Exhibit 10.64

EXECUTION COPY

 

 

ASSET PURCHASE AGREEMENT

BY AND AMONG

ICONIX BRAND GROUP, INC.,

360 HOLDINGS II-A LLC,

ICON NY HOLDINGS LLC,

ICONIX LATIN AMERICA LLC

AND

SHARPER IMAGE HOLDINGS LLC

DATED DECEMBER 23, 2016

 

 

 

 

AMERICAS 92199813 (2K)

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Table of Contents

 

 

 

Page

 

 

 

ARTICLE I DEFINITIONS; CONSTRUCTION

 

2

 

 

 

 

 

1.1

 

Defined Terms

 

2

1.2

 

Additional Defined Terms

 

8

1.3

 

Construction

 

9

1.4

 

Annexes, Exhibits and the Disclosure Letters

 

10

1.5

 

Knowledge

 

10

 

 

 

 

 

ARTICLE II SALE OF PURCHASED ASSETS AND ASSUMPTION OF ASSUMED LIABILITIES

 

11

 

 

 

 

 

2.1

 

Sale of Purchased Assets

 

11

2.2

 

Excluded Assets

 

12

2.3

 

Assumption of Assumed Liabilities

 

13

2.4

 

Excluded Liabilities

 

13

2.5

 

Transfer of Purchased Assets and Assumed Liabilities

 

14

2.6

 

Required Consents

 

14

2.7

 

Reconciliation of Royalty Payments under Assumed Contracts

 

15

 

 

 

 

 

ARTICLE III PURCHASE PRICE

 

16

 

 

 

 

 

3.1

 

Purchase Price; Delivery of Funds

 

16

3.2

 

Allocation of Purchase Price

 

16

3.3

 

Closing; Closing Deliverables

 

17

3.4

 

Withholding

 

18

 

 

 

 

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS AND PARENT

 

19

 

 

 

 

 

4.1

 

Due Organization, Good Standing and Corporate Power

 

19

4.2

 

Authorization; Noncontravention

 

19

4.3

 

Consents and Approvals

 

21

4.4

 

Absence of Certain Changes

 

21

4.5

 

Assumed Contracts; Title

 

21

4.6

 

Litigation

 

22

4.7

 

Tax Matters

 

22

4.8

 

Compliance with Laws

 

23

4.9

 

Parent’s Ownership Interest in International JVs

 

24

4.1

 

Finders; Brokers

 

24

4.11

 

Affiliate Transactions

 

24

4.12

 

Intellectual Property.

 

24

4.13

 

Licensees.

 

24

4.14

 

Exclusivity of Representations; Projections, etc.

 

25

 

AMERICAS 92199813 (2K)

(i)

 

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Page

 

 

 

 

 

ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

26

 

 

 

 

 

5.1

 

Corporate Due Organization, Good Standing and Corporate Power of Purchaser

 

26

5.2

 

Authorization; Noncontravention

 

26

5.3

 

Consents and Approvals

 

27

5.4

 

Available Funds

 

27

5.5

 

Litigation

 

27

5.6

 

Finders; Brokers

 

27

5.7

 

Investigation by Purchaser

 

27

5.8

 

Acknowledgment by Purchaser

 

28

 

 

 

 

 

ARTICLE VI COVENANTS

 

29

 

 

 

 

 

6.1

 

Access to Information Concerning Properties and Records

 

29

6.2

 

Conduct of Sellers and the Business

 

29

6.3

 

Efforts to Close; Antitrust Laws

 

31

6.4

 

Public Announcements

 

32

6.5

 

Notification of Certain Matters

 

32

6.6

 

Post-Closing Access to Records and Personnel; Litigation Support

 

33

6.7

 

Tax Matters

 

34

6.8

 

Bulk Sales Act

 

36

6.9

 

Further Assurances

 

36

6.10

 

Transfer of JV Assets

 

36

6.11

 

JV Asset Amount; Escrow

 

39

6.12

 

Camelot Agreement

 

39

 

 

 

 

 

ARTICLE VII CONDITIONS PRECEDENT

 

40

 

 

 

 

 

7.1

 

Conditions to the Obligations of Each Party

 

40

7.2

 

Conditions to the Obligations of Purchaser

 

40

7.3

 

Conditions to the Obligations of Sellers and Parent

 

41

7.4

 

Frustration of Closing Conditions

 

41

 

 

 

 

 

ARTICLE VIII SURVIVAL; INDEMNIFICATION

 

41

 

 

 

 

 

8.1

 

Survival of Representations and Warranties

 

41

8.2

 

Indemnification by Sellers and Parent

 

42

8.3

 

Indemnification by Purchaser

 

42

8.4

 

Limitation on Indemnification

 

42

8.5

 

Losses Net of Insurance, etc.

 

43

8.6

 

Indemnification Procedure

 

44

8.7

 

Third-Party Claims

 

45

8.8

 

Sole Remedy/Waiver

 

46

8.9

 

Treatment of Indemnification Payments

 

46

 

AMERICAS 92199813 (2K)

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Page

 

 

 

 

 

ARTICLE IX TERMINATION

 

46

 

 

 

 

 

9.1

 

Termination Events

 

46

9.2

 

Effect of Termination

 

47

 

 

 

 

 

ARTICLE X MISCELLANEOUS

 

48

 

 

 

 

 

10.1

 

Expenses

 

48

10.2

 

Extension; Waiver

 

48

10.3

 

Notices

 

48

10.4

 

Entire Agreement

 

49

10.5

 

Binding Effect; Benefit; Assignment

 

49

10.6

 

Amendment and Modification

 

49

10.7

 

Counterparts

 

50

10.8

 

Applicable Law

 

50

10.9

 

Severability

 

50

10.10

 

Specific Enforcement; Limitation on Damages

 

50

10.11

 

Waiver of Jury Trial

 

51

10.12

 

Rules of Construction

 

51

10.13

 

Headings

 

51

 

 

 

 

AMERICAS 92199813 (2K)

(iii)

 

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EXHIBITS

Exhibit A – Form of Escrow Agreement

Exhibit B – Form of Trademark Assignment Agreement

Exhibit C – Form of Assignment and Assumption Agreement

Exhibit D – Form of Patent Assignment Agreement

Exhibit E – Form of Copyright Assignment Agreement

 

ANNEXES

Annex A – International Joint Venture Territories and Asset Purchase Prices

 

 

 

 

AMERICAS 92199813 (2K)

(v)

 

 

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ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (this “Agreement”) is dated December 23, 2016 by
and among Icon NY Holdings LLC, a limited liability company organized under the
Laws of the State of Delaware (“Icon NY”), Iconix Latin America LLC, a limited
liability company organized under the Laws of the State of Delaware (“Iconix
Latin America”), Sharper Image Holdings LLC, a limited liability company
organized under the Laws of the State of Delaware (“Sharper Image Holdings”,
together with Icon NY and Iconix Latin America, “Sellers,” and each, a
“Seller”), 360 Holdings II-A LLC, a limited liability company organized under
the Laws of the State of Delaware (“Purchaser”) and, solely for purposes of
Section 4.1(b), Section 4.2(c), Section 4.2(d), Section 4.5(d), Section 4.9,
Section 4.10, Section 6.2(b), Section 6.4, Section 6.10, Section 6.11, Section
7.1, Section 7.3, Article VIII, and Article X, Iconix Brand Group, Inc., a
Delaware corporation (“Parent”).

W I T N E S S E T H:

WHEREAS, Sellers collectively own all of the Purchased Assets and are engaged,
directly or indirectly, in the Business, as this and other capitalized terms
used in this Agreement are defined in Section 1.1;

WHEREAS, Parent owns fifty percent (50%) of the Equity Interests in each
International JV, each of which has certain rights and interests in certain JV
Assets;

WHEREAS, upon the terms and subject to the conditions of this Agreement, the
parties hereto desire that (a) Purchaser purchase and Sellers sell or cause to
be sold, transferred, conveyed and assigned to Purchaser, the Purchased Assets,
and Purchaser assume the Assumed Liabilities, on the Closing Date (the
“Purchase”) and (b) Purchaser purchase and Parent use commercially reasonable
efforts to sell or cause to be sold, transferred, conveyed and assigned to
Purchaser, the JV Assets, and Purchaser assume the JV Liabilities, on or after
the Closing Date; and

WHEREAS, concurrently with the execution and delivery of this Agreement, and as
an inducement to Parent and Sellers to enter into this Agreement, 360 Holdings I
Corp. (the “Guarantor”) has executed and delivered a limited guaranty in favor
of Parent and Sellers (the “Limited Guaranty”) pursuant to which the Guarantor
is guaranteeing certain obligations of Purchaser subject to, and in accordance
with, the terms set forth therein.

AMERICAS 92199813 (2K)

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NOW, THEREFORE, in consideration of the premises and of the mutual covenants,
representations, warranties and agreements herein contained, the parties,
intending to be legally bound, agree as follows:

Article I

Definitions; Construction

1.1 Defined Terms.  When used in this Agreement, the following terms shall have
the respective meanings specified therefor below:

“Affiliate” of any Person shall mean any other Person directly or indirectly
controlling, controlled by, or under common control with, such Person; provided,
that for the purposes of this definition, “control” (including, with correlative
meanings, the terms “controlled by” and “under common control with”), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by Contract or
otherwise.

“Antitrust Authorities” shall mean the Federal Trade Commission, the Antitrust
Division of the United States Department of Justice, the attorneys general of
the several states of the United States and any other Governmental Entity having
jurisdiction with respect to the transactions contemplated hereby pursuant to
applicable Antitrust Laws.

“Antitrust Filings” shall mean all required filings under the HSR Act and all
required filings under other applicable Antitrust Laws required in order to
consummate the transactions contemplated by this Agreement.

“Antitrust Laws” shall mean the Sherman Act, 15 U.S.C. §§ 1-7, as amended; the
Clayton Act, 15 U.S.C. §§ 12-27, 29 U.S.C. §§ 52-53, as amended; the HSR Act;
the Federal Trade Commission Act, 15 U.S.C. § 41-58, as amended; and all other
Laws and Orders that are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization, restraint of trade, or
lessening of competition through merger or acquisition.

“Assumed Contracts” shall mean, subject to Section 2.6, all Contracts set forth
in Section 1.1(a) of the Sellers Disclosure Letter under the heading “Assumed
Contracts”; provided, that “Assumed Contracts” shall not include any Contract
that will be fully performed or satisfied as of or prior to the Closing.  

“Business” shall mean the business of Sellers of exploiting, promoting,
advertising and licensing of the Intellectual Property primarily related to the
SHARPER IMAGE brand.

“Business Day” shall mean any day except a Saturday, a Sunday or any other day
on which commercial banks are required or authorized to close in New York, New
York.

 

AMERICAS 92199813 (2K)

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“Camelot” shall mean Camelot SI, LLC, a limited liability company organized
under the laws of Michigan, with offices at 27725 Stansbury Boulevard, Suite
175, Farmington Hills, Michigan 48334.

“Camelot Agreement” shall mean the Website and Catalog Rights Purchase
Agreement, dated as of June 30, 2014, by and between Icon NY and Camelot, as
amended.

“Code” shall mean the United States Internal Revenue Code of 1986, as amended.

“Confidentiality Agreement” shall mean that certain Nondisclosure and
Restrictive Covenant Agreement, dated as of August 9, 2016, by and between
Parent and Purchaser.

“Contract” shall mean any written note, bond, mortgage, indenture, guaranty,
license, franchise, permit, agreement, contract, commitment, lease, purchase
order, or other instrument or obligation, and any amendments thereto.

“Controlled IP Assets” shall mean all Intellectual Property primarily related to
the SHARPER IMAGE brand that is owned by Sellers in the United States, Latin
America, China, India and Israel, which, for the avoidance of doubt, shall not
include the JV Assets or the JV IP Assets.  Controlled IP Assets do not include
any Intellectual Property that is owned by one or more Sellers, but licensed to
an International JV.

“Controlled Registered Trademarks” shall mean the trademark registrations and
trademark applications related to the SHARPER IMAGE brand that are included
within the Controlled Registered IP.  

“Deductible” shall mean $1,000,000.00.

“Equity Interests” of any Person shall mean the shares, membership interests,
partnership interests or other equity interests, as applicable, of such Person.

“Escrow Agent” shall mean Wilmington Trust, National Association.

“Financing Facility” shall mean that certain Base Indenture, dated as of
November 29, 2012, by and among Icon Brand Holdings LLC, a Delaware limited
liability company, Icon DE Intermediate Holdings LLC, a Delaware limited
liability company, Icon DE Holdings LLC, a Delaware limited liability company,
Icon NY, each as a Co-Issuer, and Citibank, N.A., a national banking
association, as trustee and as securities intermediary.

“Files and Records” shall mean the files, documents, books and other records,
including records generated from completed or active transactions (including
billing, payment and dispute histories, credit information and similar data);
business, financial records and correspondence; reports; drawings;
specifications; process instructions and statistics; in each case, of Sellers or
any of their respective Subsidiaries that relate primarily to the Controlled IP
Assets and Assumed Contracts; provided, that Files and Records shall not include
any information which, if transferred to Purchaser or its Affiliates, would (a)
violate applicable Law,

 

AMERICAS 92199813 (2K)

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(b) violate any confidentiality or other agreement or obligation or (c) be
reasonably likely to cause the waiver of any attorney/client or similar
privilege; provided, further, that in the case of the foregoing clause (b),
Sellers shall use their commercially reasonable efforts to remove any such
restrictions to allow for the transfer of such information.

“GAAP” shall mean generally accepted accounting principles of the United States
of America consistently applied, as in effect from time to time.

“Governmental Entity” shall mean any United States or non-United States federal,
state, territory, provincial or local court, arbitral tribunal, administrative
agency or commission or other governmental or regulatory agency or authority or
any securities exchange.

“HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
15 U.S.C. § 18a et seq., as amended, and the rules and regulations promulgated
thereunder.

“Intellectual Property” shall mean any and all intellectual property rights,
including rights in or with respect to any and all of the following: (a)
patents; (b) trademarks, service marks, trade dress, logos, slogans, design
rights, and brand names and other indicia of origin whether registered of
unregistered, and all associated goodwill; (c) copyrights; (d) all registrations
and applications for any of the foregoing; (e) social media handles; (f) trade
secrets and other confidential information; and (g) Internet  domain name
registrations.

“International JVs” shall mean Iconix Australia LLC, ICO Brands L.P., Iconix
MENA Ltd. and Iconix SE Asia Ltd.

“IRS” shall mean the United States Internal Revenue Service.

“Joint Venture Territories” shall mean the geographic locations assigned to each
International JV as set forth on Annex A, as amended from time to time by mutual
agreement of Sellers and Purchaser.

“JV Jurisdiction Royalties” means royalties that become due and payable in
respect of any Joint Venture Territory prior to the Post-Closing Acquisition or
Synthetic Acquisition for such Joint Venture Territory by (a)  Camelot pursuant
to Section 9 of the Camelot Agreement and, if applicable (b) any other licensees
under the Assumed Contracts.

“JV Assets” shall mean all JV IP Assets together with the license Contracts of
the International JVs set forth in Section 1.1(b) of the Sellers Disclosure
Letter and any additional license Contracts that are entered into by the
applicable International JV following the date of this Agreement and prior to
the Post-Closing Acquisition for such Joint Venture Territory in a manner
consistent with the terms of this Agreement.

“JV IP Assets” shall mean all Intellectual Property solely related to the
SHARPER IMAGE brand that is owned by or exclusively licensed to the
International JVs in the territories set forth on Annex A attached hereto,
which, for the avoidance of doubt, shall not include the Controlled IP
Assets.  JV IP Assets include Intellectual Property solely related to the
SHARPER IMAGE brand that is owned by one or more Sellers and exclusively
licensed to the International JVs in their respective territories.

 

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“Law” shall mean any statute, law, ordinance, rule or regulation of any
Governmental Entity and all judicial interpretations thereof and any common law
doctrine.

“Liabilities” shall mean any and all indebtedness, liabilities and obligations,
whether accrued or fixed, known or unknown, absolute or contingent, matured or
unmatured or determined or determinable.

“Liens” shall mean any liens, security interests, claims, easements, mortgages,
charges, indentures, deeds of trust, rights of way, encroachments, or any other
encumbrances and other restrictions or limitations on ownership or use real or
personal property or irregularities in title thereto.

“Loss” or “Losses” shall mean, without duplication, any and all judgments,
awards, claims, Liabilities, interest and penalties, losses, costs, expenses or
damages, including, without limitation, losses resulting from the defense,
settlement and/or compromise of a claim and/or demand and/or assessment,
reasonable, out-of-pocket and documented attorneys’, accountants’ and expert
witnesses’ fees and expenses, costs and expenses of investigating, and the costs
and expenses of enforcing the rights provided in this Agreement.

“Material Adverse Effect” shall mean any change, effect, event, development,
fact, condition, circumstance, or occurrence (each, an “Effect”) that,
individually or in the aggregate, has had, or would reasonably be expected to
have, a material adverse effect on the business, condition (financial or
otherwise) or results of operations of the Business, taken as a whole; provided,
that no Effect resulting from any of the following shall constitute a Material
Adverse Effect or be considered in determining whether a Material Adverse Effect
has occurred:

(a) general economic, business or political conditions;

(b) conditions or changes in the securities markets, credit markets, currency
markets or other financial markets in the United States or any other country or
region in the world, including (i) interest rates in the United States or any
other country or region in the world and exchange rates for the currencies of
any countries and (ii) any suspension of trading in securities (whether equity,
debt, derivative or hybrid securities) generally on any securities exchange or
over-the-counter market operating in the United States or any other country or
region in the world;

(c) any applicable Laws or interpretations thereof by any Governmental Entity or
accounting rules (or interpretations thereof);

(d) any communication by Purchaser of its plans or intentions with respect to
the Business or any portion thereof;

(e) the pendency or consummation of the transactions contemplated by this
Agreement or any actions or inactions by Purchaser or Sellers or any of their
respective Subsidiaries taken or omitted in accordance with this Agreement;

 

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(f) political conditions in the United States or any other country or region in
the world or any natural or man-made disaster or any acts of terrorism,
sabotage, military action or war (whether or not declared) or any escalation or
worsening thereof;

(g) any failure, in and of itself, by Parent, Sellers or the Business (or any
portion thereof) to meet any published analyst estimates or expectations of
revenue, earnings or other financial performance or results of operations of all
or any portion of the Business for any period, or any failure, in and of itself,
to meet internal or published projections, budgets, plans or forecasts of
revenues, earnings or other financial performance or results of operations of
all or any portion of the Business for any period (it being agreed and
understood that any fact or circumstance giving rise to any failure described in
this clause (g) may be taken into account in determining whether a Material
Adverse Effect has occurred); or

(h) any action taken or not taken at the request of, or with the written consent
or waiver of Purchaser

provided, that with respect to clauses (a), (b), (c) and (f), to the extent that
such effects do not have a materially disproportionate impact on the Business,
taken as a whole, relative to other companies in the industries in which the
Business is operated.

“Order” shall mean any judgment, order, injunction, decree, writ, permit or
license of any Governmental Entity or any arbitrator.

“Permitted Liens” shall mean  (a) Liens set forth in Section 1.1(c) of the
Sellers Disclosure Letter, (b) the Assumed Contracts, (c) all restrictions and
encumbrances resulting from filing or recordation requirements concerning the
transfer or ownership of Intellectual Property which arise as a matter of Law
and do not materially impair or limit the use of the subject Intellectual
Property, and (d) Liens created by this Agreement or the transactions
contemplated hereby.

“Person” shall mean and include an individual, a partnership, a limited
partnership, a limited liability partnership, a joint venture, a corporation, a
limited liability company, an association, a trust, an unincorporated
organization, a group and a Governmental Entity.

“Post-Closing Period” shall mean all taxable years or other taxable periods that
begin on or after the Closing Date and, with respect to any Straddle Period, the
portion thereof beginning on the Closing Date.  

“Pre-Closing Period” shall mean all taxable years or other taxable periods that
end before the Closing Date and, with respect to any Straddle Period, the
portion thereof ending  before the Closing Date.

“Qualifying Loss” shall mean any individual Loss in excess of $25,000.

 

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“Representatives” of any Person shall mean such Person’s directors, managers,
officers, employees, agents, attorneys, consultants, advisors or other Persons
acting on behalf of such Person.

“Returns” shall mean any and all returns, reports, forms (including elections,
declarations, amendments, claims for refund, schedules, information returns or
attachments thereto) and any other documents filed or required to be filed with
a Taxing Authority with respect to Taxes.

“SEC” shall mean the United States Securities and Exchange Commission.

“Sellers’ Taxes” shall mean all Taxes of Sellers, and all Taxes attributable to
the Business and the Purchased Assets in respect of all Pre-Closing Periods (for
the avoidance of doubt, not including any Transfer Taxes borne by Purchaser
pursuant to Section 6.7(a)).

“Straddle Period” shall mean any taxable year or other taxable period beginning
before and ending after the Closing Date.

“Subsidiary”, with respect to any Person, shall mean (a) any corporation more
than fifty percent (50%) of the stock of any class or classes of which having by
the terms thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time stock of any class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is owned by such Person directly or
indirectly through one or more subsidiaries of such Person and (b) any
partnership, association, joint venture, limited liability company or other
entity in which such Person directly or indirectly through one or more
subsidiaries of such Person has more than a fifty percent (50%) Equity Interest;
provided, that for the avoidance of doubt, the International JVs shall not be
considered Subsidiaries of Parent or Sellers.

“Tax” (or “Taxes”) shall mean (i) all taxes, assessments, charges, duties, fees,
levies or other governmental charges imposed by a Taxing Authority, including
all federal, state, territory, local, foreign and other income, franchise,
profits, gross receipts, capital gains, capital stock, transfer, sales, use,
value added, ad valorem, occupation, property, excise, severance, windfall
profits, stamp, license, payroll, employment, unemployment, disability, social
security, withholding, escheat, environmental, customs duty, estimated and other
taxes, assessments, charges, duties, fees, levies or other governmental charges
imposed by any Taxing Authority of any kind whatsoever (whether payable directly
or by withholding and whether or not requiring the filing of a Return), together
with any penalties and interest and any additional amounts with respect thereto,
and (ii) any Liability arising under any tax sharing agreement or any Liability
for any items described in clause (i) above of another Person by Contract, as a
transferee or successor, under U.S. Treasury Regulations Section 1.1502-6 (or
corresponding or similar provisions of state, local or foreign Law), whether
disputed or not.

“Tax Contest” shall mean any audit, hearing, proposed adjustment, arbitration,
deficiency, assessment, suit, dispute, claim, proceeding or other litigation
commenced, filed or otherwise initiated or convened to investigate or resolve
the existence and extent of a liability for Taxes.

 

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“Taxing Authority” shall mean any Governmental Entity responsible for or having
jurisdiction over the assessment, determination, collection or other imposition
of Taxes.

“Third Party” shall mean any Person other than Sellers, Parent, Purchaser or any
of their respective Affiliates.

1.2 Additional Defined Terms.  In addition to the terms defined in Section 1.1,
additional defined terms used herein shall have the respective meanings assigned
thereto in the Sections indicated below.

 

Defined Term

Section

Agreed Claims

8.6(d)

Agreement

Preamble

Allocation

3.2(a)

Anti-Corruption Laws

4.8(b)

Assumed Liabilities

2.3

Canadian JV End Date

6.10(b)

Claim Certificate

8.6(a)

Closing

3.3(a)

Closing Amount

3.1(a)

Closing Date

3.3(a)

Collateral Source

8.5(a)

Controlled Registered IP

4.12

Effect

1.1

End Date

9.1(b)(ii)

Escrow Account

6.10(c)

Escrow Agreement

3.1(b)

Excluded Assets

2.2

Excluded Liabilities

2.4

Final Reconciliation

2.7(a)

Fundamental Representations

8.1

General Cap

8.4

Guarantor

Recitals

Icon NY

Preamble

Iconix Latin America

Preamble

Indemnified Party

8.6(a)

Indemnifying Party

8.6(a)

JV Asset Amount

3.1(b)

JV Asset Closing

2.6(b)

JV Asset Purchase Price

6.10(a)

JV Business

6.2(b)

JV Liabilities

6.10(a)

Knowledge of Parent

1.5

Knowledge of Purchaser

1.5

Knowledge of Sellers

1.5

Limited Guaranty

Recitals

Parent

Preamble

 

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Post-Closing Acquisition

6.10(a)

Post-Closing Acquisition End Date

6.10(b)

Purchase

Recitals

Purchase Price

3.1

Purchased Assets

2.1

Purchaser

Preamble

Purchaser Disclosure Letter

Article V

Purchaser Indemnitees

8.2

Remaining JV Escrow Amount

6.10(b)

Royalties

2.7(a)

Seller Indemnitees

8.3

Sellers

Preamble

Sellers Disclosure Letter

Article IV

Sharper Image Holdings

Preamble

Synthetic Acquisition

6.10(b)

Top Licensees

4.13

Third-Party Claim

8.7(a)

Transfer Taxes

6.7(a)

 

 

 

1.3 Construction.  In this Agreement, unless the context otherwise requires:

(a) references to “writing” or comparable expressions include a reference to
facsimile transmission or comparable means of communication (including
electronic mail; provided, that the sender complies with the provisions of
Section 10.3);

(b) the phrases “delivered” or “made available” shall mean that the information
referred to has been physically or electronically delivered to the relevant
parties (including, in the case of “made available” to Purchaser or its
Representatives, material that has been posted, retained and thereby made
available to Purchaser or its Representatives through any on‑line “virtual data
room” established by Parent);

(c) words expressed in the singular number shall include the plural and vice
versa; words expressed in the masculine shall include the feminine and neuter
gender and vice versa;

(d) references to Annexes, Articles, Sections, Sections of the Sellers
Disclosure Letter, Sections of the Purchaser Disclosure Letter, Exhibits, the
Preamble and Recitals are references to annexes, articles, sections, exhibits,
the preamble and recitals of this Agreement, and the disclosure letters
delivered with respect to this Agreement, and the descriptive headings of the
several Articles and Sections of this Agreement, the Sellers Disclosure Letter
and the Purchaser Disclosure Letter (as applicable) are inserted for convenience
only, do not constitute a part of this Agreement and shall not affect in any way
the meaning or interpretation of this Agreement;

(e) references to “day” or “days” are to calendar days;

 

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(f) the words “hereof”, “herein”, “hereto” and “hereunder”, and words of similar
import, shall refer to this Agreement as a whole and not to any provision of
this Agreement;

(g) this “Agreement” or any other agreement or document shall be construed as a
reference to this Agreement or, as the case may be, such other agreement or
document as the same may have been, or may from time to time be, amended,
varied, novated or supplemented;

(h) “include”, “includes”, and “including” are deemed to be followed by “without
limitation” whether or not they are in fact followed by such words or words of
similar import; and

(i) references to “Dollars”, “dollars” or “$”, without more are to the lawful
currency of United States of America.

1.4 Annexes, Exhibits and the Disclosure Letters.  The Annexes, Exhibits, the
Sellers Disclosure Letter and the Purchaser Disclosure Letter are incorporated
into and form an integral part of this Agreement.

1.5 Knowledge.  When any representation, warranty, covenant or agreement
contained in this Agreement is expressly qualified by reference to the
“Knowledge of Sellers” or “Knowledge of Parent” or words of similar import, it
shall mean the actual knowledge of the individuals set forth in Section 1.5 of
the Sellers Disclosure Letter after such reasonable inquiry as such individuals
would normally conduct in the ordinary course of their duties to Parent or
Sellers, as applicable.  When any representation, warranty, covenant or
agreement contained in this Agreement is expressly qualified by reference to the
“Knowledge of Purchaser” or words of similar import, it shall mean the actual
knowledge of the individuals set forth in Section 1.5 of the Purchaser
Disclosure Letter after such reasonable inquiry as such individuals would
normally conduct in the ordinary course of their duties to Purchaser.

 

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Article II

Sale of PURCHASED Assets and Assumption of Assumed Liabilities

2.1 Sale of Purchased Assets.  On the terms and subject to the conditions of
this Agreement, including as set forth in Section 2.6, Purchaser agrees to
purchase from each Seller, and each Seller agrees to sell, convey, transfer,
assign and deliver, or cause to be sold, conveyed, transferred, assigned and
delivered, to Purchaser, at the Closing, such Seller’s right, title and interest
to the Purchased Assets free and clear of any Liens of any kind whatsoever
except Permitted Liens.  The “Purchased Assets” shall mean all the right, title
and interest of each Seller in and to the following assets (other than any such
assets specifically excluded pursuant to Section 2.2); provided, that the
definition of Purchased Assets shall not include any patents, patent
applications, copyright registrations, or applications for copyright
registrations for purposes of any representations, warranties, covenants,
agreements or obligations, express or implied, except for the obligation of each
Seller to sell, convey, transfer and assign at the Closing such Seller’s right,
title and interest to such patents, patent applications, copyright
registrations, or applications for copyright registrations that are included in
the Controlled IP Assets to Purchaser (subject to the conditions to such
obligations provided in this Agreement):

(a) all Controlled IP Assets;

(b) each Seller’s right, title and interest in each Assumed Contract;

(c) sales literature, promotional literature, and other selling and advertising
materials used in connection with the Business, in each case whether in hard
copy or electronic format:

(d) each Seller’s claims, causes of action and other legal rights and remedies
(other than claims, causes of action and other legal rights and remedies (i)
against Purchaser with respect to the transactions contemplated herein
(including the right of Parent or Sellers to any payment or credit hereunder,
including pursuant to any royalty reconciliation under Section 2.7), or (ii)
that constitute Excluded Assets) relating primarily to the Purchased Assets or
the Assumed Liabilities;

(e) all goodwill related to the Business (other than goodwill related to the
Excluded Assets); and

(f) all Files and Records, whether in hard copy or electronic format, which are
not described in Section 2.2(h).

 

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2.2 Excluded Assets.  Notwithstanding anything herein to the contrary, the
Purchased Assets shall not include any of the following assets, whether owned
by, held by or relating to any Seller or any of its Subsidiaries, and nothing
herein contained shall be deemed to sell, convey, transfer, assign or deliver to
Purchaser, and Sellers and their respective Affiliates shall retain, all right,
title and interest in, to and under all assets, properties, interests and rights
of Sellers and their respective Affiliates (other than the Purchased Assets),
including each of the following assets (collectively, the “Excluded Assets”):

(a) cash, certificates of deposit and other cash equivalents, accounts
receivable and pre-paid assets of the Business (except as provided otherwise in
Section 2.7(b)(i));

(b) rights under the Contracts to which Parent or any Seller is a party, which
are not Assumed Contracts;

(c) all rights to the name “Iconix” and related trademarks, service marks, trade
dress, domain names and other indicia of origin and any other indicia of origin
that is confusingly similar to the foregoing;

(d) all rights in and to all Intellectual Property of Parent and its
Subsidiaries that is not included within the Controlled IP Assets;

(e) all amounts owed by Camelot to Icon NY pursuant to the Camelot Agreement and
remedies related thereto as part of the purchase price for all assets purchased
thereunder (regardless of whether such amounts are payable before or after the
Closing Date) which are further described in Section 5 of the Camelot Agreement
and the amendments thereto, and which, for the avoidance of doubt, shall not
include any royalties payable thereunder other than JV Jurisdiction Royalties;

(f) JV Jurisdiction Royalties and remedies related thereto;

(g) all royalties or other amounts, with respect to the period prior to the
Closing, owed by the licensees under the Assumed Contracts that have not been
paid to the Sellers prior to Closing (for the avoidance of doubt, this includes
MerchSource, LLC) as determined pursuant to Section 2.7;

(h) general books of account and books of original entry that comprise Parent’s,
Sellers’ or their respective Affiliates’ permanent Tax records, corporate minute
books, stock books and related organizational documents and the Files and
Records that Sellers are required to retain pursuant to any Law or Order
(including, for the avoidance of doubt, for purposes of complying with federal
or state securities Laws or as otherwise required by the SEC) and the Files and
Records related exclusively to the Excluded Assets or Excluded Liabilities;

(i) all claims for refund or credit of Taxes and other Governmental Entity
charges of whatever nature that are attributable to any Pre-Closing Period;

(j) Sellers’ claims against Purchaser with respect to the Purchase (including
under this Agreement) or relating to the Excluded Assets or the Excluded
Liabilities or otherwise;

 

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(k) all claims, defenses and rights of offset or counterclaim (at any time or in
any manner arising or existing, whether choate or inchoate, known or unknown,
contingent or non-contingent) relating to any of the Excluded Assets or Excluded
Liabilities;

(l) all Third Party warranties, indemnities and guarantees in relation to any of
the Purchased Assets, except for any rights arising from any such Third Party
warranties, indemnities and guarantees included in any Assumed Contract that are
the result of any event, development or occurrence that occurs after the
Closing;

(m) all assets of Sellers and their respective Affiliates and Subsidiaries not
primarily used in or primarily relating to the Business; and

(n) the assets, properties, interests and rights of the International JVs.

Other than pursuant to Section 2.7(b), in no event shall Purchaser be entitled
to (A) recover from Parent or Sellers any guaranteed minimum royalties, earned
royalties or overage royalties paid under the Assumed Contracts prior to the
Closing or (B) claim a credit with respect to any earned royalties or overage
royalties against any guaranteed minimum royalties received by Parent or Sellers
prior to the Closing, regardless of whether the applicable licensee claims an
offset or credit for guaranteed minimum royalties paid to Parent or Sellers
prior to the Closing.

2.3 Assumption of Assumed Liabilities.  On the terms and subject to the
conditions of this Agreement, including Section 2.6, and except for the Excluded
Liabilities set forth in Section 2.4 and as otherwise provided in Section 6.7 or
Article VIII, Purchaser agrees, to assume and shall agree to pay, perform and
discharge when due, effective at the Closing, all Liabilities of Parent, Sellers
and/or their respective Subsidiaries arising out of the operation or conduct of
the Business on or after the Closing Date with respect to the period from and
after the Closing Date (collectively, the “Assumed Liabilities”) including, the
following:

(a) any Taxes for which Purchaser is responsible pursuant to Section 6.7; and

(b) all Liabilities with respect to the Purchased Assets.

2.4 Excluded Liabilities.  Notwithstanding anything contained herein to the
contrary, except as otherwise provided in Section 6.7 or Article VIII, Purchaser
shall not assume, or cause to be assumed, or be deemed to have assumed or caused
to have assumed or be liable or responsible for the following Liabilities of
Parent, Sellers and/or their respective Subsidiaries (collectively, the
“Excluded Liabilities”):

(a) any Liabilities arising out of the Excluded Assets;

(b) any Liabilities arising out of, or in connection with, any breach by Sellers
or any of their respective Affiliates of any provision of any Assumed Contract;

(c) any Liabilities arising out of or relating to this Agreement for which
Parent or Sellers have responsibility pursuant to the terms of this Agreement;

 

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(d) any Liabilities arising out of or relating to any Contract which is not an
Assumed Contract;

(e) any Liabilities for Sellers’ Taxes; and

(f) any Liabilities arising out of the ownership or operation of the Business
prior to the Closing.

2.5 Transfer of Purchased Assets and Assumed Liabilities.  The Purchased Assets
shall be sold, conveyed, transferred, assigned and delivered to Purchaser, free
and clear of all Liens except for Permitted Liens, and the Assumed Liabilities
shall be assumed by Purchaser, pursuant to transfer and assumption documentation
as shall be necessary to effect the sale, conveyance, transfer and assignment of
the Purchased Assets and an assumption of the Assumed Liabilities, which
documents and instruments shall be executed (on the terms and subject to the
conditions hereof) at the Closing by Sellers and Purchaser.

2.6 Required Consents. (a) Purchaser acknowledges that certain consents to the
transactions contemplated by this Agreement may be required from Third Parties
or Governmental Entities, and that such consents have not been and may not be
obtained.  Subject to the terms and conditions in Section 6.10, Purchaser agrees
that none of Parent, Sellers or any of their respective Affiliates shall have
any Liability whatsoever arising out of or relating to the failure to obtain any
consents that may have been or may be required in connection with the
transactions contemplated by this Agreement or because of the default under, or
acceleration or termination of, any Assumed Contract or other Purchased Asset,
as a result thereof.  Subject to the terms and conditions in Section 6.10,
Purchaser further agrees that no representation, warranty or covenant of Sellers
contained herein shall be breached or deemed breached, and, other than the
condition set forth in Section 7.1(c) or Section 7.2(c), no condition to
Purchaser’s obligations to close the transactions contemplated by this Agreement
shall be deemed not satisfied as a result of (i) the failure to obtain any such
consent or as a result of any such default, acceleration or termination or (ii)
any lawsuit, action, claim or investigation commenced or threatened by or on
behalf of any Person arising out of or relating to the failure to obtain any
consent or any such default, acceleration or termination.

(b) Notwithstanding anything to the contrary contained in this Agreement and
subject to Section 6.10, to the extent that the sale, conveyance, transfer,
assignment or delivery or attempted sale, conveyance, transfer, assignment or
delivery to Purchaser of any Purchased Asset or JV Asset, as applicable, is
prohibited by any applicable Law or would require any Third Party or any
Governmental Entity’s authorization, approval, consent, negative clearance or
waiver and such authorization, approval, consent, negative clearance or waiver
shall not have been obtained prior to the Closing, this Agreement shall not
constitute a sale, conveyance, transfer, assignment or delivery, or an attempted
sale, conveyance, transfer, assignment or delivery of such Purchased Asset or JV
Asset, as applicable.  Following the Closing or any closing of any Post-Closing
Acquisition (each, a “JV Asset Closing”), the parties hereto shall have a
continuing obligation to use their commercially reasonable efforts to cooperate
with each other and to obtain promptly all such authorizations, approvals,
consents, negative clearances or waivers; provided, that none of  Seller, Parent
or any of their respective Affiliates shall be required to repay any
indebtedness for borrowed money, amend any Contract to

 

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increase the amount payable thereunder or otherwise to be materially more
burdensome to any Seller, Parent or any of their respective Affiliates, commence
any litigation, offer or grant any accommodation (financial or otherwise) to any
Third Party or Governmental Entity, pay any amount or bear any other incremental
economic burden to obtain any such authorization, approval, consent, negative
clearance or waiver; and provided, further, that no party hereto shall incur any
expense that would be payable by any other party hereto without the consent of
such other party.  Upon obtaining the requisite authorization, approval,
consent, negative clearance or waiver, Sellers shall or shall cause the
applicable International JV, as the case may be, to promptly convey, transfer,
assign and deliver, or cause to be conveyed, transferred, assigned and
delivered, such Purchased Asset or JV Asset, as the case may be, to Purchaser
hereunder in accordance with and subject to the terms and conditions of this
Agreement.

2.7 Reconciliation of Royalty Payments under Assumed Contracts.  (a)  Within
ninety (90) days after the Closing Date, or as soon thereafter as reasonably
practicable based on the reporting periods under each applicable Assumed
Contract, Purchaser and Sellers (or Affiliates of Sellers) shall jointly prepare
in good faith a written statement (the “Final Reconciliation”) of the actual
amount of any license fees, franchise fees, royalty fees, marketing fees, or
other fees, payments, consideration or compensation (“Royalties”): (i) earned,
but not yet collected, on or prior to the Closing Date by Sellers with respect
to each Assumed Contract (including, for the avoidance of doubt, any past-due
amounts or other accounts receivable related thereto); and (ii) collected by
Sellers or Parent on or prior to the Closing Date with respect to each Assumed
Contract, but earned for periods following the Closing Date.

(b) For purposes of the calculation described in Section 2.7(a) above, the
Royalties with respect to each Assumed Contract shall be allocated to Parent or
the applicable Seller or Purchaser as follows: (i) in respect of any Assumed
Contract under which the Royalties accrued prior to the Closing Date do not
exceed the guaranteed minimum Royalties payable thereunder, such Royalties shall
be allocated pro rata between Parent or the applicable Seller or Purchaser, as
the case may be, based on the percentage of the applicable royalty period under
such Assumed Contract during which Parent or the applicable Seller and Purchaser
owned such Assumed Contract; (ii) in respect of any Assumed Contract under which
the Royalties accrued for a period exceed the minimum Royalties payable
thereunder for such period, all such excess Royalties accrued for (A) any period
prior to the Closing Date shall be allocated to Parent or the applicable Seller
and (B) any period on or after the Closing Date shall be allocated to Purchaser;
and (iii) in respect of any Assumed Contract that does not provide for the
payment of guaranteed minimum Royalties, for (A) any period prior to the Closing
Date, all Royalties shall be allocated to Parent or the applicable Seller and
(B) any period on or after the Closing Date, all Royalties shall be allocated to
Purchaser.

(c) If the Royalties earned, but not yet collected, by Parent or Sellers on or
prior to the Closing Date under any Assumed Contract exceed the amount of the
Royalties collected by Parent or Sellers as of the Closing Date under any such
Assumed Contract, then with respect to such Assumed Contract, Purchaser shall
remit the amount of the difference to Parent or Sellers by check or wire
transfer within ten (10) days following the Final Reconciliation.  If the
Royalties collected by Parent or Sellers as of the Closing Date for periods
after the Closing Date exceed the Royalties earned, but not yet collected, by
Parent or Sellers on or prior to the Closing

 

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Date, with respect to such Assumed Contract, Parent or Sellers shall remit the
amount of the difference to Purchaser by check or wire transfer within ten (10)
days of the Final Reconciliation.  

(d) Until such time as the Royalties are remitted to Parent, Sellers or
Purchaser, as applicable, in accordance with Section 2.7(c), Purchaser shall use
reasonable efforts to collect (consistent with past practice), and shall in no
event waive, write-off or extend the time for payment of, any Royalties owed to
Sellers or the International JVs, as applicable, for periods prior to the
Closing under any Assumed Contract or license Contract with an International JV.

Article III

Purchase Price

3.1 Purchase Price; Delivery of Funds. At the Closing, in full consideration for
the sale and transfer by Sellers of the Purchased Assets and the JV Assets,
Purchaser shall cause to be paid One Hundred Million Dollars $100,000,000.00
(the “Purchase Price”) by wire transfer of immediately available funds as
follows:

(a) Ninety-Eight Million, Two-Hundred and Fifty Thousand Dollars $98,250,000.00
shall be paid to Sellers (as allocated between each Seller as directed by
Parent) in respect of the Purchased Assets (the “Closing Amount”); and

(b) One Million, Seven Hundred and Fifty Thousand Dollars $1,750,000.00 shall be
paid to the Escrow Agent (such amount, without interest, the “JV Asset Amount”)
in respect of the JV Assets, which shall be held and disbursed pursuant to
Section 6.10 and Section 6.11 and the terms of the escrow agreement in the form
attached as Exhibit A hereto (the “Escrow Agreement”).

3.2 Allocation of Purchase Price.  (a) The sum of the Purchase Price, the
Assumed Liabilities, and other relevant items (such as capitalizable costs)
shall be allocated for U.S. federal income tax purposes (and any similar
provision of state, local, or foreign Law) among the Purchased Assets in the
manner required by Section 1060 of the Code (the “Allocation”).  Within sixty
(60) days following the Final Reconciliation, Purchaser shall prepare and
deliver to Sellers for their review and approval IRS Form 8594 and any required
exhibits thereto, setting forth the Allocation. If within thirty (30) days of
receipt of the Allocation, Sellers notify Purchaser that they object to one or
more items reflected on the Allocation, Sellers and Purchaser shall negotiate in
good faith to resolve such dispute. If Sellers and Purchaser fail to resolve any
such dispute within thirty (30) days of Purchaser’s receipt of Sellers’ notice,
then Sellers and Purchaser shall submit the items of the Allocation in dispute
for resolution to an independent valuation or accounting firm of international
reputation mutually acceptable to Sellers and Purchaser, which shall, as soon as
practicable after such submission, determine and report to Sellers and Purchaser
its resolution of the Allocation.  The report of such firm shall be final and
binding upon the parties hereto.  The fees for such firm shall be borne equally
between Sellers, on the one hand, and Purchaser, on the other hand.

 

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(b) Each of Purchaser and Sellers and their respective Affiliates shall, except
to the extent required otherwise by a “determination,” as defined in Section
1313 of the Code, (i) be bound by the Allocation, as finally determined, for all
Tax purposes; (ii) prepare and file all Returns in a manner consistent with the
Allocation, as finally determined; and (iii) take no position inconsistent with
the Allocation, as finally determined, in any Return, Tax Contest or
otherwise.  In the event that the Allocation, as finally determined, is disputed
by any Taxing Authority, the party receiving notice of such dispute shall
promptly notify and consult with the other parties and keep the other parties
apprised of material developments concerning resolution of such dispute.  Each
of Purchaser and Sellers hereby agrees to revise the Allocation to reflect any
adjustment to the Purchase Price pursuant to this Agreement (including Section
8.9).

3.3 Closing; Closing Deliverables. (a) Subject to the satisfaction or waiver of
all of the conditions set forth in Sections 7.1, 7.2 and 7.3, the closing of the
Purchase (the “Closing”) shall take place at the offices of White & Case LLP,
1155 Avenue of the Americas, New York, New York, 10036-2787, as soon as
practicable, but in any event within two (2) Business Days, after the last of
the conditions set forth in Sections 7.1, 7.2 and 7.3 is satisfied or waived
(other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the fulfillment or waiver of those conditions), or at
such other time, date or place as the parties hereto shall agree in
writing.  Such date is herein referred to as the “Closing Date”.

(b) At the Closing, each Seller shall deliver or cause to be delivered to
Purchaser:

(i) a certificate signed by an authorized officer of such Seller, dated as of
the Closing Date, confirming the matters set forth in Sections 7.2(a) and
7.2(b);

(ii) a non-foreign person affidavit from each transferor under this Agreement
(as determined under Section 1445 of the Code), dated as of the Closing Date, as
required by Section 1445 of the Code, in a form and manner reasonably
satisfactory to Purchaser;

(iii) counterparts to the trademark assignment agreement, or series of trademark
assignment agreements for applicable jurisdictions, substantially in the form of
Exhibit B hereto, duly executed by each Seller assigning the subject assets;

(iv) counterparts to the assignment and assumption agreement with respect to the
transfer of the Purchased Assets and the assumption of the Assumed Liabilities,
substantially in the form of Exhibit C hereto, duly executed by each Seller;

(v) counterparts to the patent assignment agreement, or series of patent
assignment agreements for applicable jurisdictions, substantially in the form of
Exhibit D hereto, duly executed by each Seller assigning the subject assets;

(vi) counterparts to the copyright assignment agreement, or series of copyright
assignment agreements for applicable jurisdictions, substantially in the form of
Exhibit E hereto, duly executed by each Seller assigning the subject assets; and

(vii) a written waiver, duly signed by Camelot, whereby Camelot waives, in
connection with the transactions contemplated by this Agreement, the right of
first

 

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refusal under the that certain Website and Catalog Rights Purchase Agreement,
dated as of June 30, 2014, by and between Icon NY and Camelot.

(c) At the Closing, Purchaser shall deliver or cause to be delivered to Sellers:

(i) the Closing Amount pursuant to Section 3.1(a);

(ii) a certificate signed by an authorized officer of Purchaser, dated as of the
Closing Date, confirming the matters set forth in Sections 7.3(a) and 7.3(b);

(iii) counterparts to the Escrow Agreement, duly executed by Purchaser;

(iv) counterparts to the trademark assignment agreement, or series or trademark
assignment agreements for applicable jurisdictions, substantially in the form of
Exhibit B hereto, duly executed by Purchaser;

(v) counterparts to the assignment and assumption agreement with respect to the
transfer of the Purchased Assets and the assumption of the Assumed Liabilities,
substantially in the form of Exhibit C hereto, duly executed by Purchaser;

(vi) counterparts to the patent assignment agreement, or series of patent
assignment agreements for applicable jurisdictions, substantially in the form of
Exhibit D hereto, duly executed by Purchaser; and

(vii) counterparts to the copyright assignment agreement, or series of copyright
assignment agreements for applicable jurisdictions, substantially in the form of
Exhibit E hereto, duly executed by Purchaser.

(d) At the Closing, Purchaser shall deliver or cause to be delivered to the
Escrow Agent, the JV Asset Amount pursuant to Section 3.1(b).

(e) At the Closing, Parent shall deliver to Purchaser and the Escrow Agent, a
counterpart to the Escrow Agreement, duly executed by Parent.

3.4 Withholding.  Purchaser shall be entitled to withhold from the Closing
Amount Taxes required to be withheld as a result of a Seller’s failure to
provide the affidavit required pursuant to Section 3.3(b)(ii)), and any such
withheld Taxes shall be deemed paid for all purposes of this Agreement.

 

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Article IV

Representations and Warranties of Sellers AND parent

Except as set forth in the disclosure letter delivered by Sellers to Purchaser
(the “Sellers Disclosure Letter”) concurrently with the execution of this
Agreement (it being agreed that any matter disclosed pursuant to any section of
the Sellers Disclosure Letter shall be deemed disclosed for purposes of any
other section of the Sellers Disclosure Letter to the extent the applicability
of the disclosure to such other section is reasonably apparent on the face of
such disclosure), each Seller and Parent hereby represent and warrant with
respect to itself, to Purchaser as follows:

4.1 Due Organization, Good Standing and Corporate Power.

(a) Each Seller is duly organized, validly existing and in good standing under
the Laws of the State of Delaware.  Each Seller has all requisite corporate or
similar power and authority to own, lease and operate the Business as now being
conducted.  Each Seller is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the Purchased Assets are owned by
such Seller or the nature of the Business makes such qualification necessary,
except such jurisdictions where the failure to be so qualified or licensed and
in good standing does not and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

(b) Parent is duly organized, validly existing and in good standing under the
Laws of the State of Delaware.  Parent has all requisite corporate or similar
power and authority to own, lease and operate its business as now being
conducted.  Parent is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business makes such
qualification necessary, except such jurisdictions where the failure to be so
qualified or licensed and in good standing does not and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

4.2 Authorization; Noncontravention  

(a) Each Seller has the requisite corporate, limited liability company,
partnership or similar power and authority, as applicable, and has taken all
corporate, limited liability company, partnership or similar action necessary to
execute and deliver this Agreement and all other instruments and agreements to
be delivered by such Seller as contemplated hereby and thereby, to perform their
respective obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby.  The execution, delivery and
performance by each Seller of this Agreement and all other instruments and
agreements to be delivered by such Seller as contemplated hereby, the
consummation by each Seller of the transactions contemplated hereby and thereby
and the performance of their respective obligations hereunder and thereunder
have been, and in the case of documents required to be delivered at the Closing
will be, duly authorized and approved by all necessary corporate, limited
liability company, partnership, stockholder, member, partner or other
action.  This Agreement has been, and all other instruments and agreements to be
executed and delivered by each Seller as contemplated hereby will be, duly
executed and delivered by each Seller.  Assuming that this Agreement and all
such

 

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other instruments and agreements constitute valid and binding obligations of
Purchaser and each other Person (other than Parent, Sellers) party thereto, this
Agreement and all such other instruments and agreements constitute valid and
binding obligations of each Seller enforceable against such Person in accordance
with the terms thereof, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar Laws affecting the enforcement of creditors’ rights generally and
by general equitable principles (whether considered in a proceeding in equity or
at law).

(b) The execution and delivery of this Agreement and all other instruments and
agreements to be delivered by each Seller as contemplated hereby do not, and the
consummation of the transactions contemplated hereby and thereby will not (i)
conflict with any of the provisions of the certificate of formation or operating
agreement or similar governance documents of each Seller in each case as amended
to the date of this Agreement, (ii) subject to receipt of the consents,
approvals, authorizations, declarations, filings and notices set forth in
Section 4.2(b) and Section 4.3 of the Sellers Disclosure Letter, conflict with
or result in a breach of, or constitute a default under, or result in the
acceleration of any obligation or loss of any benefits under, or the creation of
any Lien other than Permitted Liens upon, any Contract or other instrument to
which Sellers are party or by which Sellers or any of their properties,
including the Purchased Assets, are bound or (iii) subject to (x) the applicable
requirements of the HSR Act and any other applicable Antitrust Laws and (y)
receipt of the consents, approvals, authorizations, declarations, filings and
notices referred to in Section 4.3 of the Sellers Disclosure Letter, contravene
any Law or any Order applicable to each Seller or by which any of the Purchased
Assets are bound, except, in the case of clauses (ii) and (iii) above, for such
conflicts, breaches, defaults, consents, approvals, authorizations,
declarations, filings or notices which have not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

(c) Parent has the requisite corporate power and authority and has taken all
corporate action necessary to execute and deliver this Agreement and all other
instruments and agreements to be delivered by Parent as contemplated hereby and
thereby, to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby.  The execution, delivery and
performance by Parent of this Agreement and all other instruments and agreements
to be delivered by Parent as contemplated hereby, the consummation by Parent of
the transactions contemplated hereby and thereby and the performance of its
obligations hereunder and thereunder have been, and in the case of documents
required to be delivered at the Closing will be, duly authorized and approved by
all necessary corporate, stockholder or other action.  This Agreement has been,
and all other instruments and agreements to be executed and delivered by Parent
as contemplated hereby will be, duly executed and delivered by Parent.  Assuming
that this Agreement and all such other instruments and agreements constitute
valid and binding obligations of Purchaser and each other Person (other than
Parent and Sellers) party thereto, this Agreement and all such other instruments
and agreements constitute valid and binding obligations of Parent enforceable
against Parent in accordance with the terms thereof, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).

 

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(d) The execution and delivery of this Agreement and all other instruments and
agreements to be delivered by Parent as contemplated hereby do not, and the
consummation of the transactions contemplated hereby and thereby will not (i)
conflict with any of the provisions of the certificate of incorporation or
by‑laws of Parent, as amended to the date of this Agreement, (ii) subject to
receipt of the consents, approvals, authorizations, declarations, filings and
notices set forth in Section 4.2(b) and Section 4.3 of the Sellers Disclosure
Letter, conflict with or result in a breach of, or constitute a default under,
or result in the acceleration of any obligation or loss of any benefits under or
the creation of any Lien upon,  any Contract or other instrument to which Parent
is a party or by which Parent or any of its properties or assets, or the JV
Assets are bound or (iii) subject to (x) the applicable requirements of the HSR
Act and any other applicable Antitrust Laws and (y) receipt of the consents,
approvals, authorizations, declarations, filings and notices referred to in
Section 4.3 of the Sellers Disclosure Letter, contravene any Law or any Order
applicable to Parent or by which any of the JV Assets are bound, except, in the
case of clauses (ii) and (iii) above, for such conflicts, breaches, defaults,
consents, approvals, authorizations, declarations, filings or notices which have
not had and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

4.3 Consents and Approvals.  Assuming all required Antitrust Filings are made
and any waiting periods thereunder have been terminated or expired and any
consents required thereunder have been obtained, except as set forth in Section
4.3 of the Sellers Disclosure Letter, no consent of or filing with any
Governmental Entity or any other Person must be obtained or made by any Seller
in connection with the execution and delivery of this Agreement by any such
Seller or the consummation by any Seller of the transactions contemplated by
this Agreement.

4.4 Absence of Certain Changes.  Since December 31, 2015, (a) the Business has
been conducted in all material respects in the ordinary course consistent with
past practice, (b) there has not been any event, development, or occurrence
which has had a Material Adverse Effect and (c) Sellers have not, with respect
to the Business or the Purchased Assets, failed to file any Return or pay any
Taxes when due, made or changed any Tax election, changed any annual accounting
period, adopted or changed any Tax accounting method, filed any amended Return,
entered into any closing agreement with respect to Taxes, settled any Tax
Contest, or consented to any extension or waiver of the limitation period
applicable to any Tax Contest.

4.5 Assumed Contracts; Title

(a) Section 1.1(a) of the Sellers Disclosure Letter is a true and complete list
of all Assumed Contracts.  The Assumed Contracts constitute all Contracts under
which the Sellers have licensed any of the Controlled IP Assets to Persons.
There are no oral contracts, oral licenses or additional obligations arising
from an oral agreement related to any of the Assumed Contracts or Controlled IP
Assets.

(b) A true and complete copy of each Assumed Contract has been made available to
Purchaser.  Except as set forth in Section 4.5 of the Sellers Disclosure Letter,
each Assumed Contract is a valid and binding obligation of each Seller party
thereto, enforceable against such party in accordance with the terms thereof,
except to the extent that such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium

 

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or other similar Laws affecting the enforcement of creditors’ rights generally
and by general equitable principles (whether considered in a proceeding in
equity or at law). As to each Assumed Contract, there does not exist thereunder
any breach, violation or default on the part of any of the Sellers or, to the
Knowledge of Sellers, any other party to such Assumed Contract, and, to the
Knowledge of Sellers, there does not exist any event, occurrence or condition,
including the consummation of the transactions contemplated by this Agreement,
which (with or without notice, passage of time, or both) would constitute a
breach, violation or default thereunder on the part of any of the Sellers, which
breach, violation or default has, or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.   No waiver has
been granted by any Seller or, to the Knowledge of Sellers, any of the other
parties thereto under, and no amendment has been entered into by any Seller with
respect to, any of the Assumed Contracts and none of the Assumed Contracts is
currently being re-negotiated by the parties thereto with respect to any of its
terms.

(c) Other than with respect Intellectual Property which is addressed in Section
4.12 below, each Seller has good, valid and marketable title to, or valid
license interests in, as the case may be, the Purchased Assets, free and clear
of all Liens, other than Permitted Liens. 

(d) Except as set forth in Section 4.5(d) of the Sellers Disclosure Letter,
there are no outstanding options or commitments which relate to the Purchased
Assets, Parent’s ownership interests in the International JVs, or the JV Assets
or the sale by Parent or any Seller of the Purchased Assets, Parent’s ownership
interests in the International JVs and the JV Assets, as applicable.

4.6 Litigation.  Except as set forth in Section 4.6 of the Sellers Disclosure
Letter, as of the date hereof and, except as will not have had or would not be
reasonably expected to have, individually or in the aggregate a Material Adverse
Effect, (i) there is no action, suit, proceeding (including trademark office
oppositions or domain name disputes) at law or in equity, or arbitration by,
before or against any Governmental Entity or any other Person pending in respect
of the Business, the Purchased Assets, the JV Assets or the Assumed Liabilities
and (ii) no Seller is subject to any Order in respect of the Business.

4.7 Tax Matters .  Except as set forth in Section 4.7 of the Sellers Disclosure
Letter:

(a) To the extent a breach or inaccuracy of any of the following could result in
a liability of Purchaser to any Taxing Authority in connection with the
transactions contemplated by this Agreement: (i) each Seller has timely filed or
caused to be timely filed with the appropriate Taxing Authorities all income tax
and all material non-income tax Returns with respect to the Business or the
ownership of the Purchased Assets that in each instance were required to be
filed on or prior to the date hereof (taking into account any extension of time
to file), (ii) all such Returns are and will be true, correct and complete in
all material respects and (iii) all Taxes related to the Purchased Assets or the
Business shown on such Returns have been paid.

(b) There are no Liens for Taxes upon any of the Purchased Assets, other than
Permitted Liens.

 

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(c) Each Seller has withheld and properly remitted all material Taxes required
to be withheld and remitted in connection with the Business and the Purchased
Assets.

(d) No material Tax Contest with respect to Taxes or Returns of any Seller with
respect to the Business or the Purchased Assets is being conducted, pending, or
threatened by any Taxing Authority.  No extension or waiver of the statute of
limitations with respect to Taxes or any Return with respect to the Business or
the Purchased Assets has been granted by any Seller, which remains in
effect.  No Taxing Authority is now asserting or threatening to assert against
any Seller any deficiency for any Taxes or interest thereon or penalties in
connection therewith in connection with the Business or the Purchased
Assets.  None of the Sellers has received notice of a claim by any Taxing
Authority in any jurisdiction where the Seller does not file Tax Returns that
the Seller is or may be subject to taxation, or required to file Tax Returns,
with respect to the Business or the Purchased Assets in that jurisdiction.

(e) None of the Sellers is a party to or bound by any Contract or arrangement
with respect to the Business or the Purchased Assets to allocate, share or
indemnify another Person for Taxes.

(f) With respect to the Business or the Purchased Assets, and to the extent
having an effect after the Closing, (i) no closing agreement is currently in
force pursuant to Section 7121 of the Code (or any corresponding or similar
provision of state, local or foreign Law) and (ii) none of the Sellers has
obtained any ruling from any Taxing Authority with respect to any Tax.

(g) None of the Sellers has participated in a listed transaction within the
meaning of U.S. Treasury Regulations Section 1.6011-4 relating to the Business
or the Purchased Assets.

The representations and warranties in Section 4.4(c) and this Section 4.7 are
the sole and exclusive representations and warranties of Sellers concerning Tax
matters.

4.8 Compliance with Laws.  

(a) Except as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, each Seller is not
currently conducting the Business in violation of any Law or Order applicable to
the Business, the Purchased Assets or the Assumed Liabilities.  Each Seller, and
to Sellers’ Knowledge, each International JV, is, and for the three years prior
to the date of this Agreement has been, in compliance with U.S. and any
applicable non-U.S. economic sanctions Laws with respect to the Business and
Purchased Assets.

(b) Neither the Sellers, nor any of their respective directors, officers,
employees, nor to the knowledge of the Sellers, their respective agents,
representatives or other persons acting on the Sellers’ behalf, have, directly
or indirectly, engaged in any conduct related to the Purchased Assets to be in
violation of (i) the U.S. Foreign Corrupt Practices Act of 1977, as amended;
(ii) the U.S. Travel Act, 18 U.S.C. § 1952; (iii) the U.K. Bribery Act of 2010;
(iv) any applicable Law enacted in connection with, or arising under, the OECD
Convention on Combating Bribery of Foreign Public Officials in International
Business Transactions; or (v) any other applicable Law of any foreign or
domestic jurisdiction of similar effect or that relates to bribery or corruption
(separately or together, “Anti-Corruption Laws”) in the past five (5)

 

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years.  Further, the Sellers have not received any communication from a
Governmental Entity alleging that the Sellers, or any of their respective
officers, directors, employees, agents, or representatives, or any other person
acting on behalf of the Sellers, is or may be in violation of, or has, or may
have, any unresolved liability related to the Purchased Assets under, any
applicable Anti-Corruption Laws.

4.9 Parent’s Ownership Interest in International JVs.  Parent has good and valid
title to fifty percent (50%) of the issued and outstanding Equity Interests of
each International JV. Each International JV has good, valid and marketable
title to, or valid license interests in, as the case may be, the JV Assets, free
and clear of all Liens (other than Permitted Liens).

4.10 Finders; Brokers.  No agent, broker, Person or firm acting on behalf of
Sellers, Parent or any of their respective Affiliates is, or shall be, entitled
to any broker’s fees, finder’s fees or commissions from Purchaser in connection
with this Agreement or any of the transactions contemplated hereby.

4.11 Affiliate Transactions(a) . Except as disclosed in Section 4.11 of the
Sellers Disclosure Letter, there is no Assumed Liability comprising a Contract
or Liability between (a) any Seller with respect to the Business, on the one
hand, and (b) any equity holder, option holder, officer, member, partner or
director of any Seller or any of its Affiliate or any of their respective
Subsidiaries (other than any Seller), on the other hand.

4.12 Intellectual Property.  Section 4.12 of the Sellers Disclosure Letter sets
forth a true and complete list of all Controlled IP Assets that are the subject
of a registration or application for registration (the “Controlled Registered
IP”).  Except as disclosed in Section 4.12 of the Sellers Disclosure Letter:

(a) The Controlled Registered Trademarks are valid, subsisting and enforceable.

(b) Sellers own all right, title and interest in and to the Controlled
Registered Trademarks free and clear of all Liens (other than Permitted Liens).

(c) Use of the Controlled Registered Trademarks as a designation of source in
connection with any products and services licensed pursuant to any Assumed
Contract does not infringe, misappropriate or dilute the rights of any third
parties; provided, that this representation shall only apply with respect to
jurisdictions in which a particular Controlled Registered Trademark has been
registered or applied for. No Seller has received written notice of any adverse
claim by a Third Party relating to any of the Controlled Registered Trademarks
or alleging that the operation of the Business has infringed, misappropriated or
diluted the Intellectual Property of any third party, and to the Knowledge of
Sellers, there is no reasonable basis for any such claim to exist.

(d) To the Knowledge of Sellers, no third party is infringing, misappropriating
or otherwise violating Sellers’ rights with respect to the Controlled Registered
Trademarks.

4.13 Licensees.  Section 4.13 of the Sellers Disclosure Letter sets forth a true
and complete list of the five (5) largest licensees of the Business, on a
consolidated basis determined by dollar volume of amounts payable by such
licensees under the respective Assumed Contracts

 

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for the nine-month period ended September 30, 2016 (collectively, the “Top
Licensees”). Except as set forth on Section 4.13 of the Sellers Disclosure
Letter, Sellers have no Knowledge of any termination, cancellation or written
threat to terminate or cancel or materially and adversely modify or change the
business relationship between the Business and any of the Top Licensees.

4.14 Exclusivity of Representations; Projections, etc.  

(a) The representations and warranties made by each Seller in this Article IV
are the exclusive representations and warranties made by such Seller and its
Affiliates.  Except for any representations and warranties set forth in this
Article IV or in the Sellers Disclosure Letter, the Purchased Assets and the
Assumed Liabilities are sold “AS IS, WHERE IS,” and each Seller expressly
disclaims any other representations or warranties of any kind or nature, express
or implied, as to Liabilities, operations of the facilities, the title,
condition, value or quality of assets of such Seller or the prospects (financial
and otherwise), risks and other incidents of such Seller as they relate to the
Business, the Purchased Assets and the Assumed Liabilities, and EACH SELLER
SPECIFICALLY DISCLAIMS, AND PURCHASER HEREBY WAIVES, ANY REPRESENTATION OR
WARRANTY OF QUALITY, MERCHANTABILITY, NON-INFRINGEMENT, FITNESS FOR A PARTICULAR
PURPOSE, CONFORMITY TO SAMPLES, OR CONDITION OF THE ASSETS OF SUCH SELLER
(INCLUDING THE PURCHASED ASSETS) OR ANY PART THEREOF, WHETHER LATENT OR
PATENT.  No material or information provided by or communications made by any
Seller or any of its Affiliates, or by any advisor thereof, whether by use of a
“data room,” or in any information memorandum, or otherwise, or by any broker or
investment banker, will cause or create any warranty, express or implied, as to
or in respect of any such Seller or the title, condition, value or quality of
the Business, the Purchased Assets or the Assumed Liabilities.

(b) None of the Sellers makes any representation or warranty whatsoever with
respect to any estimates, projections and other forecasts and plans (including
the reasonableness of the assumptions underlying such estimates, projections and
forecasts).  Purchaser agrees that no Seller or any other Person will have or be
subject to any Liability, other than as a result of or arising out of or by
virtue of fraud to Purchaser or any other Person resulting from the distribution
to Purchaser, or Purchaser’s use of, any information regarding any Seller or its
respective assets and Liabilities, including any offering memorandum prepared,
as supplemented or amended, and any information, document or material made
available to Purchaser or its Affiliates in certain physical or on-line “data
rooms,” management presentations or any other form in expectation of the
transactions contemplated by this Agreement.

 

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Article V

Representations and warranties of Purchaser

Except as set forth in the disclosure letter (the “Purchaser Disclosure Letter”)
delivered by Purchaser to Sellers concurrently with the execution of this
Agreement (it being agreed that any matter disclosed pursuant to any section of
the Purchaser Disclosure Letter shall be deemed disclosed for purposes of any
other section of the Purchaser Disclosure Letter to the extent the applicability
of the disclosure to such other section is reasonably apparent on the face of
such disclosure), Purchaser hereby represents and warrants to Sellers as
follows:

5.1 Corporate Due Organization, Good Standing and Corporate Power of
Purchaser.  Purchaser is a limited liability company duly organized, validly
existing and in good standing (or the equivalent thereof) under the Laws of the
State of Delaware and has all requisite limited liability company power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.  Purchaser is a wholly-owned Subsidiary of Guarantor.

5.2 Authorization; Noncontravention.  

(a) Purchaser has the requisite limited liability company power and authority
and has taken all limited liability company or other action necessary to execute
and deliver this Agreement and all other instruments and agreements to be
delivered by Purchaser as contemplated hereby, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby.  The execution, delivery and performance by Purchaser of this
Agreement and all other instruments and agreements to be delivered by Purchaser
as contemplated hereby, the consummation by it of the transactions contemplated
hereby and thereby and the performance of its obligations hereunder and
thereunder have been, and in the case of documents required to be delivered at
the Closing will be, duly authorized and approved by the managers of
Purchaser.  This Agreement has been, and all other instruments and agreements to
be executed and delivered by Purchaser as contemplated hereby will be, duly
executed and delivered by Purchaser.  Assuming that this Agreement and all such
other instruments and agreements constitute valid and binding obligations of
each Seller and each other Person (other than Purchaser) party thereto, this
Agreement and all such other instruments and agreements constitute valid and
binding obligations of Purchaser, enforceable against Purchaser in accordance
with the terms thereof, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar Laws affecting the enforcement of creditors’ rights generally and
by general equitable principles (whether considered in a proceeding in equity or
at law).

(b) The execution and delivery of this Agreement and all other instruments and
agreements to be delivered by Purchaser as contemplated hereby do not, and the
consummation of the transactions contemplated hereby and thereby will not,
(i) conflict with any of the provisions of the certificate of incorporation or
by-laws or similar governance documents of Purchaser, in each case, as amended
to the date of this Agreement, (ii) conflict with or result in a breach of, or
constitute a default under, or result in the acceleration of any obligation or
loss of any benefits under, any Contract or other instrument to which Purchaser
is a party or by which

 

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Purchaser or any of its properties or assets are bound or (iii) subject to (x)
the applicable requirements of the HSR Act and any other applicable Antitrust
Laws and (y) receipt of the consents, approvals, authorizations, declarations,
filings and notices referred to in Section 5.3 of the Purchaser Disclosure
Letter, contravene any Law or any Order applicable to Purchaser or by which any
of its properties or assets are bound, except in the case of clauses (ii) and
(iii) above, for such conflicts, breaches, defaults, consents, approvals,
authorizations, declarations, filings or notices which do not and would not
reasonably be expected to, individually or in the aggregate, prevent, materially
delay or impair Purchaser’s ability to consummate the transactions contemplated
by this Agreement.

5.3 Consents and Approvals.  Assuming all required Antitrust Filings are made
and any waiting periods thereunder have been terminated or expired and any
consents required thereunder have been obtained, except as set forth in Section
5.3 of the Purchaser Disclosure Letter, no consent of or filing with any
Governmental Entity or any other Person, must be obtained or made by Purchaser
in connection with the execution and delivery of this Agreement by Purchaser or
the consummation by Purchaser of the transactions contemplated by this
Agreement.  

5.4 Available Funds.  Purchaser or the Guarantor will have on the date hereof
and on the Closing Date unrestricted cash on hand sufficient to pay all amounts
to be paid or repaid by Purchaser under this Agreement (whether payable on or
after the Closing) and all of Purchaser’s and its Affiliates’ fees and expenses
associated with the transactions contemplated in this Agreement.

5.5 Litigation. There is no action, suit, proceeding at law or in equity, or any
arbitration by, before or against any Governmental Entity or any other Person
pending, or, to the Knowledge of Purchaser, threatened in writing, against or
affecting Purchaser, or any of their respective properties or rights, except as
have not and would not reasonably be expected to, individually or in the
aggregate, prevent, materially delay or impair Purchaser’s ability to consummate
the transactions contemplated by this Agreement.  Purchaser is not subject to
any Order which seeks to or would reasonably be expected to, individually or in
the aggregate, prevent, materially delay or impair Purchaser’s ability to
consummate the transactions contemplated by this Agreement.

5.6 Finders; Brokers.  No agent, broker, Person or firm acting on behalf of
Purchaser or any of its Affiliates is or shall be entitled to any broker’s fees,
finder’s fees or commissions from any Seller or any of their respective
Affiliates in connection with this Agreement or any of the transactions
contemplated hereby.

5.7 Investigation by Purchaser.  Purchaser has conducted its own independent
investigation, verification, review and analysis of the Business and of the
Purchased Assets and the Assumed Liabilities, results of operations, financial
condition and prospects of the Business, which investigation, review and
analysis was conducted by Purchaser and its Affiliates and, to the extent
Purchaser deemed appropriate, by Purchaser’s Representatives.  Purchaser
acknowledges that it and its Representatives have been provided adequate access
to the personnel, properties, premises and records of the Business and of the
Purchased Assets and the Assumed Liabilities.  In entering into this Agreement,
Purchaser acknowledges that it has

 

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conducted to its satisfaction its own independent investigation of the Business
and relied solely upon the aforementioned investigation, review and analysis and
not on any factual representations or opinions of any Seller (except the
specific representations and warranties of Sellers set forth in Article IV), and
Purchaser acknowledges and agrees, to the fullest extent permitted by Law, that:

(a) no Seller or any of its shareholders, Affiliates, Representatives or any
other Person shall have any Liability or responsibility whatsoever to Purchaser
or its shareholders, Affiliates or Representatives on any basis (including in
contract, tort or equity, under federal or state securities Laws or otherwise) ,
other than as a result of or arising out of or by virtue of fraud, based upon
any information made available or delivered to Purchaser or its Affiliates and
Representatives, including any information, whether oral or written (including
cost estimates, financial information and projections and other projections and
forward-looking statements) (i) included in management presentations,
“break-out” discussions, responses to questions submitted by or on behalf of
Purchaser or its Affiliates and Representatives, or any “data room” or (ii)
delivered or made available pursuant to Section 6.1(a) or otherwise;

(b) without limiting the generality of the foregoing, no Seller makes any
representation or warranty regarding (and Purchaser disclaim) any Third Party
beneficiary rights or other rights which Purchaser might claim under any
studies, reports, tests or analyses prepared by any Third Parties for any Seller
or any of its Affiliates, even if the same were made available for review by
Purchaser or its shareholders, Affiliates or Representatives; and

(c) without limiting the generality of the foregoing, Purchaser expressly
acknowledges and agrees that none of the documents, information or other
materials provided to them at any time or in any format by any Seller, or any of
its Affiliates or Representatives constitute legal advice, and Purchaser (i)
waives all rights to assert that it received any legal advice from any Seller,
any of its Affiliates, or any of their respective Representatives, or that it
had any sort of attorney-client relationship with any of such Persons, and (ii)
agrees to indemnify and hold harmless each Seller, its Affiliates, and each of
their respective Representatives against any such assertion made by or on behalf
of any of Purchaser or its shareholders, Affiliates or Representatives.

5.8 Acknowledgment by Purchaser.  THE REPRESENTATIONS AND WARRANTIES BY EACH
SELLER CONTAINED IN THIS AGREEMENT CONSTITUTE THE SOLE AND EXCLUSIVE
REPRESENTATIONS AND WARRANTIES OF SUCH SELLER TO PURCHASER IN CONNECTION WITH
THE TRANSACTIONS CONTEMPLATED HEREBY, AND PURCHASER UNDERSTANDS, ACKNOWLEDGES
AND AGREES THAT ALL OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND OR NATURE
EXPRESSED OR IMPLIED ARE SPECIFICALLY DISCLAIMED BY EACH SELLER.  

 

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Article VI

COVENANTS

6.1 Access to Information Concerning Properties and Records.  

(a) During the period from the date of this Agreement through and including the
earlier of (i) the date this Agreement is terminated in accordance with Section
9.1 and (ii) the Closing Date, Sellers shall upon reasonable prior notice and
during regular business hours, afford Purchaser and its respective
Representatives reasonable access to the personnel, properties, books and
records of Sellers relating to the Business, the Purchased Assets and the
Assumed Liabilities to the extent Purchaser reasonably believes necessary or
advisable to familiarize itself with such properties and other matters and,
during such period, Sellers shall furnish to Purchaser all financial and
operating data and other information concerning the Business as Purchaser may
reasonably request; provided, that Sellers may restrict the foregoing access to
the extent that any applicable Law requires it to restrict such access; and
provided, further, that such access shall not unreasonably disrupt the
operations of Sellers. Notwithstanding anything to the contrary contained in
this Agreement, none of the Sellers shall be required to provide any information
or access that Sellers reasonably believe could violate applicable Law,
including Antitrust Laws, rules or regulations or the terms of any Contract or
cause the waiver of attorney/client or similar privilege.

(b) Nothing contained in this Agreement shall be construed to give to Purchaser,
directly or indirectly, rights to control or direct the Business prior to the
Closing or any other business or operations of Sellers. Prior to the Closing,
Sellers shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision of the Business and shall at all
times exercise complete control and supervision of all of its other businesses
and operations.

(c) Purchaser hereby agrees that it is not authorized to and shall not (and
shall not permit any of its respective Representatives to) contact any
competitor, contractor, vendor, supplier, distributor, customer, agent or
Representative of Sellers with respect to the Business or the transactions
contemplated hereby prior to the Closing without the prior written consent of
Sellers.

6.2 Conduct of Sellers and the Business.  

(a) Sellers agree that, except as (i) set forth in Section 6.2 of the Sellers
Disclosure Letter, (ii) may be required (including, for the avoidance of doubt,
pursuant to Section 6.10) or not otherwise prohibited by this Agreement, (iii)
required by Law (including, for the avoidance of doubt, any applicable fiduciary
duties) or by any Contract to which any Seller or Parent is a party relating to
the Business, or (iv) it relates to the Excluded Assets or Excluded Liabilities,
during the period commencing on the date hereof and ending on the earlier of the
Closing Date and the termination of this Agreement in accordance with Section
9.1, Sellers shall conduct the Business in the ordinary course of business
consistent with past practice, and to the extent consistent therewith (A) use
commercially reasonable efforts to maintain the Business and the Purchased
Assets and preserve Sellers’ current relationships

 

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with licensees of the Business, (B) use commercially reasonable efforts to
perform and comply, in all material respects, with the Assumed Contracts and to
comply with applicable Laws, (C) maintain its books and records relating to the
Purchased Assets in the ordinary course of business consistent with past
practice and (D) use commercially reasonable efforts to preserve the goodwill
embodied in the Controlled Registered Trademarks.

(b) In furtherance and not in limitation of Section 6.2(a), Sellers and Parent
(solely with respect to clauses (iii), (iv) and (vi) – (x) below) agree that,
except as (x) set forth in Section 6.2 of the Sellers Disclosure Letter, (y) may
be required by this Agreement or (z) required by Law (including, for the
avoidance of doubt, any applicable fiduciary duties) or by any Assumed Contract
or Contract relating to the Business to which any Seller is a party or by any
Contract relating to the business of each International JV only as it relates to
the JV Assets (the “JV Business”), as applicable, during the period commencing
on the date hereof and (1) in the case of Sellers, ending on the earlier of the
Closing Date and the termination of this Agreement pursuant to Section 9.1 or
(2) in the case of Parent, ending on the earlier of the date of any JV Asset
Closing (with respect to the JV Assets sold, assigned, transferred and conveyed
to, and the JV Liabilities assumed by, Purchaser on such date) and the
termination of this Agreement pursuant to Section 9.1, (A) Sellers shall not
effect any of the following (as each pertains to or is related to the Business,
the Purchased Assets or the Assumed Liabilities) and (B) Parent shall not and
shall use commercially reasonable efforts (which, for the avoidance of doubt,
shall not include any payments by Parent or its Affiliates or any restrictions
on the business of Parent) to cause the International JVs not to effect any of
the following in clauses (iii), (iv) and (vi) – (x) (as each pertains to or is
related to the JV Business, the JV Assets or the JV Liabilities), in each case,
without the prior written consent of Purchaser (such consent not to be
unreasonably withheld, conditioned or delayed):

(i) amend, renew (except for any Assumed Contracts that renew  automatically in
accordance with their terms) or terminate any Assumed Contract; provided,
however, that the expiration of any Assumed Contract in accordance with its
terms shall not be deemed to be restricted under this clause;

(ii) enter into any Contract relating to the Purchased Assets;

(iii) sell, transfer, lease, exclusively license or otherwise dispose of any
Purchased Assets or JV Assets; provided, that this restriction shall not impair
the ability of the International JVs to non-exclusively license any JV IP
Assets;

(iv) except as required by GAAP or otherwise by applicable Law, make any change
in any method of accounting or auditing practice affecting the Purchased Assets
or JV Assets, as applicable;

(v) pay, discharge, settle or satisfy any Assumed Liabilities, including with
respect to any of the matters set forth in Section 4.6 of the Sellers Disclosure
Letter, other than payments, discharges, settlements or satisfactions in the
ordinary course of business consistent with past practice to the extent that
such payment, settlement, discharge or satisfaction would not increase the
Assumed Liabilities, by an aggregate amount in excess of $50,000;

 

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(vi) allow to be subjected, or voluntarily subject, any of the Purchased Assets
or JV Assets, as applicable, to any Lien other than Permitted Liens and other
than any Lien that will be extinguished at or prior to the Closing;

(vii) incur or guarantee any obligation or indebtedness for borrowed money of
any Person on behalf of the Business or the JV Business, as applicable;

(viii) commence or settle any action, suit or proceeding at law or in equity
relating to the Business or the JV Business, as applicable;

(ix) acquire or agree to acquire any assets that would be material, individually
or in the aggregate, to the Business or the JV Business, as applicable; or

(x) commit or agree to do any of the foregoing.

6.3 Efforts to Close; Antitrust Laws.  

(a) Except as otherwise provided in this Section 6.3 and subject to Section 2.6,
Purchaser and Sellers shall, and shall cause their respective Affiliates and
Representatives to, cooperate and use their respective commercially reasonable
efforts to take, or cause to be taken, all appropriate action, and to make, or
cause to be made, all filings necessary, proper or advisable under applicable
Laws and to consummate and make effective the transactions contemplated by this
Agreement, including their respective commercially reasonable efforts to obtain,
prior to the Closing Date, all Permits, consents, approvals, authorizations,
qualifications and Orders of Governmental Entities as are necessary for
consummation of the transactions contemplated by this Agreement and to fulfil
the conditions to consummation of the transactions contemplated hereby set forth
in Section 7.2 and Section 7.3.  

(b) Purchaser and Sellers have filed the Notification and Report Forms required
under the HSR Act with respect to the transactions contemplated by this
Agreement with the Antitrust Division of the United States Department of Justice
and the Federal Trade Commission and paid the required filing fee. Purchaser and
Sellers shall use their respective reasonable best efforts to make any other
filings required under any other Antitrust Law as promptly as practicable
following the date hereof.

(c) Purchaser and Sellers shall consult and cooperate with one another in
connection with the preparation of their respective Notification and Report
Forms, and consider in good faith the views of the other party, in connection
with any analyses, appearances, presentations, memoranda, briefs, arguments,
opinions and proposals made or submitted by or on behalf of any party in
connection with proceedings under or relating to any Antitrust Laws and in
connection with resolving any investigation or other inquiry concerning the
Purchase or any of the other transactions contemplated by this Agreement
initiated by any Antitrust Authority.

(d) Purchaser shall use reasonable best efforts to obtain the required consents
from Antitrust Authorities, including antitrust clearance under the HSR Act and
under any other Antitrust Law, to the extent required, as promptly as
practicable, and in any event prior to the End Date.

 

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(e) Purchaser shall not withdraw its Notification and Report Form without the
express written consent of Sellers.  Neither Purchaser nor any Seller shall
initiate a request for early termination of the waiting period under the HSR Act
without the consent of the other party.

(f) Purchaser shall be responsible for the payment of all filing fees under the
HSR Act.

(g) Notwithstanding the foregoing or any other provision of this Agreement,
nothing contained in this Agreement shall require or obligate Purchaser or any
of its Affiliates to, and none of the Sellers shall, without the prior written
consent of Purchaser:  (i) in the event that any administrative or judicial
action or proceeding is instituted (or threatened to be instituted) by any
Governmental Entity or private party challenging the transactions contemplated
hereby, agree to defend any such action or actions; (ii) commence any litigation
with any Governmental Entity or third party; or (iii) pay or commit to pay any
material amount of cash or other consideration, or incur or commit to incur any
material Liability or other obligation, in connection with obtaining any
authorization, consent, order, registration or approval; or (iv) agree or
otherwise be required to sell, divest, dispose of, license, hold separate, or
take or commit to take any action that limits in any respect its freedom of
action with respect to, or its ability to retain, any businesses, products,
rights, services, licenses, or assets of Purchaser or any of its Affiliates,
Purchased Assets, or any interest or interests therein.

(h) Purchaser will have on the Closing Date unrestricted cash on hand sufficient
to pay all amounts to be paid or repaid by Purchaser under this Agreement
(whether payable on or after the Closing) and all of Purchaser’s and its
Affiliates’ fees and expenses associated with the transactions contemplated in
this Agreement.

6.4 Public Announcements.  Parent and Sellers, on the one hand, and Purchaser,
on the other hand, each shall (a) consult with each other before issuing any
press release or otherwise making any public statement with respect to the
transactions contemplated by this Agreement, (b) provide to the other party for
review a copy of any such press release or public statement and (c) not issue
any such press release or make any such public statement prior to such
consultation and review and the receipt of the prior consent of the other party
to this Agreement, unless required by applicable Law or regulations of any
applicable stock exchange, in which case, the party required to issue the press
release or make the public statement shall, prior to issuing such press release
or making such public statement, use its commercially reasonable efforts to
allow the other party reasonable time to comment on such release or statement to
the extent practicable.  Notwithstanding anything in the foregoing to the
contrary, nothing in this Section 6.4 shall limit the rights of Sellers, Parent
or their respective Affiliates to make public statements about their respective
actions under Section 9.1 without prior consultation with Purchaser.

6.5 Notification of Certain Matters.  

(a) Purchaser, on the one hand, and Sellers, on the other hand, shall use their
respective commercially reasonable efforts to promptly notify each other of any
material actions, suits, claims or proceedings in connection with the
transactions contemplated by this Agreement

 

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commenced or, to the Knowledge of Purchaser or the Knowledge of Sellers,
threatened, against Sellers or Purchaser, as the case may be, or any of their
respective Affiliates.

(b) If, prior to the Closing, Purchaser shall have actual knowledge of any
breach of a representation, warranty, covenant, agreement or condition of
Sellers, Purchaser shall promptly notify Sellers of such knowledge in reasonable
detail.

6.6 Post-Closing Access to Records and Personnel; Litigation Support.  

(a) For a period of seven (7) years after the Closing Date, Purchaser shall
preserve and retain all corporate, accounting, Tax, legal, auditing and other
books and records of the Business (including (i) any documents relating to any
action, claim, lawsuit, demand, inquiry, hearing, investigation, notice of a
violation or noncompliance, litigation, proceeding, arbitration, appeal or other
dispute and (ii) all Returns, schedules, work papers and other material records
or other documents relating to Taxes of the Business) relating to the conduct of
the Business prior to the Closing Date.  Notwithstanding the foregoing, during
such seven (7) year period, Purchaser may dispose of any such books and records
which are offered to, but not accepted by, Sellers.  

(b) Following the Closing, the parties hereto will allow each other reasonable
access to their books and records related to the Business, Purchased Assets and
Assumed Liabilities and such personnel having knowledge of the location or
contents of such books and records, as may be reasonably necessary for
legitimate business reasons; provided, however, that no such access shall
unreasonably interfere with Sellers’ and Purchaser’s operation of their
respective businesses.  Notwithstanding anything to the contrary contained in
this Agreement, no Person shall be required to provide any information or access
that such Person reasonably believes could violate applicable Law, including
Antitrust Laws, rules or regulations or the terms of any Contract or cause the
waiver of attorney/client or similar privilege. Each party shall be entitled to
recover from the other its out-of-pocket costs (including copying costs)
incurred in providing such books and records or personnel to the other
party.  The requesting party will hold in confidence all confidential
information identified as such by, and obtained from, the disclosing party or
any of its Representatives, except as otherwise required by Law.

(c) If and for so long as any Seller or Purchaser is actively contesting or
defending against any action, claim, lawsuit, demand, inquiry, hearing,
investigation, notice of a violation or noncompliance, litigation, proceeding,
arbitration, appeal or other dispute, brought by a Third Party in connection
with (i) the Purchase or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction on or prior to the Closing Date involving the
Business, the Purchased Assets or the Assumed Liabilities, the non-contesting or
non-defending party or parties shall, at the sole cost and expense of the
contesting or defending party (except as otherwise provided in Section 8.7(b)),
(x) cooperate with the contesting or defending party and its counsel in the
defense or contest, (y) make available its or their personnel (including to act
as a witness) and (z) provide such access to its or their books and records as
shall be necessary or reasonably requested in connection with the defense or
contests; provided, however, that no such cooperation or access shall
unreasonably interfere with such non-contesting or non-defending party’s
operation of its businesses.  All non-public information received pursuant to
this Section 6.6 shall be kept

 

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confidential, except as otherwise required by Law.  Notwithstanding anything to
the contrary contained in this Agreement, no Person shall be required to provide
any access that such Person reasonably believes could violate applicable Law,
including Antitrust Laws, rules or regulations or the terms of any Contract or
cause the waiver of attorney/client or similar privilege.  Each party shall be
entitled to recover from the other its out-of-pocket costs incurred in providing
such personnel and access to the other party.

(d) The obligations of Purchaser under this Section 6.6 shall be binding upon
the successors and assigns of Purchaser.  If Purchaser or any of its successors
or assigns (i) consolidates with or merges into any other Person or (ii)
transfers all or any portion of the Purchased Assets to any other Person
(whether by asset sale, stock sale or otherwise), proper provision shall be made
so that the successors and assigns of Purchaser honor the obligations set forth
in this Section 6.6.

6.7 Tax Matters.  

(a) All stamp, transfer, documentary, sales and use, value added, registration
and other such taxes and fees (including any penalties and interest) incurred in
connection with this Agreement or the Purchase (collectively, the “Transfer
Taxes”), shall be borne by Purchaser, and Purchaser shall properly file on a
timely basis all necessary Returns and other documentation with respect to any
Transfer Tax and provide to Sellers evidence of payment of all Transfer
Taxes.  If required by applicable Law, the parties hereto shall, and shall cause
their respective Affiliates to, join in the execution of any such Returns and
other documentation; provided, however, that, to the extent that any of the
Sellers is required to join in the execution of any such Return or
documentation, Purchaser shall prepare and deliver to the Sellers a copy of such
Return at least five (5) Business Days before the due date thereof and shall not
file such Return without the consent of the Sellers, which consent shall not be
unreasonably withheld, conditioned or delayed.

(b) All personal property Taxes, real property Taxes and similar ad valorem
obligations levied with respect to the Purchased Assets for any Straddle Period
shall be apportioned between the Sellers, on the one hand, and Purchaser, on the
other hand, as of the Closing Date based on the number of days of such taxable
period included in the Pre-Closing Period, and the number of days of such
taxable period in the Post-Closing Period.  The Sellers shall be liable for the
proportionate amount of such Taxes that is attributable to the Pre-Closing
Period, and the Purchaser shall be liable for the proportionate amount of such
Taxes that is attributable to the Post-Closing Period.  The Purchaser shall be
responsible for preparing and filing (or causing to be prepared and filed) all
periodic non-income tax Returns required to be filed after the Closing
Date.  With respect to any such Return that relates to a Straddle Period, the
Purchaser shall provide the Sellers with a copy of such completed Return and a
statement (with which the Purchaser will make available supporting schedules and
information) certifying the amount of Tax shown on such Return that is allocable
to the Sellers pursuant to this Section 6.7(b) at least thirty (30) days prior
to the due date (including any extension thereof) for filing such Return, and
the Sellers shall have the right to review and approve such Return and statement
prior to the filing of such Return (such approval not be unreasonably withheld,
conditioned or delayed).  The Purchaser and the Sellers agree to consult and to
attempt in good faith to resolve any issues arising as a result of the review of
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the Sellers, on the one hand, and the Purchaser, on the other hand, shall
provide reimbursement to the other party as necessary to give effect to this
Section 6.7(b).

(c) The Sellers shall be entitled to retain or, to the extent actually received
by or otherwise available to the Purchaser or any of its Affiliates (as
reasonably determined by the Purchaser), receive payment from the Purchaser or
any of its Affiliates of, any refund or credit with respect to Taxes (including
refunds arising by reason of amended Returns filed after the Closing or
otherwise) paid by the Sellers with respect to any Pre-Closing Period relating
to the Purchased Assets and the Business.  The Purchaser shall be entitled to
retain or, to the extent actually received by or otherwise available to the
Sellers or any of their respective Affiliates (as reasonably determined by the
Sellers), receive payment from the Sellers or any of their respective Affiliates
of, any refund or credit with respect to Taxes (including refunds arising by
reason of amended Tax Returns filed after the Closing or otherwise) with respect
to any Post-Closing Period relating to the Purchased Assets and the Business.

(d) Purchaser, on the one hand, and the Sellers, on the other hand, agree to
furnish or cause to be furnished to each other, upon request, as promptly as
practicable, such information and assistance relating to the Purchased Assets
(including access to books and records) as is reasonably necessary for the
preparation or filing of all Returns, the making of any election relating to
Taxes, the application for exemption or refund of Tax, and the preparation,
prosecution, or defense of any Tax Contest.  Any expenses incurred in furnishing
such information or assistance pursuant to this Section 6.7(d) shall be borne by
the party requesting it.

(e) Neither Purchaser nor any Affiliate of Purchaser shall amend any Return with
respect to any Pre-Closing Period with respect to the Business or the Purchased
Assets without the prior consent of the Sellers, which consent shall not be
unreasonably withheld, conditioned or delayed.

(f) If, following the Closing Date, Purchaser receives from any Taxing Authority
written notice of any Tax Contest with respect to which Sellers may have any
liability for Sellers’ Taxes, Purchaser shall use its commercially reasonable
efforts to forward to Sellers all such written notice; provided, that
Purchaser’s failure to provide a copy of such notice to Sellers shall not
relieve Sellers from their obligations under Section 8.2, except to the extent
that the Sellers are actually and materially prejudiced thereby.  Sellers shall
have the right, at Sellers’ expense, to control, manage and be responsible for,
and to contest or settle, any Tax Contest in connection with such notice, to the
extent that such notice relates to Sellers’ Taxes; provided that Purchaser shall
have the right, at Purchaser’s expense, to participate in such Tax Context, to
the extent that such Tax Contest relates to the Business or the Purchased
Assets.  Sellers shall not settle such Tax Contest, to the extent such Tax
Contest relates to the Business or the Purchased Assets, without the consent of
Purchaser, which consent will not be unreasonably withheld, conditioned or
delayed.  Sellers shall keep Purchaser informed of the progress of all such Tax
Contests and shall provide copies of all written communications with any Taxing
Authority related to such Tax Contests, in each case to the extent such Tax
Contests relate to the Business or the Purchased Assets.

 

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(g) Notwithstanding anything herein to the contrary, neither Purchaser nor any
of its respective Representatives shall have access to the Returns or related
workpapers of any Sellers or any of their respective Affiliates that do not
relate to the Business or the Purchased Assets.

6.8 Bulk Sales Act.  Purchaser hereby waives compliance by Sellers with respect
to any applicable “bulk-sale”, “bulk-transfer”, or similar Laws of any
jurisdiction in connection with the transfer or sale to Purchaser of the
Purchased Assets.  

6.9 Further Assurances.  Subject to Section 2.6, at any time and from time to
time after the Closing Date, without further consideration, each party hereto
shall, at the reasonable request of the other party hereto (including in any
case where the laws of a particular jurisdiction require different or additional
documentation to that contemplated herein to effect the transfer of any
Purchased Asset from Sellers to Buyer), execute and deliver such further
instruments of conveyance, assignment, assumption and transfer with respect to
the Purchased Assets and the Assumed Liabilities and take such further action as
may be necessary or appropriate in order to (a) effectuate the intent of this
Agreement, (b) perfect or record title of Purchaser in the Purchased Assets, (c)
put Purchaser in possession of the Purchased Assets and (d) provide such other
party in all material respects with the intended benefits of this Agreement.  If
Purchaser receives any of the Excluded Assets, Purchaser agrees to promptly
return or cause the return to the applicable Seller of, or allow such Seller or
its Representatives to remove and recover, such assets at such Seller’s
expense.  In furtherance of the foregoing, with respect to such Excluded Assets
that such Seller will remove and recover, Purchaser shall grant to such Seller
and its Representatives reasonable access to Purchaser’s property from and after
the Closing Date for a reasonable period of time not to exceed one
hundred-eighty (180) days to permit such Seller and its Representatives to
remove and recover such Excluded Assets and make any other appropriate
arrangements with respect thereto.  If any Seller retains any of the Purchased
Assets, such Seller agrees to promptly transfer or cause the transfer of such
assets to Purchaser at Purchaser’s expense.

6.10 Transfer of JV Assets.

(a) Subject to the terms and conditions herein (including Section 6.10(c)),
Parent agrees to use its commercially reasonable efforts to cause each Seller
and each International JV to sell, assign, transfer and convey, or to cause to
be sold, assigned, transferred and conveyed, the JV Assets to Purchaser at the
applicable purchase price for such JV Assets set forth on Annex A and otherwise
on terms and conditions substantially equivalent to those contained in this
Agreement, to the extent applicable (provided, that any dollar amounts shall be
adjusted as necessary to reflect the same proportion that the Purchase Price
bears to the JV Asset Purchase Price), including by the International JVs
agreeing to amend existing agreements with Sellers to allow Sellers to assign
their respective interests in the JV Assets to Purchaser.  Purchaser agrees to
purchase from each Seller and International JV all right, title and interest of
each Seller and International JV in and to the JV Assets, and Purchaser agrees
to assume, perform and pay all Liabilities of Parent, Sellers and each
International JV primarily related to the JV Assets arising after the applicable
JV Asset Closing with respect to the period from and after the applicable JV
Asset Closing (the “JV Liabilities”).  The parties hereto mutually agree and
understand that Purchaser shall, for each

 

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such sale, assignment, transfer and conveyance of the JV Assets, as the purchase
price and in full payment thereof, pay to the applicable International JV (or
Parent as agent for such International JV), the amount set forth on Annex A
allocable to each International JV for the applicable JV Assets (each, the “JV
Asset Purchase Price”) simultaneously with the applicable JV Asset Closing.  In
connection therewith, at such time that the applicable International JV is
prepared to transfer the JV Assets, Parent shall give Purchaser notice thereof
(each such transfer, a “Post-Closing Acquisition”).  Other than as provided for
in Section 6.10(b) and pursuant to the terms of any Assumed Contract, Purchaser
and its Affiliates shall have no rights with respect to the SHARPER IMAGE brand
or JV Business in a particular Joint Venture Territory prior to the Post-Closing
Acquisition for such Joint Venture Territory, and Purchaser and its Affiliates
shall not enter (and shall not authorize or enable any Third Party to enter)
such Joint Venture Territory prior to such Post-Closing Acquisition for any
purpose related to the JV Business or use in such Joint Venture Territory the
SHARPER IMAGE brand or any Intellectual Property confusingly similar to the mark
SHARPER IMAGE or any of the JV Assets.  If Sellers learn of a Third Party
licensee of Purchaser that is violating an Assumed Contract or other agreement
with Purchaser and using the SHARPER IMAGE brand or any Intellectual Property
confusingly similar to the mark SHARPER IMAGE or any of the JV Assets in a Joint
Venture Territory (prior to the Post-Closing Acquisition for such Joint Venture
Territory), Sellers may request that Purchaser, and Purchaser shall, direct such
licensee to cease and desist such conduct.  Until such time as the JV Assets for
a particular Joint Venture Territory are assigned as of the date of the related
Post-Closing Acquisition, any and all royalties received by Purchaser and its
Affiliates from their licensees for the use of the SHARPER IMAGE brand or any
Intellectual Property confusingly similar to the mark SHARPER IMAGE or any of
the JV Assets in such Joint Venture Territory (whether under an Assumed Contract
or otherwise) shall be promptly paid to Sellers for the benefit of the
applicable International JV.  For the avoidance of doubt, this includes JV
Jurisdiction Royalties.

(b) Notwithstanding the foregoing, in the event that one or more Post-Closing
Acquisitions is not consummated by the eighteen (18) month anniversary of the
Closing Date (the “Post-Closing Acquisition End Date”), or, in the case of ICO
Brands, L.P. only, in the event that the Post-Closing Acquisition involving ICO
Brands, L.P. is not consummated by the nine (9) month anniversary of the Closing
Date (“Canadian JV End Date”), then Purchaser shall designate in writing to
Parent, within ten (10) days following such applicable anniversary, at its sole
discretion that, either (i) Purchaser and Parent shall execute and deliver to
the Escrow Agent a joint written direction instructing the Escrow Agent to
disburse the remaining portion of the JV Asset Amount (such amount in respect of
the applicable JV Assets remaining as of the applicable anniversary date, the
“Remaining JV Escrow Amount”) to Purchaser from the Escrow Account, or (ii)
Purchaser and Parent shall execute and deliver to the Escrow Agent a joint
written direction instructing the Escrow Agent to disburse (A) fifty percent
(50%) of the Remaining JV Escrow Amount to Parent and (B) the remaining fifty
percent (50%) of the Remaining JV Escrow Amount to Purchaser, and, thereafter,
for such time as the International JV is licensed to use the JV Assets, upon
Parent’s receipt of funds disbursed by the applicable International JV to Parent
(as an equity holder of the applicable International JV), Parent shall pay
Purchaser an amount equal to a share of all such distributions for that portion
of the distributions related to the JV Assets, as determined by Sellers in their
reasonable discretion (taking into account, among other things, the net revenue
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the JV Assets and any costs and expenses incurred by the applicable
International JV related to its JV Assets), less any expenses incurred by
Sellers or Parent relating to the JV Assets (including, for the avoidance of
doubt, any maintenance, application or registration fees), made at any time
after such written direction (each, a “Synthetic Acquisition”).  At Purchaser’s
request, Parent shall provide reasonable documentation supporting the
distribution allocation set forth in the previous sentence. If Purchaser learns
of a Third Party licensee of Sellers or their Affiliates that is using the
SHARPER IMAGE brand or any Intellectual Property confusingly similar to the mark
SHARPER IMAGE outside of a Joint Venture Territory (prior to the Post-Closing
Acquisition for such Joint Venture Territory), Purchaser may request that
Sellers, and Sellers shall, direct such licensee to cease and desist such
conduct.  Any and all royalties received by Sellers or their Affiliates from
their licensees for the use of the SHARPER IMAGE brand or any Intellectual
Property confusingly similar to the mark SHARPER IMAGE outside of a Joint
Venture Territory shall be promptly paid to Purchaser.  If an International JV
takes or threatens to take any action (including any omission) that has, or
would reasonably be expected to have, an adverse effect on Purchaser in respect
of Purchaser’s commercialization of the SHARPER IMAGE brand in any territory
other than a Joint Venture Territory, and Sellers possess a right pursuant to
any provision of an agreement between Sellers or their Affiliates and the
International JV set forth on Section 6.10(b) of the Sellers Disclosure Letter
to prevent, cause the cessation of, or obtain damages for such action or
threatened action, Sellers shall (at Purchaser’s direction and cost) take such
steps as Purchaser may reasonably request to exercise and, to the extent
necessary, enforce such right; provided that in no event shall Sellers or their
Affiliates have any obligation to terminate any agreement with such
International JV or to take any action that would provide such International JV
with a basis to terminate any such agreement or any other agreement with Sellers
or their Affiliates, including Parent; and further provided that, Sellers and
their Affiliates shall have no obligation to take any steps requested by
Purchaser that Sellers or their Affiliates would not reasonably have been
expected to take in corresponding circumstances had they arisen prior to the
Closing. For the avoidance of doubt, the provisions of the previous sentence
shall not apply with respect to any Joint Venture Territory after the
Post-Closing Acquisition for such territory. The parties hereto acknowledge and
agree that each other party hereto shall have no continuing obligation to pursue
or effect the purchase or sale of any JV Assets following the Post-Closing
Acquisition End Date or the Canadian JV End Date, as applicable based on the
particular JV Assets at issue.

(c) Notwithstanding anything to the contrary contained in this Agreement or
otherwise, neither Parent nor any of its Affiliates shall be required to repay
any indebtedness for borrowed money, amend any Contract to increase the amount
payable thereunder or otherwise to be materially more burdensome to Parent or
any of its Affiliates, commence any litigation, offer or grant any accommodation
(financial or otherwise) to any Third Party or Governmental Entity, pay any
amount or bear any other incremental economic burden or incur any other
liability or obligation or become subject to any restriction or limitation to
obtain any authorization, approval, consent, negative clearance or waiver
contemplated to be obtained pursuant to this Section 6.10.  Without limiting the
foregoing, in no event shall Parent’s obligation to use commercially reasonable
efforts or take the actions set forth in this Section 6.10, to the extent so
provided in this Agreement or the other documents, certificates or agreements
delivered in connection with this Agreement require that Parent or its
Affiliates (including Sellers) (i) make any payment to any International JV in
connection with the Post-

 

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Closing Acquisition of JV Assets that exceeds the applicable JV Asset Purchase
Price allocable in respect thereof that Parent has received from the escrow
account established pursuant to the Escrow Agreement (the “Escrow Account”),
(ii) acquire or seek to acquire control of, either contractually or through the
purchase of equity in, any International JV, (iii) compensate any International
JV in connection with transactions contemplated by this Agreement or the
transfer of the JV Assets or incur any obligation or liability in connection
therewith, (iv) take or omit to take any action that would (upon the advice of
counsel) violate applicable Law (including any fiduciary obligation of Parent to
such International JV or any equityholder thereof), or (v) entitle Purchaser to
any rights with respect to the governance or operations of any International JV
or obligate Parent or its Affiliates (including Sellers) to assert any rights in
respect thereof in consultation with Purchaser, except as set forth in Section
6.10(b).

(d) Notwithstanding the provisions of Section 6.10(a), Section 6.10(b), and
Section 6.12, it is acknowledged and agreed that following the Closing, (i) for
so long as they continue to own or control the JV Assets for a particular Joint
Venture Territory, Sellers, the International JVs and their licensees, if any,
may manufacture and produce, or have manufactured and produced, goods branded
with the JV Assets (which may include trademarks identical or similar to the
trademarks included within the Purchased Assets) anywhere in the world, in each
case solely in connection with goods that will be marketed, sold and otherwise
exploited within such Joint Venture Territory, and (ii) Purchaser and its
licensees may manufacture and produce, or have manufactured and produced, goods
branded with the Purchased Assets (which may include trademarks identical or
similar to the trademarks included within the JV Assets) anywhere in the world,
in each case solely in connection with goods and services that will be marketed,
sold and otherwise exploited outside of a Joint Venture Territory (until the
Post-Closing Acquisition for such territory). The Parties hereby grant, or will
cause to be granted, to each other and the Persons referenced above all rights
to Intellectual Property consistent with the preceding sentence.

6.11 JV Asset Amount; Escrow.

(a) JV Asset Amount.  In consideration of the sale, transfer, conveyance and
delivery of all of the JV Assets from the International JVs as contemplated by
Section 6.10, Purchaser shall, in full payment thereof, deposit with the Escrow
Agent, in readily available funds, the JV Asset Amount in accordance with
Section 3.1(b).

(b) Escrow.  The JV Asset Amount shall be deposited with the Escrow Agent in a
segregated trust account at the Closing by Purchaser and shall be held and
disbursed pursuant to the terms of the Escrow Agreement and in accordance with
Section 6.10(b).  The parties hereto shall, at each Post-Closing Acquisition,
execute and deliver to the Escrow Agent a direction to disburse under the Escrow
Agreement instructing the Escrow Agent to disburse the pro rata portion of the
JV Asset Amount allocable to the applicable International JV as set forth on
Annex A.  

6.12 Camelot Agreement. If  Camelot takes or threatens to take any action
(including any omission) that has or would reasonably be expected to have an
adverse effect on an International JV in respect of the International JV’s
commercialization of the SHARPER IMAGE brand or the JV Assets in its Joint
Venture Territory, and Purchaser possesses a right

 

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pursuant to any provision of the Camelot Agreement set forth on Section 6.12 of
the Sellers Disclosure Letter to prevent, cause the cessation of, or obtain
damages for such action or threatened action, Purchaser shall (at Sellers’
direction and cost) take such steps as Sellers may reasonably request to
exercise and, to the extent necessary, enforce such right; provided that in no
event shall Purchaser have any obligation to terminate the Camelot Agreement or
to take any action that would provide Camelot with a basis to terminate the
Camelot Agreement; and further provided that, Purchaser shall have no obligation
to take any steps requested by Sellers that Sellers would not reasonably have
been expected to take in corresponding circumstances had they arisen prior to
the Closing.  For the avoidance of doubt, the provisions of this Section 6.12
shall not apply with respect to any Joint Venture Territory after the
Post-Closing Acquisition for such territory.

Article VII

CONDITIONS PRECEDENT

7.1 Conditions to the Obligations of Each Party.  The respective obligations of
Purchaser, Parent and Sellers to consummate and cause the consummation of the
Purchase are subject to the satisfaction or waiver in writing by Parent, Sellers
and Purchaser at or before the Closing Date of each of the following conditions:

(a) Injunctions; Illegality.  No Governmental Entity shall have issued, enacted,
entered, promulgated or enforced any Law or Order (that has not been vacated,
withdrawn or overturned) restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement.

(b) HSR Act. Any waiting periods under the HSR Act with respect to the
transactions contemplated by this Agreement shall have expired.

(c) Consents. Sellers shall have received evidence of any consents or waivers
required, pursuant to the terms of the Financing Facility, to permit the
consummation of the transactions contemplated by this Agreement.

7.2 Conditions to the Obligations of Purchaser.  The obligations of Purchaser to
consummate and cause the consummation of the Purchase are subject to the
satisfaction or waiver by Purchaser on or prior to the Closing Date of the
following further conditions:

(a) Performance.  All of the agreements and covenants of Parent and Sellers to
be performed prior to the Closing pursuant to this Agreement shall have been
duly performed in all material respects.

(b) Representations and Warranties.  (i) The Fundamental Representations shall
be true and correct in all respects as of the date when made and as of the
Closing Date as if made at and as of such time, (ii) the representations and
warranties contained in Section 4.5(c) and Section 4.12(b) shall be true and
correct in all material respects and, with respect to the representations and
warranties related to any material Controlled Registered Trademarks contained in
Section 4.12(b), in all respects, as of the date when made and as of the Closing
Date as if made at and as of such time and (iii) all other representations and
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Sellers contained in Article IV shall be true and correct (without regard to any
qualifications as to materiality or Material Adverse Effect (or any correlative
term) contained in such representations and warranties) as of the date when made
and as of the Closing Date as if made at and as of such date (other than those
representations and warranties made as of a specified date, which
representations and warranties shall be measured as of such specified date),
except, in the case of clause (iii), for such failures to be true and correct
that have not had and would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.

(c) Closing Deliverables.  Each Seller shall have delivered or caused to be
delivered to Purchaser the items set forth in Section 3.3(b) and Parent shall
have delivered to Purchaser and the Escrow Agent, the item set forth in Section
3.3(e).

7.3 Conditions to the Obligations of Sellers and Parent.  The obligations of
Sellers and Parent to consummate and cause the consummation of the Purchase are
subject to the satisfaction or waiver by Sellers and Parent, on or prior to the
Closing Date, of the following further conditions:

(a) Performance.  All of the agreements and covenants of Purchaser to be
performed prior to the Closing pursuant to this Agreement shall have been duly
performed in all material respects.

(b) Representations and Warranties.  The representations and warranties of
Purchaser contained in Article V shall be true and correct at and as of the
Closing Date as if made at and as of such date (other than those representations
and warranties made as of a specified date, which representations and warranties
shall be true and correct as of such specified date), except for such failures
to be true and correct that have not and would not reasonably be expected to,
individually or in the aggregate, prevent, materially delay or impair
Purchaser’s ability to consummate the transactions contemplated by this
Agreement.

(c) Closing Deliverables.  Purchaser shall have delivered or caused to be
delivered to Sellers or the Escrow Agent, as applicable, the items set forth in
Section 3.3(c) and Section 3.3(d).

7.4 Frustration of Closing Conditions.  Neither Purchaser nor any Seller may
rely on the failure of any condition set forth in this Article VII to be
satisfied if such failure were caused by such party’s failure to act in good
faith or such party’s failure to comply with Section 6.3.

Article VIII

SURVIVAL; INDEMNIFICATION

8.1 Survival of Representations and Warranties.  The respective representations
and warranties of Sellers, Parent and Purchaser contained in this Agreement
shall survive the Closing until the date that is twelve (12) months from the
Closing Date, except that the representations and warranties contained in (a)
Section 4.1 (Due Organization, Good Standing and Corporate Power), Section 4.2
(Authorization; Noncontravention), Section 4.10 (Finders; Brokers), Section 5.1
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Purchaser), Section 5.2 (Authorization; Noncontravention) and Section 5.6
(Finders; Brokers) (such representations and warranties, collectively, the
“Fundamental Representations”), Section 4.7 (Tax Matters) shall survive until
sixty (60) days after the expiration of the applicable statute of limitations,
including any waivers or extensions, with respect to the particular matter that
is the subject matter thereof, (b) Section 4.12 (Intellectual Property), other
than Section 4.12(b), shall survive until the date that is three (3) years from
the Closing Date and (c) Section 4.5(c) (Assumed Contracts; Title), Section
4.12(b) (Intellectual Property) shall survive until the date that is six (6)
years from the Closing Date. Each covenant and other agreement of Purchaser,
Parent or any Seller hereunder shall survive in accordance with its terms.  No
Person shall be liable for any claim for indemnification under this Article VIII
unless a Claim Certificate (as defined below) is delivered by the Person seeking
indemnification to the Person from whom indemnification is sought prior to the
expiration of the applicable survival period, in which case the representation,
warranty, covenant or agreement which is the subject of such claim shall
survive, to the extent of the claims described in such Claim Certificate only,
until such claim is resolved, whether or not the amount of the Losses resulting
from such breach has been finally determined at the time the notice is given.  

8.2 Indemnification by Sellers and Parent.  Subject to the other provisions of
this Article VIII, from and after the Closing, Sellers and Parent agree to and
shall jointly and severally indemnify Purchaser and its Subsidiaries and direct
and indirect parent companies, and its and their Representatives, shareholders,
partners, members, successors and assigns (the “Purchaser Indemnitees”) and save
and hold each of them harmless against any Losses suffered, incurred or paid by
them to the extent such Losses are a result of, arise out of or are related to:
(a) any failure of any representation or warranty made by Sellers or Parent in
this Agreement or in any certificate delivered hereunder to be true and correct
in all respects  ; (b) any breach of any covenant or agreement by Sellers or
Parent contained in this Agreement or any ancillary agreement contemplated by
this Agreement and (c) any Excluded Liability.

8.3 Indemnification by Purchaser.  Subject to the other provisions of this
Article VIII, from and after the Closing, Purchaser agrees to and shall
indemnify Sellers and their respective Subsidiaries and direct and indirect
parent companies, and their respective Representatives, shareholders, partners,
members, managers, successors and assigns (the “Seller Indemnitees”) and save
and hold each of them harmless against any Losses suffered, incurred or paid by
them to the extent such Losses are a result of, arise out of or are related to:
(a) any failure of any representation or warranty made by Purchaser in this
Agreement or in any certificate delivered hereunder to be true and correct in
all respects; (b) any breach of any covenant or agreement by Purchaser contained
in this Agreement or any ancillary agreement contemplated by this Agreement and
(c) any Assumed Liability.

8.4 Limitation on Indemnification.  Notwithstanding anything to the contrary
contained in this Agreement, neither Purchaser nor any Seller, as the case may
be, shall be liable for any claim for indemnification pursuant to (i) Section
8.2(a) or (ii) Section 8.3(a), as the case may be, unless and until the
aggregate amount of Qualifying Losses which may be recovered from Sellers,
Parent or Purchaser, as the case may be, pursuant to such provisions of this
Agreement equals or exceeds the Deductible, in which case Sellers and Parent, on
the one hand, or Purchaser, on the other hand, as the case may be, shall be
liable only for the aggregate amount of Qualifying Losses in excess of the
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herein, the maximum aggregate amount of indemnifiable Losses which may be
recovered for indemnification pursuant to (x) Section 8.2(a) or (y) Section
8.3(a), as the case may be, shall be an amount equal to $7,500,000.00 (the
“General Cap”); provided, further, that (1) the foregoing limitations shall not
apply to a claim for indemnification to the extent such claim is based upon a
breach of any of the Fundamental Representations, or the representations and
warranties contained in Section 4.5(c), Section 4.12(b), or Section 4.7 and (2)
the General Cap shall not apply to a claim for indemnification pursuant to
Section 8.2(a) for a breach of Section 4.12(a), (c) or (d) for which the maximum
aggregate amount of indemnifiable Losses which may be recovered for
indemnification shall be an amount equal to $15,000,000.00; and provided,
further, that the maximum aggregate amount of Losses which may be recovered from
Sellers and Parent pursuant to Section 8.2, on the one hand, and Purchaser
pursuant to Section 8.3, on the other hand, in each case, shall not exceed an
amount equal to the Purchase Price; provided, further, that for purposes of
determining the amount of any Losses that are the subject of a claim for
indemnification pursuant to Section 8.2(a) or Section 8.3(a), the
representations and warranties made by Parent, Sellers or Purchaser, as
applicable, shall be read without regard to any qualifications as to materiality
or material adverse effect (or any correlative terms).  Any indemnity by Sellers
with respect to a breach of any of the representations and warranties contained
in Section 4.7 (Tax Matters) shall be limited to Taxes that are incurred in or
attributable to any Pre-Closing Period. Without limiting the foregoing, no
Indemnified Party shall be entitled to indemnification under this Article VIII
with respect to special, exemplary or punitive damages; provided, that damages
payable to a Third Party by an Indemnified Party shall constitute direct damages
notwithstanding the characterization of such damages vis-à-vis the Third Party.

8.5 Losses Net of Insurance, etc.  The amount of any Loss for which
indemnification is provided under Section 8.2 or Section 8.3 shall be net of
(i) any amounts recovered by the Indemnified Party (net of any costs of
investigation of the underlying claim and of collection) pursuant to any
indemnification by or indemnification agreement (other than this Agreement) with
any Person who is not an Affiliate of such Indemnified Party and (ii) any
insurance proceeds under a third-party insurance policy (net of any costs of
investigation of the underlying claim and of collection) in each case actually
received in cash by such Indemnified Party with respect to such Loss (each
source of recovery referred to in clauses (i) and (ii), a “Collateral
Source”).  If the amount to be netted hereunder in connection with a Collateral
Source from any payment required under Section 8.2 or Section 8.3 is received
after payment by the Indemnifying Party of any amount otherwise required to be
paid to an Indemnified Party pursuant to this Article VIII, the Indemnified
Party shall repay to the Indemnifying Party, promptly after such receipt, any
amount that the Indemnifying Party would not have had to pay pursuant to this
Article VIII had such receipt occurred at the time of such payment.  Each
Indemnified Party shall take commercially reasonable steps to mitigate any
Losses as soon as reasonably practicable after such Indemnified Party becomes
aware of any event which does, or could reasonably be expected to, give rise to
any such Losses (including by pursuing recovery from any Collateral
Source).  Notwithstanding anything in Section 8.2, no Purchaser Indemnitee shall
be entitled to indemnification in respect of any breach of any representation,
warranty, covenant or other obligation of Sellers or Parent if and to the extent
that Purchaser had actual knowledge of such breach on the date hereof.

 

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8.6 Indemnification Procedure.  (a) Promptly after the incurrence of any Losses
by any Person entitled to indemnification pursuant to Section 8.2 or Section
8.3, including any claim by a Person described in Section 8.7 (an “Indemnified
Party”) which might give rise to indemnification hereunder, the Indemnified
Party shall deliver to the party from which indemnification is sought (the
“Indemnifying Party”) a certificate (a “Claim Certificate”), which Claim
Certificate shall:

(i) state that the Indemnified Party has paid or incurred Losses for which such
Indemnified Party is entitled to indemnification pursuant to this Agreement; and

(ii) describe such Losses, the amount thereof, if known, or, if not known,
provide a good faith estimate of the amount of such Losses, and the method of
computation of such Losses, all with reasonable detail  and the nature of the
misrepresentation, breach of warranty, breach of covenant or claim to which such
item is related and the computation of the amount to which such Indemnified
Party claims to be entitled hereunder; provided, that the failure to so notify
the Indemnifying Party shall not relieve the Indemnifying Party of its
indemnification obligations hereunder, except to the extent that the Claim
Certificate is not delivered to the Indemnifying Party within the relevant
survival period set forth in Section 8.1 or, and only to the extent that, the
Indemnifying Party is actually and materially prejudiced thereby.

(b) The Indemnified Party making the claim shall not be required to admit or
deny the validity of the facts or circumstances out of which such Losses arose.

(c) If the Indemnifying Party shall object to the indemnification of an
Indemnified Party in respect of any Losses specified in any Claim Certificate,
the Indemnifying Party shall, within twenty-five (25) days after receipt by the
Indemnifying Party of such Claim Certificate, deliver to the Indemnified Party a
notice to such effect, specifying in reasonable detail the basis for such
objection, and the Indemnifying Party and the Indemnified Party shall, within
the forty-five (45) day period beginning on the date of receipt by the
Indemnified Party of such objection, attempt in good faith to agree upon the
rights of the respective parties with respect to each of such Losses to which
the Indemnifying Party shall have so objected.  If the Indemnified Party and the
Indemnifying Party shall succeed in reaching agreement on their respective
rights with respect to any of such Losses, the Indemnified Party and the
Indemnifying Party shall promptly prepare and sign a memorandum setting forth
such agreement.  Should the Indemnified Party and the Indemnifying Party be
unable to agree as to any particular item or items or amount or amounts within
such time period, then the Indemnified Party shall be permitted to submit such
dispute to the courts set forth in Section 10.8.

(d) Claims for Losses specified in any Claim Certificate to which an
Indemnifying Party shall not object in writing within twenty-five (25) days of
receipt of such Claim Certificate, claims for Losses covered by a memorandum of
agreement of the nature described in Section 8.6(c), and claims for Losses the
validity and amount of which have been the subject of judicial determination or
shall have been settled with the consent of the Indemnified Party, as described
in Section 8.7(d), are hereinafter referred to, collectively, as “Agreed
Claims”.  Within ten (10) Business Days of the determination of the amount of
any Agreed Claim, the Indemnifying Party shall pay to the Indemnified Party an
amount equal to the Agreed Claim by wire transfer in

 

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immediately available funds to the bank account or accounts designated by the
Indemnified Party in a notice to the Indemnifying Party not less than two (2)
Business Days prior to such payment.

8.7 Third-Party Claims.  

(a) If a claim by a Third Party (a “Third-Party Claim”) is made against any
Indemnified Party, and if such party intends to seek indemnity with respect
thereto under this Section 8.7, such Indemnified Party shall promptly notify the
Indemnifying Party of such Third‑Party Claim by delivery of a Claim Certificate;
provided, that the failure to so notify shall not relieve the Indemnifying Party
of its obligations hereunder, except to the extent that the Claim Certificate is
not delivered to the Indemnifying Party within the relevant survival period set
forth in Section 8.1 or the Indemnifying Party is actually and materially
prejudiced thereby.  The Indemnifying Party shall notify the Indemnified Party
in writing, as promptly as possible (but in any case before the due date for the
answer or response to the Third-Party Claim) after receipt of such notice of its
election to assume the conduct and control, at the expense of the Indemnifying
Party, through counsel of its choosing, of the settlement or defense of such
Third‑Party Claim and the Indemnified Party shall cooperate with it in
connection therewith.  Notwithstanding any other provision of this Agreement,
Section 6.7(f) shall govern with respect to Tax Contests.

(b) Any Indemnified Party shall have the right to employ separate counsel for
the purpose of participating with the Indemnifying Party and its counsel in the
defense of such Third‑Party Claim, but the fees and expenses of such counsel
shall not be at the expense of the Indemnifying Party unless (i) the
Indemnifying Party is not entitled to, or shall have failed to, assume the
defense of such Third‑Party Claim as set forth in Section 8.7(c), (ii) the
employment of such counsel has been specifically authorized in writing by the
Indemnifying Party or (iii) the named parties to any such action (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party and such Indemnified Party shall have been advised in writing by such
counsel that there is a conflict of interest between the Indemnified Party and
the Indemnifying Party.  The Indemnified Party shall not pay or settle any such
Third‑Party Claim.  Notwithstanding the foregoing, the Indemnified Party shall
have the right to pay or settle any such Third‑Party Claim only as to itself;
provided, that in such event it shall waive any right to indemnity therefor by
the Indemnifying Party for such Third‑Party Claim unless the Indemnifying Party
shall have consented to such payment or settlement.

(c) Notwithstanding anything in this Section 8.7 to the contrary, the
Indemnified Party shall have the right to conduct and control, through counsel
of its choosing at the expense of the Indemnifying Party, the defense,
compromise and settlement of any Third-Party Claim (i) that seeks as the sole
remedy an injunction or other equitable relief against the Indemnified Party,
(ii) that seeks any remedy against the Indemnified Party that does not include
the payment of money damages, (iii) to the extent that such claim seeks money
damages in an amount that would be reasonably expected to exceed the then
remaining limit on the Sellers’ liability under Section 8.4 at the time such
claim is submitted by the Indemnified Party or (iv)  if the Indemnifying Party
reasonably shall have concluded (upon advice of its counsel) that, with respect
to such claims, the Indemnified Party and the Indemnifying Party are reasonably
likely to have a conflict of interest.  Additionally, if the Indemnifying Party
does not notify the Indemnified Party in accordance with Section 8.7(a) that it
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thereof, the Indemnified Party shall have the right to contest, settle or
compromise and otherwise control the defense of the Third‑Party Claim through
counsel of its choosing but shall not thereby waive any right to indemnity
therefor pursuant to this Agreement.

(d) The Indemnifying Party shall not, except with the prior written consent of
the Indemnified Party, enter into any settlement or compromise or consent to any
judgment that (i) is not entirely indemnifiable by the Indemnifying Party
pursuant to this Article VIII, (ii) does not include as an unconditional term
thereof the giving by the Person or Persons asserting such Third‑Party Claim to
all Indemnified Parties of an unconditional release from all Liability with
respect to such Third‑Party Claim, (iii) includes any statement as to or an
admission of fact, culpability or a failure to act, by or on behalf of the
Indemnified Party, or (iv)  involves any injunctive relief against the
Indemnified Party that would be reasonably expected to materially and adversely
affect the Indemnified Party.

(e) The Indemnified Party shall cooperate with the Indemnifying Party and its
counsel in all reasonable respects in connection with the defense of any
Third‑Party Claim, including making available records relating to such
Third‑Party Claim and furnishing, without expense to the Indemnifying Party
and/or its counsel, such employees of the Indemnified Party as may be reasonably
necessary for the preparation of the defense of any such Third‑Party Claim or
for testimony as witnesses in any proceeding relating to such Third‑Party Claim.

(f) The procedures in this Section 8.7 shall not apply to direct claims of the
Seller Indemnitees or the Purchaser Indemnitees, which shall be governed by
Section 8.6.

8.8 Sole Remedy/Waiver.  The parties hereto acknowledge and agree that, except
for (i) remedies that cannot be waived as a matter of Law, (ii) injunctive,
equitable and provisional relief (including specific performance), and (iii)
Losses as a result of or arising out of fraud, if the Closing occurs, the
remedies provided for in this Article VIII shall be the sole and exclusive
remedies for any breach of this Agreement or any claims relating to this
Agreement, other documents, certificates or agreements delivered in connection
with this Agreement, the Business, the Assumed Liabilities, the Purchased
Assets, the Excluded Liabilities or otherwise.

8.9 Treatment of Indemnification Payments.  Any payment made pursuant to the
indemnification obligations arising under this Agreement shall be treated as an
adjustment to the Purchase Price for all Tax purposes.

ARTICLE IX

TERMINATION

9.1 Termination Events.  This Agreement may be terminated and the Purchase may
be abandoned, at any time prior to the Closing:

(a) by mutual written consent of Sellers and Purchaser;

 

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(b) by either Sellers or Purchaser, if:

(i) any court or other Governmental Entity shall have issued, enacted, entered,
promulgated or enforced any Law or Order (that is final and non-appealable and
that has not been vacated, withdrawn or overturned) restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement; provided,
that the party seeking to terminate pursuant to this Section 9.1(b)(i) shall
have complied with its obligations, if any, under Section 6.3; or

(ii) the Closing Date shall not have occurred on or prior to the date that is
forty-five (45) days from the date of this Agreement (the “End Date”); provided,
that neither party may terminate this Agreement pursuant to this Section
9.1(b)(ii) if such party is in material breach of this Agreement;

(c) by Sellers, if:  (i) any of the representations and warranties of Purchaser
contained in Article V shall fail to be true and correct or (ii) there shall be
a breach by Purchaser of any covenant or agreement of Purchaser in this
Agreement that, in either case, (x) would result in the failure of a condition
set forth in Section 7.3(a) or Section 7.3(b) and (y) which is not curable or,
if curable, is not cured upon the occurrence of the earlier of (1) the thirtieth
(30th) day after written notice thereof is given by Sellers to Purchaser and
(2) the day that is five (5) Business Days prior to the End Date; provided, that
Sellers may not terminate this Agreement pursuant to this Section 9.1(c) if
Sellers is in material breach of this Agreement; or

(d) by Purchaser, if:  (i) any of the representations and warranties of any
Seller contained in Article IV shall fail to be true and correct or (ii) there
shall be a breach by any Seller of any covenant or agreement of Sellers or
Parent in this Agreement that, in either case, (x) would result in the failure
of a condition set forth in Section 7.2(a) or Section 7.2(b) and (y) which is
not curable or, if curable, is not cured upon the occurrence of the earlier of
(1) the thirtieth (30th) day after written notice thereof is given by Purchaser
to Sellers or Parent and (2) the day that is five (5) Business Days prior to the
End Date; provided, that Purchaser may not terminate this Agreement pursuant to
this Section 9.1(d) if Purchaser is in material breach of this Agreement.

9.2 Effect of Termination.  In the event of the termination of this Agreement
pursuant to Section 9.1 by Purchaser, on the one hand, or Sellers, on the other
hand, written notice thereof shall forthwith be given to the other party
specifying the provision hereof pursuant to which such termination is made, and
this Agreement shall be terminated and become void and have no effect and there
shall be no Liability hereunder on the part of Sellers or Purchaser, except that
this Article IX (Termination) and Article X (Miscellaneous) shall survive any
termination of this Agreement.  Nothing in this Section 9.2 shall (a) relieve or
release any party to this Agreement of any Liability or damages (which the
parties hereto acknowledge and agree shall not be limited to reimbursement of
expenses or out-of-pocket costs, and may include to the extent proven the
benefit of the bargain lost (taking into consideration relevant matters,
including other combination opportunities and the time value of money) arising
out of such party’s material breach of any provision of this Agreement or (b)
impair the right of any party hereto to compel specific performance by the other
party or parties, as the case may be, of such party’s obligations under this
Agreement.

 

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Article X

MISCELLANEOUS

10.1 Expenses.  Except as otherwise provided in this Agreement, whether or not
the Closing occurs, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby will be paid by the party
incurring such costs and expenses.

10.2 Extension; Waiver.  Subject to the express limitations herein, the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein by the other party or in any
document, certificate or writing delivered pursuant hereto by such other party
or (c) waive compliance with any of the agreements or conditions contained
herein.  Any agreement on the part of any party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by or on
behalf of such party.  No failure or delay on the part of any party hereto in
the exercise of any right hereunder shall impair such right or be construed as a
waiver of, or acquiescence in, any breach of any representation, warranty,
covenant or agreement herein, nor shall any single or partial exercise of any
such right preclude other or further exercise thereof or of any other right.

10.3 Notices.  Except as otherwise provided herein, all notices, requests,
claims, demands, waivers and other communications hereunder shall be in writing
and shall be delivered by hand or overnight courier service, mailed by certified
or registered mail or sent by telecopier, facsimile or email transmission (in
the case of telecopier, facsimile or email transmission, with copies by
overnight courier service or registered mail) to the respective parties as
follows (or, in each case, as otherwise notified by any of the parties hereto)
and shall be effective and deemed to have been given (i) immediately when sent
by telecopier, facsimile or email between 9:00 A.M. and 6:00 P.M. (New York City
time) on any Business Day (and when sent outside of such hours, at 9:00 A.M.
(New York City time) on the next Business Day) and (ii) when received if
delivered by hand or overnight courier service or certified or registered mail
on any Business Day:

 

(a)

If to Parent or to Sellers, to:

c/o Iconix Brand Group, Inc.

1450 Broadway, 3rd Floor

New York, New York 10018

Attention: Jason Schaefer

Fax: (212) 391-2057

email: jschaefer@iconixbrand.com

with a copy (which shall not constitute notice or service of process) to:

White & Case LLP

1155 Avenue of the Americas

New York, New York 10036

Attention:   Nazim Zilkha

Daren Orzechowski

 

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Fax: (212) 354-8113

email: nzilkha@whitecase.com; dorzechowski@whitecase.com

 

(b)

if to Purchaser, to:

c/o 360 Holdings I Corporation

666 Fifth Avenue

New York, NY 10103

Attention: Adam Gromfin

email: adam@merchsource.com;

with a copy (which shall not constitute notice or service of process) to:

Fried, Frank, Harris, Shriver & Jacobson LLP

One New York Plaza

New York, New York 10004

Attention: Steven Steinman

email:  steven.steinman@friedfrank.com

Notices sent by multiple means, each of which is in compliance with the
provisions of this Agreement will be deemed to have been received at the
earliest time provided for by this Agreement.

10.4 Entire Agreement .  This Agreement, together with the Exhibits hereto, the
Sellers Disclosure Letter and the Purchaser Disclosure Letter and the Limited
Guaranty, contain the entire understanding of the parties hereto with respect to
the subject matter contained herein and supersedes all prior agreements and
understandings, oral and written, with respect thereto, other than the
Confidentiality Agreement. This Section 10.4 shall not be deemed to be an
admission or acknowledgement by any of the parties hereto that any prior
agreements or understandings, oral or written, with respect to the subject
matter hereof exist, other than the Confidentiality Agreement. This Agreement
expressly supersedes in its entirety that certain Letter of Intent, dated as of
November 29, 2016, by and between Parent and 360 Holdings I Corp.

10.5 Binding Effect; Benefit; Assignment.  This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors or assigns.  Except with respect to Article VIII, which shall inure
to the benefit of each Purchaser Indemnitee and Seller Indemnitee, all of whom
are intended as express third-party beneficiaries thereof, no other Person not
party to this Agreement shall be entitled to the benefits of this Agreement.
Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto without the prior written consent
of the other party.

10.6 Amendment and Modification.  This Agreement may not be amended except by a
written instrument executed by all parties to this Agreement.

 

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10.7 Counterparts.  This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original, and all of which together shall be
deemed to be one and the same instrument.  Signed counterparts of this Agreement
may be delivered by facsimile and by scanned .pdf image.

10.8 Applicable Law.  THIS AGREEMENT AND THE LEGAL RELATIONS BETWEEN THE PARTIES
HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REGARD TO THE CONFLICT OF LAWS RULES THEREOF.  THE
COURT OF CHANCERY OF THE STATE OF DELAWARE SHALL HAVE EXCLUSIVE JURISDICTION
OVER ANY AND ALL DISPUTES BETWEEN THE PARTIES HERETO, WHETHER IN LAW OR EQUITY,
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE AGREEMENTS, INSTRUMENTS AND
DOCUMENTS CONTEMPLATED HEREBY AND THE PARTIES CONSENT TO AND AGREE TO SUBMIT TO
THE EXCLUSIVE JURISDICTION OF SUCH COURT.  EACH OF THE PARTIES HERETO HEREBY
WAIVES AND AGREES NOT TO ASSERT IN ANY SUCH DISPUTE, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (A) SUCH PARTY IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF SUCH COURT, (B) SUCH PARTY AND SUCH PARTY’S
PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURT OR (C) ANY
LITIGATION OR OTHER PROCEEDING COMMENCED IN SUCH COURT IS BROUGHT IN AN
INCONVENIENT FORUM.

THE PARTIES HEREBY AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION
WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 10.3, OR IN
SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT
SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE
MANNER HEREIN PROVIDED.

10.9 Severability.  If any term, provision, agreement, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, agreements, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated so long as the economic and legal substance of the transactions
contemplated hereby are not affected in any manner materially adverse to any
party hereto.  Upon such a determination, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties hereto as closely as possible in a reasonably acceptable manner in order
that the transactions contemplated hereby may be consummated as originally
contemplated to the fullest extent possible.

10.10 Specific Enforcement; Limitation on Damages.  The parties agree that
irreparable damage would occur if any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise breached
or threatened to be breached and that an award of money damages would be
inadequate in such event.  Accordingly, it is acknowledged that the parties
shall be entitled to equitable relief, without proof of actual damages,
including an Order for specific performance to prevent breaches of this
Agreement and

 

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to enforce specifically the terms and provisions of this Agreement, in addition
to any other remedy to which they are entitled at law or in equity as a remedy
for any such breach or threatened breach.  Each party further agrees that
neither the other party nor any other Person shall be required to obtain,
furnish or post any bond or similar instrument in connection with or as a
condition to obtaining any remedy referred to in this Section 10.10, and each
party hereto irrevocably waives any right it may have to require the obtaining,
furnishing or posting of any such bond or similar instrument.  Each party
further agrees that the only permitted objection that it may raise in response
to any action for equitable relief is that it contests the existence of a breach
or threatened breach of this Agreement.

10.11 Waiver of Jury Trial.  EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES, AND SHALL CAUSE ITS SUBSIDIARIES AND AFFILIATES TO WAIVE,
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

10.12 Rules of Construction.  The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and have participated jointly in the drafting of this Agreement and, therefore,
waive the application of any Law, holding or rule of construction providing that
ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.

10.13 Headings.  The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

[Remainder of Page Intentionally Left Blank]

 

 

 

 

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IN WITNESS WHEREOF, Purchaser, Sellers and Parent have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized, all as
of the date first above written.

 

ICON NY HOLDINGS LLC

By: /s/ David K. Jones
Name:  David K. Jones
Title:    Vice President and Treasurer

SHARPER IMAGE HOLDINGS LLC

By: /s/ David K. Jones
Name:  David K. Jones
Title:    CFP, Vice President and Treasurer

ICONIX LATIN AMERICA LLC

By: /s/ David K. Jones
Name:  David K. Jones
Title:    CFP, Vice President and Treasurer

ICONIX BRAND GROUP, INC.

By: /s/ David K. Jones
Name:  David K. Jones
Title:    Executive Vice President, CFO

360 HOLDINGS II-A LLC

By: /s/ Adam Gromfin
Name:  Adam Gromfin
Title:    Vice President

 

 

 

 

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ANNEX A

 

INTERNATIONAL JOINT VENTURE TERRITORIES AND ASSET PURCHASE PRICES

 

International JV

Joint Venture Territory

 

JV Asset Purchase Price

Iconix Australia LLC

Australia and New Zealand

$250,000

ICO Brands L.P.

Canada

$500,000

Iconix MENA Ltd.

Algeria, Azerbaijan, Bahrain, Cameroon, Egypt, Gabon, Iraq, Cote D’Ivoire,
Jordan, Kuwait, Kyrgizstan, Lebanon, Libya, Mauritania, Morocco, Nigeria, Oman,
Pakistan, Qatar, Saudi Arabia, Tunisia, Uganda, the United Arab Emirates and
Yemen

$250,000

Iconix SE Asia Ltd.

Europe* and Turkey

$500,000

Iconix SE Asia Ltd.

Brunei, Cambodia, East Timor, Indonesia, Laos, Malaysia, Myanmar Philippines,
Singapore, South Korea, Thailand, and Vietnam

$250,000

TOTAL

 

$1,750,000

 

*Europe is a part of the Iconix SE Asia joint venture and includes the following
countries: Albania, Andorra, Austria, Belarus, Belgium, Bosnia and Herzegovina,
Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, Former
Yugoslav Republic of Macedonia, France, Georgia, Germany, Greece, Hungary,
Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta,
Moldova, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal, Romania,
Russia, San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland,
Ukraine, Uzbekistan, United Kingdom (including for the avoidance of doubt the
Crown Dependencies of Jersey, Guernsey and the Isle of Man) and Vatican City
State.

 

 

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