ASSET PURCHASE AGREEMENT
dated as of
October 3, 1996, among
Affinity Entertainment, Inc.
and
Tradewinds Television, LLC
and
Royeric Pack
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS............................................................................................1
1.1 Definitions..................................................................................................1
ARTICLE 2 SALE OF ACQUIRED ASSETS, ASSUMPTION OF LIABILITIES AND RELATED TRANSACTIONS...........................7
2.1 Purchase and Sale of Acquired Assets.........................................................................7
2.2 Assumption of Certain Liabilities............................................................................8
2.3 Purchase Price and Allocation................................................................................8
2.4 Sales and Use Taxes..........................................................................................8
ARTICLE 3 CLOSING................................................................................................8
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLERS..............................................................9
4.1 Organization, Power and Authority............................................................................9
4.2 Authorization of Agreements..................................................................................9
4.3 Effect of Agreement..........................................................................................9
4.4 Financial Statements........................................................................................10
4.5 Receivables.................................................................................................10
4.6 Permits; Conduct of Business................................................................................11
4.7 Material Contracts..........................................................................................11
4.8 Condition and Use of Property...............................................................................11
4.9 Legal Proceedings...........................................................................................11
4.10 Library Rights..............................................................................................11
4.11 Third Party Rights..........................................................................................13
4.12 Library Tangible Assets.....................................................................................14
4.13 Marks and Registrations.....................................................................................14
4.14 Licenses....................................................................................................15
4.15 Insurance...................................................................................................16
4.16 Compliance with Law.........................................................................................16
4.17 Certain Interests...........................................................................................16
4.18 No Brokers or Finders.......................................................................................16
4.19 Tax and Other Returns or Reports............................................................................16
4.20 Employment Contracts; Employee Benefit Plans................................................................17
4.21 Accuracy of Information.....................................................................................17
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER................................................................18
5.1 Organization and Related Matters............................................................................18
5.2 Authorization...............................................................................................18
5.3 No Conflicts................................................................................................18
5.4 No Brokers or Finders.......................................................................................19
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ARTICLE 6 ADDITIONAL AGREEMENTS..................................................................................19
6.1 Access......................................................................................................19
6.2 Conduct of Business; Financial Statements...................................................................19
6.3 Permits and approvals; Third Party Consents.................................................................20
6.4 No Solicitations............................................................................................20
6.5 Confidentiality; Publicity..................................................................................21
6.6 Performance by Affiliates...................................................................................21
6.7 Representations and Warranties..............................................................................21
6.8 Payments to Pack............................................................................................21
ARTICLE 7 CONDITIONS OF PURCHASE................................................................................23
7.1 General Conditions..........................................................................................23
7.2 Conditions to Obligations of Buyer..........................................................................23
ARTICLE 8 TERMINATION OF OBLIGATIONS; SURVIVAL...................................................................25
8.1 Termination of Agreement....................................................................................25
8.2 Effect of Termination.......................................................................................26
8.3 Expenses....................................................................................................26
ARTICLE 9 INDEMNIFICATION........................................................................................27
9.1 Indemnification.............................................................................................27
9.2 Procedure...................................................................................................28
ARTICLE 10 GENERAL...............................................................................................29
10.1 Survival...................................................................................................29
10.2. Amendments; Waivers........................................................................................29
10.3 Schedules; Exhibits; Integration...........................................................................29
10.4 Best Efforts; Further Assurances...........................................................................30
10.5 Bulk Sale Law..............................................................................................30
10.6 Governing Law..............................................................................................30
10.7 No Assignment..............................................................................................31
10.8 Headings...................................................................................................31
10.9 Counterparts...............................................................................................31
10.10 Parties in Interest........................................................................................31
10.11 Notices....................................................................................................31
10.12 Remedies; Waiver...........................................................................................33
10.14 Knowledge Convention.......................................................................................33
10.15 Representation By Counsel; Interpretation..................................................................33
10.16 Specific Performance.......................................................................................33
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10.17 Severability...............................................................................................34
SCHEDULES
SCHEDULE 2.1...........................ACQUIRED ASSETS
SCHEDULE 2.1.1.........................LIBRARY
SCHEDULE 2.1.1(a)......................FILM LIBRARY
SCHEDULE 2.1.1(b)......................TELEVISION LIBRARY
SCHEDULE 2.1.2.........................WORKS IN PROGRESS
SCHEDULE 2.2(b)........................ASSUMED LIABILITIES
SCHEDULE 4.1...........................OWNERSHIP OF TW
SCHEDULE 4.3...........................REQUIRED PERMITS AND APPROVALS
SCHEDULE 4.5...........................ACCOUNTS RECEIVABLE
SCHEDULE 4.6...........................CONDUCT OF BUSINESS EXCEPTIONS
SCHEDULE 4.7...........................CONTRACTS
SCHEDULE 4.9...........................LEGAL PROCEEDINGS
SCHEDULE 4.10(a).......................LIBRARY RIGHTS EXCEPTIONS
SCHEDULE 4.10(b).......................RIGHTS VIOLATIONS
SCHEDULE 4.11(a).......................PARTICIPATIONS
SCHEDULE 4.11(b).......................GUILD ENCUMBRANCE
SCHEDULE 4.13(a).......................MARKS
SCHEDULE 4.13(b).......................COPYRIGHTS
SCHEDULE 4.13(b).......................INSURANCE
SCHEDULE 4.17..........................CERTAIN INTERESTS
SCHEDULE 4.20(a).......................EMPLOYMENT CONTRACTS
SCHEDULE 4.20(b).......................EMPLOYEE BENEFIT PLANS
EXHIBITS
A...▇▇▇▇ of Sale
B...Financial Statements of Tradewinds Television, LLC
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of October 3,
1996 among Affinity Entertainment, Inc., a Delaware corporation ("Buyer"),
Tradewinds Television, LLC, a California limited liability company ("TW"), and
Royeric Pack, an individual ("Pack" and, together with TW, the "Sellers" and,
individually, a "Seller").
R E C I T A L S
WHEREAS, Pack owns the entire membership interest in TW;
WHEREAS, Sellers desire to sell, and Buyer desires to
purchase, certain assets and contract rights representing the film and
television interests directly or indirectly owned and controlled by Sellers, on
the terms and conditions set forth in this Agreement.
A G R E E M E N T
In consideration of the mutual promises contained herein and
intending to be legally bound, the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS.
For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires,
(a) the terms defined in this Article 1 have the meanings
assigned to them in this Article 1 and include the plural as well as the
singular,
(b) all accounting terms not otherwise defined herein have the
meanings assigned under GAAP,
(c) all references in this Agreement to designated "Articles,"
"Sections" and other subdivisions are to the designated Articles, Sections and
other subdivisions of the body of this Agreement,
(d) pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms,
(e) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision, and
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(f) references to "Sellers" herein shall be deemed to refer to
TW and Pack, jointly and severally.
As used in this Agreement and the Exhibits and Schedules
delivered pursuant to this Agreement, the following definitions shall apply:
"Acquired Assets" has the meaning set forth in Section 2.1.
"Action" means any action, complaint, investigation, petition,
suit or other proceeding, whether civil or criminal, in law or in equity, or
before any arbitrator or Governmental Entity.
"Affiliate" means a Person that directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or is under
common control with, a specified Person.
"Affinity Encumbrance" means the Encumbrance of Buyer pursuant
to the Security Agreement.
"Agreement" means this Agreement by and among Buyer, TW and
Pack as amended or supplemented together with all Exhibits and Schedules
attached hereto or incorporated by reference.
"AMG" means Action Media Group Inc., a corporation.
"Approval" means any approval, authorization, consent,
qualification or registration, or any waiver of any of the foregoing, required
to be obtained from, or any notice, statement or other communication required to
be filed with or delivered to, any Governmental Entity or any other Person.
"Applicable Copyright Law" means the U.S. Copyright Act of
1976, as amended, and, as applicable, common law of any jurisdiction in the
United States, the Copyright Act of 1909, as amended, the Universal Copyright
Convention and the Berne Convention.
"Associate" of a Person means
(a) a corporation or organization (other than a party to this
Agreement) of which such Person is a director, an officer, member,
manager, or partner or is, directly or indirectly, the beneficial owner
of 10% or more of any class of equity securities;
(b) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as
trustee or in a similar capacity; and
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(c) any relative or spouse of such Person or any relative of
such spouse who has the same home as such Person or who is a director,
officer, member or manager of TW.
"Assumed Liabilities" has the meaning specified in Section
2.2(b).
"▇▇▇▇ of Sale" means an instrument of assignment,
substantially in the form of Exhibit A hereto, dated the Closing Date and
assigning and transferring to Buyer all right, title and interest in and to the
Acquired Assets.
"Business" means the film and television businesses of TW.
"Closing" means the consummation of the Transactions.
"Closing Date" means the date of the Closing.
"Contract" means any contract, agreement, arrangement, lease,
license, sales order, purchase order or other legally binding commitment,
instrument or understanding, whether or not in writing.
"Copyright" means legal, economic, moral and neighboring
rights in any work of authorship, including, without limitation, those arising
under Applicable Copyright Law, and all registrations, renewals, and
applications for registration or renewal of any of the foregoing owned or
controlled by Sellers and relating to any asset in the Library, including,
without limitation, the copyrights listed in Schedule 4.13(b) to this Agreement.
"Employee Benefit Plan" means all plans, funds, programs,
policies, arrangements, practices, customs and understandings providing benefits
of economic value to any employee, former employee, or present or former
beneficiary, dependent or assignee of any such employee or former employee other
than regular salary, wages or commissions paid substantially concurrently with
the performance of the services for which paid. Without limitation, the term
"employee benefit plan" includes all employee welfare benefit plans within the
meaning of section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and all employee pension benefit plans within the meaning
of section 3(2) of ERISA.
"Encumbrance" means any claim, charge, lease, covenant,
easement, encumbrance, security interest, lien, pledge, rights of others, or
other similar restriction (whether on sale, transfer, disposition or otherwise),
whether imposed by agreement, understanding, law, equity or otherwise, except
for any restrictions on transfer generally arising under any applicable federal
or state securities law.
"Film Library" means the Library Pictures listed on Schedule
2.1.1(a).
"Financial Statements" has the meaning specified in Section
4.4(a).
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"GAAP" means generally accepted accounting principles in the
United States, as in effect from time to time.
"Governmental Entity" means any government or any agency,
bureau, board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether federal, state or
local, domestic or foreign.
"Guild Encumbrances" means any right or Encumbrance,
including, without limitation, so called "separated rights" and rights similar
thereto, obtained pursuant to the terms of any guild, union or other collective
bargaining agreement applicable to any assets included in the Library, whether
said right is obtained directly or by implication or reference in an individual
Contract, to: (i) receive money or any other valuable consideration for
merchandising any assets included in the Library; or (ii) limit or prohibit the
exercise of any or all of the rights of exploitation of any assets included in
the Library; or (iii) receive money or other valuable consideration for the
exercise of any or all of the rights of exploitation of any or all of the assets
included in the Library.
"Indemnifiable Claim" means any Loss for or against which any
party is entitled to indemnification under this Agreement; "Indemnified Party"
means the party entitled to indemnity hereunder; and "Indemnifying Party" means
the party obligated to provide indemnification hereunder.
"Investment Letter" means the investment letter, in the form
to be agreed to by the parties, dated the Closing Date to be signed by Pack.
"Law" means any constitutional provision, statute or other
law, rule, regulation, or interpretation of any Governmental Entity and any
Order.
"Library" means, collectively, all Library Rights and all
Library Tangible Assets.
"Library Film Properties" means all physical properties of, or
relating to, any item of Library Pictures or Works in Progress, including,
without limitation, prints, negatives, duplicating negatives, fine grains, music
and sound effects tracks, master tapes and other duplicating materials of any
kind, all various language dubbed and titled versions, prints and negatives of
stills, trailers and television spots, all promos and other advertising and
publicity materials, stock footage, trims, tabs, out-takes, cells, drawings,
storyboards, models, sculptures, puppets, sketches, and continuities, including,
without limitation, any of the foregoing in the possession, custody or control
of Sellers, or to the extent owned by Sellers, in the possession of their
predecessors or assigns or any film laboratories, storage facilities or other
third parties.
"Library Literary Properties" means all literary, dramatic or
other works, screenplays, stories, adaptations, scripts, treatments, formats,
bibles, scenarios, characters, titles, and any and all other literary or
dramatic materials of any kind and any rights therein of or relating to any of
the Library Pictures or Works in Progress, including, without limitation, any
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remake, sequel, prequel, series, character, legitimate stage, merchandising and
other derivative, compilation and ancillary rights of every kind, whether now or
hereafter recognized, in all media including, without limitation, for
theatrical, non-theatrical, home video, multi-media, interactive, computer,
pay-per-view, television, pay or basic cable, DBS, TVRO, MDS, MMDS, STV or any
other form of exhibition or distribution now known or hereafter devised.
"Library Music Rights" means all music synchronization,
performance, mechanical, publication and other music rights of or relating to
any of the Library Pictures or Works in Progress.
"Library Outstanding Agreements" means all Contracts now in
effect pursuant to which Sellers have any rights to distribute, exhibit, use,
exercise or exploit, any rights in or to, or providing for the acquisition,
sale, purchase, lease, license or other disposition by or to Sellers of or
relating to any of the Library Pictures or Works in Progress.
"Library Pictures" means any and all completed audio, visual
and/or audiovisual works of any kind or character owned, licensed or otherwise
controlled by Sellers, including, without limitation, motion pictures,
television programs, series, mini-series, pilots, specials, documentaries,
cartoons, compilations, promotional films, trailers and shorts, whether
animated, live action or both whether produced for theatrical, non-theatrical,
home video, multi-media, interactive, computer, pay-per-view, television, pay or
basic cable, DBS, TVRO, MDS, MMDS, STV or any other form of exhibition or
distribution now known or hereafter devised, and specifically including the Film
Library and the Television Library.
"Library Rights" means, collectively, all Library Pictures,
Works in Progress, Library Literary Properties, Library Music Rights, Library
Underlying Agreements and Library Outstanding Agreements.
"Library Tangible Assets" means, collectively, all Library
Film Properties and all written Contracts and other documents evidencing,
memorializing or otherwise relating to the Library Rights, including, without
limitation, the Library Underlying Agreements and Library Outstanding
Agreements.
"Library Underlying Agreements" means all Contracts with
writers, directors, producers, actors, artists, animators, voice talent or other
parties relating to the preparation or production of any of the Library
Pictures, pursuant to which Sellers have or purport to have any rights in or
obligations relating to the Library Pictures, Works in Progress or any element
thereof.
"License" has the meaning set forth in Section 4.14(a).
"Loss" means any action, cost, damage, disbursement, expense,
liability, loss, deficiency, diminution in value obligation, penalty or
settlement of any kind or nature, whether foreseeable or unforeseeable,
including but not limited to, interest or other carrying costs, penalties,
legal, accounting and other professional fees and expenses incurred in the
5
investigation, collection, prosecution and defense of claims and amounts paid in
settlement, that may be imposed on or otherwise incurred or suffered by the
specified person.
"▇▇▇▇" has the meaning set forth in Section 4.13(a).
"Material Contract" means any Contract material to the
business of the subject person as of or after the date hereof and includes but
is not limited to those Contracts deemed material by Section 4.7.
"Note" means that certain promissory note dated September 13,
1996 executed by TW in favor of Buyer, as well as any additional notes or
evidences of indebtedness entered into by TW in favor of Buyer prior to the
Closing.
"Order" means any decree, injunction, judgment, order, ruling,
assessment or writ issued by a Governmental Entity.
"Participation" means any contingent right in, or to receive
money or other consideration in respect of, the exploitation of any asset
included in the Library, excluding Guild Encumbrances.
"Permit" means any license, permit, franchise, certificate of
authority, or order, or any waiver of the foregoing, required to be issued by
any Governmental Entity.
"Permitted Encumbrances" means Taxes (a) not yet delinquent or
(b) the validity of which are being contested in good faith by appropriate
actions.
"Person" means an association, a corporation, an individual, a
partnership, a trust or any other entity or organization, including a
Governmental Entity.
"Purchase Price" has the meaning set forth in Section 2.3.
"Registration Rights Agreement" means the Registration Rights
Agreement in the form to be agreed to by the parties.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" means the Interim Financing and Security
Agreement dated September 13, 1996 among Buyer, TW and Pack, as amended from
time to time, and the security documents executed in connection therewith,
including the UCC-1 Financing Statement dated September 13, 1996, executed by
TW, and the Copyright Mortgage and Assignment, dated September 13, 1996,
executed by TW.
"Tax" means any foreign, federal, state, county or local
income, sales and use, excise, franchise, real and personal property, transfer,
gross receipt, capital stock, production, business and occupation, disability,
employment, payroll, severance or withholding tax or charge
6
imposed by any Governmental Entity, any interest and penalties (civil or
criminal) related thereto or to the nonpayment thereof, and any Loss in
connection with the determination, settlement or litigation of any tax
liability.
"Television Library" means the Library Pictures listed on
Schedule 2.1.1(b).
"Termination Date" means, unless mutually extended by TW and
Buyer, 90 days following receipt of written notice by TW (60 days following
receipt of written notice by TW on or after December 1, 1996) that Buyer has
determined that the conditions to the Transactions could not be satisfied and
the Transactions will not be consummated.
"TW Accounts Receivable" means all on and off-balance sheet
accounts receivable relating to the Business as listed on Schedule 4.5.
"Transactions" means the transactions contemplated by this
Agreement.
"Works in Progress" means all audio, visual and/or audio
visual works for which production has commenced and which are not complete
which, if completed, would otherwise constitute Library Pictures, including,
without limitation, those properties listed on Schedule 2.1.2.
ARTICLE 2
SALE OF ACQUIRED ASSETS, ASSUMPTION OF LIABILITIES
AND RELATED TRANSACTIONS
2.1 PURCHASE AND SALE OF ACQUIRED ASSETS.
Subject to the terms and conditions of this Agreement, on the
Closing Date Sellers shall sell, convey, assign, transfer and deliver to Buyer,
and Buyer shall purchase, acquire and accept from Sellers, the assets
specifically identified on Schedule 2.1 attached hereto and incorporated herein
by this reference (the "Acquired Assets") including, without limitation, the
name "Tradewinds Television" and all good will associated therewith, free and
clear of any Encumbrances.
2.2 ASSUMPTION OF CERTAIN LIABILITIES.
(a) Liabilities Not Assumed. Except for the liabilities and
obligations of TW specifically assumed pursuant to and identified in
Section 2.2(b), Buyer shall not assume, shall not take subject to and
shall not be liable for, any liabilities or obligations of any kind or
nature, whether absolute, contingent, accrued, known or unknown, of
Sellers.
(b) Assumed Liabilities. Notwithstanding Section 2.2(a), on
the Closing Date Buyer shall assume and thereafter pay or perform the
liabilities or obligations directly
7
related to the Acquired Assets that are identified on Schedule 2.2(b)
(the "Assumed Liabilities").
2.3 PURCHASE PRICE AND ALLOCATION.
The total purchase price (the "Purchase Price") for the
Acquired Assets shall be (i) the assumption of the Assumed Liabilities, plus
(ii) automatic cancellation of the Note, in the event the Closing occurs, plus
(iii) those certain payments to Pack set forth in Section 6.8.
Buyer and Sellers agree to the allocation of the Purchase
Price among the Acquired Assets and Assumed Liabilities to be set forth on an
allocation prepared by Buyer and submitted to Sellers within thirty (30) days
following the Closing. Buyer and Sellers agree that the foregoing allocation
shall be used, reported and implemented for all federal, state, local and other
tax purposes.
2.4 SALES AND USE TAXES.
Buyer and Sellers shall cooperate in preparing and filing use
and sales tax returns relating to, and Sellers shall pay all sales, use and
other similar taxes, if any, imposed on or in connection with the purchase, sale
or transfer of the Acquired Assets to, and the assumption of the Assumed
Liabilities by, Buyer pursuant to this Agreement or on the use thereof by Buyer
after the Closing Date. In accordance with and subject to the provisions of
Article 9, Sellers agree to indemnify and hold harmless Buyer from and against
any Losses related to the failure of Sellers to pay the sales and use taxes
imposed as a result of the Transactions.
ARTICLE 3
CLOSING
Upon the terms and subject to the conditions set forth in this
Agreement, the Closing of the Transactions shall take place at the offices of
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., on October 31, 1996, or, if later, five
business days after fulfillment of all conditions to the Closing set forth
herein or at such other location or time as Buyer and Sellers may agree, but in
no event later than the Termination Date.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS
TW and Pack jointly and severally represent, warrant and agree
as follows:
4.1 ORGANIZATION, POWER AND AUTHORITY.
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TW is a limited liability company duly organized, validly
existing and in good standing under the laws of California and is duly qualified
to do business as a foreign limited liability company in the jurisdictions in
which it conducts business, except where the failure so to qualify will not have
a material adverse effect on the Acquired Assets. Sellers have all necessary
power and authority to execute and deliver this Agreement and to perform their
respective obligations hereunder; Pack has the authority to execute this
Agreement and all other agreements and other instruments on behalf of TW. TW has
all requisite power and authority to own its properties and assets and to carry
on its business as now conducted. Schedule 4.1 lists the name and address of
each member of TW, and the number and percentage of membership interests owned
by each member. TW owns no subsidiaries or equity interests in any other entity.
4.2 AUTHORIZATION OF AGREEMENTS.
As of the Closing, the execution, delivery and performance by
Sellers of this Agreement, and the consummation of the Transactions, will have
been duly authorized by all necessary action by Sellers. This Agreement has been
duly executed and delivered by Sellers and constitutes the legal, valid and
binding obligation of Sellers, enforceable against Sellers in accordance with
its terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium, and other similar laws and equitable principles relating to or
limiting creditors' rights generally.
4.3 EFFECT OF AGREEMENT
The execution, delivery and performance by Sellers of this
Agreement, and the consummation of the Transactions, will not violate the
organizational documents of TW or any law to which Sellers are subject, or any
judgment, award or decree or any indenture, agreement or other instrument to
which Sellers are subject, or by which Sellers or the Acquired Assets are bound,
or conflict with, result in a breach of or constitute (with due notice or lapse
of time or both) a default under, any such indenture, agreement or other
instrument, or result in the creation or imposition of any Encumbrance of any
nature whatsoever upon any of the Acquired Assets. Except as identified in
Schedule 4.3, the execution, delivery and performance of this Agreement, and the
consummation of the Transactions, by Sellers will not require filing or
registration with, or the issuance of any Permit or granting of any Approval by,
any other third party or Governmental Entity under the terms of any applicable
Law or Contract.
4.4 FINANCIAL STATEMENTS.
(a) Financial Statements and Balance Sheet Accounts. TW has
delivered to Buyer a balance sheet for TW at August 31, 1996 and the related
statement of operations as attached as Exhibit B hereto. Such financial
statements have been certified by Pack. All such financial statements and any
additional financial statements of TW delivered to Buyer prior to Closing are
hereafter called the "Financial Statements." The statements of operations
present fairly in all material respects the results of operations of TW for the
periods covered, and the balance sheets present fairly in all material respects
the financial condition of TW as of their respective dates. All such Financial
Statements reflect all adjustments (which consist only of
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normal recurring adjustments not material in amount and include but are not
limited to estimated provisions for year-end adjustments) necessary for such a
fair presentation. At the dates of such balance sheets of TW had no material
liability (actual, contingent or accrued) that, in accordance with GAAP applied
on a consistent basis, should have been shown or reflected therein but were not.
(b) Accounting Records. The accounting books, records and
documents of TW to which Buyer and its authorized representatives have had
access, accurately and validly reflect the business and disposition of assets of
TW in reasonable detail. TW has accounting controls sufficient to insure that
its business and transactions are executed in accordance with management's
general or specific authorization.
4.5 RECEIVABLES.
Schedule 4.5 lists the TW Accounts Receivable, including (a)
the names of the account debtor and payee, (b) balance as of August 31, 1996 and
(c) scheduled due date thereof. Each TW Account Receivable is owned by TW free
and clear of all Encumbrances other than the Affinity Encumbrance and complies
with all requirements of Law applicable thereto and constitutes the legal, valid
and binding payment obligation of the account debtor, enforceable by TW in
accordance with its terms subject to no penalty or disability. The ▇▇▇▇ of Sale,
when executed and delivered pursuant hereto, will vest in Buyer all the right,
title and interest in and to the TW Accounts Receivable and the unpaid
indebtedness evidenced thereby and will be valid and enforceable against all
creditors of and purchasers from Sellers. Sellers agree to defend the right,
title and interest of Buyer in and to the TW Accounts Receivable against all
claims of third parties except those claiming by or through Buyer. Each TW
Account Receivable arose in the ordinary course of business and, other than
adjustments related to ▇▇▇▇▇▇▇ ratings, is not subject to any dispute, offset,
counterclaim or other defense, whether arising out of the transactions
represented by the TW Accounts Receivable or independently thereof and is
unconditionally owed by the account debtor thereof without any conditions to
payment except for the passage of time.
4.6 PERMITS; CONDUCT OF BUSINESS.
Except for business Permits from local Governmental Entities,
Sellers are not required to obtain or have obtained any Permits in connection
with the operation by Sellers of the Business as presently conducted. Except as
set forth in Schedule 4.6, since August 31, 1996, Sellers have conducted the
Business only in the ordinary and usual course, have not entered into any
transactions that are material to the Acquired Assets, incurred any indebtedness
in connection with the Business (other than pursuant to the Security Agreement),
or done or permitted to be done any other acts or things that would cause
Sellers to be in violation of this Agreement.
4.7 MATERIAL CONTRACTS.
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Schedule 4.7 lists each Material Contract, which shall be
deemed to be any Contract to which either TW or Pack is a party that relates to
an Acquired Asset or by which an Acquired Asset is bound that is a License or to
which TW is a party and which was not made in the ordinary course of business.
Except as set forth on Schedule 4.7, each Material Contract is valid and
subsisting; Sellers have duly performed all their obligations thereunder to the
extent that such obligations to perform have accrued; and no breach or default,
alleged breach or default, or event which would (with the passage of time,
notice or both) constitute a breach or default thereunder by Sellers or, to the
best knowledge of Sellers, any other party or obligor with respect thereto, has
occurred or as a result of the Transactions will occur. True copies of the
written Material Contracts listed on Schedule 4.7, including all amendments and
supplements thereto, have been delivered to Buyer, together with full, complete
and accurate descriptions of all oral Material Contracts.
4.8 CONDITION AND USE OF PROPERTY.
TW has good and marketable title to or the right to use, free
of Encumbrances, all of the Acquired Assets, except for (a) Permitted
Encumbrances, (b) the Affinity Encumbrance and (c) with respect to the Library
Rights, the Licenses set forth in Schedule 4.7 and the matters set forth on
Schedules 4.10(a) and 4.11(a).
4.9 LEGAL PROCEEDINGS.
Except as set forth in Schedule 4.9, there is no Order or
Action pending, or, to the best knowledge of Sellers, threatened, against or
affecting the Acquired Assets, nor to the best knowledge of Sellers is there any
reasonable basis therefor.
4.10 LIBRARY RIGHTS
(a) Schedules 2.1.1 and 2.1.2 set forth a list of all Library
Pictures and Works in Progress, respectively. Except as set forth in
Schedule 4.10(a), TW owns, is licensed or otherwise possesses the
exclusive right, title and interest in the Library Pictures to permit
the exploitation thereof in all forms of media now existing or
hereafter created throughout the universe in perpetuity. Except as set
forth in Schedule 4.10(a), TW owns the sole copyright in the Library
Pictures and the Works in Progress. TW possesses the right afforded to
a sole copyright owner by Applicable Copyright Law to maintain a cause
of action under such Law to prevent, or to recover damages arising
from, the use, reproduction, adaptation, publication or display by
third parties not authorized by TW of the Library Pictures and the
Works in Progress. Except as set forth on Schedule 4.10(a), the Library
may be exploited for the full term of the applicable copyright and
renewals and extensions thereof without the consent of any third party,
including without limitation any employee, agent, independent
contractor, employee for hire, consultant, previous rights holder,
underlying rights holder, or successor, heir or descendent thereof.
(b) (i) Except for Permitted Encumbrances and the Affinity
Encumbrance, there are no Encumbrances or Actions, whether
pending or, to the
11
best knowledge of Sellers, threatened, involving or against
any of the Library Rights, and Buyer shall be able to exploit
the Library Rights to the full extent provided by applicable
Law.
(ii) Except as set forth on Schedule 4.10(b), neither
the Library Rights, nor any element thereof, nor the
exploitation thereof by TW, libels, defames, violates the
rights of privacy or publicity, or violates or infringes any
copyright, patent, trademark or service ▇▇▇▇, common law or
other similar right, including, without limitation, any
literary, dramatic, comedic, musical, distribution, exhibition
or photoplay right, of any Person or violates any other
applicable Law. Except as set forth in Schedule 4.10(b),
Sellers have not received any notice of any claim thereof.
(iii) All material contained in the Library Rights is
either (A) wholly original with writer(s) duly employed for
hire by TW and not copied, in whole or in part, from any other
work, (B) duly licensed to, or otherwise acquired by, TW, (C)
in the pubic domain throughout the world, (D) permitted to be
exploited by TW pursuant to the provisions of 17 U.S.C. ss.
107, as judicially interpreted for all current uses to the
full extent of the Library Rights or (E) a combination of any
of the foregoing.
(iv) All the Library Music Rights are (A) controlled
by American Society of Composers, Authors and Publishers
("ASCAP"), Broadcast Music Inc. ("BMI"), SESAC or other
applicable music performing rights organization, (B) in the
public domain throughout the world or (C) duly licensed or
otherwise owned by TW with sufficient rights to permit their
public performance in connection with, the exploitation of the
Library Pictures and Works in Progress.
(v) The credits that are contained in the Library
Pictures and Works in Progress are complete and accurate in
all material respects and do not omit any party or entity
entitled to any credit for providing services in connection
therewith, and no credit provided in the Library Pictures and
Works in Progress is inaccurate, improper or insufficient in
any material respect under any applicable Law or Contract.
(vi) A valid copyright notice which conforms to the
requirements of Applicable Copyright Law relating to the
elements, placement and other requirements of such notice
appears on each Library Picture.
(vii) TW has conformed to the requirements of Section
507 of the Federal Communications Act concerning broadcast
matter and disclosures required thereunder in all material
respects, insofar as said Section 507 applies to Persons
furnishing program material for television broadcasting, and
the portion of the Library Pictures which consist of
television programs do not include any matter for which any
money, service or other valuable consideration is or was
directly or
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indirectly paid or promised to Sellers by any third party, or
accepted from or charged to any third party by Sellers. As
used herein, the term "service or other valuable
consideration" shall not include any service or property
furnished without charge or at a nominal charge for use in, or
in connection with, the Library Pictures unless such service
or property is furnished in consideration for an
identification in a broadcast of any Person, product, service,
trademark or brand name beyond an identification which is
reasonably related to the use of such service or property
within the Library Pictures.
4.11 THIRD PARTY RIGHTS.
(a) Schedule 4.11(a) sets forth a list of all Participants
payable with respect to the exploitation of the Library Rights setting
forth the name and address of the Person to whom each such
Participation is payable and the terms, method and manner of computing
the amount and payment of each such Participation. Accurate and
complete contracts pursuant to which any Participation described on
such Schedule are payable have been made available to Buyer. No
Participation set forth on such Schedule is subject to acceleration in
any manner whatsoever as a result or by reason of the consummation of
the Transactions. Sellers have paid all Participations that are due and
payable or have accrued for all Participations that should be accrued
in accordance with GAAP consistently applied.
(b) Schedule 4.11(b) sets forth a true, accurate and complete
list of each guild, union or labor organization on behalf of which a
Guild Encumbrance is applicable to the exploitation of any of the
Acquired Assets included in the Library. Sellers have complied in all
material respects with all requirements under any applicable collective
bargaining agreements and have paid all amounts that are due and
payable (and have accrued all amounts that should be accrued in
accordance with GAAP consistently applied) under all applicable
collective bargaining agreements with any union or guild or any other
Contract by reason of any past or current television re-runs or
theatrical, home video, television or other exhibitions or exploitation
of any of the assets included in the Library (or from the exploitation
of any derivative works based thereon) or any so-called "separation of
rights" or similar provisions in any of the foregoing agreements.
4.12 LIBRARY TANGIBLE ASSETS
An original negative and soundtrack, or videotape master (or,
with respect to Works in Progress, film materials created as of the date hereof)
of each of the Library Film Properties has been properly stored. Each negative
and soundtrack within the Library Film Properties is free of cracks, tears,
scratches or abrasions, and all splices in each such negative are sound and
secure and transparent when viewed by transmitted light. An original negative
and soundtrack of each of the Library Pictures may be used for the purpose of
making a first class, fine grain print and a first class, fine grain production
master. Each videotape master within the Library Film Properties is free of
physical damage including, but not limited to, flaking, tearing, oxide loss and
shedding, and may be used for the purpose of creating a first class videotape
13
duplicate. All duplicate masters of any such original or elements thereof that
currently exist and that are owned or controlled by Sellers are included in the
Library Tangible Assets. The Library Film Properties are stored and maintained
directly by Sellers or on their behalf by authorized distributors or licensees
in film storage facilities or in film laboratories in accordance with recognized
industry standards for the use and preservation of such materials. Sellers have
customary access sufficient to exploit the Library Film Properties, including
the right to remove such materials. The Library Tangible Assets contain
sufficient Library Film Properties to satisfy the deposit requirements under
Applicable Copyright Law in order to effectuate, on a timely basis, applicable
copyright registration and renewal filings for each Library Picture and Library
Underlying Literary Property. Except for Permitted Encumbrances, there are no
Encumbrances or Actions, whether pending or, to the best knowledge of Sellers,
threatened, against any of the Library Film Properties.
4.13 MARKS AND REGISTRATIONS.
(a) The Marks include all brand names, service marks,
trademarks, tradenames, logos and other words or symbols used to
identify the source of goods or services that are or have been used in
connection with the Library. Each ▇▇▇▇ owned by TW and included in the
Acquired Assets or licensed to TW and used in connection with the
exploitation of the Acquired Assets is listed in Schedule 4.13(a)
attached hereto. TW (x) has the sole and exclusive right to use the
Marks listed in Schedule 4.13(a) for the goods and services and in the
jurisdictions indicated, and (y) has applied for or registered the
Marks owned by TW in the jurisdictions and classes shown and such
registrations with respect to such classes and such applications are
valid and pending.
(i) Except for Permitted Encumbrances, there are no
Encumbrances or Actions, whether pending or, to the best
knowledge of Sellers, threatened, involving or against any of
the Marks.
(ii) Except as set forth in Schedule 4.13 (a),
neither the Marks nor any element thereof as they currently
exist, nor the current exploitation thereof (except to the
extent elements unrelated to the Library are used in such
exploitation) by Sellers, libels, defames, violates the rights
of privacy or publicity, or violates any trademark or service
▇▇▇▇, common law or other similar right of any Person or
violates any other applicable Law. Sellers have not received
any claim thereof.
(iii) Except as set forth on Schedule 4.13(a), there
are no third party claims pending against the Marks and, to
the best knowledge of Sellers, there are no brand names,
service marks, trademarks, tradenames, logos or other words or
symbols used to identify the source of goods or services that
conflict with or infringe on the Marks or potential
infringements against the Marks.
(b) The Library Pictures and Works in Progress, and the
elements thereof, the Library Literary Properties and the Library Music
Rights are protected under valid and existing United States copyrights
and none of the Library Pictures, Works in Progress,
14
Library Literary Properties or Library Music Rights is in the public
domain in the United States or any country party to the Universal
Copyright Convention or the Berne Convention. Schedule 4.13(b) sets
forth a list of all items included in the Library that have been
registered for copyright or to which a registration has been applied
for in the name of TW and all of which are validly subsisting in the
United States and all other countries in which they are registered and,
to the best knowledge of Sellers, no third parties have a conflicting
copyright with respect thereto outside the United States. All such
registrations and applications, including the schedule expiration dates
thereof and details concerning any pending renewals or extensions, are
listed in Schedule 4.13(b).
4.14 LICENSES
(a) Schedule 4.7 sets forth a complete list of all Contracts
concerning the licensing, distribution, exhibition or any other
exploitation by TW or any assignee of TW of any of the Library Pictures
or Works in Progress (a "License"), currently in effect (except for
sublicenses entered into pursuant to, in accordance with or under any
of the Licenses), including without limitation: (i) all Licensees
authorizing exhibition of the Library Pictures or Works in Progress by
all means now known or hereafter devised; (ii) all Licenses authorizing
exploitation of the Library Rights, Marks or Copyrights in
merchandising, commercial tie-ins, co-promotions, theme parks or
endorsement; (iii) all Licenses authorizing exploitation of the Library
Rights, Marks or Copyrights in merchandising for remakes, prequels and
sequels or other derivative works not otherwise referred to in (ii)
above; and (iv) all options relating to (i)-(iii) above.
(b) Sellers have (i) delivered or (ii) made available, or upon
request by Buyer, will promptly deliver or make available to Buyer a
true and correct copy of each License, in each case as in effect and
together with all amendments or modifications thereof. Each License is
in full force and effect and is valid, binding and enforceable in
accordance with its terms by Sellers and, to the best knowledge of
Sellers, by any other party thereto. Neither Sellers nor to the best
knowledge of Sellers, any other party thereto is in material breach or
default thereunder, and no event has occurred on the part of any party
to any License which with notice or lapse of time or both would
constitute a material breach or default thereunder or permit
termination or acceleration thereunder. Neither Sellers, nor, to the
best knowledge of Sellers, has any other party to a License, threatened
to, or taken, any action that would cause or result in a material
default, a material breach or an anticipatory material breach by such
party thereunder nor has any such party alleged any such default or
breach.
(c) All Licenses that have been entered into by TW were
entered into on an arms length basis.
4.15 INSURANCE.
Schedule 4.15 lists all insurance policies and bonds that are
currently in effect and apply to the Acquired Assets. All insurance policies and
bonds are in full force and effect and
15
insure Sellers against all risks normally insured against by companies engaged
in similar businesses. Sellers are not in default under any such policy or bond
and have received no notice of cancellation of any such policy or bond.
4.16 COMPLIANCE WITH LAW.
Sellers have conducted the Business in accordance with all
applicable Laws in all material respects.
4.17 CERTAIN INTERESTS.
Except as set forth on Schedule 4.17, no Affiliate of TW nor
any officer, director, member or manager thereof, nor Associate of any such
individual, has any material interest in any of the Acquired Assets or the
Assumed Liabilities.
4.18 NO BROKERS OR FINDERS.
No agent, broker, finder, or investment or commercial banker,
or other Person or firm in connection with the negotiation, execution or
performance of this Agreement or the consummation of the Transactions, is or
will be entitled to any broker's or finder's or similar fees or other commission
as a result of this Agreement or the Transactions.
4.19 TAX AND OTHER RETURNS OR REPORTS.
All federal, state, local and foreign tax returns, reports,
statements and other similar filings required to be filed by Sellers (the "Tax
Returns") with respect to any Tax have been filed with the appropriate
governmental agencies in all jurisdictions in which such Tax Returns are
required to be filed, and all such Tax Returns properly reflect the liabilities
of Sellers for Taxes for the periods, property or events covered thereby. All
Taxes, including those without limitation which are called for by the Tax
Returns, or heretofore or hereafter claimed to be due by any taxing authority
from Sellers, have been properly accrued or paid. Sellers have not received any
notice of assessment or proposed assessment in connection with any Tax Returns,
and there are not pending tax examinations of or tax claims asserted against
Sellers or any of their assets or properties. Sellers have not extended, or
waived the application of, any statute of limitations of any Taxes. There are no
tax liens (other than any lien for current Taxes not yet due and payable) on any
of the assets or properties of Sellers. Sellers have no knowledge of any basis
for any additional assessment of any Taxes. Sellers have made all deposits
required by law to be made with respect to employees' withholding and other
employment taxes, including without limitation the portion of such deposits
relating to Taxes imposed upon Sellers. Pack shall prepare and file at his sole
expense all final tax returns of TW.
4.20 EMPLOYMENT CONTRACTS; EMPLOYEE BENEFIT PLANS
(a) Except as set forth on Schedule 4.20(a), Sellers are not a
party to any written or oral agreement, contract or commitment with any present
or former employee or consultant for
16
the employment of any person, including any consultant who is engaged in the
conduct of the Business.
(b) Except as set forth on Schedule 4.20(b), there are no
Employee Benefit Plans sponsored or maintained by the Sellers.
4.21 ACCURACY OF INFORMATION.
All information furnished by or on behalf of Sellers to Buyer,
its agents or representatives in connection with Sellers, the Acquired Assets,
the Assumed Liabilities, this Agreement and the Transactions is true and
complete in all material respects and does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make any statement
therein not misleading. None of the information supplied or to be supplied in
writing by or on behalf of Sellers to any Person for inclusion, or included, in
any document or application filed with any Governmental Entity having
jurisdiction over or in connection with the Transactions or this Agreement, did
contain, or at the respective times such information is delivered or becomes
effective, will contain any untrue statement of a material fact, or omitted or
will omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. If any of such information at any time
subsequent to its delivery and prior to Closing becomes untrue or misleading in
any material respect, Sellers will promptly notify Buyer in writing of such fact
and of the reasons for such change. All documents required to be filed by
Sellers with any Governmental Entity in connection with this Agreement or the
Transactions will comply in all material respects with the provisions of
applicable Law.
Any certificate delivered to Buyer by Sellers shall constitute
a representation and warranty by Sellers that the statements therein are
accurate in all material respects as of the date of such delivery.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents, warrants and agrees as follows:
5.1 ORGANIZATION AND RELATED MATTERS.
Buyer is a corporation duly incorporated, validly existing and
in good standing under the laws of Delaware. Buyer has the corporate power and
authority to execute, deliver and perform this Agreement.
5.2 AUTHORIZATION.
As of the Closing, the execution, delivery and performance of
this Agreement by Buyer shall have been duly and validly authorized by the Board
of Directors of Buyer and by all
17
other necessary corporate action on the part of Buyer. This Agreement
constitutes the legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws and equitable principles relating to or limiting creditors' rights
generally.
5.3 NO CONFLICTS.
The execution, delivery and performance of this Agreement by
Buyer will not violate the provisions of, or constitute a breach or default
whether upon lapse of time and/or the occurrence of any act or event or
otherwise under (a) the charter documents or bylaws of Buyer, (b) any Law to
which Buyer is subject or (c) any Contract to which Buyer is a party that is
material to the financial condition, results of operations or conduct of the
business of Buyer, provided that the appropriate regulatory approvals are
received as contemplated by Section 7.1.
5.4 NO BROKERS OR FINDERS.
No agent, broker, finder or investment or commercial banker,
or other Person or firms engaged by or acting on behalf of Buyer in connection
with the negotiation, execution or performance of this Agreement or the
Transactions, is or will be entitled to any broker's or finder's or similar fees
or other commissions as a result of this Agreement or the Transactions.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 ACCESS.
Sellers will authorize and permit Buyer and its
representatives (which shall include its independent accountants and counsel) to
have reasonable access during normal business hours, upon reasonable notice, to
all of TW's properties, books, records, operating instructions and procedures,
and all other information, to the extent they relate to the Acquired Assets as
Buyer may from time to time request, and to make copies of such books, records
and other documents and to discuss its Business with such other Persons,
including, without limitation, Sellers' directors, officers, employees,
accountants, counsel, suppliers, customers, and creditors, as Buyer considers
necessary or appropriate for the purposes of familiarizing itself with the
Acquired Assets or the Assumed Liabilities, obtaining any necessary Approvals of
or Permits for the Transactions and conducting an evaluation of the organization
and business of Sellers as it relates to the Acquired Assets and Assumed
Liabilities.
6.2 CONDUCT OF BUSINESS; FINANCIAL STATEMENTS.
(a) From the date hereof through the earlier of the Closing
Date and the date on which this Agreement is terminated in accordance
wtih Article 8, Sellers will not, without the prior consent in writing
of Buyer:
18
(i) terminate, or renegotiate any Material Contract
or default (or take or omit to take any action that with or
without the giving of notice or passage of time or both, would
constitute a default) in any of its obligations under any
Material Contract or enter into any new Material Contract; or
(ii) incur or agree to incur in connection with its
Business an obligation or liability (absolute or outright)
except pursuant to the Security Agreement; or
(iii) terminate or fail to renew any existing
insurance coverage in connection with the Business or present
any notice or claim under such policies in a timely fashion;
or
(iv) make or cause to be made any loans, advances or
payments to Sellers or their Affiliates or Associates; or
(v) do or permit to be done any other acts or things
that would cause them to be in violation of this Agreement.
(b) Sellers will furnish to Buyer monthly unaudited balance
sheets and statements of operations of TW and such other reports as
Buyer may reasonably request relating to Sellers or the Acquired Assets
or Assumed Liabilities. Each of the financial statements delivered
pursuant to this Section 6.2(b) shall be accompanied by a certificate
of Pack to the effect that such financial statements present fairly in
all material respects the financial condition and results of operations
of TW for the periods covered and reflect all adjustments (which
consist only of normal recurring adjustments not material in amount)
necessary for such a fair presentation.
6.3 PERMITS AND APPROVALS; THIRD PARTY CONSENTS.
(a) Sellers and Buyer each agree to cooperate and use their
best efforts to obtain from governmental bodies and other regulatory
authorities all Approvals and Permits that may be necessary or that may
be reasonably requested by Buyer to consummate the transactions
contemplated by this Agreement. Sellers and Buyer shall furnish each
other such necessary information and reasonable assistance as the other
may request in connection with its preparation of necessary filings or
submissions under the provisions of such laws.
(b) To the extent that the Approval of a third party with
respect to any Material Contract is required in connection with the
transactions contemplated by this Agreement, Sellers shall obtain such
approval prior to the Closing Date and in the event that any such
approval is not obtained prior to the Closing Date notwithstanding
Sellers' best efforts (but without limitation on Buyer's rights under
Section 7.2), Sellers shall cooperate with Buyer to ensure that Buyer
obtains the benefits of each such Material Contract and shall indemnify
and hold harmless Buyer for and against any and all Losses as a result,
directly or indirectly, of the failure to obtain any such Approval,
except with
19
respect to Material Contracts relating to "The Night They Saved
Christmas." In addition, Sellers shall obtain from each TW Accounts
Receivable account debtor an acknowledgment confirming the information
about such account set forth on Schedule 4.5 and an agreement to pay
all such amounts to Buyer.
6.4 NO SOLICITATIONS.
During the period from the date of this Agreement until the
Closing Date, Sellers agree that, except as required by law or court order,
neither of them will, and that they will cause the officers, directors, members
and managers of TW not to, initiate or solicit any proposal for, or provide any
non-public information to or hold negotiations or discussions with any other
person or entity regarding, any transaction regarding the sale of the Acquired
Assets or any transaction, including, but not limited to, a sale of the
membership interests or merger of TW, having a similar effect. Sellers will
immediately cease and cause to be terminated any such negotiations or
discussions currently in progress.
6.5 CONFIDENTIALITY; PUBLICITY.
Each of the parties hereto, and their respective counsel,
accountants and other parties assisting in the Transactions, agrees to keep the
terms contained in this Agreement, and all other related agreements and
documents contemplated hereby, and the Transactions and all information provided
by the other party in connection herewith and therewith, confidential and shall
not disclose the same to any other party except to the extent that such
information (i) was known by the recipient when received, (ii) it is or
hereafter becomes lawfully obtainable from other sources, (iii) is necessary or
appropriate to disclose to a Governmental Entity having jurisdiction over the
parties, (iv) as may otherwise be required by Law or (v) to the extent such duty
as to confidentiality is waived in writing by the other party. The parties
hereto shall endeavor to coordinate all publicity on or prior to the Closing
Date relating to this Agreement or the Transactions. No party shall issue any
press release, publicity statement or other public notice relating to this
Agreement or the Transactions without the prior consent of the other parties,
unless such party has been advised by its securities counsel that such press
release, publicity statement or other public notice is advisable under
applicable securities laws. In such case, the issuing party shall give an
advance copy of the release to the other parties if practicable. The parties
shall also consult with one another as to the content of any communication to
any Governmental Entity relating to this Agreement or the Transactions.
6.6 PERFORMANCE BY AFFILIATES.
Pack agrees to cause TW to comply with any obligations
hereunder relating to such entity and to cause such entity to take any other
action which may be necessary or reasonably requested by Buyer in order to
consummate the Transactions.
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6.7 REPRESENTATIONS AND WARRANTIES.
Sellers shall do nothing to cause their representations and
warranties made in this Agreement to become untrue as of the Closing Date.
6.8 PAYMENTS TO PACK.
(a) Subject to the Closing, Buyer shall provide, agree or
otherwise arrange for the following to Pack:
(i) An executive producer's fee for Bounty Hunters
(without screen credit) of $5,000 per episode, up to 26 episodes for the first
broadcast season (96/97), payable every two weeks based upon delivered episodes;
it being anticipated by the parties that approximately 24 to 26 episodes will be
delivered by the end of February, 1997. If Bounty Hunters is renewed for a
second season, the above terms shall apply; however the producer's fee shall be
$7,500 per episode. Buyer shall use its commercially reasonable efforts to
ensure that all episodes of Bounty Hunters are produced on schedule and in a
timely manner.
(ii) $150,000 cash payment at the Closing (subject to
reduction in the event that Buyer, in its sole discretion, prepays any portion
of such fee prior to Closing, which prepayment will be documented and approved
by TW).
(iii) A certificate for 50,000 shares of the common
stock of Buyer bearing a legend regarding restrictions under the Securities Act;
provided, however, that Buyer will agree to register all of such shares for
resale as soon as practicable following the Closing on a Form S-3 Registration
Statement or other comparable form; and provided further, that Pack shall be
limited to the sale of not more than 10,000 of such shares during any one month
period.
(b) Pack acknowledges that an aggregate of $60,000 with
respect to Sections 6.8(a)(i) and (ii) has been prepaid to Pack by Buyer,
allocated first to the fees set forth in Section 6.8(a)(i) for delivered
episodes.
6.9 NAME. On the Closing Date, Sellers shall deliver to Buyer
all such executed documents as may be required to change TW's name on that date
to another name bearing no similarity to Tradewinds Television, including but
not limited to a name change amendment of articles of organization with the
Secretary of State of California and an appropriate name change notice for each
state where TW is qualified to do business. Sellers hereby appoint Buyer as
their attorney-in-fact to file all such documents on or after the Closing Date.
6.10 INSURANCE. Sellers shall be named as additional insureds
on Buyer's errors and omissions policy with respect to the Acquired Assets for a
three year period following the Closing.
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ARTICLE 7
CONDITIONS OF PURCHASE
7.1 GENERAL CONDITIONS.
The obligations of the parties to effect the Closing shall be
subject to the following conditions unless waived in writing by all parties:
(a) No Orders; Legal Proceedings. No Law or Order shall have
been enacted, entered, issued, promulgated or enforced by any
Governmental Entity, nor shall any Action have been instituted and
remain pending or, to the best knowledge of Sellers, have been
threatened and remain so at what would otherwise be the Closing Date,
that prohibits or restricts or would (if successful) prohibit or
restrict the Transactions.
(b) Approvals. To the extent required by applicable Law, all
Permits and Approvals required to be obtained from any Governmental
Entity, shall have been received or obtained on or prior to the Closing
Date without the imposition of any burdens or conditions materially
adverse to the party or parties entitled to the benefit thereof.
(c) Indemnification. The parties shall have agreed as to any
of their indemnification obligations with respect to those certain
current trademark claims relating to "Bounty Hunters" set forth as item
4 in Schedule 4.9.
7.2 CONDITIONS TO OBLIGATIONS OF BUYER.
The obligations of Buyer to effect the Closing shall be
subject to the following conditions except to the extent waived in writing by
Buyer:
(a) Representations and Warranties and Covenants of Sellers.
The representations and warranties of Sellers herein contained shall be
true in all material respects at the Closing Date with the same effect
as though made at such time; Sellers shall have in all material
respects performed all obligations and complied with all covenants and
conditions required by this Agreement to be performed or complied with
by them at or prior to the Closing Date; and Sellers shall have
delivered to Buyer a certificate, in form and substance satisfactory to
Buyer, dated the Closing Date and signed by the principal executive
officer of TW and by Pack to such effect.
(b) Transfer Documents. Sellers shall have executed and
delivered the ▇▇▇▇ of Sale, and any trademark assignment, copyright
assignment, and other transfer documents reasonably requested by Buyer.
22
(c) Information on Conduct of Business. Buyer shall have
received supplements to the Schedules to the Agreement reflecting
changes from the date hereof to the Closing Date and solely to the
extent permitted in accordance with Section 6.2. Such supplements shall
be subject to Buyer's review and approval prior to Closing.
(d) Observance of Provisions; No Disbursement. TW shall have
observed all the provisions of the Note and Security Agreement, and
shall not have, in any way, compromised Buyer's position thereunder. TW
shall not have disbursed any funds without the prior approval of Buyer;
(e) No Liens. There shall have been no liens or other security
interests or pledges recorded against the assets or property rights of
TW, other than the Affinity Encumbrance, and all contractual rights of
TW, including those serving as collateral for the Note shall be valid
and enforceable in all material respects, and no third party claims
that would interfere with TW's rights under such contracts shall have
been made;
(f) Weekly Statement. TW shall have provided to Buyer weekly
in advance a statement of its cash requirements for the following week
period, for approval by Buyer in its sole discretion;
(g) AMG Release. Buyer shall have obtained a release or
releases with regard to the indebtedness owed by TW to AMG, on such
terms and conditions and in exchange for such payment and other
consideration as Buyer shall determine in its sole discretion,
including such approvals or orders from the court having jurisdiction
over AMG.
(h) Employment Agreements. TW and/or Buyer shall have entered
into mutually satisfactory employment agreements with key personnel of
TW, as determined by Buyer in its sole discretion.
(i) Due Diligence. Buyer shall have performed its "due
diligence" review to confirm the data provided and the statements made
to Buyer concerning TW, with results satisfactory to Buyer.
(j) Registration Rights Agreement. Pack shall have executed
and delivered the Registration Rights Agreement.
(k) Investment Letter. Pack shall have executed and delivered
the Investment Letter.
(l) Board Approval. The Board of Directors of Buyer shall have
approved this Agreement.
23
7.3 CONDITIONS TO OBLIGATIONS OF SELLERS.
The obligations of Sellers to effect the Closing shall be
subject to the following conditions, except to the extent waived in writing by
the affected party(ies):
(a) Representations and Warranties and Covenants of Buyer. The
representations and warranties of Buyer herein contained shall be true
in all material respects at the Closing Date with the same effect as
though made at such time; Buyer shall have in all material respects
performed all obligations and complied with all covenants and
conditions required by this Agreement to be performed or complied with
by it at or prior to the Closing Date; and Buyer shall have delivered
to Sellers a certificate of Buyer, in form and substance satisfactory
to Sellers, dated the Closing Date and signed by an officer of Buyer.
(b) Purchase Price. The Purchase Price shall have been
delivered as required by Section 2.3.
(c) Note Cancellation. The Note shall have been cancelled in
the event of the Closing.
(d) Registration Rights Agreement. Buyer shall have executed
and delivered the Registration Rights Agreement.
(e) Certificate. A certificate for 50,000 shares of common
stock of Buyer issued in the name of Pack and bearing a restrictive
legend under the Securities Act shall have been delivered to Pack.
(f) Assumption Agreement. Buyer shall have executed and
delivered an instrument of assumption relating to the Assumed
Liabilities in a form to be agreed to by the parties.
ARTICLE 8
TERMINATION OF OBLIGATIONS; SURVIVAL
8.1 TERMINATION OF AGREEMENT.
Anything herein to the contrary notwithstanding, this
Agreement and the Transactions may be terminated at any time before the Closing
as follows and in no other manner:
(a) Mutual Consent. By mutual consent in writing of Buyer and
Sellers.
24
(b) Conditions to Buyer's Performance Not Met. By Buyer upon
written notice to Sellers if any event occurs which would render
impossible the satisfaction of one or more conditions to the
obligations of Buyer to consummate the transactions contemplated by
this Agreement as set forth in Section 7.1 or 7.2.
(c) Conditions to Sellers' Performance Not Met. By Sellers
upon written notice to Buyer if any event occurs which would render
impossible the satisfaction of one or more conditions to the obligation
of Sellers to consummate the transactions contemplated by this
Agreement as set forth in Section 7.1 or 7.3.
(d) Material Breach. By Buyer or Sellers if there has been a
material misrepresentation or material breach on the part of the other
party in its representations, warranties or covenants set forth herein;
provided, however, that if such breach or misrepresentation is
susceptible to cure, Sellers or Buyer, as the case may be, shall have 5
days after receipt of notice from the other party of its intention to
terminate this Agreement pursuant to this Section 8.1(d) if such
misrepresentation or breach continues in which to cure such breach or
misrepresentation before the other party may so terminate this
Agreement.
(e) Expiration Date. By Buyer or Sellers if the Closing shall
not have been consummated before the Termination Date.
8.2. EFFECT OF TERMINATION.
In the event that this Agreement shall be terminated pursuant
to Section 8.1, all further obligations of the parties under this Agreement (but
not under the Security Agreement or Note) shall terminate without further
liability of any party to another; provided that the obligations of the parties
contained in Section 6.5 [Confidentiality], Section 8.3 [Expenses] and Section
10.6 [Governing Law] shall survive any such termination; provided further that a
termination under Section 8.1 shall not relieve any party of any liability for a
breach of, or for any misrepresentation under this Agreement, or be deemed to
constitute a waiver of any available remedy (including specific performance if
available) for any such breach or misrepresentation.
8.3 EXPENSES.
(a) If this Agreement or the Transactions are terminated or
abandoned because of:
(i) Any breach by Sellers of this Agreement;
(ii) Failure of Sellers to satisfy any of the
conditions to Closing (other than failure due to Buyer's
breach of its obligations hereunder or any matter beyond
Sellers' control) by the Termination Date;
25
Sellers shall promptly (and in any event within five days after such
event) pay Buyer, in immediately available funds, all Buyer's Expenses
(as defined below).
(b) Except as otherwise provided in Section 8.3(a), Sellers,
on the one hand, and Buyer, on the other hand, shall each pay their own
Expenses.
(c) If Sellers fail to pay the amounts due Buyer pursuant to
Section 8.3(a) when due, Sellers shall pay interest thereon from the
date due until the date paid at 8% and shall reimburse Buyer for all
reasonable attorneys' fees and other expenses incurred in collecting
any of such amounts.
ARTICLE 9
INDEMNIFICATION
9.1 INDEMNIFICATION.
(a) (i) Buyer, on the one hand, and Sellers, on the other
hand, agree to indemnify and hold the other party(ies), and its or
their respective directors, officers, agents, representatives,
employees, Affiliates, successors and permitted assigns, harmless, from
and against any and all Losses arising out of or resulting from a
breach of any representation, warranty or covenant made by the
Indemnifying Party or its Affiliates in this Agreement ("RW&C Losses").
(ii) Sellers agree to indemnify and hold Buyer and
its respective directors, officers, agents, representatives,
employees, Affiliates, successors and permitted assigns,
harmless, from and against (A) any and all Losses arising out
of any liabilities or obligations not assumed under Section
2.2(b) other than with respect to that certain lawsuit
entitled "Bountiful Entertainment, Inc. et al. v. Forever Blue
Entertainment Group, Inc., et al. (Case H-96-0196) in District
Court in Houston, Texas (the "Lawsuit"), and (B) any and all
Losses arising from any Order or Action pending or threatened
against the Acquired Assets as of the Closing Date, including
those set forth on Schedule 4.9 other than with respect to the
Lawsuit.
(iii) Either Buyer or Sellers may assign its rights
to indemnification hereunder to one or more Affiliates,
provided that (A) no such assignment shall increase the Losses
for which the Indemnifying Party is responsible beyond those
that would be payable to the Indemnified Party if there were
no such assignment, (B) one law firm shall represent the
Indemnified Party and all Affiliates in connection with any
claims asserted and (C) there shall not be a material increase
in administrative expenses of the Indemnifying Party as a
result of such assignment.
26
(b) Notwithstanding anything to the contrary contained in this
Agreement, no amounts of indemnity shall be payable by Sellers with respect to
any RW&C Loss unless the Losses suffered by Buyer and its Affiliates exceed
$25,000; provided that if the aggregate Losses exceed such amount, Buyer and its
Affiliates shall be entitled to recover all of their Losses including such
amount; and provided further that in no event shall Sellers be required to
indemnify Buyer and its Affiliates with respect to such Losses in an aggregate
amount of more than $1,000,000.
9.2 PROCEDURE.
(a) Notice. Losses for or against which any person is entitled
to indemnification pursuant to Sections 2.4, 6.3, 9.1 or 10.5 are
"Indemnifiable Claims". Any person seeking indemnification (an
"Indemnified Party") with respect to an Indemnifiable Claim shall give
notice (the "Indemnity Notice") providing in reasonable detail the
basis for and factual circumstances surrounding the Indemnifiable
Claim, to the person required to provide indemnification (the
"Indemnifying Party") within one year of becoming aware of any such
Indemnifiable Claim. The Indemnifying Party and the Indemnified Party
shall cooperate with one another and the Indemnifying Party shall have
reasonable access to all relevant books and records. Notwithstanding
the foregoing, the rights of any Indemnified Party to be indemnified in
respect of Indemnifiable Claims resulting from the assertion of
liability by third parties shall not be adversely affected by the
Indemnified Party's failure to give notice unless (and then only to the
extent that) the Indemnifying Party is prejudiced thereby. In case any
such liability is asserted against any Indemnified Party, the
Indemnifying Party may, at its option, promptly assume the defense
thereof with counsel reasonably satisfactory to the Indemnified Party.
So long as the Indemnifying Party is diligently prosecuting such
defense, the Indemnifying Party shall not be liable for any other legal
expenses of the Indemnified Party, other than reasonable costs of
investigation. Any Indemnified Party may participate in such defense at
its own expense. Notwithstanding the foregoing, in the case of any
claim or other assertion of liability by any Governmental Entity
relative to Taxes, the Indemnified Party and the Indemnifying Party
shall, at their own expense, jointly assume the defense of such claim.
A party may not compromise or settle a Tax claim affecting the
liability of the other party without the consent of the other party
either at such time or in the future, which consent shall not be
unreasonably withheld.
(b) Defense. If the Indemnifying Party fails reasonably
promptly to assume the defense of an Indemnified Party against such
Indemnifiable Claim, the Indemnified Party shall have the right to
undertake the defense of the Indemnifiable Claim at the expense of the
Indemnifying Party.
(c) Settlement. The Indemnifying Party shall not, without the
written consent of the Indemnified Party, settle or compromise any
Indemnifiable Claim or consent to entry of any judgment in respect
thereof unless such settlement, compromise or consent includes an
unconditional release by the claimant or the plaintiff of the
Indemnified Party from all liability in respect of such Indemnifiable
Claim.
27
(d) Set Off. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such
rights, if Sellers fail to make any payment required to be made by them
when due to Buyer under this Section 9, Buyer and each of its
Affiliates is hereby authorized by Pack, any time or from time to time
thereafter, to set off and to appropriate and to apply any and all
amounts owed at any time by Buyer or any of its Affiliates to or for
the credit or the account of Pack, including, without limitation, under
the agreements identified in Section 6.8, against and on account of
such obligations, irrespective of whether or not Buyer or such
Affiliate shall have made any demand hereunder.
ARTICLE 10
GENERAL
10.1 SURVIVAL.
The representations, warranties, covenants and agreements
contained in this Agreement shall survive the Closing Date and shall continue
until the third anniversary of the Closing Date; provided, however, that any
obligations of each of the parties with respect to the payment and accurate
reporting of Taxes shall survive until the expiration of the applicable statute
of limitations. Any representation, warranty, covenant or agreement that would
otherwise terminate in accordance with this Section 10.1 will continue to
survive if an Indemnity Notice meeting the standard therefor set forth in
Section 9.2 shall have been given in good faith based on facts reasonably
expected to establish a valid Indemnifiable Claim under Article 9 on or prior to
such termination date, until such claim for indemnification has been satisfied
or otherwise resolved and provided in Article 9.
10.2. AMENDMENTS; WAIVERS.
This Agreement and any schedule or exhibit attached hereto may
be amended only by agreement in writing of all parties. No waiver of any
provision nor consent to any exception to the terms of this Agreement or any
agreement contemplated hereby shall be effective unless in writing and signed by
the party to be bound and then only to the specific purpose, extent and instance
so provided.
10.3 SCHEDULES; EXHIBITS; INTEGRATION.
Each schedule and exhibit delivered pursuant to the terms of
this Agreement shall be in writing and shall constitute a part of this
Agreement, although schedules need not be attached to each copy of this
Agreement. This Agreement, together with such schedules and exhibits,
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior agreements and understandings of the
parties in connection therewith except that the Note and Security Agreement
shall continue in full force and effect.
28
10.4 BEST EFFORTS; FURTHER ASSURANCES.
(a) Commitment to Best Efforts. Each party will use its best
efforts to cause all conditions to its obligations hereunder to be
timely satisfied and to perform and fulfill all obligations on its part
to be performed and fulfilled under this Agreement, to the end that the
transactions contemplated by this Agreement shall be effected
substantially in accordance with its terms as soon as reasonably
practicable. The parties shall cooperate with each other in such
actions and in securing requisite Approvals. Each party shall execute
and deliver both before and after the Closing Date such further
certificates, agreements and other documents and take such other
actions as the other party may reasonably request to consummate or
implement the Transactions or to evidence such events or matters. After
the Closing Date, Sellers agree to provide Buyer any information
reasonably requested with respect to the calculation and payment of any
of the Assumed Liabilities and otherwise as required in connection with
Buyer's administration and exploitation of the Acquired Assets.
(b) Limitation. As used in this Agreement, the term "best
efforts" shall not mean efforts which require the performing party to
do any act that is unreasonable under the circumstances or to expend
any funds other than in payment of reasonable out-of-pocket expenses
incurred in satisfying obligations hereunder, including but not limited
to the fees, expenses and disbursements of its accountants, actuaries,
counsel and other professional advisers.
10.5 BULK SALE LAW.
In connection with the Transactions, Buyer waives compliance
with the provisions of the California and any other applicable state's Uniform
Commercial Code relating to bulk transfers, subject to the representations,
warranties and indemnities of Sellers contained in this Agreement. Nothing in
this paragraph shall estop or prevent Buyer from asserting the inapplicability
of the bulk sales provisions in any action or proceeding brought by a third
party. Sellers hereby indemnify Buyer against any liability or expense arising
from the failure to comply with such provisions.
10.6 GOVERNING LAW.
This Agreement and the legal relations between the parties
shall be governed by and construed in accordance with the laws of the State of
California applicable to contracts made and performed in such state and without
regard to conflicts of law doctrines except to the extent that certain matters
are preempted by federal law or are governed by the law of the jurisdiction of
organization or incorporation of the respective parties.
10.7 NO ASSIGNMENT.
Neither this Agreement (nor related agreements pursuant to
this Agreement) nor any rights or obligations under any of them are assignable
except that Buyer may assign its rights
29
(including but not limited to its rights under Article 9) to any Affiliate of
Buyer or to any entity which, by way of merger, consolidation or sale of
substantially all the assets of Buyer becomes a successor to Buyer, so long as
such successor assumes in writing Buyer's obligation under this Agreement, and,
after the Closing Date, to any party.
10.8 Headings.
The descriptive headings of the articles, sections and
subsections of this Agreement are for convenience only and do not constitute a
part of this Agreement.
10.9 Counterparts.
This Agreement and any amendment hereto or any other agreement
(or document) delivered pursuant hereto may be executed in one or more
counterparts and by different parties in separate counterparts. All of such
counterparts shall constitute one and the same agreement (or other document) and
shall become effective (unless otherwise therein provided) when one or more
counterparts have been signed by each party and delivered to the other party.
10.10 Parties in Interest.
This Agreement shall be binding upon and inure to the benefit
of each party, and nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement. Nothing in this Agreement is intended to
relieve or discharge the obligation of any third person to or to confer any
right of subrogation or action over against, any party to this Agreement.
10.11 Notices.
All notices and other communications required or permitted
hereunder shall be in writing and shall be delivered (a) in person, (b) by
registered or certified mail (air mail if addressed to an address outside of the
country in which mailed), postage prepaid, return receipt requested, or (c) by
facsimile or other generally accepted means of electronic transmission (provided
that a copy of any notice delivered pursuant to this clause (c) shall also be
sent pursuant to clause (b)), addressed as follows:
If to Buyer, to:
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Affinity Entertainment, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: 813/▇▇▇-▇▇▇▇
30
With copies to:
▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: 310/▇▇▇-▇▇▇▇
If to Sellers, to:
Royeric Pack
Tradewinds Television, LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No: 818/▇▇▇-▇▇▇▇
If to Pack, to:
Royeric Pack
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: 818/▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇.
▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
One Peachtree Center, Suite 5300
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No: 404/▇▇▇-▇▇▇▇
or to such other address as such party may have furnished to the other in
writing in accordance herewith. Notices delivered in person by cable, telegram
or facsimile transmission shall be deemed given when so delivered, and notices
given by mail shall be deemed given three days after mailing; provided that
notices of a change of address shall only be effective upon receipt.
10.12 Remedies; Waiver.
To the extent permitted by Law all rights and remedies
existing under this Agreement and any related agreements or documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available
under applicable Law. No failure on the part of any party to exercise or delay
in exercising any right hereunder shall be deemed a waiver thereof, nor shall
any single or partial exercise preclude any further or other exercise of such or
any other right.
31
10.13 Attorneys' Fees.
In the event of any Action, controversy, claim or dispute
between the parties hereto arising out of or relating to this Agreement or any
of the documents provided for herein, or the breach thereof, the prevailing
party shall be entitled to recover from the losing party reasonable attorneys'
fees, expenses and costs. For the purposes of this Section 10.13, the
"prevailing party" shall mean the party whose final settlement offer (or other
monetary position or claim) prior to the commencement of such court or
arbitration proceeding is closest to the judgment awarded by the court or
arbitrator, regardless of whether such judgment is entered into in favor of or
against such party.
10.14 Knowledge Convention.
Whenever any statement herein or in any schedule, exhibit,
certificate or other documents delivered to any party pursuant to this Agreement
is made "to the knowledge" or "to the best knowledge" or words of similar intent
or effect of any party or its representative, such person shall make such
statement only after conducting a diligent investigation of the subject matter
thereof, and each statement shall be deemed to include a representation that
such investigation has been conducted.
10.15 Representation By Counsel; Interpretation.
Sellers and Buyer each acknowledge that each party to this
Agreement has been represented by counsel in connection with this Agreement and
the Transactions. Accordingly, any rule of Law, including but not limited to
Section 1654 of the California Civil Code, or any legal decision that would
require interpretation of any claimed ambiguities in this Agreement against the
party that drafted it has no application and is expressly waived. The provisions
of this Agreement shall be interpreted in a reasonable manner to effect the
intent of Buyer and Sellers.
10.16 Specific Performance.
Sellers acknowledge that, in view of the uniqueness of the
Transactions, Buyer would not have an adequate remedy at law for money damages
in the event that this Agreement has not been performed by Sellers in accordance
with its terms or the Transactions not consummated as contemplated hereunder.
Sellers therefore agree that Buyer shall be entitled to specific enforcement of
the terms hereof in addition to any other remedy to which it may be entitled at
law or in equity.
10.17 Severability.
If any provision of this Agreement is determined to be
invalid, illegal or unenforceable by any Governmental Entity, these remaining
provisions of this Agreement shall remain in full force and effect provided that
the economic and legal substance of the Transactions is not affected in any
manner materially adverse to any party. In the event of any such determination,
the parties agree to negotiate in good faith to modify this Agreement to fulfill
as
32
closely as possible the original intents and purposes hereof. To the extent
permitted by Law, the parties hereby to the same extent waive any provision of
Law that renders any provision hereof prohibited or unenforceable in any
respect.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the day and year first above written.
AFFINITY ENTERTAINMENT, INC.
By:_______________________________
Its:______________________________
TRADEWINDS TELEVISION, LLC
By:_______________________________
Its:______________________________
----------------------------------
ROYERIC PACK
33
SCHEDULE 2.1
ACQUIRED ASSETS
1. Library
2. Works in Progress
3. TW Accounts Receivable as of the Closing Date
4. The name and ▇▇▇▇ "Tradewinds Television"
5. Cash
6. Fixed Assets
7. All other physical and intangible property as determined by Buyer.
SCHEDULE 2.1.1
LIBRARY
1. Film Library
2. Television Library
3. Other?
SCHEDULE 2.1.1(a)
FILM LIBRARY
SCHEDULE 2.1.1(b)
TELEVISION LIBRARY
SCHEDULE 2.1.2
WORKS IN PROGRESS
1. Bounty Hunters
SCHEDULE 2.2(b)
ASSUMED LIABILITIES
1. Payables as of 8/31/96. The assumed liabilities also include payables
as of 10/3/96 per the attached schedule incurred in the ordinary course
of business and all additional approved payables incurred through the
closing date.
2. Bounty Hunters Productions Budget
3. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
4. All contracts as listed on Schedule 4.7 denoted by asterisk (*)
5. Producers - AMG: World of Nature (WNET)
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Lottery shows)
MST-3000
Hands of a Murderer
Tradewinds: Ghostwriter (CTW)
Madison's Adventures (BBC-Worldwide)
6. ▇▇▇ ▇▇▇▇▇ exit agreement
SCHEDULE 4.1
OWNERSHIP OF TW
SCHEDULE 4.3
REQUIRED PERMITS AND APPROVALS
SCHEDULE 4.5
ACCOUNTS RECEIVABLE
SCHEDULE 4.6
CONDUCT OF BUSINESS EXCEPTIONS
SCHEDULE 4.7
CONTRACTS
SCHEDULE 4.9
LEGAL PROCEEDINGS
SCHEDULE 4.10(a)
LIBRARY RIGHTS EXCEPTIONS
SCHEDULE 4.10(b)
RIGHTS VIOLATIONS
SCHEDULE 4.11(a)
PARTICIPATIONS
SCHEDULE 4.11(b)
GUILD ENCUMBRANCE
SCHEDULE 4.13(a)
MARKS
SCHEDULE 4.13(b)
COPYRIGHTS
1. Bounty Hunters - United States
Registration #: PAu1-989-006
Date: July 24, 1995
Forever Blue Entertainment
Trademark Application Serial #: 74/646,257
Date: March 13, 1995
SCHEDULE 4.15
INSURANCE
SCHEDULE 4.20(a)
EMPLOYMENT CONTRACTS
SCHEDULE 4.20(b)
EMPLOYEE BENEFIT PLANS
