ASSET PURCHASE AGREEMENT

v

AGREEMENT, dated as of March 6, 2007, by and among Iconix Brand Group, Inc., a Delaware corporation (“Buyer”), Rocawear Licensing LLC, a New Jersey limited liability company (“Seller”), and Arnold Bize, a/k/a Alex Bize (“Bize”), Shawn Carter (“Carter”) and Naum Chernyavsky, a/k/a Norton Cher (“Cher” and, together with Bize and Carter, the “Principals”).

WHEREAS, Seller is engaged in the business of marketing and licensing the ROCAWEAR® family of marks and names as more particularly set forth in Exhibit A for use in connection with a wide variety of goods and services; and

WHEREAS, the Principals indirectly own or control all of the outstanding equity, ownership and beneficial interests of Seller; and

WHEREAS, the Buyer desires to become engaged in the Business (as defined herein) and to acquire substantially all of the assets of Seller used in connection with the Business and to assume certain of Seller’s liabilities, and Seller desires to sell such assets and to assign such liabilities to Buyer, all upon the terms and subject to the conditions hereinafter set forth.

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

1.   Certain Definitions . For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, (1) the terms defined in this Section have the meanings assigned to them in this Section, wherever they appear in this Agreement (2) all accounting terms not otherwise defined herein have the meanings assigned under generally accepted accounting principles consistently applied and as in effect on the date hereof (“GAAP”) and (3) all words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision.

1.1   “Affiliate” means, with respect to a specified Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, the specified Person.

1.2   “Business” means the licensing and brand management business conducted by Seller (exclusive of the business of any Affiliate) relating to the ROCAWEAR® family of Marks (as hereinafter defined) and associated names for use in connection with a wide variety of goods and services everywhere in the world.

1.3   “Buyer Stock” means shares of common stock, par value $0.001 per share, of Buyer.

1.4   “Closing” means the closing of the transactions contemplated by this Agreement.

1.5   “Closing Date” means the date on which the Closing occurs.

1.6   “Code” means the Internal Revenue Code of 1986, as amended.

1.7   “Consent” means any consent, approval, order or authorization of, or any declaration, filing or registration with, or any application or report to, or any waiver by, or any other action (whether similar or dissimilar to any of the foregoing) of, by or with, any Person, which is necessary in order to take a specified action or actions in a specified manner and/or to achieve a specified result or to avoid the occurrence of a default.

1.8   “Contract” means any written or oral contract, agreement, instrument, order, commitment or binding arrangement, of any nature whatsoever.

1.9   “Contract Right” means any right, power or remedy under any Contract, including but not limited to rights to receive property or services or otherwise to derive benefits from the payment, satisfaction or performance of another party’s obligations under such Contract.

1.10   “Encumbrance” means any lien, security interest, pledge, mortgage, easement, leasehold, covenant, restriction, or any other encumbrance, or charge of any kind or nature whatsoever.

1.11   “Endorsement/Services Agreement” means the endorsement/services agreement to be entered into between Buyer and Carter on the Closing Date in substantially the form attached hereto as Exhibit B .

1.12   “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

1.13   “Governmental Entity” means any government or agency, district, bureau, board, commission, court, department, official, political subdivision, tribunal, taxing authority or other instrumentality of any government, whether federal, state or local, domestic or foreign.

1.14   “HSR Act” has the meaning set forth in Section 4.10.

1.15   “HSR Filing” has the meaning set forth in Section 4.10.

1.16   “Indebtedness” means all items which, in accordance with GAAP, would be included in determining total liabilities as shown on the liability side of a balance sheet as of the date Indebtedness is to be determined.

1.17   “Insurance Policies” means any policy or binder for fire, public liability, product liability, general liability, life, hospital, medical, disability, comprehensive, automobile, property damage, workmen’s compensation, key man, fidelity bond, theft, forgery, vehicular, or errors and omissions insurance, or for any other insurance of any nature whatsoever.

1.18   “Intangibles” means, throughout the world, the Marks (as hereinafter defined), all trade secrets to the extent that they have been maintained as such Permits, licenses, patterns, designs, pressbooks, promotional material, artwork, know-how, patents, patent applications, copyrights, copyright applications, copyright registrations, Internet web sites, including the content contained therein to the extent owned by Seller, domain names, domain name registrations, designs, formula, invention, technology, Software to the extent owned, database or other intangible asset of any nature (whether in use, operational, active, under development or design, non-operative, or inactive, owned, marketed, maintained, supported, used, licensed or otherwise held for use by, or licensed to or with respect to which rights are granted to a Person), and all good will, whether or not related to the foregoing, whether arising under statutory or common law in any jurisdiction or otherwise, and includes, without limitation, any and all Intellectual Property Rights in and to the foregoing.

1.19   “Intellectual Property Right(s)” means any and all proprietary rights (throughout the universe, in all media, now existing or created in the future, and for the entire duration of such rights) arising under statutory or common law, Contract, or otherwise, and whether or not perfected, including without limitation, all: (a) rights associated with patents, reissues and reexamined patents, and patent applications, whenever filed and wherever issued, and all priority rights resulting from such applications; (b) rights associated with works of authorship including, but not limited to, copyrights, moral rights, design rights, copyright applications, copyright registrations, and rights to prepare derivative works; (c) rights relating to the protection of trade secrets and confidential information to the extent that they have been maintained as such; (d) rights in and to trademarks, service marks, trade names, logos, symbols, and the like; (e) product rights; (f) rights analogous to those set forth in this definition and any and all other proprietary rights relating to Intangibles not already included herein; (g) rights associated with divisions, divisionals, continuations, continuations-in-part, substitutes, renewals, reissues and extensions of the foregoing (as and to the extent applicable) now existing, hereafter filed, issued, or acquired; and (h) the right to sue for past infringement of any Intangible and/or Intellectual Property Rights, provided any such Intellectual Property Right is related to the Business.

1.20   “Judgment” means any order, writ, injunction, fine, citation, award, decree or any other judgment of any kind whatsoever of any foreign, federal, state or local court, governmental body, administrative agency, regulatory authority or arbitration tribunal.

1.21   “knowledge” (and phrases of similar import) of Seller means the knowledge of any of the Principals, Ronnie DeMichael, or Denise Grande, in each case after due inquiry.

1.22   “Law” means any provision of any law, statute, ordinance, order, constitution, charter, treaty, rule or regulation enacted, approved or adopted by any governmental, administrative or regulatory authority, including common law.

1.23   “Liabilities” means any direct or indirect Indebtedness, liability, Claim, loss, damage, Judgment, deficiency or obligation, known or unknown, fixed or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise whether or not of a kind required by GAAP to be set forth on financial statements.

1.24   “Losses” means any and all Liabilities, Proceedings, causes of action, costs and expenses including, without limitation, costs of investigation, actual interest costs, penalties and reasonable attorneys’ fees.

1.25   “Marks” means all names, corporate names, domain names, fictitious names, trademarks, trademark applications, trademark registrations, service marks, service mark applications, service mark registrations; trade names, brand names, logos, trade dress, symbols, slogans or other designations used by Seller in commerce or in connection with the Business.

1.26   “Permit” means any license, permit, certificate, Consent, right or privilege of any kind or nature whatsoever granted, issued, approved or allowed by any foreign, federal, state or local governmental, administrative or regulatory authority relating to the Assets or the operation of the Business, but shall not include any Intellectual Property Rights.

1.27   “Person” means any individual, sole proprietorship, joint venture, partnership, corporation, limited liability company, association, joint-stock company, unincorporated organization, cooperative, trust, estate, government entity or authority (including any branch, subdivision or agency thereof), administrative or regulatory authority, or any other entity of any kind or nature whatsoever.

1.28   “Proceeding” means any claim, suit, action, equitable action, litigation, investigation undertaken by any Governmental Entity, arbitration, trademark opposition, cancellation action, administrative hearing or any other judicial or administrative proceeding of any kind or nature whatsoever, or any formal demand which might lead to any of the foregoing.

1.29   “Property” means real, personal or mixed property.

1.30   “Real Property” means any real estate, land, building, structure, improvement or other real property of any kind or nature whatsoever owned, leased or occupied by Seller, and all appurtenant and ancillary rights thereto, including, without limitation, easements, covenants, water rights, sewer rights and utility rights.

1.31   “Registration Rights Agreement” means the registration rights agreement to be executed by Buyer and Seller at the Closing, substantially in the form of Exhibit C hereto.

1.32   “Software” means any computer program, operating system, applications system, firmware or software of any kind or nature whatsoever, including, without limitation, all object code, source code, technical manuals, user manuals and other documentation therefor, whether in machine-readable form, a programming language or any other language or symbols, and whether stored, encoded, recorded or written on disk, tape, film, memory device, paper or other media owned by Seller.

1.33   “Subsidiaries” with respect to any Person, means any other Person or business entity, with respect to whom 50% or more of the equity interest (or debt or other interest convertible into an equity interest) is owned directly or indirectly by such Person.

1.34   “Tangible Property” means any machinery, buildings, fixtures, equipment, parts, furniture, leasehold improvements, office equipment, vehicles, tools, forms, molds, supplies, archive garments or other tangible property of any kind or nature whatsoever.

1.35   “Tax” or “Taxes” means all taxes and governmental impositions of any kind in the nature of (or similar to) taxes, payable to any federal, state, local or foreign taxing authority or other governmental authority, including, but not limited to, those on or measured by or referred to as income, franchise, profits, gross receipts, capital, ad valorem, custom duties, alternative or add-on minimum taxes, estimated, environmental, disability, registration, value added, sales, use, service, real or personal property, capital stock, license, payroll, withholding, employment, social security, workers’ compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes, and interest, penalties and additions to tax imposed with respect thereto.

1.36   “Tax Return” shall mean any return (including any information return), report, statement, declaration, estimate, schedule, notice, notification, form, election, certificate or other document or information (including any amendments thereto) that is, has been or may in the future be filed with or submitted to, or required to be filed with or submitted to, any Governmental Entity in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Law relating to any Tax.

1.37   “Transaction Documents” means this Agreement together with all schedules and exhibits hereto and all other documents executed pursuant to this Agreement.

1.38   “U.S. License” means the license agreement to be entered into between Studio IP Holdings LLC (as defined in Section 2.5 below) and Seller on the Closing Date in substantially the form attached hereto as Exhibit D .

1.39   “WARN” means the Worker Adjustment and Retraining Notification Act and all similar federal and state Laws relating to termination of employment.

2.   Sale and Purchase of Assets .

2.1   Sale and Purchase of Assets . On the terms and subject to the conditions set forth in this Agreement including those set forth in Section 2.2, at the Closing, Seller shall sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase and acquire from Seller, all right, title and interest of Seller in and to all of the following assets (collectively, the “Assets”), which Assets consist of all assets of Seller used in connection with the operation of the Business (other than the Excluded Assets, as hereinafter defined):

(1)   All Intangibles owned by Seller and all Intellectual Property Rights associated therewith, all goodwill, licenses and sublicenses granted or obtained with respect thereto, and rights thereunder, remedies against infringements thereof, and rights to protection of interests therein under the laws of all jurisdictions;

(2)   All of Seller’s rights, powers and privileges in and to (a) the Contracts listed on Schedule 4.13 hereto under the caption “Specified Contracts”; and (b) any Contracts of Seller similar in nature to those listed on Schedule 4.13 hereto under such caption entered into during the period between the date hereof and the Closing Date in the ordinary course of Seller’s Business, the entry into which by Seller does not violate the provisions of this Agreement and all Contract Rights under (a) and (b) including all rights to royalties earned or accruing on or after the Closing Date (“Specified Contracts”);

(3)   All current samples, sample books, prototypes, patterns, archive files, physical designs, promotional materials and other similar items used in or related to the Business);

(4)   The pro rata portion of advances on royalties, advertising and other amounts payable to Seller under the Specified Contracts for periods after the Closing Date determined in accordance with Schedule 2.1(4) and Section 6.11 hereto; and

(5)   All of Seller’s claims, causes of action and other legal rights and remedies arising subsequent to the Closing Date relating to Seller’s ownership of the Assets and/or the Business, but excluding claims against Buyer under this Agreement or any Transaction Document to which Seller is a party with respect to the transactions contemplated herein or therein.

2.2   Excluded Assets . Notwithstanding anything to the contrary contained herein, there is excluded from the sale and purchase contemplated by this Agreement the following assets (the “Excluded Assets”):

(1)   All Contracts which are not Specified Contracts, whether or not relating to an Asset being purchased hereby;

(2)   All cash or cash equivalents in the bank or invested on the Closing Date, except for the portion of advances on royalties, advertising and other amounts payable to Buyer under the Specified Contracts for periods after the Closing Date determined in accordance with Schedule 2.1(4) and Section 6.11 hereof.

(3)   All Tangible Property of any type or description owned or leased by Seller other than Tangible Property described in clause (3) of the definition of Assets in Section 2.1;

(4)   All rights of Seller in and to this Agreement and the other Transaction Documents to which Seller is a party, including proceeds from the sale of the Purchased Assets;

(5)   The stock ledger and minute books of Seller, all financial books and records of Seller (copies of which have been delivered to Buyer) and all books and records relating to any Excluded Asset or Excluded Liabilities.

(6)   Any and all accounts or notes receivable due on account of royalties or other amounts due to Seller from any Affiliate of Seller for any and all periods.

(7)   All rights of Seller to Tax refunds with respect to any period through the Closing Date.

(8)   All other assets reflected on Seller’s balance sheet as of December 31, 2006 that are not specifically included in the definition of Assets.

(9)   A pro rata portion of royalties payable to Seller under the Specified Contracts for the period from January 1, 2007 through the Closing Date.

(10)   Any recoveries pursuant to the first two matters listed in Part 2 of Schedule 4.11 hereto.

2.3   Assumption of Certain Liabilities . On the terms and subject to the conditions set forth in this Agreement, on and after the Closing Date, Buyer shall assume, perform and pay all Liabilities of Seller and the Business arising and relating to periods after the Closing (a) arising under the Specified Contracts, but not including any Liabilities of Seller under any Contract with any Affiliate or Principal or other member of Seller, and only such Liabilities, to the extent the same are not incurred or resulting from (directly or indirectly) any breach or default by Seller under any Specified Contract or (b) otherwise relating to the Assets transferred pursuant to this Agreement (the “Specified Liabilities”). Buyer shall pay or otherwise fully discharge all of the Specified Liabilities as the same shall become due. In the event of any claim against Buyer by any third party with respect to any of the Specified Liabilities hereunder, Buyer shall have, and Seller hereby assigns to Buyer, any defense, counterclaim, or right of setoff that would have been available to Seller if such claim had been asserted against Seller.

2.4   Non-Assumption of Excluded Liabilities . Buyer is assuming only the Specified Liabilities from Seller and is not assuming, and in no event shall be liable for, any other Liability of Seller of whatever nature, whether presently in existence or arising hereafter, including without limitation, the following (which shall be the “Excluded Liabilities”):

(a)   all Liabilities arising out of or relating to the operation or conduct by Seller of the Business prior to the Closing Date, any business conducted by Seller not comprising the Business and all Liabilities to the extent arising out of or relating to any Excluded Asset;

(b)   all Liabilities of Seller in respect of Taxes;

(c)   all Liabilities relating to current or former employees of Seller, including without limitation (i) any compensation or benefits payable to present or past employees of Seller, including, any Liabilities arising under any Seller Employee Benefit Plan or other employee benefit plan and any of Seller’s Liabilities for vacation, holiday or sick pay, and (ii) any Liabilities under any employment, consulting or non-competition agreement, change of control agreement, indemnity agreement, any retention or performance-based bonus or other compensation agreement, and any similar agreements, whether written or oral, and any Liabilities arising out of the termination by Seller of any of its employees in anticipation or as a consequence of, or following, consummation of the transactions contemplated by the Transaction Documents;

(d)   all Indebtedness and capital lease obligations of Seller except to the extent such obligations constitute Specified Liabilities;

(e)   all Liabilities to any broker, finder or agent or similar intermediary for any broker’s fee, finder’s fee or similar fee or commission relating to the transactions contemplated by this Agreement for which Seller is responsible pursuant to Section 4.24;

(f)   all Liabilities with respect to any Environmental Law or environmental conditions, events, or circumstances, including with respect to any release of Hazardous Substances after the Closing Date to the extent said Liabilities arise from or in connection with conditions, events or circumstances occurring on or before the Closing Date, including without limitation the migration of Hazardous Substances which were released on or prior to the Closing Date;

(g)   all Liabilities relating to any Real Property owned or leased (or formerly owned or leased) by or for Seller;

(h)   all Liabilities resulting from the violation by Seller of WARN; and

(i)   all Liabilities of Seller relating to or arising out of state and federal securities laws, rules, regulations and fiduciary duties.

Seller shall pay or otherwise fully discharge all of the Excluded Liabilities and any other of Seller’s Liabilities which arise after the Closing Date as the same shall become due.

2.5   Delivery of Certain Assets . At the Closing, Seller shall deliver all of its right, title and interest in the Assets directly to Studio IP Holdings LLC, a Delaware limited liability company and Subsidiary of Buyer (“Studio LLC”). The parties hereto acknowledge and agree that, notwithstanding this Section, all of the Assets, including the Assets subject to this Section, are being acquired by Buyer hereunder and the delivery by Seller of the Assets, subject to this Section, to Studio LLC shall be deemed to be a delivery of such Assets initially to Buyer followed by a contribution of such Assets by Buyer to the capital of Studio LLC.

3.   Closing; Purchase Price

3.1   Closing . The Closing of the transactions contemplated by this Agreement shall take place on the first business day after the satisfaction of the terms and conditions of Section 7 but in no event later than April 30, 2007 at the offices of Blank Rome LLP, 405 Lexington Avenue, New York, New York 10174 or such other location mutually acceptable to the parties hereto or by the exchange of documents and instruments by mail, courier, telecopy and wire transfer to the extent mutually acceptable to the parties hereto. All transactions occurring at the Closing shall be deemed to occur concurrently.

3.2   Purchase Price . In consideration of the sale, transfer, conveyance and delivery of the Assets, and in reliance upon the representations and warranties made herein by Seller and Principals, Buyer shall, in full payment thereof, pay to Seller, or its respective designees, Two Hundred Four Million Dollars ($204,000,000) at the Closing (the “Purchase Price”), payable by wire transfer in immediately available funds, to an account designated in writing by Seller to Buyer at least three (3) business days prior to the Closing Date.

3.3   Earn-Out Consideration . Seller shall be entitled to aggregate additional consideration of up to Thirty-Five Million Dollars ($35,000,000), as follows: (i) up to Twenty Million Dollars ($20,000,000) shall be payable in Buyer Stock, contingent upon the Assets generating royalty revenues during the calendar years ending December 31, 2007, 2008 and 2009, respectively, in excess of certain thresholds, determined in accordance with and subject to the terms and conditions set forth in Exhibit E (the “First Earn-Out Consideration”), and (ii) up to Fifteen Million Dollars ($15,000,000) shall be payable in Buyer Stock, contingent upon the Assets generating royalty revenues during the calendar years ending December 31, 2007, 2008, 2009, 2010 and 2011, respectively, in excess of certain thresholds, determined in accordance with and subject to the terms and conditions set forth on Exhibit F (the “Second Earn-Out Consideration”, and collectively with the First Earn-Out Consideration, the “Earn-Out Consideration”).

3.4   Purchase Price Allocation . The Purchase Price for the Assets shall be allocated in a manner set forth on Schedule 3.4 hereto. In connection with the determination of such schedule, the parties shall cooperate with each other and provide such information as any of them shall reasonably request. The parties shall (a) prepare and, where applicable, file each report relating to the federal, state, local, foreign and other Tax consequences of the purchase and sale contemplated hereby (including the filing of IRS Form 8594) in a manner consistent with such allocation schedule and (ii) take no position in any Tax Return or other Tax filing, proceeding, audit or otherwise which is inconsistent with such allocation.

3.5   Reconciliation of Royalty Advertising and Other Payment . Within ninety (90) days after the Closing Date, the parties shall in good faith reconcile any royalty and advertising payments received by such parties for periods ending prior to or following the Closing Date and expenses with regard to advertising expenses incurred prior to the Closing Date pursuant to their rights and obligations set forth under Sections 2.1(4), 2.2(2) and 6.11 of this Agreement. Each party agrees to forward or otherwise pay any payments it receives to which the other party hereto is entitled.

4.   Representations, Warranties and Covenants of Seller and Principals . Seller and Principals, jointly and severally, represent and warrant to Buyer that each of the statements contained in this Section 4 is true and correct. Except for the representations and warranties set forth in this Section 4, Seller and Principals make no other representation or warranty (either express or implied) herein or with respect to the transactions contemplated by this Agreement.

4.1   Due Organization and Qualification; Subsidiaries . Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Seller has the full power and authority to own, lease and operate its Assets, Properties and Business, to carry on its Business as and where such Business is now conducted and to enter into and perform this Agreement and to consummate the transactions contemplated hereby upon the terms and conditions herein provided. Seller is duly qualified as a foreign entity in good standing under the Laws of each jurisdiction set forth in Schedule 4.1 . There is no other jurisdiction in which the nature of Seller’s Business or location of its Properties requires such licensing or qualification where such failure would result in a material adverse effect on Seller. Except as set forth in Schedule 4.1 , Seller does not own any Subsidiaries, or own, directly or indirectly any shares of stock or other equity interest in or control, alone or in combination with others, any Persons. Schedule 4.1 sets forth the names and titles of each of Seller’s managers and officers.

4.2   Capitalization; Options . Schedule 4.2 sets forth the capital structure of Seller, including the numbers and types of membership interests authorized and the number of each type of membership interests issued and outstanding. Schedule 4.2 contains an accurate and complete list of: (i) the full legal names of the members of Seller; (ii) the addresses of such members; and (iii) the number of membership interests, shares, warrants, options or other securities owned of record and beneficially by each such member and the certificate numbers of the certificates representing such equity interests, if any. Except for the members listed on Schedule 4.2 , there are no other record or beneficial owners of any membership interests of Seller or any other securities of Seller. Except for the membership interests listed on Schedule 4.2 , there have been and currently are no other issued or outstanding equity interests. All of the issued and outstanding equity interests of Seller have been duly authorized and validly issued and are fully paid and non-assessable. Except as set forth on Schedule 4.2 , there exists no right of first refusal or other preemptive right with respect to Seller or the equity interests, Business or Assets of Seller. 

4.3   Authority to Execute and Perform Agreement . Seller has all requisite power and authority and approvals required to enter into, execute, deliver and perform this Agreement and its obligations hereunder and to consummate the transactions contemplated herein. The execution, delivery and performance of this Agreement (and all other Transaction Documents required to effect the transactions contemplated herein) and the consummation of the transactions contemplated herein have been duly authorized by all necessary action on the part of Seller. This Agreement has been duly executed and delivered by Seller and each of the Principals, and constitutes Seller’s and each Principal’s valid and legally binding obligation, enforceable against Seller and each Principal in accordance with its terms and conditions, except as the same may be limited by bankruptcy, insolvency, reorganization or other laws affecting the enforcement of creditors’ rights generally, now or hereafter in effect, and subject to the availability of equitable remedies.

4.4   Financial Statements . The following representation and warranty shall be deemed to be made only upon delivery of the financial statements referred to in Section 7.1(9): Seller has delivered to Buyer true, complete and correct copies of the audited financial statements and notes thereto of Seller (including balance sheets and related statements of income, retained earnings and cash flows) at and for the fiscal years ended December 31, 2004, 2005 and 2006. All such statements, including the footnotes thereto, were audited and reported upon by Mahoney Cohen & Co., independent certified public accountants, in an unqualified auditors’ opinion with an explanatory paragraph only and substantially as follows: “The accompanying financial statements are those of Rocawear Licensing, LLC only and are not those of the primary reporting entity. The combined financial statements of ROC Apparel Group LLC (formerly Urban Menswear LLC) and Affiliates have been issued to their members as the financial statements of the primary reporting entity for the year ended December 31, 2005. The combined financial statements of the primary reporting entity have not yet been issued for the year ended December 31, 2006.” The foregoing financial statements are hereinafter collectively referred to as the “Financial Statements”. The Financial Statements have been prepared from the books and records of Seller, and fairly present, in all material respects, the financial position of Seller as at such dates and the results of its operations and the changes in its retained earnings and its financial positions for the periods then ended in accordance with GAAP consistently applied throughout the periods indicated. Since December 31, 2006, there have been no material changes in the accounting policies of Seller. The Financial Statements are not affected by transactions or accounts with affiliated companies, if any, other than as set forth in Schedule 4.4 .

4.5   No Material Adverse Change . Except as set forth in Schedule 4.5 , since December 31, 2006 there has been no material adverse change in the assets (including the Assets as defined in Section 2), Properties, Liabilities, Business, condition (financial or otherwise) or prospects of Seller. Any change which has occurred reflects only the ordinary and regular conduct of the Business or the normal use or operation of the Assets. No Seller or Principal knows of any such change which is impending, nor has there been any material damage, destruction or loss affecting the Assets, Properties, Business or financial condition of Seller, whether or not covered by insurance.

4.6   Tax Matters .

(a)   Seller, and any consolidated, combined, unitary or aggregate group for Tax purposes of which Seller is or has been a member, has timely filed with the appropriate governmental agencies all material Tax Returns required to be filed by it, all of which have been prepared and completed in compliance with all Laws in all material respects.

(b)   All Taxes due, owing and payable have been fully paid or duly provided for in the Financial Statements. No claim for Taxes due is being contested by Seller.

(c)   No written claim has ever been made by any governmental authority in a jurisdiction where Seller does not file a Tax Return that it is or may be subject to taxation by that jurisdiction.

(d)   [Intentionally Omitted].

(e)   None of the Assets is subject to any liens for Taxes, other than liens for Taxes not yet due and payable.

(f)   Seller has complied in all material respects with the provisions of the Code relating to the withholding and payment of Taxes, including, without limitation, the withholding and reporting requirements under Code sections 1441 through 1464, 3401 through 3406, and 6041 through 6049, as well as similar provisions under any other Laws, and has, within the time and in the manner prescribed by Law, withheld from employee wages and paid over to the proper governmental authorities all amounts required.

(g)   Seller has been properly treated as a partnership for United States federal income tax purposes from the time of its formation through the Closing Date.

4.7   Compliance with Laws . Except as set forth in Schedule 4.7 , Seller is in compliance in all material respects with all Laws relating to its Business, operations and the Assets. Except as set forth and specifically identified in Schedule 4.7 , neither Seller nor Principals have received notice of any alleged material violation of or claim under any such Laws. Seller does not know of any basis for any material violation thereof which may occur in the future (either upon notice, lapse of time, or both), or any material pending or threatened investigation, charge, claim or other action relating to Seller or its Business under any such Laws.

4.8   Permits . No material Permits are necessary for the conduct of the Business of Seller or the use and operation of the Assets. 

4.9   No Breach . Except as set forth and specifically identified in Schedule 4.9 , the consummation of the transactions herein contemplated includ-ing, without limitation, the execution, delivery and performance of this Agreement and the documents required to effect the transactions herein contemplated, do not and will not (1) constitute a violation of or default under (either immediately or upon notice, lapse of time or both), conflict with or result in a breach of (a) Seller’s organizational documents, (b) the terms of any Specified Contract or to any Contract to which Seller is a party and to which the Assets are or may be bound, (c) any Judgment relating to the Assets and binding upon Seller, or (d) any material Laws affecting the Assets; or (2) result in the creation or imposition of any Encumbrance on any of the Assets or give to any Person any interest or right in any of the Assets; or (3) accelerate the maturity of or otherwise modify any Liability or obligation of Seller relating to the Assets or the Specified Liabilities; or (4) result in the breach of any of the terms and conditions of, constitute a default under or otherwise cause any impairment of, any Contract, or Permits which, if not cured, could have a material adverse effect in any one case or in the aggregate on Seller, the Assets or the Business.

4.10   Consents . Except as set forth in Schedule 4.10 and for the filing of notification and report forms with the United States Federal Trade Commission and the United States Department of Justice under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the “HSR Act”) and the expiration or termination of any applicable waiting period thereunder (the “HSR Filing”), if required, no Consent is required of any third party in connection with the execution, delivery and performance by Seller or Principals of this Agreement or the consummation of the transactions contemplated hereby, including, but not limited to, the assignment of any and all of the Specified Contracts.

4.11   Judgments and Proceedings . Except as set forth in Schedule 4.11 , there is no outstanding Judgment against or affecting the Assets. Except as set forth in Schedule 4.11 , there is no material Proceeding pending or, to the best of Seller’s knowledge, threatened against or affecting the Assets, Business operations or prospects of Seller. True and correct copies of all complaints, pleadings, petitions, notices, motions and other papers filed in connection with any such Proceeding have been made available to Buyer.

4.12   Employee Relations . Seller is not a party to any collective bargaining agreement or any other Contract with any labor unions or any other representatives of Seller’s employees. Seller is not a party to any written or oral employment agreement with any of its officers, directors, employees, consultants, agents, or other Persons. To the best of Seller’s knowledge, except as set forth and specifically identified in Schedule 4.12 , (1) no grievance which might have an adverse effect on Seller or the Business, is pending and no claim therefor has been asserted, and (2) no collective bargaining agreement is currently being negotiated by Seller. Seller does not have any present or, to its knowledge, threatened labor disturbances or any pending arbitration, unfair labor practice, grievance, or other Proceeding of any kind with respect to its employees and has had no such labor disturbance, Proceeding or litigation for the past eighteen (18) months or which remains unresolved on the date hereof. Seller does not know of any present or threatened walkout, strike or any similar occurrence which adversely affects or may adversely affect the Assets, or the Business, condition or prospects of Seller. During the past five (5) years, no union attempts to organize or represent the employees of Seller has been made, nor are any such attempts now threatened, nor has Seller or any Principal been notified by any labor organization that it is soliciting or intends to solicit Seller’s employees to select a bargaining agent, nor is any such solicitation being made or, to Seller’s knowledge, contemplated by any labor union. Schedule 4.12 is a true and correct list of all personnel employed by Seller as of the date hereof and their respective salaries, wages and rates of compensation. Upon termination of the employment of any said employees, Seller will not by reason of anything done prior to the Closing Date be liable to any of said employees for severance pay or any other payments, except as and to the extent set forth and specifically identified in Schedule 4.12 and elsewhere in this Agreement. Except as disclosed in Schedule 4.12 , no employee of Seller has indicated to Seller or any Principal an intention to terminate employment.

4.13   Contracts . Schedule 4.13 sets forth a true and correct list of all Contracts to which Seller is a party or to which the Assets are subject. True and correct copies of all such Contracts have been delivered to Buyer. All of the Contracts set forth on Schedule 4.13 are in full force and effect; Seller is not in default in any material respect under any such Contract nor, to Seller’s knowledge, is any other party to any such Contract in default in any material respect thereunder. Seller has paid in full or accrued all amounts due thereunder for periods on or prior to the date hereof and has satisfied in full or provided in full for all of its Liabilities and obligations thereunder for periods on or prior to the date hereof. Except as set forth in Schedule 4.13 , all rights of Seller under the Specified Contracts extending beyond the Closing Date are assignable to Buyer and upon assignment shall continue unimpaired and unchanged in favor of Buyer on and after the Closing Date without (a) the Consent of any Person or (b) the payment of any penalty, (c) the incurrence of any additional obligation or (d) the change of any term in any manner adverse to Buyer. Except as set forth on Schedule 4.13 , Seller has examined, monitored or otherwise policed, to the extent deemed prudent by Seller and in accordance in all material respects with customary practices in the industry in which Seller operates, the activities of all of the licensee counterparties under the Specified Contracts to verify that the products manufactured, sold or offered for sale under the Marks licensed to such licensee pursuant to the Specified Contracts meet, in all material respects, the quality control standards and requirements for use of the Marks set forth in such Specified Contracts.

4.14   Real Property . Seller does not own, nor has Seller at any time owned, all or any portion of any Real Property.

4.15   Books of Account and Reports . Seller’s books of account and other financial books and records are true, correct and complete in all material respects and accurately reflect substantially all of its items of income and expense, its assets, Liabilities and accruals are and have been prepared and maintained in form and substance adequate for preparing financial statements in accordance with GAAP consistently applied which are capable of being audited. Seller has delivered to Buyer true, correct and complete copies of its charter or other formation documents, and all amendments thereto. The minute book(s) of Seller contains complete and accurate records of all official meetings and other official corporate action of its members and/or managers.

4.16   [Intentionally Omitted ]. 

4.17   Intangibles . 

(1)   All Intangibles owned, used, applied for and/or registered in the name of or licensed to Seller are listed on Schedule 4.17 . Except as specifically identified and disclosed in Schedule 4.17 , all of Seller’s rights in and to the Intangibles set forth in Schedule 4.17 are free and clear of any claims of infringement, invalidity or Encumbrance. Except as set forth in Schedule 4.17, neither Seller nor any Principal has notice of any adversely held Intangible of any other Person or or notice of any claim of any other Person relating to any of the Intangibles set forth in Schedule 4.17 or any process or confidential information of Seller, and neither Seller nor any Principal knows of any basis for any such claim. Neither Seller nor any Principal has infringed upon or misappropriated any Intellectual Property Rights of any Person. The Intangibles do not infringe upon or violate the Intellectual Property Rights or other proprietary rights of any Person. Except as set forth in Schedule 4.17 , neither Seller nor any Principal has licensed any Person to use any Intangible or other Intellectual Property Rights of Seller, nor is Seller obligated to pay any royalties, licensing fees or similar payments to any Person for use of the Intangibles and Intellectual Property Rights.

(2)   Schedule 4.17 contains a complete and accurate list and summary description of all registrations and pending applications for the Marks. All registered and pending Marks have been registered or applied for and pending, respectively (as indicated on the schedule) with the United States Patent and Trademark Office or the trademark office of the jurisdiction to which the registration or application pertains. The Marks are valid, subsisting, and enforceable and are not subject to any maintenance fees or taxes or actions falling due within sixty (60) days after the date hereof. Except as set forth in Schedule 4.17 , (i) no Mark has been or is now involved in any opposition, invalidation or cancellation Proceeding or any other Proceeding relating to the validity or registrability thereof, and no such action is threatened with respect to any of the Marks; (ii) there is no known potentially interfering trademark or trademark application of any other Person with regard to the Marks; (iii) none of the Marks has been challenged or threatened in any way by any third party; (iv) where applicable, the use of the Marks has been accompanied by the proper federal registration notice where permitted by law except for where such failure to comply with proper federal registration notice is not material to the operation of the Business.

4.18   Title . Except as set forth on Schedule 4.18 , Seller owns and has good, valid and marketable title to all of the Assets, free and clear of all Encumbrances. There are no outstanding options or commitments to which Seller or any Principal is a party which relate to the Assets or the sale by any of them of the Assets. At Closing, Buyer shall acquire all Assets used by Seller in the Business, other than the Excluded Assets set forth in Section 2.2. Within the past 10 years, Seller has not done business under or been known by any name other than its present corporate name, or done busi-ness at any address other than the names and addresses set forth in Schedule 4.18 .

4.19   [ Intentionally Omitted ]. 

4.20   Undisclosed Liabilities . As of December 31, 2006, Seller has no knowledge of any Liabilities that will not be fully and adequately reflected