TABLE OF CONTENTS

 

				Page
ARTICLE I DEFINITIONS				1
Section 1.1		Certain Defined Terms		1
Section 1.2		Table of Definitions		9
ARTICLE II PURCHASE AND SALE				10
Section 2.1		Purchase and Sale of Assets		10
Section 2.2		Excluded Assets		10
Section 2.3		Assumed Liabilities		11
Section 2.4		Excluded Liabilities		11
Section 2.5		Consideration		11
Section 2.6		Closing		11
Section 2.7		Post-Closing Adjustment of Purchase Price		13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER				15
Section 3.1		Organization and Qualification		15
Section 3.2		Authority		16
Section 3.3		No Conflict; Required Filings and Consents		16
Section 3.4		Transferred Assets		17
Section 3.5		Financial Statements; No Undisclosed Liabilities		17
Section 3.6		Absence of Certain Changes or Events		18
Section 3.7		Compliance with Law; Permits		19
Section 3.8		Litigation		19
Section 3.9		Employee Plans		19
Section 3.10		Labor and Employment Matters		20
Section 3.11		Insurance		21
Section 3.12		Real Property		21
Section 3.13		Intellectual Property		21
Section 3.14		Taxes		22
Section 3.15		Material Contracts		23
Section 3.16		Personal Property		24
Section 3.17		Brokers		24
Section 3.18		Prohibited Payments		24
Section 3.19		Solvency		24
Section 3.20		Disclosure		25
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER				25
Section 4.1		Organization and Qualification		25

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

i

 

TABLE OF CONTENTS
(Continued)

 

				Page
Section 4.2		Authority		25
Section 4.3		No Conflict; Required Filings and Consents		26
Section 4.4		Financing		26
Section 4.5		Brokers		26
ARTICLE V COVENANTS				27
Section 5.1		Covenants Regarding Information		27
Section 5.2		Intercompany Arrangements		28
Section 5.3		Confidentiality		28
Section 5.4		Consents and Filings; Further Assurances		28
Section 5.5		Refunds and Remittances		30
Section 5.6		Payment of Liabilities		30
Section 5.7		Bulk Transfer Laws		30
Section 5.8		Media Business Employees		30
Section 5.9		MIVA, Findwhat, Searchfeed, and eSpotting Names		33
Section 5.10		Non-Competition; Non-Solicitation		33
Section 5.11		Public Announcements		35
Section 5.12		Litigation Support		35
ARTICLE VI TAX MATTERS				36
Section 6.1		Price Allocation		36
Section 6.2		Tax Indemnity Adjustment		36
Section 6.3		Transfer Taxes		37
Section 6.4		Information		37
Section 6.5		VAT		37
ARTICLE VII INDEMNIFICATION				37
Section 7.1		Survival of Representations, Warranties		37
Section 7.2		Indemnification by the Sellers		38
Section 7.3		Indemnification by the Buyers		38
Section 7.4		Tax Allocation		39
Section 7.5		Procedures		39
Section 7.6		Limits on Indemnification		41
Section 7.7		Exclusivity		42
ARTICLE VIII GENERAL PROVISIONS				43
Section 8.1		Fees and Expenses		43
Section 8.2		Amendment and Modification		43

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

ii

 

TABLE OF CONTENTS
(Continued)

 

				Page
Section 8.3		Waiver		43
Section 8.4		Notices		43
Section 8.5		Interpretation		44
Section 8.6		Entire Agreement		44
Section 8.7		No Third-Party Beneficiaries		44
Section 8.8		Governing Law		45
Section 8.9		Arbitration		45
Section 8.10		Assignment; Successors		47
Section 8.11		Enforcement		47
Section 8.12		Currency		47
Section 8.13		Severability		47
Section 8.14		Waiver of Jury Trial		48
Section 8.15		Counterparts		48
Section 8.16		Facsimile Signature		48
Section 8.17		Time of Essence		48
Section 8.18		No Presumption Against Drafting Party		48
Section 8.19		Joint and Several		48

 

Exhibit 1	–	IP Assignment
Exhibit 2	–	Premises License Agreement
Exhibit 3	–	Transition Services Agreement

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

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ASSET PURCHASE AGREEMENT

 

ASSET PURCHASE AGREEMENT, dated as of March 12, 2009 (this “ Agreement ”), among MIVA, Inc., a Delaware corporation (the “ MIVA ”), B & B Advertising, Inc., a Delaware corporation (“ B&B” ), MIVA (UK) Limited, a company formed under the laws of England and Wales (“ MIVA (UK) ” , collectively with MIVA and B&B, the “ Sellers ” and each a “ Seller ”) U.S. Acquisition Sub, Inc., a Delaware corporation (the “ U.S. Acquisition Sub ”), Ajax Media Ltd., a company formed under the laws of England and Wales (the “ European Acquisition Sub ,” collectively with the U.S. Acquisition Sub, the “ Acquisition Subs ”), and Adknowledge, Inc., a Delaware corporation (“ Adknowledge ,” collectively with the Acquisition Subs, the “ Buyers ” and each a “ Buyer ”)).

 

RECITALS

 

A.            The Sellers are engaged among other things, in the business of owning and operating a pay-per-click network connecting advertisers and third party publishers (the “ Media Business ”) in North America (the “ U.S. Media Business ”) and Europe (the “ European Media Business ”) both directly and through Subsidiaries.

 

B.            The Sellers wish to sell to (i) the U.S. Acquisition Sub, and the U.S. Acquisition Sub wishes to purchase from the Sellers, the entire U.S. Media Business, and in connection therewith the U.S. Acquisition Sub is willing to assume the U.S. Assumed Liabilities, and (ii) the European Acquisition Sub, and the European Acquisition Sub wishes to purchase from the Sellers, the entire European Media Business, and in connection therewith the European Acquisition Sub is willing to assume the European Assumed Liabilities, in each case, upon the terms and subject to the conditions set forth herein.

 

AGREEMENT

 

In consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties agree as follows:

 

ARTICLE I
DEFINITIONS

 

Section 1.1          Certain Defined Terms .  For purposes of this Agreement:

 

“ Action ” means any claim, action, suit, arbitration or proceeding by or before any Governmental Authority, or any other litigation, arbitration, mediation or similar proceeding.

 

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

 

“ Ancillary Agreements ” means the Transition Services Agreement, the Premises License Agreement, the Intellectual Property Assignment, the Assignment and Assumption

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

 

Agreement, the Bill of Sale, the Sellers Solvency Certificate, the Lane’s Gifts Fulfillment Agreement and the Perot Management Agreement.

 

“ Assets and Properties ” of any Person means all assets and properties of every kind, nature, character and description (whether real, personal or mixed, whether tangible or intangible, whether absolute, contingent, accrued, fixed or otherwise and wherever situated, including the goodwill related thereto), operated owned or leased by such Person, including without limitation, evidences of indebtedness, stocks, securities, accounts and notes receivable, chattel paper, documents, instruments, general intangibles, real estate, equipment, inventory, goods and Intellectual Property.

 

“ Assignment and Assumption Agreement ” means the assignment and assumption agreement for the Transferred Assets and the Assumed Liabilities, dated as of the date hereof.

 

“ Assumed Liabilities ” means collectively the U.S. Assumed Liabilities and the European Assumed Liabilities.

 

“ Bill of Sale ” means the bill of sale for the Transferred Assets, as of the date hereof.

 

“ Books and Records ” means all books of account, general, financial, accounting and personnel records, files, invoices, customers’ and suppliers’ lists, other distribution lists, billing records, sales and promotional literature, manuals and customer and supplier correspondence owned by the Sellers or an Affiliate of the Sellers relating to the Media Business.

 

“ Business Day ” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in the City of New York.

 

“ Business Employees ” means all individuals employed by the Sellers or any of their Subsidiaries immediately prior to the Closing Date (including (i) those on military leave and family and medical leave, (ii) those on approved leaves of absence, but only to the extent they have reemployment rights guaranteed under federal, state or foreign law, under any applicable collective bargaining agreement or under any leave of absence policy of the employer and (iii) those on short-term disability under the Seller’s short-term disability program), whose duties relate primarily to the operations of the Media Business regardless of the company payroll on which such individuals are listed.

 

“ Business Intellectual Property ” means all Intellectual Property that is included in the U.S. Media Assets or the European Media Assets.

 

“ Buyer Material Adverse Effect ” means any event, change, occurrence or effect that would prevent, materially delay or materially impede the performance by the Buyers of their obligations under this Agreement or the Ancillary Agreements or the consummation of the transactions contemplated hereby or thereby.

 

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

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

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“ Contracts ” means all contracts and agreements to which a Seller is a party or by which a Seller is bound that arise out of the operation of the Media Business, including all contracts and agreements listed in Schedule 1.1(a)  of the Disclosure Schedules;

 

“ control ,” including the terms “ controlled by ” and “ under common control with ,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, as general partner or managing member, by contract or otherwise.

 

“ Employee Plans ” means all “employee benefit plans” within the meaning of Section 3(3) of ERISA (whether or not subject to ERISA), and all other compensation and benefit plans, contracts, policies, programs and arrangements (other than routine administrative procedures) of the Sellers or any of their Subsidiaries in effect as of the date hereof, including all pension, profit sharing, savings and thrift, bonus, stock bonus, stock option or other cash or equity-based incentive or deferred compensation, severance pay and medical and life insurance plans, in which any of the Business Employees or their dependents participate or under which any of the Business Employees or their dependents are covered.

 

“ Encumbrance ” means any charge, limitation, condition, equitable interest, mortgage, lien, option, pledge, security interest, easement, encroachment, right of first refusal, or pre-emption, adverse claim, restriction or third party right of any kind, including any restriction on or transfer or other assignment, as security or otherwise, of or relating to use, quiet enjoyment, voting, transfer, receipt of income or exercise of any other attribute of ownership.

 

“ European Closing Working Capital ” means the net book value of the consolidated European Included Assets less the consolidated European Included Liabilities, as shown on the European Closing Net Working Capital Statement.

 

“ European Included Assets ” means, solely with respect to the European Media Assets, the current assets included in the European Media Assets, including prepaid expenses but excluding Excluded Assets and deferred tax assets and receivables from any of the Sellers’ Affiliates, directors, employees or officers and any of their Affiliates, in each case calculated as of the close of business on the Closing Date and determined in accordance with GAAP applied on basis consistent with the preparation of the Financial Statements and in accordance with Schedule 2.7(a).

 

“ European Included Liabilities ” means, solely with respect to the European Media Assets, the current liabilities included in the European Assumed Liabilities, including accrued compensation and accrued expenses (including customer deposits or deferred revenue), but excluding payables to any of the Sellers’ Affiliates that are extinguished at Closing and Excluded Liabilities, in each case calculated as of the close of business on the Closing Date and determined in accordance with GAAP applied on a basis consistent with the preparation of the Interim Financial Statements and in accordance with Schedule 2.7(a).

 

“ European Media Assets ” means all of the Sellers’ and/or their Affiliate’s right, title and interest, direct or indirect, in and to all of the Contracts, assets, properties and rights of

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

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every nature, kind and description (wherever located), whether tangible or intangible, used or held for use in the European Media Business (other than the Excluded Assets), as they exist at the time of the Closing, including, without limitation, the Contracts, assets, properties and rights set forth on Schedule 1.1(b)  of the Disclosure Schedules.

 

“ European Targeted Working Capital ” means [***].

 

“ European Working Capital Adjustment ” means an amount equal to the European Targeted Working Capital less the European Closing Working Capital as finally determined pursuant to Section 2.7 .

 

“ Exon-Florio Provision ” means Section 721 of the Defense Production Act of 1950, as amended, and the regulations promulgated thereunder.

 

“ Foreign Plans ” means Employee Plans that are maintained or contributed to solely for the benefit of employees of a Seller or any of their Subsidiaries who are not resident in the United States, and the employee policies and practices applicable to such employees.

 

“ GAAP ” means United States generally accepted accounting principles and practices as in effect on the date hereof.

 

“ Governmental Authority ” means any United States or non-United States national, federal, state or local governmental, regulatory or administrative authority, agency or commission or any judicial or arbitral body.

 

“ Immediate Family ” means, with respect to any individual, that individual’s (i) spouse and (ii) the parents, siblings and children of that individual or of that individual’s spouse.

 

“ Intellectual Property ” means all intellectual property rights arising under the laws of the United States or any other jurisdiction with respect to the following:  (i) trade names, trademarks and service marks (registered and unregistered), domain names, trade dress and similar rights and applications to register any of the foregoing (including pending “intent-to-use” and similar applications that reserve the right to obtain or that establish or may establish a priority date with respect to any of the foregoing) (collectively, “ Marks ”); (ii) patents and patent applications (including provisional applications and all other filings that establish or may establish priority dates), inventions (including all rights to file, obtain or own any patent applications or patents that relate to any inventions), and rights in respect of utility models or industrial designs (collectively, “ Patents ”); (iii) copyrights and registrations and applications therefor (collectively, “ Copyrights ”); and (iv) know-how, inventions, discoveries, methods, processes, technical data, specifications, research and development information, technology, data bases and other proprietary or confidential information, including customer lists, in each case that derives economic value from not being generally known to other Persons who can obtain economic value from its disclosure (collectively, “ Trade Secrets ”).

 

“ Intellectual Property Assignment ” means the assignment of Intellectual Property in the form of Exhibit 1 to this Agreement.

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

4

 

“ IRS ” means the Internal Revenue Service of the United States.

 

“ Knowledge ” with respect to a Seller, means the actual knowledge of the persons listed on Schedule 1.1(c)(i)  of the Disclosure Schedules, and with respect to a Buyer, means the actual knowledge of the persons listed on Schedule 1.1(c)(ii)  of the Disclosure Schedules, and in each case, such knowledge as would be imputed to such persons upon reasonable inquiry.

 

“ Law ” means any statute, law, ordinance, regulation, rule, code, injunction, judgment, decree or order of any Governmental Authority.

 

“ Leased Real Property ” means all real property leased, subleased or licensed to the Sellers or any of its Subsidiaries or which any of them otherwise has a right or option to use or occupy, in each case used or intended to be used in connection with the Media Business, together with all structures, facilities, fixtures, systems and improvements located thereon, or attached or appurtenant thereto, and all easements, rights and appurtenances relating to the foregoing.

 

“ Material Adverse Effect ” means any event, change, circumstance, occurrence, effect or state of facts that (i) is materially adverse to the business, assets, financial condition or results of operations of the Media Business taken as a whole, or (ii) materially impairs the ability of any of the Sellers, to consummate, or prevents or materially delays, any of the transactions contemplated by this Agreement; provided , however , that none of the following, either alone or in combination, will constitute, or be considered in determining whether there has been, a Material Adverse Effect, any event, change, circumstance, effect or other matter directly resulting from or related to (a) any outbreak or escalation of war or major hostilities or any act of terrorism, (b) changes in Laws, GAAP or enforcement or interpretation thereof, (c) changes that generally affect the industries and markets in which the Business operates that do not have a disproportionate impact in any material respect on the Business, (d) changes in financial markets, general economic conditions (including prevailing interest rates, exchange rates, commodity prices and fuel costs) or political conditions that do not have a disproportionate impact in any material respect on the Business, or (e) effects or changes resulting from the execution or delivery of this Agreement, the consummation of the transactions contemplated by this Agreement or the public announcement or other publicity with respect to any of the foregoing.

 

“ Permitted Encumbrance ” means (i) statutory liens for current Taxes not yet due or delinquent (or which may be paid without interest or penalties) or the validity or amount of which is being contested in good faith by appropriate proceedings, (ii) mechanics’, carriers’, workers’, repairers’ and other similar liens arising or incurred in the ordinary course of business relating to obligations as to which there is no default on the part of the Sellers for a period greater than 60 days, or the validity or amount of which is being contested in good faith by appropriate proceedings, or pledges, deposits or other liens securing the performance of bids, trade contracts, leases or statutory obligations (including workers’ compensation, unemployment insurance or other social security legislation), (iii) zoning, entitlement, conservation restriction and other land use and environmental regulations by Governmental Authorities and (iv) defects, easements, rights of way, restrictions, covenants, claims, subleases or similar items relating to

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

5

 

real property that do not, individually or in the aggregate, have a material adverse effect on the present use or occupancy of the real property subject thereto.

 

“ Person ” means an individual, corporation, partnership, limited liability company, limited liability partnership, syndicate, person, trust, association, organization or other entity, including any Governmental Authority, and including any successor, by merger or otherwise, of any of the foregoing.

 

“ Personal Property ” means all machinery, equipment, furniture, furnishings, rolling stock, tools, office supplies, vehicles, computer hardware and other tangible personal property owned or leased by any Person and related to, used or held for use in connection with the Media Business.

 

“ Premises License Agreement ” means the premises license agreement in the form of Exhibit 2 to this Agreement.

 

“ Purchase Price ” means collectively the U.S. Purchase Price and the European Purchase Price.

 

“ Related Party ,” with respect to any specified Person, means: (i) any Affiliate of such specified Person, or any director, executive officer, general partner or managing member of such Affiliate; (ii) any Person who serves or within the past four years has served as a director, executive officer, partner, member or in a similar capacity of such specified Person; (iii) any Immediate Family member of a Person described in clause (ii); or (iv) any other Person who holds, individually or together with any Affiliate of such other Person and any member(s) of such Person’s Immediate Family, more than 5% of the outstanding voting equity or ownership interests of such specified Person.

 

“ Representatives ” means, with respect to any Person, the officers, directors, employees, agents, accountants, advisors, bankers and other representatives of such Person.

 

“ Seller Taxes ” means all Taxes (i) arising from or with respect to the Transferred Assets or the operation of the Media Business that are incurred in or attributable to any period, or any portion of any period, ending on or prior to the Closing Date (including any Taxes that are the liability of Sellers pursuant to Section 7.4 ); (ii) of the Sellers for any period that is not related to the Transferred Assets or the Media Business, and for Taxes of the Sellers for any period that could become a liability of, or be assessed or collected against, the Buyers, or that could become an Encumbrance on the Transferred Assets; and (iii) of the Sellers that arise as a result of the transactions contemplated by this Agreement (including but not limited to any Transfer Taxes that are assessed upon or with respect to the transfer of the Transferred Assets and for which the Sellers are responsible under the terms of this Agreement).

 

“ Small Business Solutions Agreements ” means the asset purchase agreement, license agreement, and transition services agreement, in each case dated August 1, 2007 and in each made by and among MIVA Small Business Solutions, Inc., a Delaware corporation, MIVA

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

6

 

and MSB Acquisition, Inc., a California corporation, together with all others agreements and documents contemplated therein.

 

“ Small Business Solutions License Agreement ” means the license agreement, dated August 1, 2007, by and among MIVA Small Business Solutions, Inc., a Delaware corporation, MIVA and MSB Acquisition, Inc., a California corporation.

 

“ Subsidiary ” means, with respect to any Person, any other Person of which at least 50% of the outstanding voting securities or other voting equity interests are owned, directly or indirectly, by such first Person.

 

“ Tangible Personal Property ” means all machinery, equipment, furniture, furnishings, parts, spare parts, vehicles and other tangible personal property owned by any of the Sellers and/or their Affiliates and used or held for use in the Media Business.

 

“ Tax Return ” means any return, declaration, report, statement, information statement and other document required to be filed with respect to Taxes.

 

“ Taxes ” means:  (i) all federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, registration, license, lease, service, service use, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments, levies, duties, contributions or charges of any kind whatsoever whether of the United States, the United Kingdom, the European Union, or elsewhere, together with any interest and any penalties, additions to tax or additional amounts with respect thereto; (ii) any liability for payment of amounts described in clause (i) whether as a result of transferee liability, of being a member of an affiliated, consolidated, combined or unitary group for any period or otherwise through operation of law; and (iii) any liability for the payment of amounts described in clauses (i) or (ii) as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement to indemnify any other Person.

 

“ Transferred Assets ” means collectively the U.S. Media Assets and the European Media Assets.

 

“ Transfer Tax ” means any tax imposed on the transferor or transferee of property by any taxing jurisdiction by reason of the transfer, or any tax that becomes a lien on the property transferred by reason of the transfer, including without limitation any stamp duty, sales, use, excise, documentary, valued added, real estate transfer taxes or taxes of a similar nature, including any interest, penalties or additions to tax that become payable with respect to such tax. “Transfer Tax” shall not include any taxes imposed on a seller or transferor of property that is measured by reference to the net income or gain of the seller or transferor.

 

“ Transition Services Agreement ” means the transition services agreement in the form of Exhibit 3 to this Agreement.

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

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“ U.S. Closing Working Capital ” shall mean the net book value of the consolidated U.S. Included Assets less the consolidated U.S. Included Liabilities, as shown on the U.S. Closing Net Working Capital Statement.

 

“ U.S. Included Assets ” means, solely with respect to the U.S. Media Assets, the current assets included in the U.S. Media Assets, including accounts receivable and prepaid expenses but excluding Excluded Assets and deferred tax assets and receivables from any of the Sellers’ Affiliates, directors, employees or officers and any of their Affiliates, determined in accordance with GAAP applied on a basis consistent with the preparation of the Financial Statements, in each case calculated as of the close of business on the Closing Date and determined in accordance with GAAP applied on a basis consistent with the preparation of the Financial Statements and in accordance with Schedule 2.7(a).

 

“ U.S. Included Liabilities ” means, solely with respect to the U.S. Media Assets, the current liabilities included in the U.S. Assumed Liabilities, including accrued compensation and accrued expenses (including customer deposits or deferred revenue), but excluding payables to any of the Sellers’ Affiliates that are extinguished at Closing and Excluded Liabilities, in each case calculated as of the close of business on the Closing Date and determined in accordance with GAAP applied on a basis consistent with the preparation of the Interim Financial Statements and in accordance with Schedule 2.7(a).

 

“ U.S. Media Assets ” means all of the Sellers’ and/or their Affiliate’s right, title and interest, direct or indirect, in and to all of the assets, properties and rights of every nature, kind and description (wherever located), whether tangible or intangible, used or held for use in the U.S. Media Business (other than the Excluded Assets), as they exist at the time of the Closing, including, without limitation, the assets, properties and rights set forth on Schedule 1.1(d)  of the Disclosure Schedules.

 

“ U.S. Targeted Working Capital ” means [***].

 

“ U.S. Working Capital Adjustment ” means an amount equal to the U.S. Targeted Working Capital less the U.S. Closing Working Capital as finally determined pursuant to Section 2.7 .

 

“ VAT ” means the tax imposed by VAT Directive 2006/112/EC of the European Communities and any national legislation implementing that directive together with legislation supplemental thereto or any similar sales or turnover tax whether of the European Union or elsewhere.

 

“ Welfare Plan ” means any employee welfare benefit plan within the meaning of Section 3(1) of ERISA, any short-term disability program classified as a “payroll practice,” any group health plan within the meaning of Section 105 of the Code, any cafeteria plan within the meaning of Section 125 of the Code, any dependent care assistance program within the meaning of Section 129 of the Code, any adoption assistance plan within the meaning of Section 137 of the Code, any tuition assistance plan within the meaning of Section 127 of the Code, and any qualified transportation plan within the meaning of Section 132 of the Code.

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

8

 

Section 1.2                               Table of Definitions .  The following terms have the meanings set forth in the Sections referenced below:

 

Definition		Location
AAA		10.9(a)
Acquisition Subs		Preamble
Adknowledge		Preamble
Agreement		Preamble
B&B		Preamble
Business Patents		3.13(a)
Business Registered Copyrights		3.13(a)
Business Registered IP		3.13(a)
Business Registered Marks		3.13(a)
Buyer		Preamble
Buyers		Preamble
Cap		8.6(a)(i)
Closing		2.6(a)
Closing Date		2.6(a)
Closing Net Working Capital Statements		2.7(a)
Confidential Information		5.3(a)
[***]		7.1(a)
Disclosing Parties		10.9(c)
Disclosure Schedules		Article III
European Acquisition Sub		Preamble
European Assumed Liabilities		2.3(b)
European Balance Sheet		3.5(a)
European Carveout Procedures		3.5(a)
European Closing Net Working Capital Statement		2.7(a)
European Media Business		Recitals
European Purchase Price		2.5(b)
Excluded Assets		2.2
Excluded Liabilities		2.4
Financial Statements		3.5(a)
HSR Act		3.3(b)
Indemnified Party		8.5(a)
Indemnifying Party		8.5(a)
Independent Accounting Firm		2.7(c)
Interim Financial Statements		3.5(a)
Losses		8.2
Material Contracts		3.15(a)
Media Business		Recitals
MIVA		Preamble

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

9

 

Definition		Location
MIVA (UK)		Preamble
New York Convention		10.9(b)
Notice of Disagreement		2.7(b)
Order		6.4
Permits		3.7(b)
Post-Closing Tax Period		8.4
Pre-Closing Tax Period		8.4
Price Allocation		6.1
Proposed Expert		10.9(c)
[***]		2.3(b)
Restricted Contract		5.4(a)
Restricted Period		5.10(a)
Seller Solvency Certificate		2.6(b)(ii)(D)
Seller(s)		Preamble
Third Party Claim		8.5(a)
Transferring Employees		5.8(a)
TUPE		5.8(d)
U.S. Assumed Liabilities		2.3(a)
U.S. Balance Sheet		3.5(a)
U.S. Carveout Procedures		3.5(a)
U.S. Closing Net Working Capital Statement		2.7(a)
U.S. Media Business		Recitals
U.S. Purchase Price		2.5(a)
US Acquisition Sub		Preamble

 

ARTICLE II
PURCHASE AND SALE

 

Section 2.1                               Purchase and Sale of Assets .  Upon the terms and subject to the conditions of this Agreement, at the Closing, the Sellers shall, or cause its Subsidiaries to, sell, assign, transfer, convey and deliver to (a) the U.S. Acquisition Sub all of the Sellers’ and/or their Affiliate’s right, title and interest as of the Closing Date in and to the U.S. Media Assets, and the U.S. Acquisition Sub shall purchase, acquire, accept and pay for the U.S. Media Assets and assume the U.S. Assumed Liabilities and (b) the European Acquisition Sub all of the Sellers’ and/or their Affiliate’s right, title and interest as of the Closing Date in and to the European Media Assets, and the European Acquisition Sub shall purchase, acquire, accept and pay for the European Media Assets and assume the European Assumed Liabilities.

 

Section 2.2                               Excluded Assets .  Notwithstanding anything contained in Section 2.1 to the contrary, the Sellers are not selling, and the Acquisition Subs are not purchasing, any assets listed on Schedule 2.2 of the Disclosure Schedules, all of which shall be retained by the Sellers (collectively, the “ Excluded Assets ”).

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

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Section 2.3                               Assumed Liabilities .

 

(a)                                   In connection with the purchase and sale of the U.S. Media Assets pursuant to this Agreement, at the Closing, the U.S. Acquisition Sub shall assume and pay, discharge, perform or otherwise satisfy the liabilities and obligations of the Sellers related to the U.S. Media Business and set forth on Schedule 2.3(a)  of the Disclosure Schedules (the “ U.S. Assumed Liabilities ”).

 

(b)                                  In connection with the purchase and sale of the European Media Assets pursuant to this Agreement, at the Closing, the European Acquisition Sub shall assume and pay, discharge, perform or otherwise satisfy the liabilities and obligations of the Sellers related to the European Media Business and set forth on Schedule 2.3(b)  of the Disclosure Schedules (the “ European Assumed Liabilities ”)

 

Section 2.4                               Excluded Liabilities . Notwithstanding the provisions of Section 2.3 or any other provision of this Agreement, any Disclosure Schedule hereto or any Ancillary Agreement to the contrary, except for the Assumed Liabilities, neither of the Acquisition Subs shall assume, and neither shall have any Liability for, any Liabilities of any Seller (including without limitation those relating to the Media Business and any Seller Taxes) of any kind, character or nature whatsoever (the “ Excluded Liabilities ”).  [***].

 

Section 2.5                               Consideration .

 

(a)                                   In full consideration for the sale, assignment, transfer, conveyance and delivery of the U.S. Media Assets to the U.S. Acquisition Sub, at the Closing, the U.S. Acquisition Sub shall (a) pay, or cause to be paid, to the Sellers, an amount equal to $6,966,600 (the “ U.S. Purchase Price ”) in immediately available funds in United States dollars and (b) assume the U.S. Assumed Liabilities.  The U.S. Purchase Price shall be subject to adjustment as provided in Section 2.7 .

 

(b)                                  In full consideration for the sale, assignment, transfer, conveyance and delivery of the European Media Assets to the European Acquisition Sub, at the Closing, the European Acquisition Sub shall (a) pay, or cause to be paid, to the Sellers, an amount equal to $4,644,400 (the “ European Purchase Price ”) in immediately available funds in United States dollars and (b) assume the European Assumed Liabilities.  The European Purchase Price shall be subject to adjustment as provided in Section 2.7 .

 

Section 2.6                               Closing .

 

(a)                                   The sale and purchase of the Transferred Assets shall take place simultaneously with the execution of this Agreement at a closing (the “ Closing ”) to be held at the offices of Gibson, Dunn & Crutcher LLP, 200 Park Avenue, New York, NY 10166. The day on which the Closing takes place is referred to as the “ Closing Date .”

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

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(b)                                  Closing Deliveries .

 

(i)                                      At the Closing, the Buyers shall deliver:

 

(A)                               to MIVA, both for itself and as trustee for the other Sellers, by wire transfer from the U.S. Acquisition Sub to a bank account designated in writing by the Sellers to the Buyers, an amount equal to the Purchase Price in immediately available funds in United States dollars;

 

(B)                                 to the Sellers, a duly executed counterpart of the Assignment and Assumption Agreement;

 

(C)                                 to the Sellers, a duly executed counterpart of the Bill of Sale;

 

(D)                                to the Sellers, a duly executed counterpart of the Perot Management Agreement;

 

(E)                                  to the Sellers, a duly executed counterpart of the Lane’s Gifts Fulfillment Agreement;

 

(F)                                  to the Sellers, a duly executed counterpart of the Transition Services Agreement; and

 

(G)                                 to the Sellers, a duly executed counterpart of the Premises License Agreement.

 

(ii)                                   At the Closing, the Sellers shall deliver or cause to be delivered to the Buyers:

 

(A)                               a duly executed counterpart of the Bill of Sale;

 

(B)                                 a duly executed counterpart of the Assignment and Assumption Agreement;

 

(C)                                 all Books and Records;

 

(D)                                a solvency certificate signed by the Chief Financial Officer of MIVA (the “ Seller Solvency Certificate ”);

 

(E)                                  the Intellectual Property Assignment duly executed by the Sellers;

 

(F)                                  a duly executed counterpart of the Perot Management Agreement;

 

(G)                                 a duly executed counterpart of the Lane’s Gifts Fulfillment Agreement;

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

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(H)          a duly executed counterpart of the Transition Services Agreement; and

 

(I)            a duly executed counterpart of the Premises License Agreement.

 

(J)            such other bills of sale, assignments and other instruments of assignment, transfer or conveyance, in form and substance reasonably satisfactory to the Buyers, as the Buyers may reasonably request or as may be otherwise necessary or desirable to evidence and effect the sale, assignment, transfer, conveyance and delivery of the Transferred Assets to the Acquisition Sub and to put the Buyers in actual possession or control of the Transferred Assets, duly executed by the Sellers; and

 

(K)          an affidavit of non-foreign status that complies with Section 1445 of the Code for each of MIVA and B&B.

 

Section 2.7          Post-Closing Adjustment of Purchase Price .

 

(a)           Within 90 days after the Closing Date, (i) the U.S. Acquisition Sub shall deliver to the Sellers a consolidated net working capital statement (the “ U.S. Closing Net Working Capital Statement ”) of the U.S. Media Business, consisting of the U.S. Included Assets and the U.S. Included Liabilities, and (ii) the European Acquisition Sub shall deliver to the Sellers a consolidated net working capital statement (the “ European Closing Net Working Capital Statement ”) of the European Media Business, consisting of the European Included Assets and the European Included Liabilities, in each case, including all notes thereto, dated as of the Closing Date (collectively, the “ Closing Net Working Capital Statements ”).  Each aforementioned Closing Net Working Capital Statement shall be prepared in accordance with GAAP applied on a basis consistent with the preparation of the Balance Sheets, and the respective European Targeted Working Capital and U.S. Targeted Working Capital calculations as set forth by way of example on Schedule 2.7(a)  (other than the inclusion of any normal and recurring year-end adjustments that would be required under GAAP and the absence of notes thereto) ; provided that no purchase accounting adjustments in respect of the transactions contemplated by this Agreement shall be made; provided further , that in the event of a conflict between the applicable GAAP and consistent application thereof, the applicable GAAP shall prevail.  The Sellers shall cause their employees and the employees of their respective Subsidiaries to assist the Buyers and their auditors in the preparation of the Closing Statements and shall provide the Buyers and their Representatives reasonable access, during normal business hours and upon reasonable prior notice, to the personnel, properties, books and records of the Sellers and their Subsidiaries for such purpose.

 

(b)           During the 20 Business Day period following the Sellers’ receipt of the Closing Statements, the Buyers shall provide the Sellers and their Representatives with access to the working papers of the Buyers relating to the Closing Statements, and the Buyers shall cooperate with the Sellers and their Representatives to provide them with any other information used in preparing the Closing Statements reasonably requested by the Sellers and their Representatives.  Each Closing Statement shall become final and binding on the 20th Business

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

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Day following delivery thereof, unless prior to the end of such period, the Sellers deliver to the Buyers written notice of their disagreement (a “ Notice of Disagreement ”) specifying the nature and amount of any disputed item.  The Sellers shall be deemed to have agreed with all items and amounts in a Closing Statement not specifically referenced in a Notice of Disagreement, and such items and amounts shall not be subject to review in accordance with this Section 2.7(b) .

 

(c)           During the ten Business Day period following delivery of a Notice of Disagreement by the Sellers to the Buyers, the parties in good faith shall seek to resolve in writing any differences that they may have with respect to the matters specified therein.  During such ten Business Day period, the Sellers shall use their commercially reasonable efforts to provide the Buyers and their Representatives with access to the working papers of the Sellers and their accountants relating to such Notice of Disagreement, and the Sellers and its Subsidiaries and their accountants shall cooperate with the Buyers and their Representatives to provide them with any other information used in preparation of such Notice of Disagreement reasonably requested by the Buyers or their Representatives.  Any disputed items resolved in writing between the Sellers and the Buyers within such ten Business Day period shall be final and binding with respect to such items, and if the Sellers and the Buyers agree in writing on the resolution of each disputed item specified by the Sellers in the Notice of Disagreement and the amount of the Closing Statement, the amount so determined shall be final and binding on the parties for all purposes hereunder.  If the Sellers and the Buyers have not resolved all such differences by the end of such ten Business Day period, the Sellers and the Buyers shall submit, in writing, to an independent public accounting firm (the “ Independent Accounting Firm ”), their briefs detailing their views as to the correct nature and amount of each item remaining in dispute and the amounts of the Closing Working Capital.  Sellers and Buyers will also furnish to the Independent Accounting Firm such other work papers, documentation and information directly relating to the disputed items as the Independent Accounting Firm may reasonably request.  The Independent Accounting Firm shall make a written determination as to each such disputed item and the amounts of the Closing Working Capital, which determination shall be final and binding on the parties for all purposes hereunder.  The Independent Accounting Firm shall be authorized to resolve only those items remaining in dispute between the parties in accordance with the provisions of this Section 2.7 within the range of the difference between the Buyers’ position, on the one hand, with respect thereto and the Sellers’ position, on the other hand, with respect thereto.  The determination of the Independent Accounting Firm shall be accompanied by a certificate of the Independent Accounting Firm that it reached such determination in accordance with the provisions of this Section 2.7 .  For purposes of this Section 2.7 , the Independent Accounting Firm shall be Grant Thornton LLP or, if such firm is unable or unwilling to act, such other independent public accounting firm as shall be agreed in writing by the Sellers and the Buyers.  The Sellers and the Buyers shall use their commercially reasonable efforts to cause the Independent Accounting Firm to render a written decision resolving the matters submitted to it within 20 Business Days following the submission thereof.  The fees and expenses of the Independent Accounting Firm shall be borne by the parties in inverse proportion as they may prevail on the matters resolved by the Independent Accounting Firm, which proportionate allocation shall be calculated on an aggregate basis based on the relative dollar values of the amounts in dispute and shall be determined by the Independent

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

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Accounting Firm at the time the determination of such firm is rendered on the merits of the matters submitted.  Except as aforesaid, all fees and expenses incurred by a party in connection with any dispute resolution pursuant to this Section 2.7 , including without limitation the fees and disbursements of the auditors and other Representatives of each party incurred in connection with their preparation or review of a Closing Net Working Capital Statement, preparation or review of any Notice of Disagreement and presentation of issues to the Independent Accounting Firm, shall be borne by such party.

 

(d)           Upon final determination of the amounts on the Closing Statements as provided in Section 2.7(c)  above, (1) if the U.S. Working Capital Adjustment or the European Working Capital Adjustment is positive, the Sellers shall promptly, but no later than five Business Days after such final determination, pay to the Buyers (or if requested by the Buyers, to a specified Person) the relevant Working Capital Adjustment in United States dollars in immediately available funds by wire transfer to an account designated in writing by the Buyers to the Sellers and (2) if the U.S. Working Capital Adjustment or the European Working Capital Adjustment is negative, the Buyers shall promptly, but no later than five Business Days after such final determination, pay to the Sellers the absolute value of the relevant Working Capital Adjustment.  Any amounts to be paid pursuant to Section 7.2 or this Section 2.7 not paid within the five Business Day period following such final determination shall bear interest from the Closing Date to the date of such payment at a rate equal to six percent (6%).  For purposes hereof, each of the U.S. Working Capital Adjustment and the European Working Capital Adjustment shall be considered separately and neither shall be netted against the other.  If the European Working Capital Adjustment is negative, the amount of such adjustment shall be paid by disbursing to MIVA or its nominee the amount of such adjustment from the European Acquisition Sub.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLER

 

Except as set forth in the Disclosure Schedules attached hereto (collectively, the “ Disclosure Schedules ”), the Sellers hereby represent and warrant, jointly and severally, to the Buyers as follows:

 

Section 3.1          Organization and Qualification .  Each Seller is a corporation or other limited liability company duly organized or formed, validly existing and in good standing under the laws of its jurisdiction of organization or formation and has all necessary corporate power and authority to own, lease and operate the Transferred Assets owned by it and to carry on the Media Business as it is now being conducted.  Except as set forth on Schedule 3.1 of the Disclosure Schedules, each Seller is duly qualified or licensed as a foreign corporation or other legal entity to do business, and is in good standing, in each jurisdiction where the ownership or operation of the Transferred Assets or the conduct or operation of the Media Business makes such qualification or licensing necessary, except, in each case, for any such failures that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on such Seller or the Media Business.

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

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Section 3.2          Authority .  Each Seller has full corporate power and authority to execute and deliver this Agreement and each of the Ancillary Agreements to which it is a party, to perform its 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 each of the Ancillary Agreements to which it is a party and the consummation by each Seller of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action, and the Sellers represent and warrant that the consent of MIVA’s stockholders is not required to consummate the transactions contemplated hereby.  This Agreement and each of the Ancillary Agreements to which any Seller is a party have been duly executed and delivered by such Seller.  This Agreement and each of the Ancillary Agreements to which any Seller is a party constitute the legal, valid and binding obligations of such Seller, enforceable against such Seller in accordance with their respective terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether considered in a proceeding in equity or at law).

 

Section 3.3          No Conflict; Required Filings and Consents .

 

(a)           Except as set forth on Schedule 3.3(a)  of the Disclosure Schedules, the execution, delivery and performance by the Sellers of this Agreement and each of the Ancillary Agreements to which any Seller is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not:

 

(i)            conflict with or violate the certificate of incorporation or bylaws or similar charter or organizational document of any Seller;

 

(ii)           conflict with or violate any Law applicable to any Seller, the Media Business or any of the Transferred Assets or by which any Seller, the Media Business or any of the Transferred Assets may be bound or affected; or

 

(iii)          conflict with, result in any breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default) under, require any consent of any Person pursuant to, or give to others any rights of termination, acceleration or cancellation of, any Material Contract;

 

except, in the case of clause (ii) or (iii), for any such conflicts, violations, breaches, defaults or other occurrences that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or that arise as a result of any facts or circumstances relating to the Buyers or any of their Affiliates.

 

(b)           No Seller is required to file, seek or obtain any notice, authorization, approval, order, permit or consent of or with any Governmental Authority in connection with the execution, delivery and performance by such Seller of this Agreement or any Ancillary Agreements to which any Seller is a party or the consummation of the transactions contemplated hereby or thereby or in order to prevent the termination of any right, privilege, license or qualification of the Media Business, except for (i) any filings required to be made

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

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under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”), (ii) where failure to obtain such consent, approval, authorization or action, or to make such filing or notification, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or (iii) as may be necessary as a result of any facts or circumstances relating to the Buyers or any of their Affiliates.

 

Section 3.4          Transferred Assets .

 

(a)           The sale of the Transferred Assets by Sellers to Buyer(s) pursuant to this Agreement will effectively convey to Buyer(s) the entire Media Business and all of the tangible and intangible property used by Sellers or any of their respective Affiliates (whether owned, leased or held under license by Sellers, by any of Sellers Affiliates or by others) in connection with the conduct of the Media Business as heretofore conducted by the Sellers (except for the Excluded Assets and those assets to be provided pursuant to the terms of the Ancillary Agreements) including, without limitation, all tangible Assets and Properties of the Sellers reflected in the Balance Sheet and assets and properties acquired since the date of the Balance Sheet, other than Excluded Assets and assets and properties disposed of since the date of the Balance Sheet. Except as disclosed in Schedule 3.4 of the Disclosure Schedules, there are no shared facilities used in connection with the Media Business.  None of the Transferred Assets are owned or held by any Person other than MIVA, B&B or MIVA (UK).

 

(b)           The Sellers have good and valid title to or a valid leasehold interest in all of the Transferred Assets, free and clear of any Encumbrance, other than Permitted Encumbrances.  The delivery to the Buyers of the Bill of Sale and other instruments of assignment, conveyance and transfer pursuant to this Agreement and the Ancillary Agreements will transfer to the Buyers good and valid title to or a valid leasehold interest in all of the Transferred Assets, free and clear of any Encumbrance other than Permitted Encumbrances.  Except for the Excluded Assets and assets to be made available to Buyer(s) under the Ancillary Agreements, the Transferred Assets constitute all of the assets, properties and rights necessary and sufficient for the conduct and operation of the Media Business.

 

Section 3.5          Financial Statements; No Undisclosed Liabilities .

 

(a)           True and complete copies of (i) the consolidated audited balance sheet of MIVA as at December 31, 2007, and the related consolidated statements of results of operations and cash flows of MIVA together with all related notes and schedules thereto, (ii) the consolidated unaudited balance sheet of MIVA as at March 31, 2008, June 30, 2008 and September 30, 2008, and the related consolidated statements of results of operations and cash flows of MIVA together with all related notes and schedules thereto, (iii) the unaudited balance sheet of the U.S. Media Business as at December 31, 2008, and the related statements of results of operations of the U.S. Media Business together with all related notes and schedules thereto (including the worksheet reflecting the adjustments or elimination entries used in the preparation of the U.S. Balance Sheet and related financial statements (the “U.S. Carveout Procedures”)), and (iv) the unaudited balance sheet of the European Media Business as at December 31, 2008, and the related statements of results of operations of the European Media Business together with all related notes and schedules thereto (including the worksheet

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

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reflecting the adjustments or elimination entries used in the preparation of the European Balance Sheet and related financial statements (the “European Carveout Procedures”)) (collectively referred to as the “ Financial Statements ”) and (i) the unaudited balance sheet of the U.S. Media Business as at January 31, 2009 (the “ U.S. Balance Sheet ”), and the related statements of results of operations, together with all related notes and schedules thereto, and (ii) the unaudited balance sheet of the European Media Business as at January 31, 2009 (the “ European Balance Sheet ”), and the related statements of results of operations, together with all related notes and schedules thereto (collectively referred to as the “ Interim Financial Statements ”), are attached hereto as Schedule 3.5(a)  of the Disclosure Schedules.  Each of the Financial Statements and the Interim Financial Statements (A) has been prepared based on the books and records of the Seller pertaining to the Media Business (except as may be indicated in the notes thereto), (B) has been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto) and (C) fairly presents, in all material respects, the consolidated financial position, results of operations and (in the case of (i) and (ii) above only) cash flows of the Media Business as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein and subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments and the absence of notes that will not, individually or in the aggregate, be material.  The adjustments and elimination entries included in the U.S. Carveout Procedures and the European Carveout Procedures, in each case, were determined in the reasonable, good faith estimation of Miva’s management to be meaningfully necessary for purposes of the preparation of the standalone U.S. Balance Sheet and European Balance Sheet, and the financial statements of the results of operations for the US Media Business and the EU Media Business at December 31, 2008 are complete and consistent with the historic practices of Miva management for purposes of evaluating and measuring the results of operations and financial position of the Media Business and, except as specifically footnoted on the statements (which footnotes relate to the U.S. Carveout Procedures and European Carveout Procedures), do not exclude operating expenses that were incurred in respect of the operation of the Media Business for the period covered by such financial statements of the results of operations.

 

(b)           Except (A) as set forth on Schedule 3.5(b)  of the Disclosure Schedules and (B) as and to the extent adequately accrued or reserved against in the reviewed balance sheet of the Media Business as at the date of the Balance Sheet, there are no debts, liabilities or obligations, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, of the Media Business of a nature required to be reflected on a balance sheet prepared in accordance with GAAP, other than any such debts, liabilities or obligations (i) reflected or reserved against on the Financial Statements or the notes thereto, (ii) incurred since the date of the Balance Sheet in the ordinary course of business, (iii) for Taxes, or (iv) that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 3.6          Absence of Certain Changes or Events .  Except as set forth on Schedule 3.6 of the Disclosure Schedules, since September 30, 2008, (a) the Sellers have conducted the Media Business, in all respects, in the ordinary course of business consistent with past practice and (b) there has not occurred any Material Adverse Effect.

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

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Section 3.7          Compliance with Law; Permits .

 

(a)           Except as set forth on Schedule 3.7(a)  of the Disclosure Schedules, to the Knowledge of the Sellers, the Media Business is and has been conducted in compliance with all applicable Laws.  The Sellers, their Subsidiaries or any of their executive officers have not received during the past five years, nor, to the Knowledge of such individuals, is there any basis for, any notice, order, complaint or other communication from any Governmental Authority or any other Person that any part of the Media Business is not in compliance in any material respect with any Law applicable to it.

 

(b)           Except as set forth on Schedule 3.7(b)  of the Disclosure Schedules, the Sellers are in possession of all permits, licenses, franchises, approvals, certificates, consents, waivers, concessions, exemptions, orders, registrations, notices or other authorizations of any Governmental Authority necessary for it to own, lease and operate the Transferred Assets and to carry on the Media Business as currently conducted (the “ Permits ”), each of which is in full force and effect, except where the failure to have, or the suspension or cancellation of, any of the Permits would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  All aspects of the Media Business has been conducted in compliance in all material respects with all such Permits.  No suspension, cancellation, modification, revocation or nonrenewal of any Permit is pending or, to the Knowledge of the Sellers, threatened or likely to be threatened.

 

Section 3.8          Litigation .  Except as set forth on Schedule 3.8 of the Disclosure Schedules, as of the date hereof, there is no Action by or against the Sellers in connection with the Media Business or which could affect the Transferred Assets pending, or to the Knowledge of the Sellers, threatened in writing (a) seeking damages in excess of $100,000, (b) pursuing any criminal sanctions or penalties, (c) seeking equitable or injunctive relief or (d) that would otherwise, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or would affect the legality, validity or enforceability of this Agreement or any Ancillary Agreement or the consummation of the transactions contemplated hereby or thereby.

 

Section 3.9          Employee Plans .

 

(a)           Schedule 3.9 of the Disclosure Schedules sets forth all material Employee Plans.  The Sellers have made available to the Buyers a true and complete copy of the following documents:  (i) each writing constituting an Employee Plan or a written description of any Employee Plan not in writing, (ii) the current summary description of each Employee Plan and any material modifications thereto and (iii) the most recent determination letter from the IRS, if any, with respect to any Employee Plan qualified under Section 401(a) of the Code.

 

(b)           With respect to the Employee Plans:  (i) no event (including, but not limited to, the undertaking of the transactions contemplated by this Agreement, either alone or in conjunction with any other event) or omission has occurred and, to the Knowledge of the Sellers, there exists no condition or set of circumstances in connection with which the Buyer or its Affiliates would incur a material liability after Closing under the terms of any Employee

 

[***] = Confidential treatment requested for redacted portion; redacted portion has been filed separately with the Securities and Exchange Commission.

 

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Plan, ERISA or the Code, (ii) to the Knowledge of the Sellers, each of the Employee Plans has been operated and administered in all material respects in accordance with its terms, applicable Law, and the rules or regulations of any Governmental Authority, including ERISA and the Code, (iii) there is no claim pending or, to the Knowledge of the Seller, threatened, against or in connection with any Employee Plan by any Business Employee or any Governmental Authority that would be a liability of Buyer or its Affiliates after Closing, and (iv) each Employee Plan intending to be “qualified” within the meaning of Section 401(a) of the Code has received a favorable determination or opinion letter as to such qualification from the IRS and, to the Knowledge of the Sellers, no event has occurred, either by reason of any action or failure to act, which would cause the loss of any such qualification.

 

(c)           Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, none of the Employee Plans is a “multiemployer plan” (within the meaning of Section 3(37) or of ERISA), a “multiple employer plan” (within the meaning of Section 4063 or 4064 of ERISA), or subject to Section 412 of the Code or Title IV of ERISA.

 

(d)  &