PURCHASE AND SALE AGREEMENT

Exhibit 2.1

EXECUTION COPY

PURCHASE AND SALE AGREEMENT

Dated as of April 17, 2009

by and among

SCHURMAN FINE PAPERS, 644064 N.B. INC.,

CARLTON CARDS RETAIL, INC., CARLTON CARDS LIMITED, AGC, LLC,

and

AMERICAN GREETINGS CORPORATION

PURCHASE AND SALE AGREEMENT

This PURCHASE AND SALE AGREEMENT, dated as of April 17, 2009 (this “ Agreement ”), by and among Schurman Fine Papers, a California corporation (“ Bear U.S. ”), 644064 N.B. INC., a New Brunswick corporation (“ Bear Canada ” and, together with Bear U.S., the “ Bear Group ”), Carlton Cards Retail, Inc., a Connecticut corporation (“ Buckeye U.S. ”), Carlton Cards Limited, an organization governed by the federal laws of Canada (“ Buckeye Canada ”), AGC, LLC, a Delaware limited liability company (“ Buckeye IP Buyer ” and, together with Buckeye U.S. and Buckeye Canada, the “ Buckeye Group ”), and American Greetings Corporation, an Ohio corporation (“ AG ”).

WHEREAS, Bear U.S. and its Subsidiaries are engaged in the business of designing, developing, marketing, distributing, manufacturing and selling in retail stores, online and through third parties, stationery, greeting cards, other paper products and gift items (the “ Bear Business ”).

WHEREAS, the Wholesale Business (as hereinafter defined) is part of the Bear Business.

WHEREAS, as part of the Wholesale Business, Bear U.S. is engaged in the United States in the business of distributing and selling stationery, greeting cards, other paper products and gift items through third parties (other than Bear Franchisees) (the “ U.S. Wholesale Business ”).

WHEREAS, as part of the Wholesale Business, Bear U.S. is engaged in Canada in the business of distributing and selling stationery, greeting cards, other paper products and gift items through third parties (other than Bear Franchisees) (the “ Canada Wholesale Business ” and, together with the U.S. Wholesale Business, the “ Wholesale Business ”).

WHEREAS, Buckeye U.S., Buckeye Canada and their respective Subsidiaries are engaged in the business of designing, developing, marketing, distributing, manufacturing and selling in retail stores, online and through third parties, stationery, greeting cards, other paper products and gift items (the “ Buckeye Business ”).

WHEREAS, as part of the Buckeye Business, Buckeye U.S. is engaged in the United States in the business of storefront retail sales of greeting cards, stationery products and related materials to consumers (the “ U.S. Retail Business ”).

WHEREAS, as part of the Buckeye Business, Buckeye Canada is engaged in Canada in the business of storefront retail sales of greetings cards, stationery products, and related materials to consumers (the “ Canada Retail Business ” and, together with the U.S. Retail Business, the “ Retail Business ”).

WHEREAS, the parties desire that Bear U.S. sell, assign, transfer, convey and deliver, or cause to be sold, assigned, transferred, conveyed and delivered, to the Buckeye Group, and that the Buckeye Group purchase, acquire and accept from the Bear Group, all of the right, title and interest of Bear U.S. and each other member of the Bear Group

in, to and under the Wholesale Purchased Assets (as hereinafter defined), and that one or more members of the Buckeye Group assume the Wholesale Assumed Liabilities (as hereinafter defined), upon the terms and subject to the conditions of this Agreement.

WHEREAS, the parties desire that Buckeye U.S. sell, assign, transfer, convey and deliver, or cause to be sold, assigned, transferred, conveyed and delivered, to the Bear Group, and that the Bear Group purchase, acquire and accept from the Buckeye Group, all of the right, title and interest of Buckeye U.S. and each other member of the Buckeye Group in, to and under the Retail Purchased Assets (as hereinafter defined), and that one or more members of the Bear Group assume the Retail Assumed Liabilities (as hereinafter defined), upon the terms and subject to the conditions of this Agreement.

WHEREAS, the Bear Group and their Affiliates, as the acquirers of the Retail Purchased Assets, intend to own, operate and control such assets and the business related thereto in a manner that the Bear Group and their Affiliates deem appropriate and in the best interests of the Bear Group.

WHEREAS, in connection with the ownership, operation and control of the Retail Purchased Assets, the Bear Group and their Affiliates intend to utilize their substantial experience and expertise in the retail industry, including their own business plans, operating manuals, accounting practices and systems, personnel policies, sales training programs and promotional campaigns with respect to operational, marketing and advertising matters.

WHEREAS, the Bear Group expects to derive substantial benefit from this Agreement in connection with its ownership, operation and control of the business comprising the Retail Purchased Assets.

WHEREAS, the parties desire that Bear U.S. issue and sell, and that AG purchase, 6,946,440 shares of the Common Stock of Bear U.S. (the “ Bear U.S. Shares ”).

NOW, THEREFORE, in consideration of the foregoing premises and the respective representations and warranties, covenants and agreements contained herein, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions . When used in this Agreement, the following terms shall have the meanings assigned to them in this Article I or in the applicable Section of this Agreement to which reference is made in this Article I.

“ Action ” means any claim, action, suit, proceeding or investigation by or before any Governmental Entity.

“ Affiliate ” means, with respect to any specified Person, any other Person directly or indirectly controlling, controlled by or under common control with such specified

 

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Person; where “control” means, with respect to any specified Person, the power to direct or cause the direction of the management and policies of such specified Person, whether through the ownership of voting securities or otherwise.

“ Amended Articles ” means the Third Amended and Restated Articles of Incorporation of Bear U.S., in the form of Exhibit A hereto.

“ Ancillary Agreements ” means the Wholesale (U.S.) Bill of Sale, the Wholesale (Canada) Bill of Sale, the Wholesale Assignment and Assumption Agreement, the Wholesale Trademark Assignment Agreement, the Wholesale Copyright Assignment Agreement, the Transition Services Agreement, the Sublease Agreements, the Long-Term Supply Agreement, the Marketing Services Agreement, the Trademark License Agreement, the POS Data Services Agreement, the Shareholders’ Agreement, the Retail (U.S.) Bill of Sale, the Retail (Canada) Bill of Sale, the Retail Assignment and Assumption Agreement, and the other agreements, instruments and documents delivered at the Closing.

“ Authorization ” means any authorization, approval, consent, certificate, license, permit or franchise of or from any Governmental Entity or pursuant to any Law.

“ Bear Franchisees ” means the parties listed on Schedule 1.1(a) that operate Bear franchises under the franchise agreements listed on Schedule 1.1(b).

“ Bear Group Benefit Plan ” means any Benefit Plan which the Bear Group or any of its Subsidiaries maintains or is required to make contributions, payments or transfers to with respect to the Wholesale Business Employees.

“ Benefit Plan ” means any (a) “employee benefit plan” as defined in ERISA Section 3(3) maintained for Persons employed in the United States, including any (i) nonqualified deferred compensation or retirement plan or arrangement which is an Employee Pension Benefit Plan (as defined in ERISA Section 3(2)), (ii) qualified defined contribution retirement plan or arrangement which is an Employee Pension Benefit Plan, (iii) qualified defined benefit retirement plan or arrangement which is an Employee Pension Benefit Plan (including any Multiemployer Plan (as defined in ERISA Section 3(37)) and (iv) Employee Welfare Benefit Plan (as defined in ERISA Section 3(1)) or material fringe benefit plan or program, or (b) stock purchase, stock option, severance pay, pension or other retirement, employment, change-in-control, vacation pay, company award, salary continuation, sick leave, excess benefit, bonus or other incentive compensation, life insurance, material fringe benefit or other employee benefit plan, contract, program, policy or arrangement, whether or not maintained for Persons employed in the United States or subject to ERISA.

“ Books and Records ” means, with regard to a referenced business or asset, books of account, general, financial, warranty and shipping records, invoices, supplier lists, product specifications, product formulations, drawings, correspondence, engineering, maintenance, operating and production records, advertising and promotional materials, credit records of customers and other documents, records and files, including books and

 

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records relating to intellectual property, and employee and personnel records.

“ Buckeye Bridge Guarantee ” means the guarantee of up to Twelve Million and 00/100 Dollars ($12,000,000.00) by AG of the obligations owed by the members of the Bear Group under the Credit Facility, together with the related letter of credit in the amount of Twelve Million and 00/100 Dollars ($12,000,000.00).

“ Buckeye Credit Facility ” means the Credit Agreement, by and among AG, the Foreign Subsidiary Borrowers (as defined therein) from time to time party thereto, the lenders from time to time party thereto, National City Bank, UBS Securities LLC, KeyBank National Association, JPMorgan Chase Bank, N.A., and LaSalle Bank National Association, dated as of April 4, 2006 (as amended).

“ Buckeye Group Benefit Plan ” means any Benefit Plan which the Buckeye Group or any of its Subsidiaries maintains or is required to make contributions, payments or transfers to with respect to the Retail Business Employees.

“ Buckeye Guarantee ” means the guarantee of up to Twelve Million and 00/100 Dollars ($12,000,000.00) by AG of the obligations owed by the members of the Bear Group under the Credit Facility, together with the related letter of credit in the amount of Twelve Million and 00/100 Dollars ($12,000,000.00).

“ Business Day ” means a day other than a Saturday, Sunday or other day on which banks located in New York City are authorized or required by Law to close.

“ Canadian Sublease Agreement ” means either the Master Canadian Sublease or a replacement of the Master Canadian Sublease with respect to any particular Buckeye Leased Real Property.

“ Charter Documents ” means, with respect to any entity, the certificate of incorporation, the articles of incorporation, by-laws, articles of organization, limited liability company agreement, partnership agreement, formation agreement, joint venture agreement or other similar organizational documents of such entity (in each case, as amended).

“ Code ” means the Internal Revenue Code of 1986, as amended, and the treasury regulations promulgated thereunder.

“ Competition Act ” means the Competition Act (Canada) R.S., 1985, c. C-34, s.1; R.S., 1985, c.19 (2 ^nd Supp), s.19 and the regulations promulgated thereunder, both as amended from time to time.

“ Consent ” means any consent, waiver, assignment or other approval.

“ Contract ” means any agreement, contract, license, lease, commitment, arrangement or understanding, written or oral, including any sales order or purchase order.

 

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“ Credit Facility ” means the First Amended and Restated Loan and Security Agreement, by and among Bear U.S., each of its Subsidiaries party thereto, Wells Fargo Retail Finance LLC and each other revolving credit lender party thereto, dated April 17, 2009, as amended from time to time.

“ Equipment ” means machinery, fixtures, furniture, supplies, accessories, materials, equipment, parts, automobiles, trucks, vehicles, tooling, tools, molds, office equipment, computers, telephones and all other items of tangible personal property.

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

“ ERISA Affiliate ” means any entity which is a member of a “controlled group of corporations” with, under “common control” with or a member of an “affiliated services group” with, a referenced party, as defined in Section 414(b), (c), (m) or (o) of the Code.

“ Escrow Agreement ” means that certain Escrow Agreement, by and among AG, Bear U.S., and JPMorgan Chase Bank, National Association, as escrow agent, dated as of April 10, 2009.

“ Financial Model ” means the financial model prepared by the Bear Group in connection with the transactions contemplated by this Agreement and the Ancillary Agreements, which is set forth on Exhibit B hereto.

“ GAAP ” means generally accepted accounting principles in the United States, applied on a consistent basis.

“ Governmental Entity ” means any entity or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to United States federal, state, local, or municipal government, Canadian federal, provincial, local or municipal government, foreign, international, multinational or other government, including any department, commission, board, agency, bureau, subdivision, instrumentality, official or other regulatory, administrative or judicial authority thereof, and any non-governmental regulatory body to the extent that the rules and regulations or Orders of such body have the force of Law.

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

“ Indebtedness ” means any of the following: (a) any indebtedness for borrowed money, (b) any obligations evidenced by bonds, debentures, notes or other similar instruments (including purchase money obligations), (c) any obligations to pay all or any part of the deferred purchase price of property or services (except trade accounts payable and other current Liabilities arising in the ordinary course of business), including any “earnout” or other similar payments, (d) any obligations as lessee under leases that are required to be classified as capitalized leases in accordance with GAAP, (e) any indebtedness created or arising under any conditional sale or other title retention agreement with respect to acquired property, (f) any obligations, contingent or otherwise, under acceptance credit, letters of credit, note purchase facilities or other similar

 

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facilities, (g) any obligations with respect to “cut” but uncashed checks issued that are outstanding as of the date of this Agreement, (h) any obligations under interest rate swap, hedging or other similar agreements, (i) any obligations with respect to accrued interest, success fees, prepayment premiums or penalties, make-whole premiums or penalties, and fees or expenses actually incurred (including attorney’s fees) associated with the prepayment of any Indebtedness, (j) any obligations with respect to cash, book or bank account overdrafts, (k) any obligations with respect to amounts owed to Affiliates, and (l) any guaranty of any of the foregoing.

“ Inventory ” means all raw materials, work-in-process, finished goods, supplies, spare parts and other inventories.

“ Investment Canada Act ” means the Investment Canada Act (Canada), R.S.C. 1985, c. 28 (1 ^st Supp.) and the regulations promulgated thereunder, both as amended from time to time.

“ Knowledge ” or any similar phrase means, with respect to any fact or matter, the information that is actually known or, in the exercise of reasonable diligence in the normal course of their employment and/or assigned duties, should be known by the directors and executive officers of a referenced entity.

“ Law ” means any statute, law (including common law), constitution, treaty, ordinance, code, rule, regulation, Order and any other binding requirement or determination of any Governmental Entity.

“ Lien ” means, with respect to any property or asset or any interest in any property or asset, any mortgage, lien, pledge, charge or encumbrance, security interest, prior assignment, warrant, lease, sublease, right to possession, other right, restriction, claim, option, hypothecation, right of first refusal, restriction on transferability or voting, title defect, title retention agreement, voting trust agreement or restrictions or limitations of a similar nature in respect of such property or asset or such interest in such property or asset.

“ Master Canadian Sublease ” means that certain Master Canadian Sublease in the form of Exhibit C hereto, to be executed at the Closing, whereby the Buckeye Group shall sublease to the Bear Group each of the Buckeye Leased Real Properties located in Canada.

“ Master U.S. Sublease ” means that certain Master U.S. Sublease in the form of Exhibit D hereto, to be executed at the Closing, whereby the Buckeye Group shall sublease to the Bear Group each of the Buckeye Leased Real Properties located in United States.

“ Order ” means any award, injunction, judgment, decree, order, ruling, subpoena or verdict or other decision issued, made, rendered, promulgated or entered by or with any Governmental Entity of competent jurisdiction.

“ Other Antitrust Laws ” means the antitrust and competition Laws of all

 

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jurisdictions other than those of the United States and Canada.

“ Permitted Liens ” means (a) Liens for Taxes not yet due and payable, (b) workers’, carriers’, warehousemen’s, materialmen’s and mechanics’ or other like Liens incurred in the ordinary course of a referenced business with respect to which payment is not due and that do not impair the conduct of a referenced business or the present or proposed use of the affected property, (c) restrictions arising under applicable zoning and other land use Laws that do not, individually or in the aggregate, have a material adverse effect on the present or proposed use or occupancy of the property subject thereto, (d) Liens that are immaterial in character, amount, and extent and which do not detract from the value or marketability or interfere with the present or proposed use of the properties they affect, and (e) Liens arising under the terms of the Buckeye Real Property Leases (other than Liens arising as a result of a default thereunder).

“ Person ” means an individual, a corporation, a partnership, a limited liability company, a trust, an unincorporated association, a Governmental Entity or any other entity or body.

“ Recent AG SEC Reports ” means all reports, schedules, forms, statements and other documents (including exhibits and all other information incorporated therein) filed by AG under the Securities Act and the Exchange Act with the Securities and Exchange Commission since February 28, 2007 (as such reports, schedules, forms, statements and documents have been amended since the time of their filing) and prior to the date of this Agreement.

“ Related to the Canada Retail Business ” means primarily used, held for use or acquired or developed for use in the Canada Retail Business, or otherwise primarily relating to, or arising out of, the operation or conduct of the Canada Retail Business.

“ Related to the Canada Wholesale Business ” means primarily used, held for use or acquired or developed for use in the Canada Wholesale Business, or otherwise primarily relating to, or arising out of, the operation or conduct of the Canada Wholesale Business.

“ Related to the Retail Business ” means primarily used, held for use or acquired or developed for use in the Retail Business, or otherwise primarily relating to, or arising out of, the operation or conduct of the Retail Business.

“ Related to the U.S. Retail Business ” means primarily used, held for use or acquired or developed for use in the U.S. Retail Business, or otherwise primarily relating to, or arising out of, the operation or conduct of the U.S. Retail Business.

“ Related to the U.S. Wholesale Business ” means primarily used, held for use or acquired or developed for use in the U.S. Wholesale Business, or otherwise primarily relating to, or arising out of, the operation or conduct of the U.S. Wholesale Business.

“ Related to the Wholesale Business ” means primarily used, held for use or acquired or developed for use in the Wholesale Business, or otherwise primarily relating

 

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to, or arising out of, the operation or conduct of the Wholesale Business.

“ Retail Business Employee ” means an employee of the Buckeye Group who works primarily in the Retail Business.

“ Shareholders’ Agreement ” means an agreement among certain holders of the outstanding shares of Common Stock of Bear U.S. in the form of Exhibit E hereto.

“ Stock Conversion ” means the conversion of all outstanding preferred stock of Bear U.S. into common stock of Bear U.S.

“ Sublease Agreements ” means (a) the U.S. Sublease Agreements and Canadian Sublease Agreements and/or (b) the Subleases (With Assignment, Assumption, Consent and Release), as applicable.

“ Sublease (With Assignment, Assumption, Consent and Release) ” means, as applicable, either (a) a U.S. Sublease for a term of two (2) years following the Closing Date, together with an Assignment, Assumption, Consent and Release executed by the respective master landlord releasing the applicable Buckeye Group party from all obligations of the applicable Buckeye Real Property Lease for any remaining or additional term beyond the date that is two (2) years following the Closing Date, in the form of Exhibit F hereto or (b) a Canadian Sublease for a term of two (2) years following the Closing Date, together with an Assignment, Assumption, Consent and Release executed by the respective master landlord releasing the applicable Buckeye Group party from all obligations of the applicable Buckeye Real Property Lease for any remaining or additional term beyond the date that is two (2) years following the Closing Date, in the form of Exhibit G hereto.

“ Subsidiary ” or “ Subsidiaries ” means, with respect to any Person, any other Person, of which (i) the first Person or any other Subsidiary of the first Person is a general partner, (ii) securities or other ownership interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to the other Person are at the time owned by the first Person and/or one or more of the first Person’s Subsidiaries, or (iii) the first Person owns directly or indirectly more than 50% of the equity interests in the other Person.

“ Tax ” or “ Taxes ” means any and all federal, state, provincial, local, or foreign net or gross income, gross receipts, net proceeds, sales, use, ad valorem, value added, goods and services, harmonized sales, franchise, bank shares, withholding, payroll, employment, excise, property, escheat, unclaimed property, deed, stamp, alternative or add-on minimum, environmental, profits, windfall profits, transaction, license, lease, service, service use, occupation, severance, energy, unemployment, social security, workers’ compensation, capital, premium, and other taxes, assessments, customs, duties, fees, levies, or other governmental charges of any nature whatever, whether disputed or not, together with any interest, penalties, additions to tax, or additional amounts with respect thereto.

“ Tax Returns ” means any return, declaration, report, claim for refund, or

 

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information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“ Taxing Authority ” means any Governmental Entity having jurisdiction with respect to any Tax.

“ U.S. Sublease Agreement ” means either the Master U.S. Sublease or a replacement of the Master U.S. Sublease with respect to any particular Buckeye Leased Real Property.

“ WARN Act ” means the Worker Adjustment and Retraining Notification Act of 1988.

“ Wholesale Business Employee ” means an employee of the Bear Group who works primarily in the Wholesale Business.

“ $ ” means United States dollars.

1.2 Other Defined Terms . The following terms have the meanings assigned to such terms in the Sections of this Agreement set forth below:

 

 

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ARTICLE II

PURCHASE AND SALE OF WHOLESALE BUSINESS

2.1 Purchase and Sale of the Wholesale Purchased Assets . Upon the terms and subject to the conditions of this Agreement, at the Closing, Bear U.S. shall sell, assign, transfer, convey and deliver, and shall cause each other relevant member of the Bear Group to sell, assign, transfer, convey and deliver, to the Buckeye Group or its or their designee(s), and the Buckeye Group or its or their designee(s) shall purchase, acquire and accept from the Bear Group, free and clear of all Liens except for Permitted Liens (other than in the case of the assets, properties and rights described in Section 2.1(c) below, which shall be free and clear of all Liens), the entire right, title and interest of Bear U.S. and each other member of the Bear Group in, to and under all of the assets, properties and rights of every kind and description, real, personal and mixed, tangible and intangible, wherever situated, listed below (the “ Wholesale Purchased Assets ”):

(a) all Inventory of the Bear Group used, held for use or intended to be used primarily in connection with the Wholesale Business, including the Inventory listed on Schedule 2.1(a);

 

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(b) all Equipment of the Bear Group used, held for use or intended to be used primarily in connection with the Wholesale Business, including the Equipment listed on Schedule 2.1(b);

(c) all Bear Owned IP listed on Schedule 2.1(c);

(d) all Contracts of the Bear Group listed on Schedule 2.1(d), and any other outstanding purchase orders or sales orders used primarily in connection with the Wholesale Business, but excluding any and all Benefit Plans offered, available, applicable or covering any employee of the Bear Group (the “ Wholesale Assigned Contracts ”);

(e) to the extent transferable under applicable Law, all Bear Business Authorizations used, held for use or intended to be used primarily in connection with the Wholesale Business, including the Bear Business Authorizations listed on Schedule 2.1(e);

(f) to the extent transferable under applicable Law, all Books and Records Related to the Wholesale Business;

(g) all claims, causes of action, choses in action, rights of recovery and rights under all warranties, representations and guarantees made by suppliers of products, materials or equipment, or components thereof, arising from or relating to the other Wholesale Purchased Assets or the Wholesale Assumed Liabilities;

(h) all goodwill of the U.S. Wholesale Business as a going concern; and

(i) all goodwill of the Canada Wholesale Business as a going concern.

For this purpose, GGIP, Inc., a Delaware corporation, shall be designated by the Buckeye Group as the buyer of the Wholesale Purchased Assets Related to the U.S. Wholesale Business and Buckeye Canada shall be the buyer of the Wholesale Purchased Assets Related to the Canada Wholesale Business, or as otherwise may be designated by the Buckeye Group as attached in Schedule 2.1, and Buckeye IP Buyer shall be the buyer of the Wholesale Purchased Assets described in Sections 2.1(c) and 2.1(h) above, or as may otherwise be designated by the Buckeye Group as attached in Schedule 2.1.

2.2 Bear Excluded Assets . The Wholesale Purchased Assets do not include, and neither Bear U.S. nor any other member of Bear Group is selling, assigning, transferring, conveying or delivering, and neither Buckeye U.S. nor any other member of the Buckeye Group is purchasing, acquiring or accepting from any member of the Bear Group or any of their respective Affiliates, any of the assets, properties or rights not specifically set forth in Section 2.1, including (a) all cash and receivables of the members of the Bear Group or their respective Affiliates and (b) all rights in and to the marks and names of (i) Schurman Fine Papers and (ii) Marcel Schurman (collectively, the “ Bear Excluded Assets ”).

 

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2.3 Wholesale Assumed Liabilities . Upon the terms and subject to the conditions of this Agreement, one or more members of the Buckeye Group shall assume effective as of the Closing, and from and after the Closing one or more members of the Buckeye Group shall pay, discharge or perform when due, as appropriate, all Liabilities in respect of the Wholesale Assigned Contracts, but only to the extent that such Liabilities thereunder are required to be performed after the Closing Date, were incurred in the ordinary course of the Wholesale Business and do not relate to any failure to perform, improper performance, warranty or other breach, default or violation of the Wholesale Assigned Contracts on or prior to the Closing, but, in any case, excluding such obligations to the extent they are for the payment of money (a) that is due and payable prior to the Closing or (b) for services rendered or goods received prior to the Closing (the “ Wholesale Assumed Liabilities ”), and no other Liabilities of any member of the Bear Group or their respective Affiliates; provided that, for the avoidance of doubt, Buckeye Canada shall assume those Wholesale Assumed Liabilities that are Related to the Canada Wholesale Business.

2.4 Wholesale Excluded Liabilities . Neither the Buckeye Group nor any of its Affiliates shall assume any Liabilities of any member of the Bear Group or their respective Affiliates (such unassumed Liabilities of the members of Bear Group and their respective Affiliates, the “ Wholesale Excluded Liabilities ”) other than those Liabilities of the Bear Group specifically set forth in Section 2.3. Without limiting the generality of the foregoing, in no event shall the Buckeye Group or any of its Affiliates assume or incur any Liability in respect of, and the Bear Group shall remain bound by and liable for, and shall pay, discharge or perform when due, all Liabilities of any member of the Bear Group or their respective Affiliates (other than the Wholesale Assigned Contracts), including:

(a) all accounts payable to trade creditors, and all payables to other creditors, of the members of the Bear Group;

(b) all Liabilities of the members of the Bear Group for Taxes as at the Closing Date for the period ended on or prior to the Closing Date;

(c) all Liabilities of the members of the Bear Group in respect of (i) Contracts (other than Wholesale Assigned Contracts) and (ii) other Bear Excluded Assets;

(d) all Liabilities of the members of the Bear Group related to products, warranty and similar claims for damages or injury to person or property, claims of infringement of intellectual property and all other Liabilities of any member of Bear Group, regardless of when made or asserted, which arise out of, relate to or are based upon any events occurring or actions taken or omitted to be taken by any member of Bear Group, or otherwise arising out of, relate to or incurred in connection with the conduct of the Wholesale Business, on or before the Closing Date;

(e) all Indebtedness of any member of the Bear Group;

 

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(f) all Liabilities under Bear Group Benefit Plans;

(g) all Liabilities arising out of, relating to or in connection with the Stock Conversion and the Amended Articles;

(h) all Liabilities arising out of or incurred in connection with the negotiation, preparation and execution of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby, including Taxes (excluding Transfer Taxes), fees and expenses of counsel, accountants and other experts; and

(i) all Liabilities, including any alleged violations of Laws, of the members of the Bear Group relating to the employment or termination of any employee of the Bear Group (including any termination in connection with the consummation of the transactions contemplated by this Agreement) to the extent such Liabilities arise out of or in connection with any event or condition which occurred or existed on or prior to April 18, 2009 and, with respect to any employee of the Bear Group who does not become a U.S. Transferred Wholesale Employee, after April 18, 2009 until such employee’s date of hire with the Buckeye Group, if applicable.

2.5 Wholesale Purchase Price . The aggregate consideration to be paid by Buckeye U.S. and Buckeye Canada to Bear U.S. for the Wholesale Purchased Assets (the “ Wholesale Purchase Price ”) shall be (i) Eighteen Million and Sixty-Five Thousand and 00/100 Dollars ($18,065,000) less any amount of the Fund (as such term is defined in the Escrow Agreement) distributed to Bear U.S. or its Affiliates pursuant to the Escrow Agreement (the “ Wholesale Cash Consideration ”), (ii) the assumption of the Wholesale Assumed Liabilities, and (iii) the Buckeye Bridge Guarantee and the Buckeye Guarantee.

2.6 Wholesale Allocation .

(a) Subject to Section 3.7, the Wholesale Purchase Price, less the amount of the Wholesale Assumed Liabilities excluded from the amount realized on the sale of the Wholesale Purchased Assets for federal income tax purposes, if any, shall be allocated among the Wholesale Purchased Assets (and other relevant items) in accordance with Section 1060 of the Code and any analogous provisions of state, local or foreign Law (the “ Wholesale Allocation Statement ”). For the avoidance of doubt, and with respect to the Wholesale Purchased Assets Related to the Canada Wholesale Business, the Wholesale Allocation Statement shall divide such assets into specific asset classes and specify the amount of the Wholesale Purchase Price allocated to each such asset class.

(b) As soon as practicable, but no later than sixty (60) days after the Closing Date, the parties hereto shall prepare and agree upon the Wholesale Allocation Statement. The Wholesale Allocation Statement shall be adjusted, as agreed upon by the Buckeye Group and the Bear Group for any adjustment to the amount of the Wholesale Assumed Liabilities included in the amount realized for federal income tax purposes or any other adjustments as required by Law, or as otherwise mutually agreed upon by

 

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Buckeye Group and Bear Group, to the extent consistent with applicable Law. Except as otherwise required by Law, Buckeye U.S. and Bear U.S. shall, and Buckeye U.S. and Bear U.S. shall cause each other member of Buckeye Group and Bear Group respectively, to file all Tax Returns (such as IRS Form 8594 or any other forms or reports required to be filed pursuant to Section 1060 of the Code or any comparable provisions of Law (“ Section 1060 Forms ”)) in a manner that is consistent with the Wholesale Allocation Statement and refrain from taking any action inconsistent therewith; provided, however, that Buckeye U.S. or Buckeye IP Buyer’s Tax basis (as applicable) in the Wholesale Purchased Assets may exceed the total amount allocated to the Wholesale Purchased Assets pursuant to the Wholesale Allocation Statement to reflect Buckeye Group’s capitalized transaction costs not included in the Wholesale Purchase Price, and Bear U.S.’s amount realized may be less than the total amount allocated to the Wholesale Purchased Assets pursuant to the Wholesale Allocation Statement in order to reflect its transaction costs. Buckeye U.S. and Bear U.S. shall, and Buckeye U.S. and Bear U.S. shall cause each other member of Buckeye Group and Bear Group respectively, to cooperate in the preparation of Section 1060 Forms and file such Section 1060 Forms (such Section 1060 Forms to be prepared in a manner consistent with the Wholesale Allocation Statement) and shall timely and in the manner required by applicable Law.

(c) The Wholesale Allocation Statement, as agreed upon by the parties hereto, shall be binding on Buckeye Group, Bear Group and their Affiliates. Notwithstanding anything herein to the contrary, the parties agree that the Wholesale Allocation Statement shall be consistent with the overall allocation set forth in Schedule 2.6; provided, however, that for the avoidance of doubt, adjustments may be made in accordance with Section 2.6(b).

2.7 Withholding Taxes. Notwithstanding anything herein to the contrary, to the extent required by Law, Buckeye U.S. and Buckeye Canada shall be entitled to withhold any and all amounts from the Wholesale Purchase Price equal to any withholding Tax owed to any Tax Authority or which may be withheld pursuant to applicable Law as a result of the transactions contemplated by this Agreement. For avoidance of doubt, any amounts withheld hereunder shall be treated as having been paid to Bear Group.

2.8 Consents .

(a) Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to sell, assign, transfer, convey or deliver any Wholesale Purchased Asset or any benefit arising under or resulting from such Wholesale Purchased Asset if the sale, assignment, transfer, conveyance or delivery thereof, without the Consent of a third party, (i) would constitute a breach or other contravention of the rights of such third party, (ii) would be ineffective with respect to any party to a Wholesale Assigned Contract concerning such Wholesale Purchased Asset, or (iii) would, upon sale, assignment, transfer, conveyance or delivery, in any way adversely affect the rights of Buckeye U.S. under such Wholesale Purchased Asset. If the sale, assignment, transfer, conveyance or delivery by any member of the Bear Group to, or any assumption by Buckeye U.S. of, any interest in, or Wholesale Assumed

 

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Liability under, any Wholesale Purchased Asset requires the Consent of a third party, then such sale, assignment, transfer, conveyance, delivery or assumption shall be subject to such Consent being obtained, subject to Section 2.8(c), at the cost of the Bear Group. Without limiting Section 2.8(b), to the extent any Wholesale Assigned Contract may not be sold, assigned, transferred, conveyed or delivered to Buckeye U.S. by reason of the absence of any such Consent (a “ Wholesale Restricted Contract ”), Buckeye U.S. shall not be required to assume any Wholesale Assumed Liabilities arising under such Wholesale Restricted Contract.

(b) To the extent that any Consent in respect of a Wholesale Restricted Contract or any other Wholesale Purchased Asset shall not have been obtained on or before the Closing Date, Bear U.S. shall continue to use commercially reasonable efforts to obtain any such Consent after the Closing Date until such time as it shall have been obtained. Bear U.S. shall, and shall cause each other relevant member of the Bear Group to, cooperate with Buckeye U.S. in any economically feasible arrangement proposed by Buckeye U.S. to provide that Buckeye U.S. shall receive the interest of Bear U.S. or such member of Bear Group in the benefits under such Wholesale Restricted Contract or other Wholesale Purchased Asset. As soon as a Consent for the sale, assignment, transfer, conveyance, delivery or assumption of a Wholesale Restricted Contract or other Wholesale Purchased Asset is obtained, Bear U.S. shall promptly assign, transfer, convey and deliver such Wholesale Restricted Contract or other Wholesale Purchased Asset to Buckeye U.S., and Buckeye U.S. shall assume the Wholesale Assumed Liabilities under any such Wholesale Restricted Contract from and after the date of assignment to Buckeye U.S., pursuant to a special-purpose assignment and assumption agreement substantially similar in terms to those of the Wholesale Assignment and Assumption Agreement.

(c) Nothing contained in this Section 2.8 or elsewhere in this Agreement shall be deemed a waiver by Buckeye U.S. of its right to have received on the Closing Date an effective assignment of all of the Wholesale Purchased Assets or of the covenant of Bear U.S. to obtain all Consents, nor shall this Section 2.8 or any other provision of this Agreement be deemed to constitute an agreement to exclude from the Wholesale Purchased Assets any Wholesale Assigned Contracts or other Wholesale Purchased Assets as to which a Consent may be necessary.

ARTICLE III

PURCHASE AND SALE OF RETAIL BUSINESS

3.1 Purchase and Sale of the Retail Purchased Assets . Upon the terms and subject to the conditions of this Agreement, at the Closing, Buckeye U.S. shall sell, assign, sublease, transfer, convey and deliver, and shall cause each other relevant member of the Buckeye Group to sell, assign, sublease, transfer, convey and deliver, to the Bear Group, and the Bear Group shall purchase, acquire and accept from the Buckeye Group, free and clear of all Liens except for Permitted Liens, the entire right, title and interest of Buckeye U.S. and each other member of the Buckeye Group in, to and under all of the assets, properties and rights of every kind and description, real, personal and mixed, tangible and intangible, wherever situated, listed below (the “ Retail Purchased Assets ”):

 

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(a) subject to Section 10.10 of the Buckeye Disclosure Schedule, a sublease interest, or leasehold interest, if applicable, in the Buckeye Leased Real Property, together with all fixtures, displays, signage, and improvements erected or located on the Buckeye Leased Real Property, listed on Schedule 3.1(a);

(b) all Inventory of the Buckeye Group used, held for use or intended to be used primarily in connection with the Retail Business, including the Inventory listed on Schedule 3.1(b);

(c) all Equipment of the Buckeye Group used, held for use or intended to be used primarily in connection with the Retail Business, including the Equipment listed on Schedule 3.1(c);

(d) all Contracts of the Buckeye Group used, held for use or intended to be used primarily in connection with the Retail Business, including the Contracts listed on Schedule 3.1(d), and any other outstanding purchase orders or sales orders used primarily in connection with the Retail Business, but excluding any and all Benefit Plans offered, available, applicable or covering any employee of the Buckeye Group (the “ Retail Assigned Contracts ”);

(e) to the extent transferable under applicable Law, all Buckeye Business Authorizations used, held for use or intended to be used primarily in connection with the Retail Business, including the Buckeye Business Authorizations listed on Schedule 3.1(e);

(f) to the extent transferable under applicable Law, all Books and Records Related to the Retail Business;

(g) all claims, causes of action, choses in action, rights of recovery and rights under all warranties, representations and guarantees made by suppliers of products, materials or equipment, or components thereof, arising from or relating to the other Retail Purchased Assets or the Retail Assumed Liabilities;

(h) all goodwill of the U.S. Retail Business as a going concern; and

(i) all goodwill of the Canada Retail Business as a going concern.

For this purpose, Bear U.S. shall be the buyer of the Retail Purchased Assets Related to the U.S. Retail Business and Bear Canada shall be the buyer of the Retail Purchased Assets Related to the Canada Retail Business , or as otherwise may be designated by the Bear Group as attached in Schedule 3.1.

In connection with Section 3.1(a), the parties acknowledge that the Buckeye Group is seeking the written Consent of each master landlord under each Buckeye Real Property Lease to the U.S. Sublease Agreements and the Canadian Sublease Agreements, and in the case of any Buckeye Real Property Lease with a remaining term greater than two (2) years following the Closing Date, Consent to the Sublease (With Assignment, Assumption, Consent and Release).

 

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3.2 Buckeye Excluded Assets . The Retail Purchased Assets do not include, and no member of the Buckeye Group or any of its Affiliates is selling, assigning, transferring, conveying or delivering, and no member of the Bear Group is purchasing, acquiring or accepting from any member of the Buckeye Group or any of their respective Affiliates, any of the assets, properties or rights not specifically set forth in Section 3.1, including (a) all cash and receivables of the members of the Buckeye Group or their respective Affiliates, (b) the Gorant Candies manufacturing facility (and all of the Inventory and Equipment located at such manufacturing facility, and the employees employed at such manufacturing facility), (c) the corporate retail store operated at AG’s world headquarters in Cleveland, Ohio (and all of the Inventory and Equipment located at such store, and the employees employed at such store), (d) the assets identified on Schedule 3.2 of the Buckeye Disclosure Schedule and (e) all Intellectual Property of the Buckeye Group or any of its Affiliates (collectively, the “ Buckeye Excluded Assets ”).

3.3 Retail Assumed Liabilities . Upon the terms and subject to the conditions of this Agreement, one or more members of the Bear Group shall assume effective as of the Closing, and from and after the Closing one or more members of the Bear Group shall pay, discharge or perform when due, as appropriate, all Liabilities in respect of the Retail Assigned Contracts, but only to the extent that such Liabilities thereunder are required to be performed after the Closing Date, were incurred in the ordinary course of the Retail Business and do not relate to any failure to perform, improper performance, warranty or other breach, default or violation of the Retail Assigned Contracts on or prior to the Closing, but, in any case, excluding such obligations to the extent they are for the payment of money (a) that is due and payable prior to the Closing or (b) for services rendered or goods received prior to the Closing (the “ Retail Assumed Liabilities ”), and no other Liabilities of any member of the Buckeye Group or their respective Affiliates; provided that, for the avoidance of doubt, Bear Canada shall assume the Retail Assumed Liabilities that are Related to the Canada Retail Business.

3.4 Retail Excluded Liabilities . Neither the Bear Group nor any of its Affiliates shall assume any Liabilities of the Buckeye Group or their respective Affiliates (such unassumed Liabilities of the members of the Buckeye Group and their respective Affiliates, the “ Retail Excluded Liabilities ”) other than those Liabilities of the Buckeye Group specifically set forth in Section 3.3. Without limiting the generality of the foregoing, in no event shall the Bear Group or any of its Affiliates assume or incur any Liability in respect of, and the Buckeye Group shall remain bound by and liable for, and shall pay, discharge or perform when due, all Liabilities of any member of the Buckeye Group or their respective Affiliates (other than the Retail Assigned Contracts), including:

(a) all accounts payable to trade creditors, and all payable to other creditors, of the members of the Buckeye Group;

(b) all Liabilities of the members of the Buckeye Group for Taxes as at the Closing Date for the period ended on or prior to the Closing Date (it being expressly acknowledged by the Bear Group that this exclusion for “Taxes” shall not apply, generally, to property or lease Taxes or, specifically, to amounts required to be paid by any Buckeye Real Property Lease or corresponding Sublease Agreement for real estate

 

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taxes or common area maintenance charges, which amounts the Bear Group is expressly agreeing to pay as and when due pursuant to the Sublease Agreements, except to the extent accruing prior to the Closing Date, and in such case they shall be Retail Excluded Liabilities);

(c) all Liabilities of the members of the Buckeye Group in respect of (i) Contracts other than Retail Assigned Contracts and (ii) other Buckeye Excluded Assets;

(d) all Liabilities of the members of the Buckeye Group related to products, warranty and similar claims for damages or injury to person or property, claims of infringement of intellectual property and all other Liabilities of any member of the Buckeye Group, regardless of when made or asserted, which arise out of, relate to or are based upon any events occurring or actions taken or omitted to be taken by any member of Buckeye Group, or otherwise arising out of, relate to or incurred in connection with the conduct of the Retail Business, on or before the Closing Date;

(e) all Indebtedness of any member of the Buckeye Group;

(f) all Liabilities under Buckeye Group Benefit Plans;

(g) all Liabilities arising out of or incurred in connection with the negotiation, preparation and execution of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby, including Taxes (excluding Transfer Taxes), fees and expenses of counsel, accountants and other experts; and

(h) all Liabilities, including any alleged violations of Laws, of the members of the Buckeye Group relating to the employment or termination of any employee of the Buckeye Group (including any termination in connection with the consummation of the transactions contemplated by this Agreement) to the extent such Liabilities arise out of or in connection with any event or condition which occurred or existed on or prior to April 18, 2009 and, with respect to any employee of the Buckeye Group who does not become a U.S. Transferred Retail Employee, after April 18, 2009 until such employee’s date of hire with the Bear Group, if applicable.

3.5 Retail Purchase Price . The aggregate consideration to be paid by Bear U.S. and Bear Canada (through its agent, Bear U.S.) to the Buckeye Group for the Retail Purchased Assets (the “ Retail Purchase Price ”) shall be (i) Six Million and 00/100 Dollars ($6,000,000.00) (the “ Retail Cash Consideration ”), and (ii) the assumption of the Retail Assumed Liabilities. Bear Canada shall cause Bear U.S., and Bear U.S. shall on behalf of Bear Canada, deliver to or at the direction of Buckeye Canada the Retail Purchase Price Related to the Canada Retail Business.

3.6 Retail Allocation .

(a) Subject to Section 3.7, the Retail Purchase Price, less the amount of the Retail Assumed Liabilities excluded from the amount realized on the sale of the

 

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Retail Purchased Assets for federal income tax purposes, if any, shall be allocated among the Retail Purchased Assets (and other relevant items) in accordance with Section 1060 of the Code and any analogous provisions of state, local or foreign Law (the “ Retail Allocation Statement ”). For the avoidance of doubt, and with respect to the Retail Purchased Assets Related to the Canada Retail Business, the Retail Allocation Statement shall divide such assets into specific asset classes and specify the amount of the Retail Purchase Price allocated to each such asset class.

(b) As soon as practicable, but no later than sixty (60) days after the Closing Date, the parties hereto shall prepare and agree upon the Retail Allocation Statement. The Retail Allocation Statement shall be adjusted, as agreed upon by the Buckeye Group and the Bear Group for any adjustment to the amount of the Retail Assumed Liabilities included in the amount realized for federal income tax purposes or any adjustments as required by Law, or as otherwise mutually agreed upon by Buckeye Group and Bear Group, to the extent consistent with applicable Law. Except as otherwise required by Law, Buckeye U.S. and Bear U.S. shall, and Buckeye U.S. and Bear U.S. shall cause each other member of Buckeye Group and Bear Group respectively, to file all Tax Returns (such as IRS Form 8594 or any other forms or reports required to be filed pursuant to Section 1060 of the Code or any comparable provisions of Law (such as Section 1060 Forms) in a manner that is consistent with the Retail Allocation Statement and refrain from taking any action inconsistent therewith; provided, however, that Bear U.S.’s Tax basis in the Retail Purchased Assets may exceed the total amount allocated to the Retail Purchased Assets pursuant to the Retail Allocation Statement to reflect Bear Group’s capitalized transaction costs not included in the Retail Purchase Price, and Buckeye U.S.’s amount realized may be less than the total amount allocated to the Retail Purchased Assets pursuant to the Retail Allocation Statement in order to reflect its transaction costs. Buckeye U.S. and Bear U.S. shall, and Buckeye U.S. and Bear U.S. shall cause each other member of Buckeye Group and Bear Group respectively, to cooperate in the preparation of Section 1060 Forms and file such Section 1060 Forms (such Section 1060 Forms to be prepared in a manner consistent with the Retail Allocation Statement) and shall timely and in the manner required by applicable Law.

(c) The Retail Allocation Statement, as agreed upon by the parties hereto, shall be binding on Bear Group, Buckeye Group and their Affiliates. Notwithstanding anything herein to the contrary, the parties agree that the Retail Allocation Statement shall be consistent with the overall allocations set forth in Schedule 2.6; provided, however, that for the avoidance of doubt, adjustments may be made in accordance with Section 3.6(b).

3.7 Tax Reporting . For U.S. federal, state and local income tax purposes, the parties hereto agree that the transactions contemplated herein shall be treated as a taxable purchase of certain assets and stock (as applicable). Certain assets, however, may be eligible for like-kind treatment under Section 1031 of the Code and the Treasury Regulations thereunder or similar provision under state and local law. Each of the parties hereto shall cooperate fully with each other to determine the portion of the assets that are eligible for like-kind treatment.

 

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3.8 Withholding Taxes. Notwithstanding anything herein to the contrary, to the extent required by Law, Bear U.S. and Bear Canada shall be entitled to withhold any and all amounts from the Retail Purchase Price equal to any withholding Tax owed to any Tax Authority as a result of the transactions contemplated by this Agreement. For avoidance of doubt, any amounts withheld hereunder shall be treated as having been paid to Buckeye U.S or Buckeye Canada, as applicable.

3.9 Consents .

(a) Notwithstanding anything in this Agreement to the contrary, except for any Sublease Agreements with respect to any Buckeye Real Property Leases, which are subject to Section 3.9(b), this Agreement shall not constitute an agreement to sell, sublet, assign, transfer, convey or deliver any Retail Purchased Asset or any benefit arising under or resulting from such Retail Purchased Asset if the sale, sublet, assignment, transfer, conveyance or delivery thereof, without the Consent of a third party, (i) would constitute a breach or other contravention of the rights of such third party, (ii) would be ineffective with respect to any party to a Retail Assigned Contract concerning such Retail Purchased Asset, or (iii) would, upon sale, assignment, transfer, conveyance or delivery, in any way adversely affect the rights of the Bear Group under such Retail Purchased Asset. If the sale, sublet, assignment, transfer, conveyance or delivery by any member of the Buckeye Group to, or any assumption by the Bear Group of, any interest in, or Retail Assumed Liability under, any Retail Purchased Asset requires the Consent of a third party, then such sale, sublet, assignment, transfer, conveyance, delivery or assumption shall be subject to such Consent being obtained, subject to Section 3.9(c), at the cost of the Buckeye Group. Without limiting Section 3.9(c), to the extent any Retail Assigned Contract may not be sold, assigned, transferred, conveyed or delivered to the Bear Group by reason of the absence of any such Consent (a “ Retail Restricted Contract ”), the Bear Group shall not be required to assume any Retail Assumed Liabilities arising under such Retail Restricted Contract.

(b) With respect to the Buckeye Real Property Leases, each of the Bear Group and the Buckeye Group acknowledge and agree that each shall execute and deliver the Master U.S. Sublease and the Master Canadian Sublease, pursuant to which the Buckeye Group shall sublease to the Bear Group each of the Buckeye Real Property Leases. Upon the Closing, each such Master U.S. Sublease and Master Canadian Sublease shall be a valid, binding and enforceable sublease notwithstanding whether or not a Consent has been obtained for any particular Buckeye Leased Real Property.

(c) To the extent that any Consent in respect of a Retail Restricted Contract or any other Retail Purchased Asset shall not have been obtained on or before the Closing Date, the Buckeye Group shall continue to use commercially reasonable efforts to obtain any such Consent after the Closing Date until such time as it shall have been obtained. The Buckeye Group shall, and shall cause each other relevant member of the Buckeye Group to, cooperate with the Bear Group in any economically feasible arrangement proposed by the Bear Group to provide that the Bear Group shall receive the interest of the Buckeye Group in the benefits under such Retail Restricted Contract or other Retail Purchased Asset. As soon as a Consent for the sale, assignment, transfer,

 

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conveyance, delivery or assumption of a Retail Restricted Contract or other Retail Purchased Asset is obtained, the Buckeye Group shall promptly assign, transfer, convey and deliver such Retail Restricted Contract or other Retail Purchased Asset to the Bear Group, and the Bear Group shall assume the Retail Assumed Liabilities under any such Retail Restricted Contract from and after the date of assignment to the Bear Group, pursuant to a special-purpose assignment and assumption agreement substantially similar in terms to those of the Retail Assignment and Assumption Agreement.

(d) Nothing contained in this Section 3.9 or elsewhere in this Agreement shall be deemed a waiver by the Bear Group of its right to have received on the Closing Date an effective assignment (or sublease, as applicable) of all of the Wholesale Purchased Assets or of the covenant of Buckeye Group to obtain all Consents, nor shall this Section 3.9 or any other provision of this Agreement be deemed to constitute an agreement to exclude from the Retail Purchased Assets any Retail Assigned Contracts or other Retail Purchased Assets as to which a Consent may be necessary.

ARTICLE IV

PURCHASE OF SHARES

4.1 Sale of the Shares . Upon the terms and conditions of this Agreement, at the Closing, Bear U.S. shall issue and sell, and AG shall purchase, the Bear U.S. Shares free and clear of all Liens for an aggregate purchase price of One Million Nine Hundred and Thirty-Five Thousand and 00/100 Dollars ($1,935,000) (the “ Share Cash Consideration ”).

ARTICLE V

CLOSING

5.1 Closing Date . The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Morgan, Lewis & Bockius LLP, One Market, Spear Street Tower, San Francisco, at 10 a.m. Pacific Standard Time on April 17, 2009, unless another time, date and/or place is agreed to in writing by the parties. The date on which the Closing occurs is referred to in this Agreement as the “ Closing Date .”

5.2 Deliveries by Bear Group at the Closing . At the Closing, the Bear Group shall deliver to the Buckeye Group the following (unless the delivery of any of the following is waived by the Buckeye Group):

(a) a Bill of Sale in the form of Exhibit H hereto (the “ Wholesale (U.S.) Bill of Sale ”) and a Bill of Sale in the form of Exhibit I hereto (the “ Wholesale (Canada) Bill of Sale ”) duly executed by the relevant member(s) of the Bear Group;

(b) an Assignment and Assumption Agreement in the form of Exhibit J hereto and an Assignment and Assumption Agreement in the form of Exhibit K hereto

 

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(together, the “ Wholesale Assignment and Assumption Agreement ”) duly executed by the relevant member(s) of the Bear Group;

(c) the Trademark Assignment Agreement in the form of Exhibit L hereto (the “ Wholesale Trademark Assignment Agreement ”) duly executed by the relevant member(s) of the Bear Group;

(d) the Copyright Assignment Agreement in the form of Exhibit M hereto (the “ Wholesale Copyright Assignment Agreement ”) duly executed by the relevant member(s) of the Bear Group;

(e) a Transition Services Agreement in the form of Exhibit N hereto (the “ Transition Services Agreement ”) duly executed by the relevant member(s) of the Bear Group;

(f) a certificate of an officer of Bear U.S. to the effect that the requisite holders of the outstanding shares of Common Stock of Bear U.S., the holders of the requisite number of the outstanding shares Series A Preferred Stock of Bear U.S. and the holders of the requisite number of the outstanding shares Series B Preferred Stock have (i) consented to this Agreement and the Amended Articles and the transactions contemplated hereby and thereby and (ii) executed and delivered to Bear U.S. a general release of the members of the Bear Group, the officers of the members of the Bear Group, the directors of the members of the Bear Group, the stockholders of Bear Group and the members of the Buckeye Group;

(g) a completed certification of non-foreign status pursuant to Section 1.1445-2(b)(2) of the Treasury Regulations in a form agreed to by Buckeye U.S. duly executed by each member of the Bear Group, as applicable, that is selling Wholesale Purchased Assets and/or the Bear U.S. Shares to Buckeye U.S., Buckeye IP Buyer or AG, as applicable, pursuant hereto;

(h) the Retail Cash Consideration by wire transfer of immediately available funds to an account designated in writing by the Buckeye Group to the Bear Group;

(i) the Retail Assignment and Assumption Agreement duly executed by the relevant member(s) of the Bear Group or its or their designee(s) pursuant to Section 3.1;

(j) with respect to each Buckeye Leased Real Property located in the United States, the Master U.S. Sublease, and with respect to each Buckeye Leased Real Property located in Canada, the Master Canadian Sublease, each duly executed by a member of the Bear Group or its designee pursuant to Section 3.1;

(k) stock certificates representing the Bear U.S. Shares, in each case endorsed in blank or with an executed blank stock power attached and with all transfer tax stamps attached or provided for sufficient to vest good and valid title to the Bear U.S. Shares in AG free and clear of all Liens;

 

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(l) the Long-Term Supply Agreement in the form of Exhibit O hereto (the “ Long-Term Supply Agreement ”) duly executed by the relevant member(s) of the Bear Group;

(m) the Marketing Services Agreement in the form of Exhibit P hereto (the “ Marketing Services Agreement ”) duly executed by the relevant member(s) of the Bear Group;

(n) the Trademark License Agreement in the form of Exhibit Q hereto (the “ Trademark License Agreement ”) duly executed by the relevant member(s) of the Bear Group;

(o) the Shareholders’ Agreement duly executed by Bear U.S. and certain holders of the outstanding shares of the Common Stock of Bear U.S.;

(p) the POS Data Services Agreement in the form of Exhibit R hereto (the “ POS Data Services Agreement ”) duly executed by the relevant member(s) of the Bear Group;

(q) all instruments and documents necessary to release any and all Liens on the Wholesale Purchased Assets from Wells Fargo Retail Finance, LLC, Wells Fargo Bank and any of their respective Affiliates, including appropriate UCC financing statement amendments (termination statements), and the Canadian equivalent for each of the applicable Provinces;

(r) the amendments/terminations of the Bear Real Property Leases consistent with the Financial Model;

(s) confirmation that the Bear Group entered into the Termination and Settlement Agreement, dated April 17, 2009, between Bear U.S. and EPI Printers, Inc.;

(t) confirmation that the members of the Bear Group entered into the Credit Facility;

(u) the Amended Articles;

(v) a certificate of an officer of each member of the Bear Group, dated as of the Closing Date, certifying (i) the completeness and correctness of the Charter Documents of such member of the Bear Group, (ii) resolutions of the Board of Directors or other governing body, as applicable, of such member of the Bear Group authorizing the execution and delivery of this Agreement and the Ancillary Agreements to which such member of the Bear Group is a party and the performance of the obligations of such member of the Bear Group hereunder and thereunder, and (iii) the incumbency and signatures of the officers of such member of the Bear Group; and

(w) all instruments and documents necessary to release any and all Liens on the Bear Owned IP that constitutes Wholesale Purchased Assets, including

 

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appropriate UCC financing statement amendments (termination statements), and the Canadian equivalent for each of the applicable Provinces.

5.3 Deliveries by Buckeye Group at the Closing . At the Closing, members of Buckeye Group shall deliver to the Bear Group the following (unless the delivery of any of the following is waived by the Bear Group):

(a) a Bill of Sale in the form of Exhibit S hereto (the “ Retail (U.S.) Bill of Sale ”) and a Bill of Sale in the form of Exhibit T hereto (the “ Retail (Canada) Bill of Sale ”) duly executed by the relevant member(s) of the Buckeye Group;

(b) an Assignment and Assumption Agreement in the form of Exhibit U hereto and an Assignment and Assumption Agreement in the form of Exhibit V hereto (together, the “ Retail Assignment and Assumption Agreement ”) duly executed by the relevant member(s) of the Buckeye Group;

(c) with respect to each Buckeye Leased Real Property located in the United States, the Master U.S. Sublease, and with respect to each Retail Leased Real Property located in Canada, the Master Canadian Sublease, each duly executed by the relevant member(s) of the Buckeye Group;

(d) the Transition Services Agreement duly executed by the relevant member(s) of the Buckeye Group;

(e) a completed certification of non-foreign status pursuant to Section 1.1445-2(b)(2) of the Treasury Regulations in a form agreed to by Bear U.S. duly executed by each member of the Buckeye Group, as applicable, that is selling Retail Purchased Assets to the Bear Group pursuant hereto;

(f) the Wholesale Cash Consideration and the Share Cash Consideration by wire transfer of immediately available funds to an account of Bear U.S. designated in writing by Bear U.S.;

(g) the Wholesale Assignment and Assumption Agreement duly executed by the relevant member(s) of the Buckeye Group or its or their designee(s) pursuant to Section 2.1;

(h) the Wholesale Trademark Assignment Agreement duly executed by Buckeye IP Buyer;

(i) the Wholesale Copyright Assignment Agreement duly executed by Buckeye IP Buyer;

(j) the Buckeye Bridge Guarantee and the Buckeye Guarantee, each duly executed by AG;

(k) the Shareholders’ Agreement duly executed by Buckeye U.S.;

 

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(l) the Long-Term Supply Agreement duly executed by the relevant member(s) of the Buckeye Group;

(m) the Marketing Services Agreement duly executed by the relevant member(s) of the Buckeye Group;

(n) the Trademark License Agreement duly executed by the relevant member(s) of the Buckeye Group;

(o) the POS Data Services Agreement duly executed by the relevant member(s) of the Buckeye Group; and

(p) a certificate of an officer of each member of the Buckeye Group, dated as of the Closing Date, certifying (i) the completeness and correctness of the Charter Documents of such member of the Buckeye Group, (ii) resolutions of the Board of Directors or other governing body, as applicable, of such member of the Buckeye Group authorizing the execution and delivery of this Agreement and the Ancillary Agreements to which such member of the Buckeye Group is a party and the performance of the obligations of such member of the Buckeye Group hereunder and thereunder, and (iii) the incumbency and signatures of the officers of such member of the Buckeye Group.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF BEAR GROUP

Each member of the Bear Group, jointly and severally, represents and warrants to each member of the Buckeye Group as of the date hereof that the statements contained in this Article VI are true and correct, except as set forth in the disclosure schedule dated and delivered as of the date hereof by the Bear Group to the Buckeye Group (the “ Bear Disclosure Schedule ”), which is attached to this Agreement and is designated therein as being the Bear Disclosure Schedule (it being understood that (i) any matter or item disclosed in the Bear Disclosure Schedule shall be deemed disclosed with respect to any section of this Article VI to which the matter or item relates to the extent the relevance to each such section is reasonably apparent on its face, and (ii) the disclosure of any matter or item in the Bear Disclosure Schedule shall not be deemed to constitute an acknowledgment that such matter or item is required to be disclosed therein or is material to a representation or warranty set forth in this Agreement and shall not be used as a basis for interpreting the terms “material,” “materially,” “materiality” or any word or phrase of similar import). The Bear Disclosure Schedule shall be arranged in paragraphs corresponding to each representation and warranty set forth in this Article VI.

6.1 Organization and Good Standing . Each member of the Bear Group is a corporation, limited liability company or other legal entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or formation, has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted and as proposed to be conducted, and

 

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is duly qualified to do business and is in good standing in each jurisdiction in which it owns or leases property or conducts any business so as to require such qualification, except for those jurisdictions where the failure to be so qualified or in good standing would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Wholesale Purchased Assets, the Wholesale Business or any member of the Bear Group.

6.2 Authority and Enforceability.

(a) Each member of the Bear Group has the requisite power and authority to enter into this Agreement, to perform its obligations hereunder, and to consummate the transactions contemplated hereby. The execution, performance and delivery by each member of the Bear Group of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of each member of the Bear Group. Each member of the Bear Group has duly executed and delivered this Agreement, and received all necessary approvals of its stockholders and board of directors, or other equity holders or governing body. This Agreement constitutes the valid and binding obligation of each member of the Bear Group, enforceable against it in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws affecting or relating to creditors’ rights generally, and (ii) the availability of injunctive relief and other equitable remedies.

(b) Each member of the Bear Group has the requisite power and authority to enter into each Ancillary Agreement to which it is, or is specified to be, a party, to perform its obligations thereunder, and to consummate the transactions contemplated thereby. The execution, performance and delivery by each member of the Bear Group of each Ancillary Agreement to which it is, or is specified to be, a party and the consummation of the transactions contemplated thereby have been duly authorized by all necessary corporate, limited liability company or other action on the part of each member of the Bear Group. Each member of the Bear Group has duly executed and delivered each Ancillary Agreement to which it is, or is specified to be, a party. The Ancillary Agreements constitute the valid and binding obligation of each member of the Bear Group party thereto, enforceable against it in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws affecting or relating to creditors’ rights generally, and (ii) the availability of injunctive relief and other equitable remedies.

6.3 No Conflicts; Consents.

(a) The execution and delivery of this Agreement by each member of the Bear Group, and the execution and delivery of each Ancillary Agreement to which each member of the Bear Group is, or is specified to be, a party, does not, and the performance by each member of the Bear Group of its obligations hereunder and thereunder and the consummation by each member of the Bear Group of the transactions contemplated hereby and thereby (in each case, with or without the giving of notice or lapse of time, or both), will not, directly or indirectly, (i) conflict with or violate the

 

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provisions of any of the Charter Documents of any member of the Bear Group, (ii) violate or constitute a default, an event of default or an event creating rights of acceleration, termination, cancellation, imposition of additional obligations or loss of rights under any Contract (including any Contract with any franchisee of the Bear Group or any of its Subsidiaries) (A) to which any member of the Bear Group is a party or (B) by which any member of the Bear Group or any of their respective assets is bound, (iii) violate or conflict with any Law, Authorization or Order applicable to any member of the Bear Group, or give any Governmental Entity or other Person the right to challenge any of the transactions contemplated by this Agreement or the Ancillary Agreements or to exercise any remedy, obtain any relief under or revoke or otherwise modify any rights held under, any such Law, Authorization or Order, or (iv) result in the creation of any Liens upon any of the assets owned or used by any member of the Bear Group, except for any such violations, defaults and events referred to in clause (ii) and for any such violations, conflicts, challenges, remedies, relief, revocations, modifications or Liens referred to in clauses (iii) and (iv) that would not in the aggregate be material to the Wholesale Business, the Wholesale Purchased Assets or any member of the Bear Group. Section 6.3(a) of the Bear Disclosure Schedule sets forth all Consents that are required in connection with the transactions contemplated by this Agreement and the Ancillary Agreements under any Contract to which any member of the Bear Group is a party (collectively, “ Bear Consents ”) in order (i) in the case of Contracts that are not Wholesale Assigned Contracts, to preserve all material rights and benefits of the Bear Group thereunder and (ii) in the case of Contracts that are Wholesale Assigned Contracts, to sell, assign, transfer, convey and deliver to, Buckeye U.S. all material rights and benefits of the Bear Group thereunder without any material impairment or alteration whatsoever.

(b) No Authorization or Order of, registration, declaration or filing with, or notice to, any Governmental Entity or other Person, is required by or with respect to any member of the Bear Group in connection with the execution and delivery of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby, including such Authorizations, Bear Consents, registrations, declarations, filings and notices as may be required under the HSR Act, the Competition Act and the Other Antitrust Laws.

6.4 Financial Statements .

(a) Section 6.4(a) of the Bear Disclosure Schedule contains true, complete and correct copies of the following financial statements:

(i) January 31, 2009 (the “ Bear Annual Financial Statements ”); and

(ii) March 28, 2009 (the “ Bear Interim Financial Statements ” and together with the Bear Annual Financial Statements, the “ Bear Financial Statements ”).

 

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(b) The Bear Financial Statements are true, complete and correct and have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved, subject, in the case of the Bear Interim Financial Statements, to normal year-end adjustments (the effect of which will not be materially adverse) and the absence of notes (that, if presented, would not differ materially from those presented in the Bear Annual Financial Statements). The Bear Financial Statements are based on the books and records of the Bear Group, and fairly present the financial condition of the Bear Group as of the respective dates they were prepared and the results of the operations of the Bear Group for the periods indicated. Each member of the Bear Group maintains a standard system of accounting established and administered in accordance with GAAP.

(c) Section 6.4(c) of the Bear Disclosure Schedule contains a true, complete and correct list of all Indebtedness of the Bear Group, setting forth the Person or Persons to whom such Indebtedness is owed, the amount of such Indebtedness, and the interest rate, the schedule of repayment and the maturity date with respect thereto.

6.5 Competition Act and Investment Canada Act .

(a) Bear Canada, together with its Affiliates (including Bear U.S.) and any other affiliates, as determined in accordance with the Competition Act, does not have assets in Canada, or gross revenues from sales in, from or into Canada, that exceed CDN$50,000,000 in aggregate value as determined in accordance with the Notifiable Transactions Regulations promulgated under the Competition Act.

(b) Bear Group is a “WTO Investor” within the meaning of the Investment Canada Act.

6.6 No Undisclosed Liabilities . There are no liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise (“ Liabilities ”) with regard to the Bear Group or any of their respective businesses, except (a) those which are adequately reflected or reserved against in the balance sheet included in the Bear Interim Financial Statements and (b) those which have been incurred in the ordinary course of business and consistent with past practice since the date of the balance sheet included in the Bear Interim Financial Statements and which are not, individually or in the aggregate, material in amount.

6.7 Compliance with Law . Each member of the Bear Group has conducted, and is conducting, its business in compliance in all material respects with all applicable Laws. No member of the Bear Group has received written notice regarding any violation of, conflict with, or failure to conduct its business in compliance with, any applicable Law. No member of the Bear Group has been notified in writing of a pending investigation or review by any Governmental Entity with respect to the Wholesale Business or any member of the Bear Group, nor has any Governmental Entity indicated in writing an intention to conduct the same, nor, to the Bear Group’s Knowledge, is the same threatened, except, in each case, for those the outcome of which would not

 

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reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Wholesale Business or any member of the Bear Group.

6.8 Bear Business Authorizations .

(a) Each member of the Bear Group owns, holds or lawfully uses in the operation of (i) the Wholesale Business, all Authorizations which are necessary for it to conduct the Wholesale Business as currently conducted or as proposed to be conducted or for the ownership and use of the assets owned or used by such member of the Bear Group in the conduct of the Wholesale Business (the “ Bear Business Authorizations ”) and (ii) its other businesses, all Authorizations which are necessary for it to conduct its other businesses as currently conducted or as proposed to be conducted or for the ownership and use of the assets owned or used by such member of the Bear Group in the conduct of its other businesses (the “ Other Authorizations ”) free and clear of all Liens, except where the failure to own, hold or lawfully use any such Bear Business Authorizations or Other Authorizations, as the case may be, would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Wholesale Business or any member of the Bear Group. Such Bear Business Authorizations and such Other Authorizations are valid and in full force and effect.

(b) No member of the Bear Group has received written notice regarding any violation of, conflict with, failure to comply with the terms of, or any revocation, withdrawal, termination, cancellation, suspension or modification of, any Bear Business Authorization or Other Authorization. To the Bear Group’s Knowledge, no member of the Bear Group is in default with respect to any Bear Business Authorization or Other Authorization.

(c) No Person other than a member of the Bear Group owns or has any proprietary, financial or other interest (direct or indirect) in any Bear Business Authorization or Other Authorization.

6.9 Title to Personal Properties .

(a) Section 6.9(a) of the Bear Disclosure Schedule sets forth a complete and accurate list of all tangible personal properties (other than any such properties that are immaterial) that are Wholesale Purchased Assets as of the date of this Agreement (“ Wholesale Personal Property ”), specifying whether, and by which member of the Bear Group, such Wholesale Personal Property is owned or leased and, in the case of leased assets, indicating the parties to, execution dates of and annual payments under, the leases.

(b) A member of the Bear Group has good and valid title to all of the Wholesale Personal Property, free and clear of all Liens except for Permitted Liens.

(c) All leases under which Wholesale Personal Property is leased are in full force and effect and constitute valid and binding obligations of the relevant member of the Bear Group, and to the Bear Group’s Knowledge, are valid and binding obligations of the other party(ies) thereto, and no member of the Bear Group nor, to the

 

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Bear Group’s Knowledge, any other party thereto, is in breach of any of the terms of any such leases except where any such violation would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on its business or any member of the Bear Group.

6.10 Sufficiency . The Wholesale Purchased Assets (together with the Bear Excluded Assets) comprise substantially all of the assets employed by the Bear Group or any of their respective Affiliates in connection with the Wholesale Business. The Wholesale Purchased Assets are, together with the agreements of the members of the Bear Group hereunder and under the Ancillary Agreements, sufficient for the conduct of the Wholesale Business immediately following the Closing in substantially the same manner as currently conducted. A member of the Bear Group has good and valid title to all of the Wholesale Purchased Assets that are owned by the Bear Group, free and clear of all Liens except for Permitted Liens. A member of the Bear Group has a valid leasehold interest in all of the Wholesale Purchased Assets that are leased by the Bear Group, except where the failure to have a valid leasehold interest would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Wholesale Business or any member of the Bear Group.

6.11 Real Property .

(a) No member of the Bear Group owns any real property.

(b) Section 6.11(b) of the Bear Disclosure Schedule contains a complete and accurate list of all real property leased, subleased or otherwise occupied by a member of the Bear Group (the “ Bear Leased Real Property ”). Except as disclosed in Section 6.11(b) of the Bear Disclosure Schedule, the leases, subleases and other Contracts relating to the Bear Leased Real Property (the “ Bear Real Property Leases ”) have not been altered, modified or amended and are in full force and effect. There are no Contracts between the landlord and tenant, or sublandlord and subtenant, or other relevant parties, relating to the use and occupation of the Bear Leased Real Property, other than as contained in the Bear Real Property Leases. The Bear Group has the sole right to use, and is in sole possession and occupancy of, the Bear Leased Real Property.

(c) With respect to every Bear Real Property Lease, the relevant member of the Bear Group has peaceful, undisturbed and exclusive possession of the applicable Bear Leased Real Property.

(d) The Bear Leased Real Property and all present uses and operations of the Bear Leased Real Property comply in all material respects with all Laws, covenants, conditions, restrictions, easements, disposition agreements and similar matters affecting the Bear Leased Real Property. The Bear Leased Real Property and its continued use, occupancy and operation as used, occupied and operated in the conduct of its business does not constitute a nonconforming use and is not the subject of a special use permit under any Law.

 

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(e) No Person other than a member of the Bear Group is in possession of any of the Bear Leased Real Property or any portion thereof, and there are no Contracts granting to any Person other than the Bear Group the right of use or occupancy of the Bear Leased Real Property or any portion thereof.

6.12 Intellectual Property .

(a) As used in this Agreement, “ Intellectual Property ” means: (i) inventions (whether or not patentable), trade secrets, technical data, databases, customer lists, designs, tools, methods, processes, technology, ideas, know-how, source code, product road maps and other proprietary information and materials (“ Proprietary Information ”); (ii) trademarks and service marks (whether or not registered), trade names, logos, trade dress and other proprietary indicia of the source or origin of goods or services, Internet domain names, and all goodwill associated therewith; (iii) documentation, advertising copy, marketing materials, web-sites, specifications, drawings, graphics, databases, recordings and other works of authorship, whether or not protected by copyright; (iv) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code, design documents, flow-charts, user manuals and training materials relating thereto and any translations thereof (collectively, “ Software ”); and (v) all forms of legal rights and protections that may be obtained for, or may pertain to, the Intellectual Property set forth in clauses (i) through (iv) in any country in the world (“ Intellectual Property Rights ”), including all letters patent, patent applications, provisional patents, design patents, PCT filings, invention disclosures and other rights to inventions or designs (“ Patents ”), all registered and unregistered copyrights in both published and unpublished works (“ Copyrights ”), all trademarks, service marks and other proprietary indicia of the source or origin of goods or services, business names and Internet domain names, including any that incorporate a trademark or service mark (whether or not registered) or any derivatives thereof, and all goodwill associated therewith (“ Marks ”), trade secret rights, moral rights or other literary property or authors rights, and all applications, registrations, issuances, divisions, continuations, renewals, reissuances and extensions of the foregoing.

“ Registered IP ” means Intellectual Property that is the subject of an application, certificate, filing, registration or other document issued by, filed with, or recorded by, any Government Entity at any time.

“ Bear IP ” means all Intellectual Property currently in use or held for use in connection with the Bear Business, with the exception of the Schurman Fine Papers corporate name and any and all Marks, whether registered or at common law, consisting of the Schurman Fine Papers name.

“ Bear Owned IP ” means Bear IP owned, in whole or in part, by any member of Bear Group.

(b) Section 6.12(b) of the Bear Disclosure Schedule contains a complete and accurate list including application and registration number of all Bear

 

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Owned IP that is Registered IP ( “Bear Registered IP” ). All Bear Registered IP that is a Wholesale Purchased Asset is recorded on the applicable public records as being owned solely by a member of the Bear Group.

(c) Section 6.12(c) of the Bear Disclosure Schedule lists (with such list including the parties to and exclusivity or non-exclusivity of) all licenses, sublicenses and other agreements pursuant to which (i) a third party authorizes any member of Bear Group to use, practice any rights under, or grant sublicenses with respect to, any Bear IP that is owned by a third party (“ Bear In-Bound Licenses ”), other than “shrink-wrap” or “off the shelf” software end-user licenses having a per person licensing fee of less than $500 and an aggregate value of less than $10,000; (ii) any member of Bear Group authorizes a third party to use, practice any rights under, or grant sublicenses with respect to, any Bear IP (“ Bear Out-Bound Licenses ”); and (iii) material agreements between any member of Bear Group and any third party relating to the development or use of any Bear IP.

(d) The members of the Bear Group (i) exclusively own the entire right, interest and title to each item of Bear Owned IP free and clear of Liens (including the design, manufacture, license and sale of all products currently under development or in production), except those Liens which may be held to secure any existing line of credit (which Liens shall be released or terminated in full at the Closing), or (ii) otherwise rightfully use or otherwise enjoy such Bear Owned IP pursuant to the terms of a valid and enforceable Bear In-Bound License that is listed in the Bear Disclosure Schedule. The Bear Owned IP, together with the Bear Group’s rights under the Bear In-Bound Licenses listed in the Bear Disclosure Schedule (collectively, the “ Bear Intellectual Property ”), constitutes all the material Intellectual Property used in, or necessary for, the operation of the business of Bear Group as it is currently conducted, except for specific third party products Bear Group presently offers or has offered as a reseller. The Bear IP that constitutes the Wholesale Purchased Assets, together with the Bear In-Bound Licenses assigned to the Buckeye Group and the Wholesale Restricted Contracts, constitute all the Intellectual Property used in or necessary for the operation of the Wholesale Business as it is currently conducted, except for specific third party products Bear Group presently offers or has offered as a reseller.

(e) All registration, maintenance and renewal fees related to Marks and Copyrights that constitute Bear Registered IP that are currently due have been paid and all documents and certificates related to such Bear Registered IP have been filed with the relevant Governmental Entity or other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of maintaining such Bear Registered IP. There are no actions that must be taken within 60 days after the date hereof, including the payment of any registration, maintenance or renewal fees or the filing of any documents, applications or certificates for the purposes of maintaining, perfecting or preserving or renewing any Bear Registered IP. All Bear Registered IP are in good standing, held in compliance with applicable legal requirements and enforceable by the Bear Group.

 

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(f) Except as disclosed in the Bear Disclosure Schedule, Bear Group is not aware of any challenges (or any basis therefor) with respect to the ownership, validity or enforceability of any Bear Owned IP. The Bear Disclosure Schedule lists the status of any proceedings or actions before the United States Patent and Trademark Office or any other Governmental Entity anywhere in the world related to any of the Bear Owned IP, including the due date for any outstanding response by any member of the Bear Group in such proceedings. No member of the Bear Group has taken any action or failed to take any action that could reasonably be expected to result in the abandonment, cancellation, forfeiture, relinquishment, invalidation, waiver or unenforceability of any Bear Owned IP in the United States and Canada.

(g) None of the products or services currently or formerly developed manufactured, sold, distributed, provided, shipped or licensed by any member of the Bear Group, or which are currently under development, infringes or allegedly infringes upon, has misappropriated or misappropriates, or otherwise unlawfully has violated or violates or has conflicted or conflicts with, the Intellectual Property Rights of any third party. Since January 1, 2006, except as set forth on Section 6.12(g) of the Bear Disclosure Schedule, no member of the Bear Group has received any written communication alleging that any member of the Bear Group has infringed, misappropriated or otherwise violated or conflicted with or, by conducting the Bear Business as currently conducted or as proposed to be conducted, would infringe, misappropriate or otherwise violate or conflict with, any Intellectual Property Rights of a third party. No action has been instituted, or, to Bear Group’s Knowledge, threatened, relating to any Intellectual Property formerly or currently used by any member of the Bear Group and none of the Bear Owned IP nor the Bear Group’s rights under the Bear In-Bound Licenses listed in the Bear Disclosure Schedule is subject to any outstanding Order. To Bear Group’s Knowledge, no Person has infringed or is infringing any Bear IP or has misappropriated or otherwise violated or conflicted with or is misappropriating or otherwise violating or conflicting with any Bear IP.

(h) Each member of the Bear Group has taken commercially reasonable steps to protect and preserve the confidentiality of all Proprietary Information owned by any member of the Bear Group that is not covered by an issued Patent.

(i) Bear has secured valid written assignm