Summary of HEELYS, INC. - Yahoo! Finance

Entry into a Material Definitive Agreement, Other Events, Financial Statements and E

Item 1.01 Entry into a Material Definitive Agreement.

Sale Transaction

On October 22, 2012, Heelys, Inc. (the "Company") entered into an Asset Purchase Agreement, by and among The Evergreen Group Ventures, LLC, a Delaware limited liability company ("Buyer Parent"), and TEG Bronco Acquisition Company, LLC, a Delaware limited liability company ("Buyer" and, together with Buyer Parent, the "Buyer Parties"), on the one hand, and the Company, Heeling Sports Limited, a Texas limited partnership ("Heelys Texas"), Heeling Sports EMEA SPRL, a Belgian corporation ("Heelys EMEA"), and Heeling Sports Japan, K.K., a Japanese corporation ("Heelys Japan" and, together with the Company, Heelys Texas, and Heelys EMEA, the "Seller Parties"), on the other hand (the "Asset Purchase Agreement"). A copy of the Asset Purchase Agreement is attached hereto as Exhibit 10.1 and incorporated herein by reference. Capitalized terms not defined in this Current Report on Form 8-K (this "Current Report") have the meanings given to them in the Asset Purchase Agreement.

Pursuant to the terms and provisions of the Asset Purchase Agreement, the Seller Parties will sell to the Buyer Parties substantially all of their assets and the Buyer Parties will assume certain of the Seller Parties' liabilities (the "Sale Transaction").

Purchase Price

The aggregate purchase price for the purchased assets will be $13,900,000 in cash, plus the assumption of certain specified liabilities, all subject to an adjustment based upon the Working Capital of the Seller Parties as of the Closing Date. If the Working Capital is less than the Working Capital Target ($11,450,000), the Purchase Price will be decreased dollar for dollar. If the Working Capital is more than $11,600,000, the Purchase Price will be increased dollar for dollar. These adjustments to the Purchase Price and the mechanism for such adjustments are more specifically described in the Asset Purchase Agreement.

Representation and Warranties

The Asset Purchase Agreement contains a number of customary mutual representations and warranties of the Seller Parties to the Buyer Parties relating to, among other things: organization of the Seller Parties; authority of the Seller Parties; conflicts and consents; periodic reporting with the Securities and Exchange Commission (the "Commission") and financial statements; the absence of undisclosed liabilities; the absence of certain changes and certain events; material contracts; title to the purchased assets; condition and sufficiency of assets; real property; intellectual property; inventory; accounts receivable; customers and suppliers; insurance; legal proceedings and Governmental Orders; compliance with laws and permits; environmental matters; employee benefit matters; employment matters; taxes; product liability claims; transactions with affiliates; brokers; vote required for the Sale Transaction; state anti-takeover statutes; solvency; and voting agreements.

The Asset Purchase Agreement contains a number of customary mutual representations and warranties of the Buyer Parties to the Seller Parties relating to, among other things: organization of the Buyer Parties; authority of the Buyer Parties; conflicts and consents; brokers; legal proceedings; financing; disclaimers of representations and warranties; and independent investigation.

The representations, warranties, and covenants of the Seller Parties contained in the Asset Purchase Agreement have been made solely for the benefit of the parties to the Asset Purchase Agreement. The Company's stockholders and investors are not third-party beneficiaries under the Asset Purchase Agreement. Further, the representations and warranties of the Seller Parties in the Asset Purchase Agreement (a) have been made only for purposes of the Asset Purchase Agreement; (b) may be qualified by disclosures made to the Buyer Parties in connection with the Asset Purchase Agreement; and (c) are subject to materiality qualifications contained in the Asset Purchase Agreement which may differ from what may be viewed as material by the Company's stockholders and investors.

Closing Conditions

The Asset Purchase Agreement contains conditions precedent to the obligations of the Buyer Parties to complete the Sale Transaction (each of which may be waived by Buyer at or before Closing), including, without limitation:

· the representations and warranties of the Seller Parties in the Asset Purchase Agreement, the other Transaction Documents, and any certificate or other writing delivered pursuant to the Asset Purchase Agreement must be true and correct in all material respects on and as of the date of signing the Asset Purchase Agreement and on the Closing Date (subject to certain exceptions);

· the Seller Parties' performance in all material respects of their respective agreements, covenants, and conditions set forth in the Asset Purchase Agreement and the other Transaction Documents, as applicable, on or before the Closing Date;

· the absence of a Governmental Order making the Sale Transaction illegal, or otherwise restraining or prohibiting the consummation of the Sale Transaction, or causing the Sale Transaction to be rescinded following its completion;

· the Seller Parties receiving all approvals, consents, and waivers that are necessary to consummate the Sale Transaction, unless the failure to receive the foregoing (except the Stockholder Approval (as defined below)) would not result in a Material Adverse Effect or materially adversely affect the Seller Parties' ability to perform their respective obligations under the Asset Purchase Agreement;

· the absence of a Material Adverse Effect;

· the delivery of the signatures, certificates, instruments, and other deliverables by the Seller Parties and the Company that are contemplated by the Asset Purchase Agreement; and

· the absence of Encumbrances relating to the purchased assets, other than certain specified permitted encumbrances.

The Asset Purchase Agreement contains conditions precedent to the obligations of the Seller Parties to complete the Sale Transaction (each of which may be waived by the Company at or before Closing), including, without limitation:

· the representations and warranties of the Buyer Parties in the Asset Purchase Agreement, the other Transaction Documents, and any certificate or other writing delivered pursuant to the Asset Purchase Agreement must be true and correct in all material respects on and as of the date of signing the Asset Purchase Agreement and on the Closing Date (subject to certain exceptions);

· the Buyer Parties' performance in all material respects of their respective agreements, covenants, and conditions set forth in the Asset Purchase Agreement and the other Transaction Documents, as applicable, on or before the Closing Date ;

· the delivery of the signatures, certificates, instruments, and other deliverables by the Buyer Parties that are contemplated by the Asset Purchase Agreement;

· the approval of the Sale Transaction by the holders of a majority of the Company's outstanding shares of common stock (the "Stockholder Approval"); and

· the delivery of the signatures, certificates, instruments, and other deliverables by the Buyer Parties that are contemplated by the Asset Purchase Agreement.

Covenants

The Asset Purchase Agreement contains numerous covenants of the Seller Parties, the Company, and the Buyer Parties during the period up to and including the Closing Date. The covenants that are specific to the Seller Parties generally relate to, among other things: the conduct of the Seller Parties' business operations before the Closing; providing the Buyer Parties with access to, and deliveries of, certain information; holding a meeting of the Company's stockholders (the "Meeting") and soliciting proxies to the Company's stockholders to obtain the Stockholder Approval; notifications to Buyer of certain events; certain employee matters; keeping certain information concerning the Seller Parties' business and other matters confidential; a non-solicitation of persons who are offered employment by the Buyer Parties; and the Seller Parties' termination of certain intercompany contracts relating to licensing of intellectual property and distribution.

The Asset Purchase Agreement contains additional covenants of the Seller Parties and the Buyer Parties relating to, among other things: making notices to, and obtaining consents, authorizations, orders, and approvals from, Governmental Authorities in connection with the Sale Transaction; using commercial reasonable efforts to take such actions as are necessary to expeditiously satisfy the closing conditions of the parties; making public announcements of the Asset Purchase Agreement and the Sale Transaction; payment of Taxes and fees incurred in connection with the Asset Purchase Agreement and the other Transaction Documents; access to retained books and records; the execution and delivery of . . .