FORM OF INDEMNIFICATION AND TAX MATTERS AGREEMENT
Exhibit
F
FORM
OF INDEMNIFICATION AND TAX MATTERS AGREEMENT
This
INDEMNIFICATION AND TAX MATTERS AGREEMENT (this “Agreement”),
dated
as of [_________], 2007, is by and between DG FastChannel, Inc., a Delaware
corporation (the “Purchaser”),
and
New 360, a California corporation (the “PPB
Sub”).
All
capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in the Merger Agreement (as defined below).
WHEREAS,
the Purchaser is a party to that certain Agreement and Plan of Merger and
Reorganization, dated as of April 16, 2007, by and among the Purchaser,
POINT.360, a California corporation (the “Company”),
and
the PPB Sub, a wholly-owned subsidiary of the Company (as amended or
supplemented, the “Merger
Agreement”),
pursuant to which, among other things, the Purchaser shall acquire the ADS
Business of the Company;
WHEREAS,
the PPB Sub is a party to that certain Contribution Agreement, dated as of
April
16, 2007, by and among the PPB Sub, the Purchaser and the Company (as amended
or
supplemented, the “Contribution
Agreement”),
pursuant to which, among other things, the PPB Sub acquired the non-ADS Business
of the Company;
WHEREAS,
upon the consummation of the transactions contemplated by the Merger Agreement,
the Purchaser shall become the successor-in-interest to the Company under the
Contribution Agreement; and
WHEREAS,
as a condition of consummating the transactions contemplated by the Merger
Agreement on the Acceptance Date, the parties hereto are executing this
Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants and promises contained
in
this Agreement and in the Merger Agreement and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties to this Agreement hereby agree as follows:
SECTION
1. INDEMNIFICATION
(a) Indemnification
by the PPB Sub.
Subject
to the provisions of this Agreement, from and after the Acceptance Date, the
PPB
Sub shall indemnify, defend and hold harmless the Purchaser and each of its
affiliates and each of the Purchaser’s and its affiliates’ respective officers,
directors, employees, agents and representatives (collectively, the
“Purchaser
Indemnified Parties”)
from
and against any and all losses, Liabilities, damages, deficiencies, claims,
awards, fines, penalties, judgments, Taxes, settlements, compromises, costs
and
expenses (including the costs of reasonable investigation and accountants’ and
attorneys’ fees), whether or not involving any third party claims (collectively
and individually, “Losses”),
arising out of, resulting from or relating to (i) any of the Assumed Liabilities
(other than Taxes) or (ii) any real property lease that would constitute an
Excluded Asset but for the failure of the Company to obtain a third party’s
consent to the assignment of such lease to the PPB Sub.
(b) Indemnification
by the Purchaser.
Subject
to the provisions of this Agreement, from and after the Acceptance Date, the
Purchaser shall indemnify, defend and hold harmless the PPB Sub and each of
its
affiliates and each of the PPB Sub’s and its affiliates’ respective officers,
directors, employees, agents and representatives (collectively, the
“PPB
Indemnified Parties”)
from
and against any and all Losses arising out of, resulting from or relating to
any
of the Retained Liabilities (other than Taxes).
(c) Claim
Procedure.
(i) Upon
receipt by the party seeking indemnification (the “Indemnified
Party”)
from a
third party of notice of any action, suit, proceeding, claim, demand or
assessment against such Indemnified Party which might give rise to a claim
for
Losses under Section
1(a)
or
Section
1(b)
(a
“Claim
Notice”),
the
Indemnified Party (or the Purchaser or the PPB Sub, as applicable, on behalf
of
an Indemnified Party) shall promptly give written notice thereof to the party
from which indemnification is sought (the “Indemnifying
Party”)
indicating in reasonable detail the nature of such claim and the basis therefor,
along with copies of any notice and documents related to such claim;
provided,
however,
that
the failure to give such notice shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party shall have actually been
materially prejudiced as a result of such failure. The Indemnifying Party shall
have the right to participate in the defense of and (subject to Section
1(c)(ii)
below),
at its option, to assume the defense of, at its own expense and by its own
counsel, any such matter in respect of which a Claim Notice has been provided
as
to which either (x) the Indemnifying Party shall have acknowledged its
obligation to indemnify the Indemnified Party in respect of all Losses
associated therewith or (y) the Indemnifying Party shall have agreed to pay
the
reasonable fees, costs and expenses of one separate counsel in each applicable
jurisdiction to the Indemnified Party, who shall be entitled to participate
in
the defense of such matter pursuant to this Section
1(c).
If the
Indemnifying Party shall, in accordance with the preceding sentence, assume
the
defense of any such matter, it shall promptly notify the Indemnified Party
of
its intention to do so, and the Indemnified Party shall, at the expense of
the
Indemnifying Party, agree to cooperate fully with the Indemnifying Party and
its
counsel in the defense of such matter; provided,
however,
that
the Indemnifying Party’s counsel shall be reasonably satisfactory to the
Indemnified Party and the Indemnifying Party shall not settle or consent to
any
judgment relating to any such matter without the prior written consent of the
Indemnified Party (which consent shall not be unreasonably withheld);
provided,
further,
however,
that
the immediately preceding proviso shall not apply in the case of any settlement
that unconditionally releases the Indemnified Party completely in connection
with such matter and that provides relief solely of money damages borne by
the
Indemnifying Party.
(ii) Notwithstanding
an election by the Indemnifying Party to assume the defense of such matter,
such
Indemnified Party shall have the right to employ separate counsel and to
participate in the defense of such matter at its own expense. The Indemnifying
Party shall bear the reasonable fees, costs and expenses of one such separate
counsel in each applicable jurisdiction (and pay such fees, costs and expenses
at least quarterly) if, but only if, (A) the Indemnified Party shall have
reasonably concluded that (1) there may be a conflict of interest (including
one
or more legal defenses or counterclaims available to it or to other Indemnified
Parties which are different from or additional to those available to the
Indemnifying Party) that would make it inappropriate in the reasonable judgment
of the Indemnified Party (after consulting in good faith with outside counsel)
for the same counsel to represent both the Indemnified Party and the
Indemnifying Party or (2) the claim seeks nonmonetary relief which, if granted,
could materially and adversely affect the Indemnified Party or its affiliates
(in which case, notwithstanding any other terms of this Agreement, the
Indemnifying Party shall not have the right to direct the defense of such matter
on behalf of the Indemnified Party); (B) the Indemnifying Party shall not have
employed counsel reasonably satisfactory to such Indemnified Party to represent
such Indemnified Party within a reasonable time after notice of the institution
of any action or proceeding relating to such matter; or (C) the Indemnifying
Party shall authorize such Indemnified Party to employ separate counsel at
the
Indemnifying Party’s expense, including pursuant to clause (i)(y) of this
Section
1(c).
In
addition, the Indemnifying Party shall be liable for the fees and expenses
of
counsel employed by the Indemnified Party as to a matter for any period during
which the Indemnifying Party has not assumed the defense thereof. In the event
the Indemnifying Party does not assume control of the defense of any matter
as
provided above, the Indemnified Party shall have the right to undertake the
defense, compromise and settlement of such matter; provided,
however,
that,
whether or not the Indemnifying Party assumes the defense of any such matter,
the Indemnified Party shall not admit any liability with respect to, or settle
or consent to any judgment relating to, any such matter without the prior
written consent of the Indemnifying Party (which consent shall not be
unreasonably withheld). In any event, the Indemnified Party and its counsel,
on
the one hand, and the Indemnifying Party and its counsel, on the other hand,
shall cooperate with each other in the defense of the matter. All out-of-pocket
costs and expenses incurred in connection with an Indemnified Party’s
cooperation shall be borne by the Indemnifying Party. In any event, the
Indemnified Party shall have the right at its own expense to participate in
the
defense of such matter.
2
(iii) Notwithstanding
anything in this Section
1(c)
to the
contrary, this Section 1(c)
shall
not apply, and Section
2
shall
apply to the extent of any claims or other matters in connection with
Taxes.
(iv) In
the
event any Indemnified Party has a claim against any Indemnifying Party under
Section
1(a)
or
Section
1(b)
that
does not involve a third party, the Indemnified Party (or the Purchaser or
the
PPB Sub, as applicable, on behalf of an Indemnified Party) shall promptly
deliver written notice thereof to the Indemnifying Party indicating in
reasonable detail the nature of such claim and the basis therefor, along with
copies of any notice and documents related to such claim; provided,
however,
that
the failure to give such notice shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party shall have actually been
materially prejudiced as a result of such failure. The Indemnifying Party shall
notify the Indemnified Party within ten (10) business days following its receipt
of such notice if the Indemnifying Party disputes its liability to the
Indemnified Party under this Agreement. If the Indemnifying Party does not
so
notify the Indemnified Party, the claim specified by the Indemnified Party
in
such notice shall be conclusively deemed to be a liability of the Indemnifying
Party under this Agreement, and the Indemnifying Party shall pay the amount
of
such liability to the Indemnified Party on demand or, in the case of any notice
in which the amount of the claim (or any portion of the claim) is estimated,
on
such later date when the amount of such claim (or such portion of such claim)
becomes finally determined. If the Indemnifying Party has timely disputed its
liability with respect to such claim as provide above, the Indemnifying Party
and the Indemnified Party shall resolve such dispute in accordance with
Section
3(c).
3
(d) Waiver
and Release by the PPB Sub.
From
and after the Acceptance Date, the PPB Sub shall not have any right of
contribution or indemnification against the Purchaser or the Company. Effective
as of the Acceptance Date, the PPB Sub, on behalf of itself and each of its
past, present and future affiliates, beneficiaries and assigns (the
“PPB
Sub Related Persons”),
hereby releases and forever discharges the Purchaser and the Company and each
of
their respective past, present and future affiliates, subsidiaries,
stockholders, successors and assigns, and their respective officers, directors,
employees, agents and representatives (collectively, “Purchaser
Releasees”),
from
any and all claims, demands, proceedings, causes of action, court orders,
obligations, contracts, agreements (express or implied), debts and liabilities
under or relating to the Purchaser or the Company (including any liability
or
obligation arising under or pursuant to any employment agreement or other
compensation arrangement) whether known or unknown, suspected or unsuspected,
both at law and in equity, which the PPB Sub or any of the PPB Sub Related
Persons now has, has ever had or hereafter has against the respective Purchaser
Releasees. Notwithstanding the foregoing, the PPB Sub does not release, and
this
Section
1(d)
shall
not be deemed to affect, any obligation of the Purchaser pursuant to this
Agreement, the Merger Agreement, the Contribution Agreement, the Working Capital
Reconciliation Agreement, the PPB Services Agreement or the Noncompetition
Agreement.
(e) Waiver
and Release by the Company.
From
and after the Acceptance Date, the Company shall not have any right of
contribution or indemnification against the PPB Sub. Effective as of the
Acceptance Date, the Company, on behalf of itself and each of its past, present
and future affiliates, beneficiaries and assigns (the “Company
Related Persons”),
hereby releases and forever discharges the PPB Sub and each of its respective
past, present and future affiliates, subsidiaries, stockholders, successors
and
assigns, and their respective officers, directors, employees, agents and
representatives (collectively, “PPB
Sub Releasees”),
from
any and all claims, demands, proceedings, causes of action, court orders,
obligations, contracts, agreements (express or implied), debts and liabilities
under or relating to the PPB Sub (including any liability or obligation arising
under or pursuant to any employment agreement or other compensation arrangement)
whether known or unknown, suspected or unsuspected, both at law and in equity,
which the Company or any of the Company Related Persons now has, has ever had
or
hereafter has against the respective PPB Sub Releasees. Notwithstanding the
foregoing, the Company does not release, and this Section
1(e)
shall
not be deemed to affect, any obligation of the PPB Sub pursuant to this
Agreement, the Merger Agreement, the Contribution Agreement, the Working Capital
Reconciliation Agreement, the PPB Services Agreement or the Noncompetition
Agreement.
(f) Exclusive
Remedy.
The
rights of the Purchaser Indemnified Parties and the PPB Indemnified Parties
to
receive indemnification pursuant to this Agreement (i) shall apply without
regard to, and shall not be subject to, any limitation by reason of set-off
and
(ii) are intended to be comprehensive and not to be limited by any requirements
of law concerning prominence of language or waiver of any legal right under
any
law. Notwithstanding anything to the contrary in this Agreement, in the event
of
any conflict between this Section
1
and
Section
2
with
respect to Taxes, Section
2
shall
control.
4
SECTION
2. TAX
MATTERS
(a) Indemnification
for Taxes.
The
Purchaser Indemnified Parties shall be indemnified, defended and held harmless
by the PPB Sub from and against any and all Losses arising out of, resulting
from or related to (i) any breach of or inaccuracy in any representation and
warranty contained in Section 3.12 of the Merger Agreement; (ii) Taxes of any
of
the Company and its Subsidiaries for any Pre-Acceptance Date Tax Period; (iii)
Taxes of any other Person imposed on any of the Company or its Subsidiaries
for
any Pre-Acceptance Date Tax Period, whether imposed as a result of Treasury
Regulation Section 1.1502-6 or any provision of any foreign, state or local
Tax
law having similar effect, by contract or otherwise; and (iv) the failure of
the
Company and its Subsidiaries to comply with their obligations under this
Section
2;
provided,
however,
that no
indemnity shall be provided under this Section
2(a)
for any
Losses to the extent of any current liability for Taxes that is set forth on
the
ADS Business Balance Sheet (as such term is defined in the Working Capital
Reconciliation Agreement) and taken into account in determining the Acceptance
Date Net Working Capital (as such term is defined in the Working Capital
Reconciliation Agreement). The amount of all indemnification obligations under
this Agreement shall be (a) increased to take account of any net Tax cost
actually incurred by the Purchaser Indemnified Party arising out of or in
connection with any indemnity payments hereunder (grossed up for such increase)
and (b) reduced to take account of any net Tax benefit actually realized by
the
Purchaser Indemnified Party arising from the incurrence or payment of any such
indemnified amount. In computing the amount of any such Tax cost or Tax benefit,
the Purchaser Indemnified Party shall be deemed to recognize all other items
of
income, gain, loss, deduction or credit before recognizing any item arising
from
the receipt of any indemnity payment hereunder or the incurrence or payment
of
any indemnified amount. For the purposes of this Section
2(a),
reference to any “Loss” of any description shall be deemed to include amounts
that would have constituted a “Loss” but for the set-off or other utilization of
any loss, deduction or credit realized in, or attributable to, a Post-Acceptance
Date Tax Period.
(b) Tax
Returns.
(i) The
Company shall prepare or cause to be prepared, and shall file or cause to be
filed, all Tax Returns of the Company and its Subsidiaries that are required
to
be filed on or before the Closing Date. Except to the extent otherwise required
by law, such Tax Returns shall be prepared on a basis consistent with the past
practices of such entities. The Company shall make such Tax Returns available
to
the Purchaser for review no less than thirty (30) days in advance of the due
date for filing any such Tax Returns to provide the Purchaser with a meaningful
opportunity to analyze and comment on such Tax Returns before filing. The
Company shall make such changes and revisions to such Tax Returns as are
reasonably requested by the Purchaser. The Company shall cause such Tax Returns
to be timely filed (taking into account extensions granted).
(ii) The
Purchaser shall prepare or cause to be prepared and shall file or cause to
be
filed all Tax Returns of the Company and its Subsidiaries for all Pre-Closing
Tax Periods required to be filed after the Closing Date and all Straddle
Periods. Except to the extent otherwise required by law, all such Tax Returns
shall be prepared on a basis consistent with the past practices of such
entities. The Purchaser shall permit the PPB Sub to review and comment on each
material Tax Return that is prepared under this Section
2(b)(ii)
no less
than thirty (30) days in advance of the extended due date for filing any such
Tax Returns to provide the PPB Sub with a meaningful opportunity to analyze
and
comment on such Tax Returns before filing. The Purchaser shall make such changes
and revisions to such Tax Returns as are reasonably requested by the PPB Sub
to
the extent that such revisions relate to Taxes of any Pre-Closing Tax Period
for
which the PPB Sub may be liable pursuant to Section
2(a),
except
(i) where a contrary position is required under applicable law or (ii) to the
extent such comments, if incorporated in any such Tax Return, could reasonably
be expected to have a material adverse affect resulting from incorporating
such
comments in such Tax Return on the liability for Taxes of the Purchaser, the
Company or any of their affiliates in any Post-Closing Tax Period. In the event
that the Tax liability of the Company or any of its Subsidiaries in a
Pre-Closing Tax Period reflected on a Tax Return prepared under this
Section
2(b)(ii)
exceeds
the reserve for such Tax liability reflected on the ADS Business Balance Sheet
and taken into account in the calculation of Acceptance Date Net Working
Capital, the Purchaser shall notify the PPB Sub of such excess and the PPB
Sub
shall promptly (but in any event within three (3) Business Days of the
Purchaser’s request) pay to the Purchaser an amount equal to such
excess.
5
(c) Straddle
Periods.
For
purposes of this Agreement, in the case of any Taxes that are payable for a
Straddle Period, the portion of such Taxes that relate to the Pre-Acceptance
Tax
Period (i) in the case of any property or ad valorem Taxes, shall be deemed
to
be the amount of such Taxes for the entire Tax period multiplied
by
a
fraction the numerator of which is the number of days in the Tax period ending
on the Acceptance Date and the denominator of which is the number of days in
the
entire Tax period, and (ii) in the case of all other Taxes, shall be deemed
equal to the amount which would be payable as computed on a
“closing-of-the-books” basis as if the relevant Straddle Period ended on the
close of business on the Acceptance Date.
(d) Tax
Contests.
The
Purchaser shall promptly notify the PPB Sub in writing upon receipt by the
Purchaser, the Company or any of their affiliates of a written notice of any
pending or threatened Tax audits or assessments of the Company in which there
are issues as to which the PPB Sub may have liability pursuant to Section
2.1(a)
of this
Agreement (such issues, “Tax
Contest Claims”);
provided,
however,
that no
failure or delay by the Purchaser to provide notice of any Tax Contest Claim
shall reduce or otherwise affect the obligation of the PPB Sub hereunder except
to the extent the PPB Sub is actually prejudiced thereby. The Purchaser and
the
PPB Sub shall cooperate with each other in the conduct of any Tax Contest Claim.
The PPB Sub shall have the right to control the conduct of any Tax Contest
Claim
if the PPB Sub agrees in writing that the PPB Sub is liable for the full amount
of the Taxes payable with respect to such Tax Contest Claim (any such claim,
a
“Company
Tax Contest Claim”);
provided
that:
(i) the PPB Sub shall keep the Purchaser informed regarding the progress and
substantive aspects of any Company Tax Contest Claim, including providing the
Purchaser with all written materials relating to such Tax proceeding received
from the relevant Governmental Entity; (ii) the Purchaser shall be entitled
to
participate in any Company Tax Contest Claim, including having an opportunity
to
comment on any written materials prepared in connection with any Company Tax
Contest Claim and attending any conferences relating to any Company Tax Contest
Claim; and (iii) the PPB Sub shall not compromise or settle any Company Tax
Contest Claim, without obtaining the Purchaser’s prior written consent, which
consent shall not be unreasonably withheld.
The
Purchaser shall control all other audit, examination or administrative or
judicial proceedings in respect of Taxes.
6
(e) Tax
Matters Cooperation.
Each of
the parties to this Agreement shall cooperate in both (i) the preparation of
all
Tax Returns for any Tax periods for which one party could reasonably require
the
assistance of the other party in obtaining any necessary information and (ii)
any subsequent audits, claims, contests, litigation or other proceedings with
respect to Taxes of any of the Company or its Subsidiaries (collectively,
“Tax
Proceedings”).
Such
cooperation shall include, but not be limited to, furnishing prior years’ Tax
Returns or return preparation packages to the extent related to illustrating
previous reporting practices or containing historical information relevant
to
the preparation of such Tax Returns, and furnishing such other information
within such party’s possession requested by the party filing such Tax Returns or
participating in Tax Proceedings, as is relevant to the preparation of such
Tax
Returns or the conduct of such Tax Proceedings, respectively. Such cooperation
and information also shall include without limitation provision of powers of
attorney for the purpose of signing Tax Returns and defending audits and
promptly forwarding copies of appropriate notices and forms or other
communications received from or sent to any applicable governmental authority
which relate to any of the parties to this Agreement, and providing copies
of
all relevant Tax Returns to the extent related to any of the parties to this
Agreement, together with accompanying schedules and related work papers,
documents relating to rulings or other determinations by any governmental
authority and records concerning the ownership and tax basis of property, which
the requested party may possess. The parties and their respective affiliates
shall make their respective employees and facilities available on a mutually
convenient basis to explain any documents or information provided
hereunder.
(f) Successor
Employer Status.
The
Company and the PPB Sub shall, to the extent permitted by law, (i) treat the
PPB
Sub and its affiliates (as applicable) as a “successor employer” and the Company
and its affiliates (as applicable) as a “predecessor,” within the meaning of
Sections 3121(a)(1) and 3306(b)(1) of the Code, with respect to employees of
the
PPB Business that were employed by the Company and its affiliates prior to
the
Spin-Off for purposes of Taxes imposed under the United States Federal
Unemployment Tax Act or the United States Federal Insurance Contributions Act
and (ii) cooperate with each other to avoid the filing of more than one IRS
Form
W-2 with respect to each such employee for the calendar year in which the
Spin-Off occurs.
(g) Other
Tax Matters.
(i) For
purposes of this Agreement, (A) the term “Pre-Acceptance
Date Tax Period”
refers
to any taxable period that ends on or before the Acceptance Date and the portion
of any Straddle Period that ends on the close of business on the Acceptance
Date; (B) the term “Post-Acceptance
Date Tax Period”
refers
to any taxable period that begins after the Acceptance Date and that portion
of
any Straddle Period that begins on the day after the Acceptance Date; and (C)
the term “Straddle
Period”
means
any taxable period that begins on or before, and ends after, the Acceptance
Date.
7
(ii) For
purposes of this Section
2,
references to any of the Purchaser, the Company, and any of their
affiliates
shall include successors.
(iii) The
covenants and agreements of the parties contained in this Section
2
shall
survive the Acceptance Date and shall remain in full force and effect until
such
covenant or agreement is fully performed.
(iv) In
the
event of any conflict between this Section
2
and the
Merger Agreement, this Section
2
shall
control.
SECTION
3. MISCELLANEOUS
(a) Notices.
All
notices and other communications hereunder shall be in writing and shall be
deemed given if delivered personally (notice deemed given upon receipt),
telecopied (notice deemed given upon confirmation of receipt) or sent by a
nationally recognized overnight courier service, such as Federal Express (notice
deemed given upon receipt of proof of delivery), to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if
to the
Purchaser, to:
DG
FastChannel, Inc.
000
X.
Xxxx Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx,
XX 00000
Attention:
Chief Financial Officer
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
with
a
copy to:
Xxxxxx
& Xxxxxxx LLP
000
Xxxxxxxx Xxxxxx XX, Xxxxx 0000
Xxxxxxxxxx,
XX 00000
Attention:
Xxxxxxx X. X’Xxxxx
Xxxx
X.
Xxxxxxxx
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
and
(b) if
to the
PPB Sub, to:
0000
Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx,
XX 00000
Attention:
Chief Financial Officer
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
8
with
a
copy to:
Xxxx
& Xxxxx PC
0000
Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
Attention:
Xxxxxxx Xxxxx
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
(b) Counterparts;
Facsimile.
This
Agreement may be executed manually or by facsimile by the parties hereto, in
any
number of counterparts, each of which shall be considered one and the same
agreement and shall become effective when a counterpart hereof shall have been
signed by each party and delivered to the other party.
(c) Governing
Law; Consent to Jurisdiction.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of California, without giving effect to conflicts of laws principles
that would result in the application of the law of any other state.
(d) Assignment.
This
Agreement shall not be assigned by any party hereto (whether by operation of
law
or otherwise) without the prior written consent of the other party. Subject
to
the preceding sentence, but without relieving any party hereto of any obligation
hereunder, this Agreement will be binding upon, inure to the benefit of and
be
enforceable by the parties and their respective successors and
assigns.
(e) Amendments;
Waiver.
This
Agreement may be amended or modified only by a written instrument signed by
each
of the parties hereto. Any party may waive any provision of this Agreement
or
compliance therewith; provided
that
such waiver is set forth in an instrument in writing signed by the party to
be
bound thereby. Any waiver or failure to insist on strict compliance with any
agreement or obligation contained herein shall not operate as a waiver of,
or
estoppel with respect to, any subsequent or other failure.
(f) Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
by
the Merger Agreement are not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated by the Merger Agreement are fulfilled to the extent
possible.
(g) Transferee
Liability.
(i) Prior
to
the third anniversary of the date of this Agreement, the PPB Sub agrees that
it
shall not sell, convey or otherwise transfer any material assets to a third
party, in a single transaction or series of related transactions, if, at the
time of such transaction(s) (or pro forma, after giving effect to such
transaction(s)), the PPB Sub has Deficient Net Consolidated Assets (as defined
below), unless, at least fifteen (15) business days prior to the closing of
such
transaction(s), (A) each transferee of such Assets delivers to the Purchaser
a
valid guaranty (in form and substance reasonably satisfactory to the Purchaser),
executed by a duly authorized officer of such transferee, unconditionally (1)
guaranteeing the Liabilities of the PPB Sub under this Agreement and (2)
agreeing to cause any affiliate of such transferee to which such transferee
sells, conveys or otherwise transfers any material assets to deliver a
comparable guaranty as a condition precedent to such transaction; provided
that (1)
the PPB Sub shall remain bound in all respects by the terms of this Agreement,
(2) the maximum liability that any such transferee will have under this
Agreement shall be equal to the value of the assets acquired from the PPB Sub
as
of the date of such acquisition and (3) the guaranty delivered to the Purchaser
shall set forth the applicable transferee’s best estimate of the value of such
assets and (B) the PPB Sub delivers to the Purchaser a written certification,
duly executed by the chief financial officer of the PPB Sub, as to the PPB
Sub’s
best estimate of the value of such assets.
9
(ii) For
the
purpose of this Section
3(g),
(A) the
value of assets transferred to any transferee shall equal the sum of (1) the
amount of any cash paid for such assets and (2) the value of any non-cash
consideration, as reasonably determined by the chief financial officer of the
PPB Sub; provided,
however,
that
the Purchaser shall be entitled to determine in its reasonable judgment the
value of such assets if the transfer is not made at arms’ length or the
Purchaser otherwise reasonably determines that the value otherwise determined
in
accordance with this sentence is incorrect in any material respect, and (B)
the
PPB Sub shall be deemed to have “Deficient
Net Consolidated Assets”
if
it
has tangible assets (exclusive of goodwill), net of all liabilities
(“Net
Assets”),
equal
to less than fifty percent (50%) of the Net Assets of the PPB Sub as of the
Acceptance Date, based on GAAP consistent with the accounting principles and
practices applied in the preparation of the financial statements included in
the
Form 10, applied on a consistent basis during the periods involved.
(h) WAIVER
OF JURY TRIAL.
EACH
PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO
A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF
SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
SUCH WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY AND (D) IT HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 3(h).
[Remainder
of this page intentionally left blank.]
10
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by
their respective officers thereunto duly authorized as of the date first written
above.
|
DG
FASTCHANNEL, INC.
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||
| |
|
|
| By: | ||
|
Name:
Xxxxx
X. Xxxxxxxx
Title:
Chairman
of the Board and
Chief Executive Officer
|
||
| |
|
|
| By: | ||
|
Name:
Xxxx X. Bagerdjian
Title:
Chairman, President and CEO
|
||
