics web portal that provides retailers with real-time

order and SKU tracking and logistics details to assist with customer supply chain management.

5. Ashford is by far Debtor’s largest creditor, with claims nearly double the amount

of claims asserted by CIT and all the members of the unsecured creditors’ committee combined.

Ashford began providing product to Northwest approximately 15 years ago. Now Northwest’s

largest supplier of finished goods for resale to its customers, I believe Ashford’s expertise and

knowledge of Debtors’ business makes it an obvious potential purchaser.

6. According to the Sales Procedure Motion, Debtors retained investment bankers

and purportedly initiated a “broad, robust and fair” marketing process that included “a “buyer

list” of 90 parties, of which 83 were directly contacted.” Yet Ashford, an obvious potential

purchaser, was not among the parties directly contacted. Neither was Ashford contacted by the

Committee’s investment banker. While Ashford was obviously aware of the on-going sale

process, it was reluctant to participate as long as Mr. Auerbach was in control of Debtors. On

Friday, July 17 Ross Auerbach was effectively removed from management of Debtors and his

ability to influence the parameters of the sale process was eliminated sufficiently to permit

Ashford to participate without fear of reprisal.

7. Ashford is now able to present Debtors estate with the Ashford LOI that markedly

maximizes the sale price and increases the likelihood of a return to creditors. I believe that

approving Ashford as the stalking horse on the terms delineated in the Ashford LOI will

maximize value for Debtors’ creditors. A complete and accurate copy of the Ashford LOI is

attached hereto as Exhibit 1. A complete and accurate copy of a redline comparison showing the


4

changes between the Ashford LOI and the Cathay LOI is attached hereto as Exhibit 2.

8. Ashford is fully financially capable of closing the contemplated transaction, and

accordingly, the Ashford LOI contains no financing contingency. Attached hereto as Exhibit 3 is

a complete and accurate copy of correspondence I received from East West Bank confirming that

Ashford has not less than $25,500,000 in readily available funds. In addition, on July 21, 2020 I

caused Ashford to wire $1,500,000 representing the proposed deposit under the Ashford LOI

into the Buchalter client trust account so that it will be immediately available upon approval of

Ashford as the stalking horse.

I declare that the foregoing is true and correct under penalty of perjury, and if called as a

witness, I could and would testify competently thereto.

Executed on July 21 at Los Angeles, California.

_________________________ JACK BURNS


EXHIBIT 1





















EXHIBIT 2


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July 1020, 2020

MMG Advisors, Inc. 561 Seventh Ave, 17th Fl. New York, NY 10018 Attn: Andrew Postal Managing Partner Robert Shoobs Executive Director

Re: The Northwest Company, LLC, et al. - Letter of Intent to Acquire Assets

Gentlemen:

In response to your letter dated June 27Ashford Textiles, 2020, Cathay Home, Inc., LLC or a special purpose entity formed to consummate this transaction (the “Purchaser”), is pleased to submit this proposal (this “Letter of Intent”) to acquire certain assets of The Northwest Company, LLC, and The Northwest.Com LLC (collectively, “Northwest” or the “Debtor”) as debtor and debtor in possession. free and clear of liens, claims and encumbrances, in a sale to be conducted under section 363 of the Bankruptcy Code, and pursuant to bid procedures approved by the United States Bankruptcy Court for the Southern District of New York in Case No. 20-10990 et. seq. (the “Bankruptcy Court”) as outlined below (the “Proposed Transaction”).

The Purchaser, a New York corporation. is a vertically integrated manufacturer and importer offering its customers a full complement of services including marketing research, sales, product development, design, and production, logistics, EDI, VMI, drop ship and warehousing. It is a specialist in microfiber related product and controls and monitors production through weaving, printing, dying, cutting and sewing. The Purchaser has showrooms in New York, Canada and Mexico and New York corporate offices, located at 230 Fifth Avenue, where Purchaser provides an inviting and broad display of the most fashionable licensed and private label soft home products. Our New York management team encompasses sales, design, production, e commerce and administration. The Purchaser will form special purpose entity to acquire the Debtor’s assets. The special purpose entity’s participants and affiliates will include Cathay Home, Inc. The Purchaser is bidding independently and not as part of a consortium of bidders.

The Purchaser, a California Limited Liability Company, is a vertically integrated manufacturer and importer of specialty sustainable fabrics, performance apparel, and a highly specialized producer of value-added home textiles. The Purchaser maintains extensive vertical manufacturing capabilities in China including knitting, printing, dying, cutting and sewing of fleece blankets, a variety of throws, comforters, sheeting, bedding, and more. The 3 million sq. /ft. manufacturing facility has years of expertise and experience printing the world’s most recognized Licensed products via state of the art European made digital printers, as well as flat panel and rotary printers. This facility is ISO-9001 compliant, routinely inspected by major retailers, such as Walmart, Academy Sports and others using third party inspection companies with a history of full compliance. In addition to retail approval, this facility has a long-standing history and vendor approval status from Disney, Realtree, major sports leagues, colleges and various other major


BN 41291907v1 BN 41291907v3

2

licensors. The Purchaser’s art department is highly regarded for its deep knowledge of licensed art, art preparation and color separation, and intellectual property protection. The art team has years of experience adapting art to a variety of home textiles and overcoming challenges during product development. Purchaser has produced top selling, licensed SKU’s found in most major retailers for a variety of licensors for nearly 15 years. The 90 acre production campus includes a world-class warehouse and fulfillment center capable of providing FOB shipments, in-time inventory system, ocean container consolidation, and timely exportation directly to retail distribution centers. The sister company in Xiamen holds a Chinese export license, bringing full vertical integration to the export operation. In addition to China, the purchaser manufactures in Vietnam, Cambodia, Mexico, and is expanding print operations in the United States at its Los Angeles headquarters. This US expansion services ecommerce requirements of quickly growing on-demand personalized and custom print programs. The Los Angeles headquarters consists of sales, customer service, product development, accounting, and digital printing, a product showroom, cross dock, shipping, and warehousing. The company recently added an ocean container tracking and logistics web portal that provides retailers with real-time order and SKU tracking and logistics details to assist with customer supply chain management.

Thank you for providing us with the preliminary due diligence materials and Confidential Information Memorandum that were recently made available to us. As we have previously communicated, we We are confident that our due diligence can be completed in a timely manner following access to and review of the remaining due diligence information and management team members, In addition, given that we operate in the same industryhave manufactured for Debtor for a number of years, we already have an understanding of the Debtor and its assets, which will allow us to complete- our evaluation quickly. Our initial discussions with MMG have also highlighted We understand the importance of speed and certainty during this process. In this regard, we have committed the appropriate resources, including, the retention of legal and accounting professionals identified below, to allow us to move quickly, and we have already lined up a team of internal and external advisors.

The key assets that we would be interested in acquiring would include, but not be limited to, (i) certain of the Debtor’s intellectual property (i.e. the brand names), including its rights under all executory contracts and trademark license agreements designated by Purchaser to be assumed and assigned by Debtor to Purchaser, as currently contemplated, subject to the APA, the executory contacts that the Purchaser may wish to assume include those set forth on Exhibit “A.” hereto (the “Assigned Contracts”), (ii) a significant number of the current company employees, including certain members of senior management, many of whom Purchaser has worked with over the years, to be determined during our due diligence review (iii) certain office, store, showroom and warehouse agreements, as reflected on Exhibit “B” hereto (the “Real Estate Agreements,” which shall be part of the Assigned Contacts), (iv) all inventory associated with or relating to the Assigned Contracts and the inventory of raw material located in Ronda, NC (the “Purchased Inventory”), (v) all furniture, fixtures, computers, CAD machines and other equipment (“FF&E”) owned by the Debtor located at the Roslyn, NY, Bentonville, AR and Ronda, NC locations and scheduled in the APA, provided, however, that this shall not include any FF&E subject to first priority liens or secured equipment leases unless such leases are designated by Purchaser in the APA as Assigned Contracts, (vi) IT software/systems with corresponding data, including the social media accounts, social media handles, websites, e-commerce sites, URLs, domain names, phone numbers and e-mail addresses owned or controlled by the Debtor or used in the business, (vii) all


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insurance proceeds and insurance proceeds receivable arising from any claim made under Debtor’s insurance policies with respect to the Purchased Assets (defined below), excluding insurance proceeds and insurance proceeds receivable in respect of tort liabilities and other Excluded Liabilities; (viii) any rights of the Debtor under or pursuant to all warranties, representations and guaranties made by suppliers, manufacturers and contractors, and (ix) all general intangibles and supporting obligations relating to any of the foregoing, (x) other assets which will be designed during our due diligence review and defined in the APA (collectively, the “Purchased Assets”). The Purchased Assets will be conveyed free and clear of all liens, claims and encumbrances except for Assumed Liabilities (as defined below).

As more fully detailed below, the Proposed Transaction would be structured as a purchase and sale of assets under Section 363 of the U.S. Bankruptcy Code. The Debtor and a special purpose entity formed to act as the Purchaser in connection with the Proposed Transaction would negotiate and enter into a definitive asset purchase agreement (the “APA”) governing the purchase and sale of the Purchased Assets and the Debtor would file a motion with the Bankruptcy Court seeking an order approving the terms and conditions of the APA with Purchaser and a process for the submission of any competing bids for the sale of the Purchased Assets in accordance with Section 363 bidding process, the Bankruptcy Court would enter an order which, among other things, approves the APA with Purchaser and provides for the sale of the Purchased Assets free and clear of all liens, claims and encumbrances. The Proposed Transaction would be consummated following entry of the Bankruptcy Court sale order (the “Sale Order”).

If the parties agree to proceed on the terms set forth herein, it is contemplated that they will promptly enter into the APA incorporating terms substantially similar to those described herein and such other terms and conditions customary for such transactions.

SECTION I

1. Transaction. Based on the information received to date and subject to the completion of legal and financial due diligence and the assumptions and terms and conditions set forth herein, we are prepared to complete the Proposed Transaction in a timely manner and on the following general terms:

Purchase Price: $24,400,000 Twenty-Five Million Five Hundred Thousand Dollars ($25,500,000) consisting of cash at closing of (a) $18,400,000 19,500,000 for the Purchased Assets, and (b) payment of cure amounts in connection with the Assigned Contracts, in an amount not to exceed $6,000,000 plus (c) in addition to the amounts paid under clauses (a) and (b) above, the purchase price shall be increased by such amount as the Purchaser and the National Football League, (“NFL”) may agree will be assumed by the Purchaser with respect to gross margin royalties and unpaid earned royalties under Contract #51363 (the “NFL-GMR Obligations”) as more specifically discussed below. The purchase price assumes that there is $15,250,000 of Purchased


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Inventory associated with the Assigned Contracts as of the date of this LOI (the “Starting Inventory Cost”) and $2,000,000 of deposits held by suppliers that relate to Purchased Inventory (the “Starting Supplier Deposits”). To the extent the (c) Purchased Inventory on the Closing date (the “Closing Inventory Cost”) is greater, or less, than the Starting Inventory Cost, the purchase price shall be increased or reduced, as the case may be, by the amount by which the Closing Inventory Cost is less than, or exceeds, the Starting Inventory Cost on a dollar for dollar cost basis and/or (d) the supplier deposits that relate to the Purchased Inventory on the Closing date (the “Closing Supplier Deposits”) is greater, or less, than the Starting Supplier Deposits, the purchase price shall be increased or reduced, as the case may be, by the amount by which the Closing Supplier Deposits is less than, or exceeds, the Starting Supplier Deposits on a dollar for dollar basis.

Deposit:

Simultaneously with the execution by Purchaser and Debtor of the APA incorporating the provisions herein, Purchaser shall make a cash deposit in the sum of $1,000,000 1,500,000 (the “Deposit”). The Deposit shall be held in escrow pursuant to the terms of the APA. The Deposit shall be promptly returned to the Purchaser upon the Debtor’s breach of the APA which, among other things, shall include compliance with the dates by which the Bid Procedures Order and the Sale Order must be entered by the Bankruptcy Court, unless such dates are extended in writing by the Purchaser. The Debtor shall retain the Deposit as a credit against the cash portion of the Purchase Price at Closing (as defined below) or as liquidated damages if Purchaser breaches its obligations under the APA, or upon the failure of Purchaser to consummate the Proposed Transaction, provided that all conditions precedent to closing have been satisfied and the Debtor has not breached its obligations under the APA.

Excluded Assets: The following assets shall be excluded from the Proposed Transaction: (a) cash and cash equivalents, other than any deposits provided by the Debtor under Assigned Contracts or to suppliers of Purchased Inventory, which shall constitute a Purchased Asset; (b) all accounts receivable of the Debtor; (c) inventory that is not Purchased Inventory, (d) all leases, executory contracts and trademark license agreements that are not


BN 41291907v1 BN 41291907v3

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designated by Purchaser to be Assigned Contracts and (e) any rights, claims or causes of action of the Debtor, including any actions under Chapter 5 of the Bankruptcy Code, other than any rights of the Debtor under or pursuant to all warranties, representations and guaranties made by suppliers, manufacturers and contractors with respect to the Purchased Assets (collectively, the “Excluded Assets”).

The Debtor shall retain all Excluded Assets.

Assumed/Excluded Liabilities: Purchaser will assume certain liabilities and pay cure amounts in connection with the Assigned Contracts in an amount not to exceed $6,000,000 in the aggregate, which shall be a part of, and not in addition to, the Purchase Price upon Closing (the “Assumed Liabilities”).

In addition to the foregoing, the assumption of liabilities will be limited to all obligations related to the Purchased Assets arising after the Closing and cure amounts in connection with the Assigned Contracts. Cure payments for Assigned Contracts will be paid in cash at Closing, to the extent of the allowed cure claim. Except as otherwise expressly provided herein, Purchaser shall not be liable for: (i) any obligation arising prior to the Closing (as defined below) whether related to the Purchased Assets or otherwise (other than the cure amounts described above), (ii) any liability related to any breach of contract, breach of warranty, legal proceedings, tort, employee or employment claims, including WARN Act and benefit plan funding obligations, infringement or violation of law by Debtor; and (iii) any liabilities, whenever arising, relating to the Excluded Assets, (collectively, the “Excluded Liabilities”). The Purchaser has not designated Contract# 51363 with the NFL for the manufacture and sale of backpacks under such contract as an Assigned Contract and will not be assuming that license. The Debtor has advised the Purchaser We understand that the NFL-GMR Obligations owed to the NFL under Contract 51363 are approximately $1,460,000 and has requested . Purchaser to will negotiate with the NFL regarding payment of some or all of the NFL-GMR Obligations on mutually agreeable terms to the Purchaser and the NFL. Purchaser agrees to engage in discussions with the NFL regarding payment of the Debtor's NFL-GMR


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Obligations on such terms as may be mutually agreed between the Purchaser and the NFL

Form of Acquisition: Upon (i) approval of the Proposed Transaction and APA by the Bankruptcy Court, (ii) any other required approvals under applicable non-bankruptcy law, and (iii) satisfaction of all other conditions precedent set forth in the APA, the Debtor will sell and transfer the Purchased Assets to Purchaser and Purchaser will pay the Purchase Price, assume the Assumed Liabilities and pay any cure amounts owing with respect to any Assigned Contracts in cash at a closing of the Proposed Transaction (“Closing”). The Purchased Assets and Assumed Liabilities, to be acquired and assumed will be more thoroughly identified in the APA.

Financing Contingency: The Purchaser docs not contemplate that the APA will have a financing contingency.

Letter of Intent: Purchaser and Debtor shall execute the LOI by no later than July 1023, 2020.

Asset Purchase Agreement: Purchaser and Debtor will enter into the APA by no later than July 2027, 2020. The APA will contain the salient terms set forth herein and such conditions, representations and warranties and covenants by Purchaser and Debtor as are customarily found in transactions of this type, subject to negotiation. In the event the APA is not executed by the parties on or before July 2427, 2020, either the Debtor or Purchaser may terminate this LOI without penalty.

The APA shall also provide that (1) the Bid Procedures Order (including approval of the Breakup Fee), in form and substance reasonably satisfactory to the Purchaser, shall have been entered by no later than July 31, 2020 with an auction to be held no later than August 5, 2020; (2) a Sale Order of the Bankruptcy Court, in form and substance satisfactory to Purchaser, will have been entered by no later than August, 7, 2020, that includes: (i) a finding that the Proposed Transaction is in good faith and otherwise satisfies the provisions of section 363, including section 363(m), of the Bankruptcy Code; (ii) authorization and approval of the Proposed Transaction pursuant to the APA; (iii) a provision that the Purchased Assets are being transferred free and clear of all liens, claims and encumbrances pursuant to


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Bankruptcy Code section 363(f) and all Assumed Contracts shall be free of any and all existing defaults and that the Purchaser is not a successor to the Debtor for any purpose; and (3) the Closing of the Proposed Transaction shall have occurred by not later than August 27, 2020.

Alternate Transactions: The APA will include provisions for a Breakup Fee (as defined below), to be paid as an administrative claim with priority under Bankruptcy Code sections 503(b) or 507(b) solely from the proceeds of sale in the event the Purchased Assets are sold to a competitive bidder in the pending Chapter 11 case (an “Alternative Transaction”). The Breakup Fee will be paid to Purchaser solely in the event, and from the proceeds of, an Alternative Transaction at the time of the closing of such Alternative Transaction.

Sale Motion: Debtor will file a motion to authorize and approve the sale of substantially all of the Debtor’s assets and to assume and assign the Assigned Contracts by no later than July 2228, 2020.

Bid Procedures: The sale motion shall include a request to approve the entry of the Bid Procedures Order approving the bidding procedures (including the Breakup Fee and Purchaser Expenses (as defined below)) and minimum bid requirements (including requirements as to who shall constitute a “qualified bidder”), subject to the approval of Purchaser, which approval will not be unreasonably withheld (the “Bid Procedures”) and scheduling an auction (the “Auction”) and hearing on the Proposed Transaction (the “Sale Hearing”).

The Bid Procedures will also provide that the minimum initial overbid (the “Initial Overbid”) must be a bid which is at least $250,000 150,000 in excess of the aggregate of (i) the Purchase Price, (ii) reimbursement of Purchaser’s actual expenses, including legal, accounting and other expenses incurred in connection with the Proposed Transaction, in an amount not to exceed $150,0001 (the “Purchaser Expenses”) and (iii)

1 Cathay will be paid its actual, out of pocket costs, expenses, including legal, accounting and other expenses

incurred in connection with the proposed transaction contemplated by the Stalking Horse Agreement, up to a cap of $150,000. Ashford will forego any such expense reimbursement.


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the Breakup Fee. If an Initial Overbid is received, subsequent overbids (each such bid, an “Overbid”) must be in $100,000 cash increments over the preceding Overbid.

The Bid Procedures will additionally provide that Purchaser, or such other successful bidder at the Auction will increase the amount of the Deposit to a total of ten percent (10%) of the amount of the Purchase Price of the successful bid within three (3) business days of the conclusion of the Auction. Such increase shall be in the form of cash deposit, letter of credit or such other form acceptable to Debtor.

Breakup Fee: Upon the closing of an Alternative Transaction, the Debtor shall pay to Purchaser a breakup fee in the amount of 31.5% of the cash component of the Purchase Price (the “Breakup Fee”). The Breakup Fee and the Purchaser Expenses shall have administrative expense priority pursuant to Bankruptcy Code sections 503(b) or 507(b) and shall be paid solely from the proceeds of the closing of an Alternative Transaction and no later than the date of closing of an Alternative Transaction with a party other than Purchaser.

Closing Conditions: The APA will include the following conditions to closing:

all documentation shall be in form and substance satisfactory to the Seller and Purchaser in their reasonable discretion;

all motions and other documents to be filed with and submitted to the Bankruptcy Court in connection with the Proposed Transaction (including, without limitation, the Sale Order) shall be in form and substance satisfactory to the Purchaser in its sole discretion;

the Sale Order shall have become a final , non-appealable order of the Bankruptcy Court no later than August 21, 2020, unless otherwise waived by Purchaser;

without contingencies, all required under applicable necessary approvals non-bankruptcy law,


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including, without limitation, and under antitrust laws, if applicable, have been obtained;

no material breach of the representations or warranties and continued compliance with covenants will have been made;

no interlocutory, appealable or final order or judgment, including any temporary restraining order, preliminary or permanent injunction, will have been issued that prohibits or restricts the consummation of the Proposed Transaction;

all governmental and third party consents and approvals necessary in connection with the acquisition and the transactions contemplated thereby shall have been obtained and shall remain in effect, except as otherwise waived by the Purchaser;

Debtor and Purchaser shall have entered into the APA that has been approved by the Bankruptcy Court and is effective immediately upon the Sale Order becoming a Final Order, unless the requirement of a Final Sale Order is waived by the Purchaser, time being of the essence;

Debtor shall be responsible for any sales tax that may be assessed as a result of the Proposed Transaction;

the representations and warranties of the Debtor shall be true and correct immediately prior to the Closing Date except to the extent that any such representation or warranty shall survive closing, in which case such representations and warranties shall be true and correct on such later date;

there shall exist no default or event of default under the APA or under the Debtor’s post-petition financing that has not been waived by the lender;

the acquisition shall not violate any requirement of applicable law and shall not be enjoined, temporarily, preliminarily or permanently by any governmental authority;


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the Bankruptcy Court shall have entered the Sale Order, in form and substance satisfactory to the Purchaser in its sole discretion, which order shall be in full force and effect and shall not have been reversed, vacated or stayed and shall not have been amended, supplemented or otherwise modified without the prior written consent of the Purchaser (which consent may be withheld in its sole discretion) (i) authorizing and approving the transactions contemplated thereby, including, without limitation, (X) the sale of the Purchased Assets free and clear of all liens, claims and encumbrances pursuant to section 363(.£363(f) of the Bankruptcy Code and (Y) the assumption and assignment to the Purchaser pursuant to section 365 of all of the executory contracts, unexpired leases and all intellectual property license agreements selected by the Purchaser, with the aggregate cure amounts payable by Purchaser not to exceed an amount to be agreed between Debtor and the Purchaser in the APA, exclusive of employee and broker guarantees, and (ii) finding that Purchaser is entitled to the protections afforded under section 363(m) of the Bankruptcy Code and granting such protection to the fullest extent under section 363(m) of the Bankruptcy Code;

there shall not have occurred a material adverse change to the condition of the Purchased Assets between the date of this LOI and the Closing;

Purchaser shall have received assurances, m Purchaser’s sole discretion, from counsel and/or appropriate regulatory agencies that Purchaser shall have no successor liability of any nature or description resulting from the Proposed Transaction;

satisfaction of all state and federal WARN Act notification requirements, if any;

such other conditions of closing that are customary for transactions of this nature;

Termination Events: The occurrence of any of the foregoing shall result in the termination of the obligations of the Purchaser under the


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LOI, unless waived by the Purchaser:

the APA is not executed on or before July 2027, 2020;

the Procedures Order shall not have been entered by the Bankruptcy Court on or before July 31, 2020;

a final, non-appealable Sale Order shall not have been entered by the Bankruptcy Court by August 21, 2020;

dismissal of any of the chapter 11 cases with respect to the Debtor or conversion of any chapter 11 cases to a chapter 7 case, or the sale of substantially all of the assets of the Debtor other than pursuant to the APA;

appointment of a chapter 11 trustee or examiner with expanded powers or other person with expanded powers in any the chapter 11 case of the Debtor;

granting of relief from the automatic stay to permit foreclosure or the exercise of other remedies on the material assets of any the Debtor;

Debtor's modification or consent to any modification of the APA, in each case, without the prior agreement of the Purchaser;

the date of the Closing shall be no more than 10 days after all closing conditions have been satisfied, but in no event later than August 27, 2020, unless otherwise agreed to, in writing, by Purchaser.

Executory Contracts and Unexpired Leases:

Purchaser shall review the Debtor’ s executory contract, unexpired leases and intellectual property license agreements to determine which, if any, it desires or requires to be assigned to Purchaser as Assigned Contracts. Debtor shall promptly provide, to the extent not previously provided, copies of all contracts and leases to Purchaser along with a schedule of the cure amounts and any other defaults thereunder known to the Debtor as of the date of this LOI. Purchaser ‘ s review of the schedule of intellectual property license agreements provided by the Debtor that comprise Assigned Contracts reflects that many of the Assigned


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Contracts terminate on or before December 31, 2020. The Proposed Transaction is conditioned on the Purchaser’s ability to enter into renewals of all intellectual property license agreements that are designated as Assigned Contracts that expire on or before December 31, 2020 on terms and conditions acceptable to Purchaser. The Purchaser agrees to work with the Debtor and each licensor between the date of the execution of this LOI by the Debtor and the date of the execution of the APA by Purchaser and Debtor to obtain renewals from each licensor on terms acceptable to the Purchaser.

The Debtor shall continue to pay all post-petition obligations under such Assigned Contracts from the date of the LOI through the Closing and Purchaser shall be responsible for and obligated to pay all cure costs associated with the Assigned Contracts in the amounts reflected in the APA, which amount shall be the cure amounts as of the date of this LOI, at the time of assignment unless otherwise agreed between Purchaser and the contract counter party.

Successor Liability:

The Sale Order shall provide that Purchaser shall have no successor liability for any claims against the Debtor except for liabilities that are expressly assumed by Purchaser.

Venue and Retention of Jurisdiction:

All actions arising out of or related to the Proposed Transaction shall be brought in the Bankruptcy Court, and the Bankruptcy Court shall retain jurisdiction to determine any and all such actions.

Governing Law for APA: State of New York

SECTION II

1. Certain Fundamental Assumptions. The Purchase Price assumes the following:

(a) Purchased Assets. Conditions relating to the Purchased Assets shall be subject to Purchaser’s completing its due diligence review in order to confirm, among other things, (i) that the condition, nature and usefulness of the Purchase Assets is acceptable to Purchaser, and (ii) that the Debtor has all requisite power and authority to contemplate the transactions contemplated herein, including the ability to assign the Assigned Contracts, permits and other materials related to the Purchased Assets. The APA shall also include conditions relating to the Purchased Assets that are customary for a transaction of this nature.


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2. Employee Matters. Employees and former employees of the Debtor would be eligible to apply for positions with Purchaser, Purchaser would have the right to offer employment to employees or former employees of the Debtor, but Purchaser would have no obligation to make an offer of employment to any such persons. As a condition to closing the Proposed Transaction, the Debtor would terminate each person employed by the Debtor in connection with the conduct of the business associated with the Purchased Assets. Purchaser shall not assume, nor shall it be obligated to pay, perform, discharge or be responsible for any liabilities of the Debtor relating to its employees and former employees arising prior to the closing of the Proposed Transaction, including any liabilities arising under the Worker Adjustment and Retraining Notification Act or any similar state or federal laws or regulations.

3. APA. The Proposed Transaction would be subject to the terms and conditions of the APA and would include: (a) customary representations, warranties and covenants; (b) customary covenants that the Debtor shall continue to conduct its business and affairs only in the ordinary and usual course; (c) other customary conditions to closing; and (d) appropriate indemnification provisions. The Debtor and Purchaser will use commercially reasonable efforts to complete the negotiation of the terms of, and to execute and to deliver, the APA as soon as practicable, but no later than the dates set forth above. To facilitate negotiation of the APA, the Debtor and Purchaser request that Purchaser’s counsel prepare an initial draft.

4. Conditions to Execution of the APA. The execution of the APA is subject to the satisfactory completion or determination of each of the following: (a) negotiation of mutually satisfactory terms and conditions for the APA; (b) absence of anything coming to the attention of Purchaser as a result of its due diligence investigation or otherwise that could reasonably be considered to affect materially and adversely, whether directly or indirectly, Purchaser’s determination to enter into the APA; and (c) receipt of necessary corporate or limited liability Debtor management approvals.

SECTION III

The following Sections of this LOI are the legally binding and enforceable agreements of Purchaser and the Debtor:

1. Due Diligence; Access to Information and Personnel. The Debtor and its representatives shall cooperate fully with Purchaser and shall afford Purchaser and its representatives full and free access to the Debtor, its personnel, properties, contracts, books and records and all other documents and data, including appraisals with respect to any of the Purchased Assets as Purchaser or its representatives may reasonably request in connection with their investigation and due diligence of the Debtor and its assets and properties. Purchaser shall be entitled to conduct all legal and financial due diligence activities with respect to the Debtor through the Closing of the Proposed Transaction, including, without limitation, any off-site due diligence.

2. Preservation of Purchased Assets. During the period between the date hereof and the Termination Date (as hereinafter defined): (a) the Debtor shall conduct its business and affairs only in the ordinary and usual course consistent with its past practices; (b) the Debtor shall not enter into or amend any material contract without the written consent of Purchaser; and (c) the


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Debtor shall maintain, and shall not remove, any Debtor assets or properties anticipated to constitute Purchased Assets or of the same or similar type, now existing or hereafter acquired.

3. Confidentiality. Except as required by law, unless otherwise agreed in writing by the other party hereto, each of the Debtor and Purchaser agrees not to disclose to any person (other than those of its representatives who are actively and directly participating in the such party’s evaluation of the Proposed Transaction and need to know for purposes of evaluating the Proposed Transaction and, in the case of such party’s representatives, whom the party will cause to observe the terms of this LOI) any information about the Proposed Transaction, or the terms or conditions or any other facts relating thereto, including, without limitation, the fact that discussions are taking place with respect thereto or the status thereof, or the fact that information about the Debtor has been made available to Purchaser or Purchaser’s representatives. Notwithstanding the forgoing, the Purchaser may disclose this LOI to any committee of creditors in respect of the bankruptcy case of the Debtor, provided that such committee agrees in writing and in a manner satisfactory to Purchaser to keep confidential this LOI and, upon execution of this LOI by all parties, may attach the execution version of the LOI as an exhibit to the bid procedure motion.

4. Public Disclosure. All press releases or other public communications of any sort relating to this LOI or the Proposed Transaction and the method of the release for publication thereof will be subject to the prior written approval of Purchaser and the Debtor, which prior approval shall not be unreasonably withheld by the other party hereto; provided, that, nothing herein shall prevent either party hereto from making such disclosures as may be required by applicable law.

5. Expenses. Except as otherwise provided above, each of the Parties hereto will bear and pay all costs and expenses incurred by it with respect to the Proposed Transaction contemplated herein and all investigations and proceedings in connection therewith including, without limitation, fees and expenses of their respective legal counsel, accountants and financial advisors. The Debtor shall pay the amount of all transaction costs incurred by the Debtor including, but not limited to, any expenses relating to the transfer of the Purchased Assets to Purchaser.

6. Enforceability. The parties hereto recognize that the Proposed Transaction will require further documentation and approvals, including the preparation and approval of the APA, setting forth the terms and conditions of the Proposed Transaction in detail. The parties hereto execute this LOI to evidence their intention to proceed in mutual good faith to carry out the transactions substantially in the manner outlined. This LOI shall constitute a non-binding agreement in principle between Purchaser and the Debtor with respect to the subject matter hereof except that the provisions of Section III of this LOI (collectively, the “Binding Provisions”) hereof shall constitute a binding agreement of the parties hereto, enforceable against them in accordance with their respective terms.

7. Agreement to LOI. The proposal set forth in this LOI shall expire if this LOI is not countersigned by the Debtor and returned to Purchaser by July 1023, 2020, unless extended by the Purchaser in writing.

8. Termination. This LOI will terminate (a) upon the occurrence of any of the Termination Events set forth above, unless waived in writing by the Purchaser, (b) the date of


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termination of negotiations with respect to the Proposed Transaction by written consent of both Parties hereto; and (c) the date of execution of the APA. Upon termination of this LOI, the parties will have no further obligations hereunder, except as stated in Sections 3 (Confidentiality), 4 (Public Disclosure), 5 (Expenses), 6 (Enforceability), 7 (Agreement to LOI), 8 (Termination), 9 (Entire Agreement) and l 0 (Governing Law; Jurisdiction) of Part III of this LOI, which will survive any such termination. The termination of this LOI will not affect the liability of a party hereto for breach of any of the Binding Provisions prior to the termination.

9. Entire Agreement; Assignment. This LOI constitutes the entire agreement between the Parties and supersedes all prior oral or written agreements, understandings, representations and warranties and courses of conduct and dealing between the Parties on the subject matter thereof. Except as otherwise provided herein, this LOI may be amended or modified only by a writing executed by both of the Parties. This LOI shall not be assigned by either party hereto without the prior written consent of the other, except that this LOI may be assigned by Purchaser to a special purpose entity to consummate the transactions without consent of the Debtor.

10. Governing Law; Jurisdiction. Ibis LOI shall be governed in all respects, including validity, interpretation and effect, by the laws of the State of New York without giving effect to the provisions thereof relating to conflict of laws. For so long as the Debtor is subject to the jurisdiction of the Bankruptcy Court, the Parties irrevocably elect as the sole judicial forum for the adjudication of any matters arising out of or relating to this LOI (including, without limitation, any action concerning the violation or threatened violation of this LOI), and consent to the exclusive jurisdiction of, the Bankruptcy Court. After the Debtor is no longer subject to the jurisdiction of the Bankruptcy Court, the Parties hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court sitting in the State of New York, New York County, with respect to any action or proceeding arising out of or relating to this LOI (including, without limitation, any action concerning the violation or threatened violation of this LOI). Each party hereto waives any objection it may now or hereafter have to the laying of venue of any such action, and irrevocably submits to the jurisdiction of any such court in any such action and hereby further irrevocably and unconditionally waves and agrees not to plead or claim in any court that any such lawsuit, claim or other proceeding brought in any such court has been brought in any inconvenient forum. Nothing contained herein shall be deemed to affect the right of either party hereto to serve process in any manner permitted by law.

11. Primacy Contact Information. The Purchaser contact information is:

(a) For Cathay Home, Inc.:

• Steven Qian: tel.#: 646-461-2451/email: [email protected]

• Julie Fogerty: tel.#: 646-362-0604/email: JFogerty@,cathayhome.com

(a) Ashford Textiles, LLC:

• Jack Burns: tel.#: (310) 327-4670/email: [email protected]

• Allen Guo: tel.#: (310) 327-4670/email: [email protected]


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(b) Accountants/Financial Advisors: Skwiersky, Alpert & BresslerRossi LLP

• Albert Rossi, CPA tel#: (562) 495-3325 [email protected]

• Neil Bressler: tel.#: 212-714-0462 /email: [email protected]

(c) Legal: Otterbourg P.C.Buchalter

• Jeffrey H. Kapor: tel.#: (213) 891-5003/email: [email protected]

• Richard L. Stehl: tel.#: 212-905-3651 /email: [email protected]

• Steven B. Soll: tel.# 212-905-3650 /email: ssoll(a)otterbourg.com

• Philip Berg: tel.# 212-905-3659 / email: [email protected]

• Bernard Bollinger: tel.# (213) 891-5009/email: [email protected]

• Paul S. Arrow: tel.# (213) 891-5002/email: [email protected]

• Tracy L. Klestadt: tel# (212) 679-8700/email: [email protected]

[SIGNATURES APPEAR ON NEXT PAGE]


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If the foregoing meets with your approval, please indicate your acceptance of the terms set forth in this LOI by signing in the space provided below and on the enclosed copy and by returning the copy to us. This LOI may be signed in one or more counterparts each of which shall be deemed an original hereof.

Sincerely yours,

By: Cathay Home, Inc.

Steven Qian ASHFORD TEXTILES, LLC

Jack Burns-Manager

Chief Executive Officer

Agreed to and accepted, as of July___, 2020

MMG ADVISORS

By:

Name:

Title:

THE NORTHWEST COMPANY, LLC

By:

Name:

Title:

THE NORTHWEST.COM, LLC

By:


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Name:

Title:


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EXHIBIT A

Assigned Contracts

[See excel Schedule of Assigned Contracts forwarded to MMG Advisors on July 8, 2020)] [??]


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EXHIBIT B

REAL ESTATE AGREEMENTS.

Leases

• Roslyn, NY - HQ

• Ronda, NC - Manufacturing Facility

• Bentonville, AR - WM Sales Office

Warehouse Agreements

• Los Angeles - 3PL


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EXHIBIT C

Sale Order

(To Be Filed)


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Original Document [BN][#41291907] [v1] Northwest Co. LOI to Acquire Assets.docx

Modified Document [BN][#41291907] [v3] Northwest Co. LOI to Acquire Assets.docx

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EXHIBIT 3


STATEMENT OF ACCOUNT July 20, 2020 Ashford Textiles, LLC Ashford Partners, LLC 1535 W. 139th Street Gardena, CA 90249 To Whom It May Concern: We hereby certify that the above listed customers have total deposit balance not less than $25.5 million with East West Bank. If you have any questions, feel free to contact me at (626) 768-6785. Best Regards, Li Zhang Senior Vice President East West Bank


Documents

KLESTADT WINTERS JURELLER SOUTHARD & STEVENS, LLP … · New York, New York 10036-7203 Tel: 212-972-3000 [email protected] BUCHALTER A Professional Corporation Bernard D. Bollinger,