INTERESTPURCHASE AGREEMENT By andAmong ICONIXBRAND GROUP, INC., UNITEDFEATURE SYNDICATE, INC.

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and

 

 

 

Exhibits
Exhibit A	-	Contribution Agreement
Exhibit B	-	Principal Terms of Sublease
Exhibit C	-	Principal Terms of Transition Services Agreement
Exhibit D	-	Financial Statements
Exhibit E	-	Release

 

Section 5.2            Authority; No Conflict.

 

(a)           This Agreement constitutes the legal, valid, and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws relating to creditors’ rights generally and by equitable principles. Upon the execution and delivery by Buyer of the Transaction Documents to which it is a party, such Transaction Documents will constitute the legal, valid, and binding obligations of Buyer, enforceable against Buyer in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws relating to creditors’ rights generally and by equitable principles.  Buyer has the corporate power and authority to execute and deliver this Agreement and the Transaction Documents to which it is a party and to perform its obligations hereunder and thereunder.

 

(b)           Neither the execution and delivery of this Agreement by Buyer nor the consummation or performance of any of the Contemplated Transactions by Buyer will give any Person the right to prevent, delay, or otherwise interfere with any of the Contemplated Transactions pursuant to (i) any provision of Buyer’s Organizational Documents; (ii) any resolution adopted by the board of directors or the stockholders of Buyer; (iii) any Legal Requirement or Order to which Buyer may be subject; or (iv) any Contract to which Buyer is a party or by which Buyer may be bound.  Except as contemplated by Section 8.2 hereof, Buyer is not and will not be required to obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions.

 

Section 5.3            Investment Intent; Financial Capability.  The offering and sale of the Interests is intended to be exempt from the applicable provisions of the Securities Act and any applicable state securities or blue-sky laws.  Buyer is acquiring the Interests for its own account and not with a view to their distribution within the meaning of § 2(11) of the Securities Act.  Buyer has, and will have at Closing, sufficient cash to enable it to purchase the Interests as provided herein.

 

Section 5.4            Certain Proceedings.  There is no pending Proceeding that has been commenced against Buyer and that challenges, or would have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions.  To the Knowledge of Buyer, no such Proceeding has been Threatened.

 

Section 5.5           Brokers or Finders.  Neither Buyer nor any of its Representatives has incurred any obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payments in connection with the Contemplated Transactions.

 

Section 5.6            Investigation by Buyer.  Buyer has conducted its own independent review and analysis of the Business and the Contemplated Transactions and acknowledges that Seller has provided Buyer with access to the personnel, properties, premises and records of the Business for this purpose. Buyer acknowledges that the representations and warranties contained in this Agreement are exclusive of any other representations and warranties, express or implied, and that none of Seller nor any of its Affiliates makes or has made any representation or warranty, either express or implied, as to the accuracy or completeness of any of the information provided or made available to Buyer or any of its Affiliates, except as and only to the extent expressly set forth in this Agreement and subject to the limitations and restrictions contained in this Agreement.

 

 

Section 6.1           Access and Investigation.  Subject to the provisions of the Non-Disclosure Agreement, between the date of this Agreement and the Closing Date, Seller shall, and shall cause its Representatives to, (a) afford Buyer and its Representatives, upon reasonable advance notice, full and free access to the Business Assets and books and records relating to the Business during regular business hours or at such other time agreed to by Buyer and Seller, (b) furnish Buyer and Buyer’s Representatives with copies of all Business Contracts and such books and records of Seller, UMKK, UMNet or the Company, as Buyer reasonably requests, and (c) furnish Buyer and Buyer’s Representatives with such additional financial, operating, and other data and information relating to the Business as Buyer reasonably requests.  Further, between the date of this Agreement and the Closing Date, upon reasonable notice Seller shall permit Buyer’s senior officers to meet with the senior officers of Seller responsible for the Business.  

 

Section 6.2           Operation of the Business.  Between the date hereof and the earlier of the Closing Date and the termination of this Agreement pursuant to or in accordance with Article XI hereof, except as otherwise contemplated by this Agreement or otherwise taken with the prior written consent of Buyer, Seller shall, and shall cause UMKK and UMNet to:

 

(a)          conduct the Business substantially in the ordinary course;

 

(b)          comply with all requirements of all applicable laws;

 

(c)          use reasonable best efforts to preserve intact its current business organization, keep available the services of its current employees and agents, and maintain business relations and goodwill with suppliers, customers, landlords, creditors, employees, agents, licensees, clients and others having business relationships with it that are material to the Business;

 

(d)          otherwise report periodically to Buyer, at Buyer’s reasonable request, concerning the operations of the Business;

 

(e)          permit, allow or suffer any Business Asset to become subjected to any Encumbrance of any nature whatsoever that would have been required to be set forth in Schedule 3.5 if existing on the date of this Agreement, other than in the ordinary course or except to the extent any such Encumbrance is released or fully discharged at or prior to Closing; and

 

(f)           not engage or agree to engage in any practice, take any action or enter into any transaction outside the ordinary course of business or of the sort described in Section 3.7.

 

 

Section 6.3           Commercially Reasonable Efforts.  Between the date of this Agreement and the Closing Date, Seller shall use commercially reasonable efforts to take all action and to do all things necessary, proper or advisable in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the closing conditions set forth in Article IX).

 

Section 6.4           Audited Financials.  Following the date of this Agreement, upon Buyer’s request and at Buyer’s expense, Seller will cooperate with Buyer and the Company to prepare audited financial statements for the periods ended December 31, 2008 and December 31, 2009.

 

 

Section 7.1            Commercially Reasonable Efforts.  Between the date of this Agreement and the Closing Date, Buyer shall use its commercially reasonable efforts to take all action and to do all things necessary, proper or advisable in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the closing conditions set forth in Article X).

 

Section 7.2            Buyer Acknowledgement.  Notwithstanding any other provision of this Agreement, including, without limitation Section 3.5 and Section 3.11, Buyer agrees and acknowledges that the Transferred Peanuts Copyrights, and Seller’s and, following the Closing Date, Company’s, right, title, and interest therein, may be subject to contractual and statutory termination rights.  No representation and warranty by Seller under this Agreement shall be construed as a representation or warranty as to the absence of any of the foregoing.

 

 

Section 8.1            Tax Treatment of Purchase of Membership Interests in Company.  The Company shall be a “disregarded entity” as such term is defined in Treasury Regulation Section ###-###-####-3(b) (and any corresponding provision of state, local or foreign Law) on the Closing Date.  Accordingly, for federal, state, local and foreign income Tax purposes, the purchase of the membership interests in the Company shall be treated as the purchase by the Buyer of the assets owned by the Company on the Closing Date subject to the liabilities owned by the Company on the Closing Date.  The Buyer, the Seller and the Seller’s parent shall report the purchase of the membership interests in the Company as a sale of assets on all of their respective Tax Returns and shall not take any contrary position thereto, unless otherwise required to pursuant to applicable Law.

 

Section 8.2            Required Approvals of Governmental Bodies.

 

(a)           Buyer and Seller shall, and Seller shall cause the Company to, promptly after execution of this Agreement, make all registrations, filings and submissions with all Governmental Bodies required to be made or effected by them pursuant to all applicable Legal Requirements with respect to this Agreement and the other Transaction Documents and the Contemplated Transactions.  Between the date of this Agreement and the Closing Date, Buyer and Seller shall, and Seller shall cause the Company to, cooperate with each other with respect to all filings that the other elects to make or is required by Legal Requirements to make in connection with the Contemplated Transactions.

 

 

(b)           Without limiting the generality of Section 8.2(a), Seller and Buyer shall promptly (but not later than fifteen (15) calendar days after the date hereof) make and effect all registrations, filings and submissions required to be made or effected pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), the Japanese Anti- Monopoly Act and all other applicable Legal Requirements with respect to this Agreement and the other Transaction Documents and the Contemplated Transactions in order to obtain any antitrust clearance or similar clearance required to be obtained from the Federal Trade Commission, the Antitrust Division of the Department of Justice, any state attorney general, any foreign competition authority (including, without limitation, in Japan) or any other Governmental Body in connection with the Contemplated Transactions.  Each of Seller and Buyer shall bear one-half of the HSR Act filing fee.  

 

(c)           Seller and Buyer shall, and Seller shall cause the Company to, (i) promptly provide all information requested by any Governmental Body in connection with this Agreement and the other Transaction Documents and the Contemplated Transactions, and (ii) promptly take all actions and steps necessary to obtain any antitrust clearance or similar clearance required to be obtained from the Federal Trade Commission, the Antitrust Division of the Department of Justice, any state attorney general, any foreign competition authority (including, without limitation, in Japan) or any other governmental entity in connection with the Contemplated Transactions.  The actions required to be taken by Buyer and Seller pursuant to this Section in order to obtain required antitrust clearances will include using reasonable efforts to avoid or set aside any preliminary or permanent injunction or other Order but do not include making arrangements for the disposition of particular assets and making arrangements to hold such assets separate pending their disposition.

 

(d)           Without limiting any other provision of this Section, each party hereto shall (i) give the other party prompt notice of the commencement of any Proceeding by or before any Governmental Body with respect to this Agreement or the other Transaction Documents or any of the Contemplated Transactions, (ii) keep the other party informed as to the status of any such Proceeding, and (iii) promptly inform the other party of any communication to or from the Federal Trade Commission, the Antitrust Division of the Department of Justice, or any other Governmental Body regarding this Agreement or the Contemplated Transactions.

 

Section 8.3            Notice of Developments; Access to Records.  Each party will give prompt notice to the other parties of the occurrence, or failure to occur, of any event, which occurrence or failure to occur would be reasonably expected to cause (a) any representation or warranty contained in this Agreement to be untrue or inaccurate at any time from the date of this Agreement to the Closing Date or (b) any failure of any party or of any officer, director, manager, employee or agent thereof, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it under this Agreement.  On or prior to the Closing Date, the Seller shall supplement and update the schedules delivered as of the date hereof.  Notwithstanding the above, the delivery of any notice or updates to the schedules pursuant to this Section 8.3 will not limit or otherwise affect the remedies available hereunder to the party receiving such notice or updates and no notice or update shall constitute an amendment of any statement, representation or warranty in this Agreement or any schedule, exhibit or document furnished pursuant hereto. For a period of (i) six (6) years following the Closing Date (in respect of Books and Records of Seller or the Company) or (ii) ten (10) years following the Closing Date (in respect of Books and Records of UMKK or UMNet), Buyer shall provide, or shall cause the Company to provide, to Seller reasonable access upon reasonable advance notice to or copies of any files, records, books of account, computer programs and software, data and other records pertaining to the Business (“Books and Records”) for periods prior to the Closing Date that Seller reasonably believes are necessary or advisable for Tax reporting, litigation or performance of Parent’s or Seller’s obligations hereunder, and Seller agrees not to disclose the foregoing or any of the content thereof to any Person except to its employees and Representatives on a “need to know” basis.

 

 

Section 8.4           Transition Services Agreements; Sublease; Syndicate Services Agreement.  From and after the date hereof and until the earlier or termination of this Agreement pursuant to Article XI or the Closing Date, Buyer and Seller shall negotiate in good faith the definitive terms and conditions of (a) the Transition Services Agreements covering transition services described on Exhibit C, (b) the Sublease, (c) the Short Form License and (d) the Syndicate Services Agreement, in each case for execution and delivery by the parties thereto at or prior to Closing.

 

Section 8.5            Employees of the Business.

 

(a)           Not later than the second Business Day prior to the Closing Date, Buyer shall, subject to the Closing of the Contemplated Transactions, offer employment with the Company, commencing on the Closing Date, to all of the Business Employees.  Any such offer shall be made at salaries, pro rated bonus incentive opportunities and wages no less than those currently being paid or made available by Seller, which employment, if accepted, shall become effective as of the Closing Date.  Any Business Employee who accepts any such offer of employment is referred to in this Agreement as a “Hired Employee.”  To the extent that any Hired Employee receives a portion of his pro rated bonus for 2010 from Seller, such amount shall be credited to Buyer when determining the bonus incentive for such Hired Employee.  For a period of two years following the Closing, Buyer shall provide to each Hired Employee who shall remain at the Company, employee benefits programs that are available to employees of Buyer in similarly situated positions. Seller shall not continue to employ any Hired Employee who resigns from employment with Seller and who begins employment with Buyer effective as of the Closing Date. Notwithstanding anything to the contrary in the foregoing or elsewhere in this Agreement, if (i) any Hired Employee now employed in the Seller’s New York office is terminated by Buyer or any Affiliate thereof after the Closing and prior to the first anniversary of the Closing Date, Buyer shall pay to such Hired Employee within ten (10) days of such termination, severance amounts and benefits equivalent to those that Schedule 8.5 indicates Seller would have paid to such Hired Employee in connection with the loss of such Hired Employee’s employment as a result of the Contemplated Transactions (the “Severance Provision”); provided, however, that Buyer shall assume any individual severance agreement between Seller and any such Hired Employee employed in such New York office, as indicated in Schedule 8.5; and (ii) if any Hired Employee now employed in the Parent’s Cincinnati office is terminated by Buyer or any Affiliate thereof after the Closing and (x) prior to the 181st day of such Hired Employee’s employment, Buyer shall pay the Severance Provision to such Hired Employee and Seller shall reimburse Buyer in the full amount of the Severance Provision, or (y) after the 181st day and prior to the 366th day of such Hired Employee’s employment, Buyer shall pay the Severance Provision to such Hired Employee and Seller shall reimburse Buyer in an amount equal to fifty percent (50%) of the Severance Provision; provided, however, that Buyer shall assume any individual severance agreement between Seller and any such Hired Employee employed in such Cincinnati office, as indicated in Schedule 8.5, and Seller shall reimburse Buyer in accordance with clauses (x) and (y) above if Buyer pays the Severance Provision under any such agreement. Buyer and, after the Closing Date, the Company shall not have any obligation or liability of any kind with respect to any Business Employee or Hired Employee for the period prior to the Closing Date including, without limitation, accrued compensation and bonus.  Schedule 8.5 sets forth a list of all severance agreements between Seller and each individual Business Employee.

 

 

(b)           Buyer shall credit each Hired Employee for his or her time in service as an employee of Seller or any Affiliate thereof (“Prior Service”) for purposes of any severance, vacation or leave benefits for which the Hired Employee may become eligible as an employee of the Company or Buyer (or any Affiliate of Buyer) upon or after the Closing. Buyer shall, as to all Hired Employees, cause its insurance carriers and benefit plan administrators or trustees to: (i) recognize Prior Services for purposes of eligibility to enroll in its welfare plans (e.g., its life, medical, dental, accident, disability and similar benefit plans), and (ii) provide each Hired Employee with credit under its medical plan for payments made under The E.W. Scripps Company Medical Plan in satisfying any deductible or out-of-pocket limit requirements.  Buyer shall recognize Prior Service for all Hired Employees for purposes of eligibility and vesting, but not for benefit accrual, under each benefit program that provides pension, savings, or other deferred benefits which is adopted, maintained, or contributed to by Buyer or any of its Affiliates to the extent Hired Employees participate or are eligible for participation after the Closing.

 

(c)           In order to allow for an orderly transition of Hired Employees to the employ of the Company or Buyer after the Closing, prior to the Closing Seller and the Company shall allow Buyer reasonable access to the Business Employees and such portions of their employment records as Seller shall agree to release in its reasonable discretion.  As soon as practicable after the Closing, Seller shall provide the Company with all such employment records of the Hired Employees.  Notwithstanding any other provision of this Agreement to the contrary, Seller shall have the right to remove any information from such employment records of the Hired Employees as shall be necessary to comply with any applicable Legal Requirements relating to such information.

 

(d)           Buyer acknowledges that it is obligated to comply with the Federal Worker Adjustment and Retraining Notification Act, the New York State Worker Adjustment Retraining Notification Act and any other federal, state and local laws relative to any Hired Employees as of the Closing Date and Buyer covenants and agrees to provide any legally required notices under such Legal Requirements, if any, to Hired Employees after the Closing Date.

 

(e)           Seller shall be responsible for and will perform all Tax withholding, payment and reporting duties with respect to any wages and other compensation paid to a Hired Employee on or prior to the Closing Date, and Buyer shall be responsible for and will perform all Tax withholding, payment and reporting duties with respect to any wages and other compensation paid by Buyer, the Company, UMKK or UMNet after the Closing Date to any Hired Employee.

 

 

(f)           Notwithstanding the foregoing, nothing in this Section 8.5 shall be construed to entitle any Hired Employee (including a leased employee within the meaning of Section 414(n) of the IRC) to coverage under any of Buyer’s benefit plans after the Closing Date.  Any decision to extend such coverage to some or all of such individuals shall be subject to the sole and absolute discretion of Buyer and its Affiliates, as the case may be, and to the Legal Requirements.  Moreover, the Hired Employees shall be deemed employees at will of Buyer, the Company or their Affiliates and nothing express or implied herein shall obligate Buyer, the Company or their Affiliates to provide continuing employment or any particular individual or aggregate benefits to any Hired Employee after the Closing Date for a specified period of time, except as an individual employment agreement may otherwise provide.  In addition, the parties do not intend for this Agreement to amend any employee benefit plans or arrangements or create any rights or obligations except between the parties, and Buyer retains full rights to amend or terminate any plans or arrangements it or its Affiliates maintain.

 

Section 8.6            Tax Matters.  The following provisions shall govern the allocation of responsibility as between Buyer and Seller for certain tax matters following the Closing Date:

 

(a)           Straddle Tax Period. In the case of any taxable period that includes (but does not end on) the Closing Date (a “Straddle Tax Period”), the amount of any income Taxes or other Taxes based on receipts for the Pre-Closing Tax Period shall be determined based on an interim closing of the books as of the close of business on the Closing Date and the amount of all other Taxes for the Pre-Closing Tax Period shall be determined based on the number of days in the Pre-Closing Period divided by the number of days in the taxable period.

 

(b)           Responsibility for Filing Tax Returns. Buyer shall prepare or cause to be prepared and file or cause to be filed all Tax Returns for the Company, UMKK and UMNet that are filed after the Closing Date.   Buyer shall deliver each Tax Return required to be prepared pursuant to this Section 8.6(b) to Seller at least fifteen (15) days before the due date (taking into consideration all applicable extension periods) and permit Seller to review and comment on each such Tax Return described in the preceding sentence prior to filing and Buyer shall accept any comments of Buyer that are reasonable..  Such Tax Returns shall be prepared consistently with the past practice of the Company, UMKK or UMNet unless otherwise required by applicable Law.

 

(c)           Tax Payments.  The Buyer shall pay or cause to be paid all unpaid Taxes shown as due and owing by the Company, UMKK or UMNet on the Tax Returns prepared pursuant to Section 8.6(b).  If the amount of Taxes set forth on the Tax Returns prepared pursuant to Section 8.6(b) for a Pre-Closing Tax Period exceeds the accrual for such Taxes reflected as a liability in the calculation of Working Capital (such excess amount with respect to any such Tax Return, an “Unpaid Taxes Shortfall”), then, no later than five (5) days after the date that the Buyer notifies Seller of the Unpaid Taxes Shortfall, Seller shall reimburse Buyer for the Unpaid Taxes Shortfall.

 

 

(d)           Refunds and Tax Benefits. Any Tax refunds that are received by Buyer, the Company, UMKK or UMNet, and any amounts credited against Tax to which Buyer, the Company, UMKK or UMNet become entitled (in each case, net of any Taxes incurred by the Company, UMKK or UMNet) that relate to Pre-Closing Tax Periods shall be for the account of Seller, and Buyer shall pay over to Seller any such refund or the amount of any such credit  net of any accrual for such refund or credit taken into consideration in the calculation of Working Capital within fifteen (15) days after receipt or entitlement thereto; provided that the Seller shall not be entitled to any refund or credit attributable to a carryback of loss or credit from any period or portion thereof beginning after the Closing Date.

 

(e)           Cooperation on Tax Matters.

 

(i)           Buyer, the Company, UMKK, UMNet and Seller shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Tax Returns pursuant to this Section and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party's request) the provision of records and information that are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Company, UMKK, UMNet and Seller shall (x) retain all books and records with respect to Tax matters pertinent to the Company, UMKK and UMNet relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by Buyer or Seller, any extensions thereof) of the respective taxable periods, and abide by all record retention agreements entered into with any taxing authority, and (y) give the other party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other party so requests, the Company, UMKK, UMNet, or Seller, as the case may be, shall allow the other party to take possession of such books and records.

 

(ii)          Buyer and Seller further agree, upon request, to use their best efforts to obtain any certificate or other document from any Governmental Body or any other person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the Contemplated Transactions).

 

(f)           Tax-Sharing Agreements. All tax-sharing agreements or similar agreements between Seller and its Affiliates on the one hand, and the Company, UMKK or UMNet, on the other, with respect to or involving the Company, UMKK and UMNet shall be terminated as of the Closing Date and, after the Closing Date the Company, UMKK and UMNet shall not be bound thereby or have any liability thereunder.

 

(g)           Post-Closing Elections. At Seller's request, Buyer shall cause the Company, UMKK, and UMNet to make or join with Seller in making any election if the making of such election does not have a material adverse impact on Buyer (or the Company, UMKK or UMNet) for any Tax period beginning after the Closing Date or portion of any Straddle Tax Period that begins after the Closing Date.

 

(h)           Reimbursement for Post-Closing Transactions. Buyer shall reimburse Seller for any additional Tax owed by Seller (including Tax owed by Seller due to any indemnification payment) resulting from any transaction engaged in by the Company, UMKK or UMNet not in the ordinary course of business occurring on the Closing Date after Buyer's purchase of the Interests–.

 

 

(i)           §338(g).  Buyer will not permit without Seller’s consent, which shall not be unreasonably withheld or delayed, (i) a section 338(g) election to be made with respect to the Company, UMKK or UMNet or (ii) a distribution to be made in 2010 by UMKK or UMNet.

 

(j)           Allocation of Purchase Price.  Buyer shall prepare an allocation of the Purchase Price among the (i) the membership interests in the Company and (ii) the stock of UMKK and UMNet (“Asset Allocation Statement”).  The portion of the Purchase Price that is allocated to the membership interests of the Company on the Asset Allocation Statement plus the liabilities of the Company that are deemed to be assumed by the Buyer pursuant to the treatment of the purchase of the membership interests in the Company as an asset acquisition in the manner set forth in Section 8.1 shall be allocated among the assets of the Company in accordance with Section 1060 of the IRC and the applicable Treasury Regulations thereunder (and any similar provision of state, local or foreign Law, as appropriate) and such allocation shall be set forth on the Asset Allocation Statement.  Buyer shall deliver the Asset Allocation Statement to Seller no later than ninety (90) days following the Closing Date.  Seller shall notify Buyer of any objections to the Asset Allocation Statement within fifteen (15) days after the Seller receives the Allocation Statement.  If Seller does not notify Buyer of any objections to the Asset Allocation Statement, within that fifteen (15) day period, the Asset Allocation Statement shall be construed as final.  If Seller notifies Buyer of an objection to the Asset Allocation Statement by the end of the fifteen (15) day period, and Buyer and Seller are unable to resolve their differences within fifteen (15) days thereafter (“Dispute Resolution Period”), then the disputed items on the Asset Allocation Statement shall be submitted to the Tax Dispute Accountants within five (5) days after the end of the Dispute Resolution Period for resolution and the Tax Dispute Accountants shall be instructed to deliver a finalized Asset Allocation Statement as soon as possible.  Buyer and Seller and their respective Affiliates shall report, act and file all Tax Returns (including, but not limited to, IRS Form 8594) in all respects and for all purposes consistent with the Asset Allocation Statement as well as any amendments to such Tax Returns required with respect to any adjustment to the Purchase Price.  Neither Buyer, Seller or any of their Affiliates shall take any position (whether in audits, Tax Returns or otherwise) that is inconsistent with the information set forth on the Asset Allocation Statement, unless required to do so by applicable Law; provided, however, that (i) the Buyer’s cost for the assets that it is deemed to acquire may differ from the total amount allocated hereunder to reflect the inclusion in the total cost of items (for example, capitalized acquisition costs) not included in the total amount so allocated and (ii) the amount realized by Seller may differ from the total amount allocated hereunder to reflect transaction costs that reduce the amount realized for federal income Tax purposes.

 

 

(k)           Tax Dispute Resolution Mechanism.  Any dispute among the parties involving Taxes arising under this Agreement shall be resolved as follows: (i) the parties will in good faith attempt to negotiate a prompt resolution of the dispute; (ii) if the parties are unable to negotiate a resolution of the dispute within thirty (30) days, the dispute will be submitted to the national office of a firm of independent accountants of nationally recognized standing reasonably satisfactory to the Sellers and the Buyer (the “Tax Dispute Accountants”); (iii) the Tax Dispute Accountants shall resolve the dispute, in a fair and equitable manner and in accordance with applicable Tax Law and the provisions of this Agreement, within thirty (30) days after the parties have submitted the dispute to the Tax Dispute Accountants, whose decision shall be final, conclusive and binding on the parties, absent fraud or manifest error; (iv) any payment to be made as a result of the resolution of a dispute shall be made, and any other action taken as a result of the resolution of a dispute shall be taken, on or before the fifth (5th) Business Day following the date on which the dispute is resolved (except that if the resolution requires the filing of an amended Tax Return, such amended Tax Return shall be filed within thirty (30) Business Days following the date on which the dispute is resolved); and (v) the fees and expenses of the Tax Dispute Accountants shall be paid one-half by the Buyer and one-half by the Seller.

 

Section 8.7            Mail and Other Communications.  After the Closing, Seller shall promptly remit to Buyer any checks, cash payments, mail or other communications relating to the Business after the Closing Date, unless the same also relates to the other businesses of Seller, in which case Seller shall send copies thereof.  After the Closing, Buyer shall promptly remit to Seller any check, cash, payments, mail or communications relating to the other businesses of Seller that are received by Buyer after the Closing Date, unless the same also relates to the Business.

 

Section 8.8            Transfer Taxes.  All transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including any penalties and interest, but for the avoidance of doubt, not including any income, gains (including capital gains) or similar Taxes, which shall be solely the responsibility of the Seller) (“Transfer Taxes”) incurred in connection with this Agreement shall be paid fifty percent (50%) by the Buyer and fifty percent (50%) by the Seller when due, and the Seller, the Buyer, the Company, UMKK or UMNet (whichever is primarily responsible under applicable law) will, at such party’s own expense, file all necessary Tax Returns and other documentation with respect to all such Transfer Taxes, and, if required by applicable Law, the applicable non-filing parties will join in the execution of any such Tax Returns and other documentation.

 

Section 8.9           Use of United Media and United Feature Syndicate Names.  Following the Closing, Buyer will have in inventory a quantity of preprinted stationery, invoices, receipts, forms, advertising and promotional materials, training and source literature, packaging materials and other supplies (collectively, the “Stationery”) which bear any of the United Media, United Media K. K. and United Feature Syndicate names and variations and derivations thereof (collectively, the “United Media Names”).  Buyer agrees to exhaust such Stationery in the ordinary course as soon as reasonably practicable after the Closing, but in any event no later than one hundred eighty (180) days after the Closing.  During the one hundred eighty (180) day period  after the Closing, Buyer may otherwise use or make reference to any of the United Media Names in any other materials or information, including any print advertising and internet or other electronic communications vehicles, in the ordinary course of business.  Seller hereby grants Buyer a royalty-free license to the use the United Media Names solely for the period set forth in, and for the purposes permitted by, this Section 8.9.  Except as provided in this Section 8.9, no interest in or right to use the names “United Media,” “United Media K. K.,” “UMKK” or “United Feature Syndicate” or any variation or derivation thereof is being transferred to Buyer pursuant hereto.

 

 

Section 8.10          Consents to Assignments of Contracts.  Buyer acknowledges that certain consents and approvals with respect to the Contemplated Transactions may be required from parties to the Business Contracts and that such consents and approvals have not been obtained as of the date hereof.  Prior to the Closing, Seller shall use its commercially reasonable efforts to obtain any such consents and approvals; provided, however, that such efforts shall not include any requirement of Seller to expend money, commence any litigation or offer or grant any accommodation (financial or otherwise) to any third party.  In the event such consents or approvals have not been obtained prior to the Closing Date, at Buyer’s request, Seller will cooperate with Buyer to provide that Buyer shall receive Seller’s interest in the benefits under any such Business Contract, including (at Buyer’s request) performance by Seller as agent, provided that Buyer shall undertake to pay or satisfy the corresponding liabilities for the enjoyment of such benefit to the extent that Buyer would have been responsible therefor hereunder if such consent or approval had been obtained.

 

Section 8.11          Bank Group Consent and Release.   Seller and certain of its Affiliates (the “Borrower Group”) are parties together with SunTrust Bank, U.S. Bank National Association, Fifth Third Bank, First Tennessee Bank, N.A., and PNC Bank, National Association (collectively, the “Lender Banks”), to that certain Amended and Restated Revolving Credit Agreement, dated as of August 5, 2009 (the “Credit Agreement”), and that certain Pledge and Security Agreement, dated as of August 5, 2009 and that certain Grant of Security Interest Patents and Trademarks, dated as of August 5, 2009 (collectively the “Security Agreements”) pursuant to which, among other things, certain assets of Seller that will be contributed to the Company, and Seller’s equity interest in the Company, are subject to Encumbrances securing obligations of the Borrower Group under the Credit Agreement and may not be contributed to the Company or otherwise transferred, as applicable, without the consent of the Lender Banks.  Seller shall cause all Encumbrances imposed on any such asset, or such equity interest, pursuant to the Security Agreements to be released in full upon the Closing of the Contemplated Transactions.

 

Section 8.12          Credit Support Arrangements.  The parties acknowledge that Seller has entered into an arrangement set forth on Schedule 8.12 in which a guaranty was issued by or for the account of Seller to support or facilitate business transactions by, or for, the Business. Such arrangement is referred to herein as the “Credit Support Arrangement.” At or prior to Closing, Buyer shall arrange for Buyer or one of its Affiliates to be substituted as the obligor thereof, obtaining from the creditor a full release of Seller or its Affiliates (the foregoing arrangement is referred to as the “Replacement Credit Support Arrangement”).  Buyer shall provide to Seller at Closing written evidence of such Replacement Credit Support Arrangement.

 

Section 8.13          Post-Closing Intellectual Property Transfer Recordation.  Buyer shall be responsible for any and all Intellectual Property ownership transfer recordation, and all filing, transfer or other costs and expenses associated therewith, that Buyer may elect to do after the Closing Date and that may be required by the U.S. Patent and Trademark Office, the U.S. Copyright Office, and by any other domestic or foreign jurisdictions.  Buyer’s responsibilities under this Section 8.13 shall include, without limitation, any recordation of ownership transfer of the Intellectual Property required to evidence the transfer of Intellectual Property ownership from Seller or the Company, on the one hand, to Buyer and any Affiliate of Buyer, on the other hand.  Seller shall reasonably cooperate, at Buyer’s expense, with executing any necessary documentation requested by Buyer in order for Buyer to accomplish such recordation of Intellectual Property ownership transfer set forth in this Section 8.13.

 

 

Section 8.14          Tarsin Agreement and Ringtales Agreement.  While the Tarsin Agreement and the Ringtales Agreement are each a Business Contract hereunder, the parties hereto shall cooperate to negotiate in good faith with the counterparties to each such Contract (a) to remove any Intellectual Property that is an Excluded Asset and (b) to enter into a new agreement between Seller and each applicable counterparty to cover arrangements for such removed Intellectual Property.

 

Section 8.15          Original Peanuts Drawings.  From time to time hereafter, Parent shall send any physical drawings of the original Peanuts Feature created under The 1950 Agreement, The 1959 Agreement and The 1979 Agreement in its possession, promptly upon any discovery thereof, to Buyer.  Upon receipt, Buyer shall send such drawings to Charles M. Schulz  Creative Associates.

 

Section 8.16          Accounts Receivable.  Following the Closing Date, if Buyer or the Company receives any amounts that are Aged Accounts Receivable, Buyer or Company, as the case may be, shall pay over to Seller such amount received in respect of Aged Accounts Receivable.

 

Section 8.17          Foreign Withholding Tax Credit.  From and after the Closing Date, in the event that Seller receives a tax credit, Seller and Parent shall pay over to the Schulz family any amounts owed to the Schulz family or their Affiliates pursuant to The 1979 Agreement on account of foreign withholding taxes from third parties withheld on their behalf for periods prior to the Closing Date.

 

Section 8.18          Name Change.  Following the date of this Agreement, the Seller shall, upon the request of the Buyer, take all actions necessary to change the name of the Company to a name provided by Buyer.

 

 

Buyer’s obligation to purchase the Interests and to take the other actions required to be taken by Buyer at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Buyer, in whole or in part):

 

Section 9.1            Accuracy of Representations.  Each of the representations and warranties set forth in Article III and Article IV in this Agreement must be accurate in all respects, if qualified by any of the terms “material,” “Material Adverse Change,” “Material Adverse Effect,” or must be accurate in all material respects, if not so qualified, in each case, as of the date hereof and as of the Closing Date as if made on the Closing Date, unless such representation expressly relates to an earlier date in which case such representation must be accurate as of such earlier date.

 

 

Section 9.2           Seller’s Performance.  Each of the covenants and obligations that Seller is required to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been duly performed and complied with in all material respects.

 

Section 9.3            Additional Documents.  Each of the following documents must have been delivered to Buyer by Seller:

 

(a)          a certificate executed by Seller dated the Closing Date certifying to Buyer the satisfaction of the conditions set forth in Section 9.1;

 

(b)          copies of the resolutions of the Board of Directors and sole shareholder of Seller authorizing Seller’s execution, delivery and performance of this Agreement and the consummation of the Contemplated Transactions, certified as of the Closing Date by a duly authorized officer of Seller as true and correct;

 

(c)          a non-foreign person affidavit dated as of the Closing Date, sworn under penalty of perjury and in form and substance required under the Treasury Regulations issued pursuant to IRC §1445 stating that Seller is not a “Foreign Person” as defined in IRC §1445;

 

(d)          written releases in form and substance reasonably acceptable to Buyer setting forth that all of the Encumbrances on the equity interest in, or any asset of, the Company imposed by the Lender Banks or any other party shall have been released in full, duly executed by the Lender Banks or such other parties;  

 

(e)          the Transition Services Agreement, duly executed by Seller;

 

(f)           the Short Form License, duly executed by Seller;

 

(g)          the Sublease, duly executed by Seller;

 

(h)          a release, duly executed by Seller in the form attached hereto as Exhibit E; and

 

(i)           such other documents as Buyer may reasonably request for the purpose of facilitating the consummation or performance of any of the Contemplated Transactions.

 

Section 9.4            No Injunction.  There shall not be in effect any Legal Requirement or any injunction or other Order that prohibits the sale of the Interests by Seller to Buyer.

 

Section 9.5           Governmental Approvals.  The waiting period (and any extensions thereof) applicable to the Contemplated Transactions under the HSR Act and under the Japanese Anti-Monopoly Act or any other Legal Requirement shall have been terminated or shall have expired.

 

Section 9.6           Material Adverse Effect.  There shall not have occurred a Material Adverse Effect or any event or circumstance that individually or in the aggregate would reasonably be expected to result in a Material Adverse Effect.

 

 

 

Seller’s obligation to sell the Interests and to take the other actions required to be taken by Seller at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Seller, in whole or in part):

 

Section 10.1          Accuracy of Representations.  Each of the representations and warranties in Article V of this Agreement must be accurate in all material respects as of the Closing Date as if made on the Closing Date.

 

Section 10.2         Buyer’s Performance.  Each of the covenants and obligations that Buyer is required to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been performed and complied with in all material respects.

 

Section 10.3          Additional Documents.  Each of the following must have been delivered to Seller by Buyer:

 

(a)          a certificate executed by Buyer dated the Closing Date certifying to Seller the satisfaction of the conditions set forth in Section 10.1;

 

(b)          copies of the resolutions of the board of directors of Buyer authorizing Buyer’s execution, delivery and performance of this Agreement and the consummation of the Contemplated Transactions, certified as of the Closing Date by a duly authorized officer of Buyer as true and correct;

 

(c)          written evidence of the Replacement Credit Support Arrangements, in form and substance satisfactory to Seller;

 

(d)          the Transition Services Agreement, duly executed by Buyer;

 

(e)          the Short Form License, duly executed by Buyer;

 

(f)           the Sublease, duly executed by Buyer;

 

(g)          the amounts payable at Closing pursuant to Section 2.5; and

 

(h)          such documents as Seller may reasonably request for the purpose of facilitating the consummation of any of the Contemplated Transactions.

 

Section 10.4          No Injunction.  There shall not be in effect any Legal Requirement or any injunction or other Order that prohibits the sale of the Interests by Seller to Buyer.

 

Section 10.5          Governmental Approvals.  The waiting period (and any extensions thereof) applicable to the Contemplated Transactions under the HSR Act and under the Japanese Anti-Monopoly Act or any other Legal Requirement shall have been terminated or shall have expired.

 

 

 

Section 11.1          Termination of Agreement.  This Agreement may be terminated and the Contemplated Transactions abandoned at any time prior to the Closing Date:  

 

(a)           by mutual written consent of Buyer and Seller duly authorized by their respective Boards of Directors;

 

(b)           by either Buyer or Seller, if there is any Legal Requirement that makes consummation of the Contemplated Transactions illegal or otherwise prohibited or if consummation of the Contemplated Transactions would violate any Final Order of any Governmental Body having competent jurisdiction;

 

(c)           by either Buyer or Seller, if the Closing shall not have been consummated on or before the date that is one hundred twenty (120) days following the date of this Agreement (the “Termination Date”); provided, that such right to terminate this Agreement will not be available to any party whose failure to perform in any material respect any obligation of such party under this Agreement when performance thereof was due is the cause of the delay;

 

(d)          by either Buyer or Seller, if any of the representations or warranties of the other party contained herein are inaccurate or untrue in any respect if qualified by the word “material” or the terms “Material Adverse Effect” or “Material Adverse Change” or in any material respect if not so qualified, and such inaccuracy cannot reasonably be expected to be cured prior to the Termination Date and, in the case of any representation or warranty of Seller, the failure of any representation and warranty of Seller to satisfy the foregoing standard would be reasonably be expected to have a Material Adverse Effect on the Business;

 

(e)           by Buyer, provided it is not then in material breach of any of its obligations under this Agreement, if Seller fails to perform or satisfy, in any respect if qualified by the word “material” or in any material respect if not so qualified, any agreement, covenant, condition or obligation in this Agreement when performance or satisfaction thereof is due and does not cure the failure within twenty (20) Business Days after Buyer delivers written notice thereof; or

 

(f)           by Seller, provided it is not then in material breach of any of its obligations under this Agreement, if Buyer fails to perform or satisfy in any material respect any agreement, covenant, condition or obligation in this Agreement when performance thereof is due and does not cure the failure within twenty (20) Business Days after notice by Seller thereof.

 

The party desiring to terminate this Agreement pursuant to this Section 11.1 will give written notice of such termination to the other party.

 

Section 11.2         Effect of Termination.  Each party’s right to termination under Section 11.1 is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will not be an election of remedies. If this Agreement is terminated pursuant to Section 11.1, all further obligations of the parties under this Agreement will terminate, except that the obligations in Sections 13.1 and 13.3 will survive; provided, however, that if this Agreement is terminated by a party because of the breach of the Agreement by the other party or because one or more of the conditions to the terminating party’s obligations under this Agreement is not satisfied as a result of the other party’s failure to comply with its obligations under this Agreement, the terminating party’s right to pursue all legal remedies will survive such termination unimpaired.

 

 

 

Section 12.1         General Indemnification by Seller and Parent.  Following the Closing, Seller and Parent shall, jointly and severally, indemnify and hold harmless Buyer and its Representatives and Affiliates (including the Company, UMKK and UMNet after Closing) (collectively, the “Buyer Indemnified Persons”) for, and shall pay to the Buyer Indemnified Persons the amount of, any loss, liability, claim, damage, cost, penalty, fine, judgment, expense (including reasonable attorneys’ fees), whether or not involving a third-party claim (collectively, “Damages”), arising from or in connection with: (a) any breach of any representation or warranty made by Seller in this Agreement, the Contribution Agreement or any ancillary agreement or certificate delivered by Seller pursuant to this Agreement; (b) any breach by Seller or Parent of any covenant or obligation of Seller or Parent in this Agreement; (c) any liability with respect to any Hired Employee for any period prior to the Closing Date; and (d) any claim for brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding made, or alleged to have been made, by any Person with Seller (or any Person acting on its behalf) in connection with any of the Contemplated Transactions.

 

Section 12.2          Tax Indemnification by Seller and Parent.  Other than as specifically set forth in Section 8.8, after Closing, Seller and Parent shall, jointly and severally, indemnify the Buyer Indemnified Persons, and hold them harmless from and against (a) all Taxes (or the non-payment thereof) of the Company, UMKK, and UMNet for all taxable periods ending on or before the Closing Date and the portion through the end of the Closing Date for any taxable period that includes (but does not end on) the Closing Date (“Pre-Closing Tax Period”); (b) any and all Taxes of any member of an affiliated, consolidated, combined, or unitary group of which the Company, UMKK or UMNet is or was a member on or prior to the Closing Date, including pursuant to IRS regulation §1.1502-6 or any analogous or similar state, local, or non-U. S. law or regulation; (c) any Taxes of any Person (other than the Company, UMKK and UMNet) imposed on the Company, UMKK or UMNet as a transferee or successor, by Contract or pursuant to any law, rule or regulation, which Taxes relate to an event or transaction occurring before the Closing; (d) all Taxes related to the Business prior to the date that the Seller entered into the Contribution Agreement, (e) except as provided in Section 8.7, any Taxes that arise as a result of the Contemplated Transactions and (f) reasonable attorneys fees incurred in connection with the enforcement of the indemnification obligation set forth in this Section 12.2.

 

Section 12.3         Indemnification by Buyer.  Following the Closing, Buyer shall indemnify and hold harmless Seller and its Representatives and Affiliates (including the Company, UMKK and UMNet prior to Closing) (collectively, the “Seller Indemnified Persons”) for, and shall pay to the Seller Indemnified Persons the amount of any Damages arising from or in connection with (a) any breach of any representation or warranty made by Buyer in this Agreement, the Contribution Agreement or in any ancillary agreement or certificate delivered by Buyer pursuant to this Agreement, (b) any breach by Buyer of any covenant or obligation of Buyer in this Agreement, or (c) any claim for brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding made, or alleged to have been made, by any Person with Buyer (or any Person acting on its behalf) in connection with any of the Contemplated Transactions.

 

 

Section 12.4          Time Limitations.  Seller and Parent will not be liable (for indemnification or otherwise) with respect to any representation or warranty, or covenant or obligation to be performed and complied with prior to the Closing Date, other than those in Sections 3.1, 3.3, 3.5, 4.1 and 4.2, (the “Fundamental Reps”) or Sections 3.11 or 3.19 (the “Designated Reps”) unless on or before the first anniversary of the Closing Date, Buyer notifies Seller of a claim.  A claim with respect to the Fundamental Reps may be made by Buyer at any time within the applicable statute of limitations plus thirty (30) days and not otherwise.  A claim with respect to the Designated Reps may be made by Buyer at any time within eighteen (18) months from the Closing Date and not otherwise.  If the Closing occurs, Buyer will not be liable (for indemnification or otherwise) with respect to any representation or warranty, or covenant or obligation to be performed and complied with prior to the Closing Date, unless on or before the first anniversary of the Closing Date Seller notifies Buyer of a claim.  All claims shall specify the factual basis of that claim in reasonable detail to the extent then known by such party initiating the claim. All covenants to be performed after the Closing Date in this Agreement shall survive Closing.

 

Section 12.5          Limitations on Amount.

 

(a)           In no event shall either party have the right to loss of profits or consequential, incidental, special or punitive damages of any kind whatsoever.

 

(b)           Seller and Parent shall have no liability with respect to claims for indemnification by the Buyer Indemnified Persons and Buyer shall have no liability with respect to claims for indemnification by the Seller Indemnified Persons, until (and only to the extent that) the total of all Damages with respect to such claims exceeds One Million Seven Hundred Fifty Thousand Dollars ($1,750,000) (the “Basket”), which amount shall be treated as a deductible for purposes of this Article XII.

 

(c)           In no event shall the Buyer Indemnified Persons or Seller Indemnified Person, as the case may be, be entitled to recover Damages from the other in excess of an amount equal to Thirty-Five Million Dollars ($35,000,000) in the aggregate (the “Cap”).

 

(d)           The Buyer Indemnified Persons’ right to indemnification shall be reduced to the extent that the subject matter of any claim is covered by and already paid pursuant to any insurance policy, warranty or indemnification from a third party Person.

 

(e)           Subject to Section 13.15, and except with respect to any claim for fraud, the remedies provided in this Article XII shall be exclusive and shall preclude other remedies that may be available to Seller, Buyer, the Seller Indemnified Persons or the Buyer Indemnified Persons.

 

 

(f)           Notwithstanding anything in this Section 12.5 to the contrary, neither the Basket nor the Cap shall apply to Damages arising out of or related to (i) breaches by Seller of the Fundamental Reps; (ii) matters covered by Sections 12.1(b); or (d) or Section 12.3(b) and (c); (iii) matters covered by Section 12.2; or (iv) fraud.

 

Section 12.6          Procedure for Indemnification – Third Party Claims.

 

(a)           Promptly after receipt by a party indemnified under Section 12.1, 12.2 or 12.3 of notice of the commencement of any Proceeding against it, any indemnified party will, if a claim is to be made against an indemnifying party under such Section, give notice to the indemnifying party of the commencement of such claim, but the failure to notify the indemnifying party will not relieve the indemnifying party of any liability that it may have to any indemnified party, except to the extent that the indemnifying party demonstrates that the defense of such action is prejudiced by the indemnified party’s failure to give such notice.

 

(b)           If any Proceeding referred to in Section 12.6(a) is brought against an indemnified party and it gives notice to the indemnifying party of the commencement of such Proceeding, the indemnifying party may elect to assume the defense of such Proceeding with counsel reasonably satisfactory to the indemnified party (unless the indemnifying party is also a party to such Proceeding and the indemnified party determines in good faith that joint representation would be inappropriate) and, after notice from the indemnifying party to the indemnified party of its election to assume the defense of such Proceeding, the indemnifying party shall not, as long as it diligently conducts such defense, be liable to the indemnified party under this Article XII for any fees of other counsel or any other expenses with respect to the defense of such Proceeding, in each case subsequently incurred by the indemnified party in connection with the defense of such Proceeding. If the indemnifying party assumes the defense of a Proceeding, no compromise or settlement of such claims may be effected by the indemnifying party without the indemnified party’s consent (which consent shall not be unreasonably withheld) unless (i) there is no finding or admission of any violation of Legal Requirements or any violation of the rights of any Person and no effect on any other claims that may be made against the indemnified party, and (ii) the sole relief provided is monetary damages that are paid in full by the indemnifying party. If notice is given to an indemnifying party of the commencement of any Proceeding and the indemnifying party does not, within thirty (30) days after the indemnified party’s notice is given, give notice to the indemnified party of its election to assume the defense of such Proceeding, the indemnified party may assume control of the defense of such Proceeding with counsel of its own choosing, at the cost of the indemnifying party and the indemnifying party will be bound by any determination made in such Proceeding or any compromise or settlement effected by the indemnified party.

 

(c)           Each party shall make available to the other all records and other materials reasonably required to contest any claim and shall cooperate fully with the other in the defense of all such claims.  Information disclosed by one party to the other shall be kept confidential.

 

 

Section 12.7          Adjustment to Purchase Price.  The parties agree that any indemnification payment made pursuant to this Agreement shall be treated as an adjustment to the Purchase Price for Tax purposes unless a Final Determination with respect to the indemnitee or any of its Affiliates causes any such payment not to be treated as an adjustment to the Purchase Price for federal income Tax purposes.  For purposes of this Agreement, “Final Determination” means (i) with respect to federal income Taxes, a “determination” as defined in Section 1313(a) of the Code or execution of an IRS Form 870-AD and, (ii) with respect to Taxes other than federal income Taxes, any final determination of liability in respect of a Tax that, under applicable Law, is not subject to further appeal, review or modification through a Proceeding or otherwise (including the expiration of a statute of limitations or a period for the filing of claims for refunds, amended Tax Returns or appeals from adverse determinations).

 

Section 12.8         Damages.  For purposes of determining the amount only of any Damages in connection with this Article XII, all representations and warranties made by Seller or Buyer that are qualified by “material,” “Material Adverse Change” or “Material Adverse Effect” shall be deemed to be not so qualified.

 

 

Section 13.1          Expenses.  Except as otherwise expressly provided in this Agreement, each party will bear its fees and expenses incurred in connection with the preparation, execution, and performance of this Agreement and the Contemplated Transactions, including all fees and expenses of its Representatives.

 

Section 13.2          Public Announcements.  The parties shall issue a joint press release (and individual press releases that have been reviewed by the other party) upon execution of this Agreement and upon the Closing.  Seller and Buyer will consult with each other concerning the means by which the Seller’s employees and customers, suppliers, licensees, agents, clients and others having dealings with Seller material to the Business will be informed of the Contemplated Transactions.  Notwithstanding anything to the contrary in this Agreement, either party may make such disclosure of the Contemplated Transactions and the terms of this Agreement as is required by law or the rules of any applicable stock exchange.

 

Section 13.3          Notices.  All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by facsimile (with confirmation of transmission by the transmitting equipment), or (c) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses or facsimile numbers set forth below (or to such other addresses or numbers as a party may designate by notice to the other parties):

 

Section 13.4          Jurisdiction; Service Of Process.  Any Proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may be brought against either of the parties in the courts of the State of New York, County of New York, or in the United States District Court for the Southern District of New York and each party consents to the jurisdiction of such courts (and of the appropriate appellate courts) in any such Proceeding and waives any objection to venue laid therein. Process in any Proceeding referred to in the preceding sentence may be served on any party anywhere in the world.  Each party hereby waives, and agrees not to assert as, any defense in any Proceeding in which any such claim is made that it is not subject thereto or that such Proceeding may not be brought or is not maintainable in such courts or that the venue thereof may not be appropriate or that this Agreement or any of the other Transaction Documents may not be enforced in or by such courts.

 

Section 13.5          Further Assurances.  Each party agrees (a) to furnish to the other party such further information, (b) to execute and deliver to the other party such other documents, and (c) to do such other acts and things, all as the other party reasonably requests for the purpose of carrying out the intent of this Agreement and the Contemplated Transactions.  The parties shall cooperate with each other in connection with any litigation relating to the Business, including providing reasonable access to books and records and employees (current or former); provided that in no event shall either party be required to make any expenditure of money in connection therewith.

 

 

Section 13.6          Waiver.  The parties’ rights and remedies are cumulative and not alternative. A party’s failure or delay in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement will not operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver given by a party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.

 

Section 13.7          Entire Agreement and Modification.  This Agreement, together with the Non-Disclosure Agreement, supersedes all prior agreements between the parties with respect to its subject matter and constitutes (along with the documents referred to in this Agreement) a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter. This Agreement may not be amended except by a written agreement executed by the parties.

 

Section 13.8          Schedules.

 

(a)           The information in the Schedules constitutes (i) exceptions to particular representations, warranties, covenants and obligations of Seller as set forth in this Agreement or (ii) descriptions or lists of assets and liabilities and other items referred to in this Agreement.

 

(b)           Any disclosure under one Schedule shall be deemed disclosure under all Schedules and this Agreement to the extent that the reference of such disclosure is reasonably apparent on its face to such other Schedule.  It is understood that any reference to a subpart of a Schedule is a reference to the entire Schedule.  Disclosure of any matter in the Schedules shall not constitute an expression of a view that such matter is material or is required to be disclosed pursuant to this Agreement.

 

Section 13.9          Assignments and Successors.  Neither party may assign any of its rights or obligations under this Agreement without the prior written consent of the other party hereto, except that (a) Seller may assign its rights under this Agreement to the Lender Banks pursuant to the Credit Agreement and the Security Agreement and (b) Buyer may assign any of its rights but not any of its obligations hereunder to any Affiliate (including any joint venture between the members of the Schulz family or any of its Affiliates, on the one hand, and Buyer, on the other hand, assuming such joint venture is an Affiliate of Buyer).  This Agreement will apply to, be binding in all respects upon, and inure to the benefit of the successors and assigns of the parties.

 

 

Section 13.10       Severability.  If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

 

Section 13.11        Section Headings, Construction.  The headings of Articles and Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All references to “Articles” or “Sections” refer to the corresponding Articles or Sections of this Agreement.

 

Section 13.12       Governing Law; Waiver of Jury Trial.  This Agreement will be governed by and construed under the laws of the State of New York without regard to conflict of laws principles that would require the application of any other law and each of the parties hereto irrevocably consents to the exclusive jurisdiction and venue of the federal and state courts located in New York, NY.  Each party hereby waives to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement or any Contemplated Transaction.  Each party (a) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 13.12.

 

Section 13.13        Counterparts.  This Agreement may be executed in two or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

 

Section 13.14       No Third Party Beneficiaries.  This Agreement is not intended to confer upon any Person other than the parties hereto and their respective successors and permitted assigns any rights or remedies hereunder, except as otherwise set forth in Article XII.

 

Section 13.15        Specific Performance.  If either party defaults in the performance of its obligations under this Agreement (other than pursuant to Article XII), and the other party shall not be in material default, such party shall be entitled to apply for and obtain specific performance, which shall be in addition to any and all other rights and remedies available to Buyer herein.  The parties acknowledge that in the event of such default, monetary damages alone would not be an adequate compensation, and agree that if any action is brought seeking specific performance, each party shall waive the defense that there is an adequate remedy at law.

 

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IN WITNESS WHEREOF, a duly authorized representative of each of the parties hereto has executed and delivered this Agreement as of the date first written above.