MEMORANDUM OF UNDERSTANDING
Exhibit 99.1
THIS MEMORANDUM OF UNDERSTANDING is made and entered into as of this 7th day of February,
2006, by and among FUNimation Productions Management, LLC, a limited liability company organized
and existing under the laws of Texas (“FUN Seller”), FUNimation General Partnership, a Texas
general partnership organized and existing under the laws of Texas (“GP Seller”), FUNimation
Management Company, LLC, a limited liability company organized and existing under the laws of Texas
(“Management Seller”), each individual (“Individual”) signatory hereto, (each of FUN Seller, GP
Seller, Management Seller, and each Individual a “Seller” and collectively, the “Sellers”),
FUNimation Productions, Ltd., a limited partnership organized and existing under the laws of Texas,
The FUNimation Store, Ltd., a limited partnership organized and existing under the laws of Texas
(respectively, “Productions Company” and “Store Company” each a “Company” and collectively, the
“Companies”), and Xxxxxx Xxxxxxxxxxx as the representative of all Sellers (the “Seller
Representative”), and Xxxxxxx XX, LLC, a limited liability company organized and existing under the
laws of Minnesota (“Xxxxxxx XX”), Xxxxxxx XX, LLC, a limited liability company organized and
existing under the laws of Minnesota (“Xxxxxxx XX”), and Navarre CLP, LLC, a limited liability
company organized and existing under the laws of Minnesota (“Navarre CLP” and collectively with
Xxxxxxx XX and Xxxxxxx XX, the “Buyers”), and Navarre Corporation, a corporation organized and
existing under the laws of Minnesota (“Navarre”).
WHEREAS, the Sellers, Companies, Seller Representative, Buyers and Navarre entered into that
certain Partnership Interest Purchase Agreement, dated January 10, 2005, pursuant to which the
Buyers acquired all of the outstanding limited partnership interests and general partnership
interests of the Companies on May 11, 2005 (the “Purchase Agreement”);
WHEREAS, pursuant to Sections 1.4 and 5.13 of the Purchase Agreement certain post-closing
calculations, and potentially payments, may be required to be made by the Buyers or Sellers, as the
case may be (the “Post Closing Adjustments”); and
WHEREAS, notwithstanding anything in the Purchase Agreement to the contrary, the Sellers,
Companies, Seller Representative, Buyers and Navarre desire to complete and finalize the Post
Closing Adjustments, and certain other matters, as set forth in this Memorandum of Understanding.
NOW THEREFORE, in consideration of the foregoing and the mutual promises contained herein, the
parties agree as follows:
1. Post Closing Adjustments. Notwithstanding anything in the Purchase Agreement to
the contrary, the Sellers, Companies, Seller Representative, Buyers and Navarre agree to complete
and finalize the Post Closing Adjustments as follows:
(a) Closing Accounts Receivable. The Buyers and the Companies shall retain all
right, title and interest in and to the Closing Accounts Receivable and shall not be
obligated to reassign all or any portion of the Closing Accounts Receivable to the Seller
Representative.
(b) A/R Amount. Within five (5) days following the execution and delivery of
this Memorandum of Understanding, the Buyers and Seller Representative shall direct the
Escrow Agent to release from the Escrow Account to Navarre the A/R Amount by executing and
delivering to the Escrow Agent the escrow notice substantially in the form attached hereto
as Exhibit A (the “Escrow Notice”).
(c) Indemnification Cash. Within five (5) days following the execution and
delivery of this Memorandum of Understanding, the Buyers and Seller Representative shall
direct the Escrow Agent to release from the Escrow Account $10,000,000 of the
Indemnification Cash to Navarre and $10,000,000 of the Indemnification Cash to the Seller
Representative, with any and all interest thereon earned in the Escrow Account to be
released to the Seller Representative, by executing and delivering to the Escrow Agent the
Escrow Notice.
(d) Cash Payment. Within five (5) days following the execution and delivery of
this Memorandum of Understanding, Navarre shall make a payment to the Seller Representative
in an amount equal to $680,000 in cash or certified funds or by wire transfer.
(e) Termination of Escrow Agreement. Concurrently with the delivery of the
Escrow Notice to the Escrow Agent and the disbursement of amounts as provided in the Escrow
Notice, the Escrow Agreement is terminated.
(f) No Known Claims. Each of the parties hereto acknowledges and agrees that,
as of the date hereof, after giving effect to this Memorandum of Understanding, no party
hereto has any claim against any other party hereto arising out of the Purchase Agreement or
the transactions contemplated thereby or consummated thereunder, including without
limitation any claims under Article 8 of the Purchase Agreement.
(g) Termination of Indemnification. Each of the parties hereto agrees that no
further claims of any kind or nature may be brought under the Purchase Agreement or in
connection with the transactions contemplated thereby, including without limitation pursuant
to Article 8 thereof; provided that Seller shall continue to have the right to receive
payments pursuant to Section 1.5 of the Purchase Agreement and to make claims in connection
therewith.
2. Mutual Releases. The Sellers, Companies, Seller Representative, Buyers and Navarre
agree to the following releases:
(a) Buyer Release. The Companies, Buyers and Navarre, for themselves, and
their respective successors, assigns, subsidiaries, affiliates, insurers, officers,
directors, governors, members, shareholders, employees, managers, agents, and attorneys
hereby release and forever discharge the Sellers and the Seller Representative and their
respective successors, assigns, subsidiaries, affiliates, insurers, officers, directors,
governors, members, shareholders, employees, managers, agents, attorneys and assigns, from
any and all actions, liabilities, liens, debts, damages, claims, suits, judgments,
executions and demands of every kind, nature and description, whether based on common
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law or statutory law (collectively, a “Claim”), that the Companies, Buyers and/or
Navarre has, had, or may have against the Sellers and/or the Seller Representative up to the
date of this Memorandum of Understanding, except for any Claims arising out of this
Memorandum of Understanding or any documents or agreements executed in connection therewith
or any action or event occurring after the date hereof.
(b) Seller Release. The Sellers and Seller Representative, for themselves, and
their respective successors, assigns, subsidiaries, affiliates, insurers, officers,
directors, governors, members, shareholders, employees, managers, agents, and attorneys
hereby release and forever discharge the Companies, Buyers and Navarre and their respective
successors, assigns, subsidiaries, affiliates, insurers, officers, directors, governors,
members, shareholders, employees, managers, agents, attorneys and assigns, from any and all
Claims, that the Sellers and/or Seller Representative has, had, or may have against the
Companies, Buyers and/or Navarre up to the date of this Memorandum of Understanding, except
for any Claims arising out of this Memorandum of Understanding or any documents or
agreements executed in connection therewith or any action or event occurring after the date
hereof.
3. Non-Disparagement. The parties hereto agree that no party will make any statements
or other communications, oral or written, to any third party disparaging the reputation or
character of any other party hereto, or their respective partners or advisors, as the case may be,
nor will they disparage any product or service offered or business conducted by either party. Each
party hereto agrees to indemnify and hold harmless the other from and against any loss, cost,
liability or expense (including reasonable attorneys’ fees) arising out of or resulting from a
breach of this Section 3.
4. Capitalized Terms. All capitalized terms not defined herein shall have the
meanings forth in the Purchase Agreement.
5. Enforceability. In the event that any one or more of the provisions of this
Memorandum of Understanding is invalid, illegal, or unenforceable, the validity, legality, and
enforceability of the remaining provisions contained herein shall not in any way be affected or
impaired.
6. Law Governing. THIS MEMORANDUM OF UNDERSTANDING IS INTENDED AS A CONTRACT UNDER
AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LOCAL LAW OF THE STATE OF MINNESOTA
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT SUCH PRINCIPLES WOULD PERMIT OR
REQUIRE THE APPLICATION OF LAW OF ANY OTHER JURISDICTION), INCLUDING WITHOUT LIMITATION AS TO ALL
MATTERS OF CONSTRUCTION, VALIDITY, ENFORCEABILITY AND PERFORMANCE.
7. Entire Agreement. This Memorandum of Understanding constitutes the entire
agreement among the parties hereto relating to the subject matter hereof, and supersedes and
cancels any and all prior agreements among them, relating to the subject matter hereof and may not
be amended or modified except by a written agreement signed by each party hereto.
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8. Successors in Interest. This Memorandum of Understanding shall inure to the
benefit of, and shall be binding upon, the heirs, legatees, transferees, assigns, personal
representatives, owners, insurers, agents, employees, administrators, executors, representatives
and/or successors, business entities or successors in interest of any kind whatsoever, of the
parties hereto.
9. Counterparts. This Memorandum of Understanding may be executed in several
counterparts, and all counterparts so executed shall constitute one agreement, binding on the
parties hereto, notwithstanding that such parties are not signatory to the same counterpart.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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[Signature page to that certain Memorandum of Understanding, dated February 7, 2006.]
IN WITNESS WHEREOF, the parties have caused this Memorandum of Understanding to be executed on the
day and year first above mentioned.
| FUNimation Productions Management, LLC |
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| By: | ||||
| Name: | Xxx Xxxxxxxx | |||
| Title: | Manager | |||
| FUNimation General Partnership |
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| By: | ||||
| Name: | Xxxxxx Xxxxxxxxxxx | |||
| Title: | Managing Partner | |||
| FUNimation Management Company, LLC |
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| By: | ||||
| Name: | Xxx Xxxxxxxx | |||
| Title: | Manager | |||
| Xxxxxx Xxxxxxxxxxx, as the Seller Representative |
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| By: | ||||
| XXXXXX XXXXXXXXXXX | ||||
| XXX XXXXXXXX | ||||
| XXXXXX XXXXXXXXXXX | ||||
| XXXXXX XXXXXXXXXXX | ||||
| XXXXX XXXXXXXXXXX | ||||
| XXXXXXXX X. XXXXXXXXXXX | ||||
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[Signature page continued to that certain Memorandum of Understanding, dated February 7, 2006.]
| XXXXXX XXXXXXXXXXX, Custodian for XXXXXX X. XXXXXXXXXXX XX., Minor |
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| XXXXXX XXXXXXXXXXX XX., Custodian for XXXXXXXX X. XXXXXXXXXXX, Minor |
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| XXXXXX XXXXXXXXXXX XX., Custodian for XXXXX X. XXXXXXXXXXX, Minor |
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| XXXXX XXXXXXXX | ||||
| XXXXXX XXXXXXX | ||||
| XXXXX XXXXXX | ||||
| FUNimation Productions, Ltd. By Xxxxxxx XX, LLC, its general partner |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| The FUNimation Store, Ltd. By Xxxxxxx XX, LLC, its general partner |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| Xxxxxxx XX, LLC |
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| By: | ||||
| Name: | ||||
| Title: | ||||
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[Signature page continued to that certain Memorandum of Understanding, dated February 7, 2006.]
| Xxxxxxx XX, LLC |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| Navarre CLP, LLC |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| Navarre Corporation |
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| By: | ||||
| Name: | ||||
| Title: | ||||
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EXHIBIT A
ESCROW NOTICE
The undersigned hereby certify that they are duly authorized to execute and deliver this
Escrow Notice on behalf of Xxxxxxx XX, LLC, a Minnesota limited liability company (“Xxxxxxx XX”),
Xxxxxxx XX, LLC, a Minnesota limited liability company (“Xxxxxxx XX”), Navarre CLP, LLC, a
Minnesota limited liability company (“Navarre CLP” and collectively with Xxxxxxx XX and Xxxxxxx XX,
the “Buyers”), and the general and limited partners of the Companies as the Seller Representative.
Pursuant to Section 3 of the Escrow Agreement (the “Escrow Agreement”), dated May 11, 2005, by
and among the Buyers, the Seller Representative and Xxxxx Fargo Bank, National Association (the
“Escrow Agent”), the Buyers and the Seller Representative hereby request that the Escrow Agent
remit, in immediately available funds, from the Escrow Account to:
| Party: | Amount | |||||
Navarre Corporation
|
$ | 11,800,000 | ||||
Bank Name: |
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Bank Address: |
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Account Name: |
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Account Number: |
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ABA Routing Number: |
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Xxxxxx Xxxxxxxxxxx, as Seller Representative |
$ | 10,000,000 | ||||
Bank Name: |
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Bank Address: |
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Account Name: |
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Account Number: |
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ABA Routing Number: |
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All interest earned on the Escrow Funds shall be paid to Xxxxxx Xxxxxxxxxxx, as the Seller
Representative.
All capitalized terms not defined herein shall have the meanings forth in the Escrow
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned have executed this Escrow Notice.
| Date: February 7, 2006 | Xxxxxxx XX, LLC |
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| By: | ||||
| Its: | ||||
| Date: February 7, 2006 | Xxxxxxx XX, LLC |
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| By: | ||||
| Its: | ||||
| Date: February 7, 2006 | Navarre CLP, LLC |
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| By: | ||||
| Its: | ||||
| Date: February 7, 2006 | By: | |||
| Xxxxxx Xxxxxxxxxxx, as Seller Representative | ||||
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