BINDING LETTER OF INTENT
October 27, 1998
Xxx Xxxxxxx
Animagic
0000 Xxxx 000xx, Xxx. 000
Xxxxxxx, Xxxxxxxxxx 00000
Re: PROPOSAL TO PURCHASE ALL OF THE ASSETS OF ANIMAGIC CORPORATION
Dear Xx. Xxxxxxx:
The purpose of this letter (the "LETTER OF INTENT") is to set forth a
binding Letter of Intent between Animagic Corporation (the "SELLER") and Genesis
Media Group, Inc., a Delaware corporation (the "BUYER"), with respect to the
possible acquisition of all of the assets identified on SCHEDULE A (the
"ASSETS") of the Seller (the "TRANSACTION") related to the business (the
"Business") conducted by the Seller.
This Letter of Intent shall bind both parties to such an extent as stated
herein, unless it is terminated pursuant to SECTION 12 below. Because the
Seller has filed for bankruptcy protection, the terms of the Transaction are
subject to the approval of the United States Bankruptcy Court.
1. BASIC TRANSACTION. The Buyer will acquire the Assets and none of
the liabilities of any kind, contingent or otherwise, of the Seller. The
parties intend the closing of the Transaction to occur as soon as possible, but
not later than December 15, 1998 (the "CLOSING").
2. PROPOSED PURCHASE PRICE. Based on the information known to the
Buyer on the date hereof, the total consideration for the Assets will be as
follows (collectively, the "PURCHASE PRICE"):
(a) Fifty Thousand dollars ($50,000) will be paid to the Seller
in cash on January 1, 1999;
(b) Fifty Thousand dollars ($50,000) will be paid to the Seller
in cash on March 1, 1999; and
(c) Fifty Thousand dollars ($50,000) will be paid to the Seller
in cash on May 1, 1999.
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3. REPRESENTATIONS. Seller represents and warrants to Buyer that: (a)
Seller has all necessary corporate power and authority and has taken all
corporate action necessary to enter into this Letter of Intent, to consummate
the transactions contemplated hereby, and to perform its obligations hereunder;
(b) this Letter of Intent has been duly executed and delivered by Seller and is
a valid and binding obligation, enforceable against it in accordance with its
respective terms subject to the effect of applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting the
rights of creditors generally and limitations imposed by equitable principles,
whether considered in a proceeding at law or in equity and the discretion of the
court before which any proceeding therefor may be brought; (c) there are no
actions, suits, investigations or proceedings, at law or in equity or before or
by any governmental authority or instrumentality or before any arbitrator of any
kind, pending or, to Seller's knowledge, threatened against Seller relating to
the Assets; (d) there are no outstanding orders, decrees or stipulations issued
by any federal, state, local, international or foreign, judicial or
administrative authority in any proceeding to which Seller is or was a party
relating to the Assets; (e) no consent, waiver, approval or authorization of or
by, or declaration, filing or registration with, any governmental or regulatory
authority is required to be made or obtained by Seller in connection with the
execution, delivery and performance of this Letter of Intent and the
consummation of the transactions contemplated hereby; (f) Seller owns, or is
licensed or otherwise entitled to exercise pursuant to the terms of a license or
other similar agreement all rights to all intellectual property ("Intellectual
Property") used in the Business as currently conducted or in connection with
products to be used in the Business currently under development without any
conflict or infringement of the rights of others; (g) Seller is the absolute
owner or a nonexclusive or exclusive licensee of, with all necessary right,
title and interest in and to (free and clear of any liens, encumbrances or
security interests) all non-public domain intellectual property and has rights
to the use, sale, license or disposal thereof in connection with the services or
products in respect of which the Intellectual Property are being used or
proposed to be used in the Business in connection with products currently under
development; (h) no claims with respect to the Intellectual Property have been
asserted to Seller, or, to Seller's knowledge, are threatened by any person, and
Seller knows of no claims (1) to the effect that Seller in the conduct of the
Business infringes any copyright, patent, trade secret, or other Intellectual
Property right of any third party or violates any license or Letter of Intent
with any third party, (2) contesting the right of Seller to use, sell, license
or dispose of any Intellectual Property, or (3) challenging the ownership,
validity or effectiveness of any of the Intellectual Property; (i) all
trademarks, service marks, and other company, product or service identifiers
held by Seller and used in the Business are valid and subsisting; (j) there has
not been and there is not now any unauthorized use, infringement or
misappropriation of any of the Intellectual Property by any third party: (k) no
person has a license to use or the right to acquire a license to use any future
version of any Seller product used in or sold by the Business or any such Seller
product that is under development; (l) the Assets include all properties,
tangible and intangible, and only such properties, used by Seller in operating
the Business and necessary for Buyer to operate the Business; (m) Seller holds
good and marketable title, license to or leasehold interest in all of the
Assets and has the complete and unrestricted power and the unqualified right to
sell, assign and deliver the Assets to Buyer, and upon consummation of the
transactions contemplated by this Letter of Intent, Buyer will acquire good and
marketable title, license or leasehold interest to the Assets free and clear of
any liens or encumbrances (n) all taxes relating to the Business or the Assets
have been or will be paid by Seller with respect to all periods (or portions
thereof) prior to and including the date of Closing (o) the operation of the
Business has been conducted in all material respects in accordance with all
applicable laws, regulations and other requirements of governmental entities
having jurisdiction over the same.
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4. CONDITIONS TO TRANSACTION. The closing of the Transaction is
subject to the following conditions:
(a) receipt of the necessary approvals of the Buyer's Board of
Directors and the United States Bankruptcy Court and any
other necessary third parties;
(b) absence of pending or threatened litigation regarding this
Letter of Intent or the transactions contemplated hereby;
(c) certain employees of the Seller including Xxx Xxxxxxx shall
have entered into employment and non-competition agreements
acceptable to Buyer; and
(d) all representations of Seller shall be true and correct on
the date of such closing.
5. EXPENSES. Each of the Buyer and the Seller shall be responsible
for and bear all of its own costs and expenses (including attorney's fees)
incurred in connection with the Transaction.
6. GOVERNING LAW. The terms of the Transaction and all other
matters relating to the Transaction will be governed by the laws of the State of
California, without regard to the conflicts of law provisions thereof.
7. APPROVALS. This Letter of Intent will be subject to the approval
by the Buyer's Board of Directors and by the United States Bankruptcy Court.
Should such approvals not be received, then all matters pertaining to the
Transaction will be terminated.
8. ACCESS. Until the closing of the Transaction, the Seller shall
provide to the Buyer complete access to the Seller's facilities, books and
records, and shall cause the directors, employees, accountants and other agents
and representatives (collectively, the "REPRESENTATIVES") of the Seller to
cooperate fully with the Buyer and the Buyer's Representatives.
9. CONDUCT OF BUSINESS. Until the closing of the Transaction,
Seller shall not engage in any extraordinary transactions without the Buyer's
prior consent.
10. CONFIDENTIALITY. Except as and to the extent required by law,
each party (for purposes of this SECTION 10, the "FIRST PARTY") agrees that it
shall not disclose or use, and it shall cause its Representatives not to
disclose or use, any Confidential Information (as defined below) with respect to
the other party furnished, or to be furnished, by either the other party or its
Representatives to the first party or the first party's Representatives in
connection herewith at any time or in any manner other than in connection with
its evaluation of the Transaction. For purposes of this SECTION 10,
"CONFIDENTIAL INFORMATION" means any information about the other party stamped
"confidential" or identified in writing as such to the first party by the other
party; PROVIDED, HOWEVER, that Confidential Information does not include
information which the first party can demonstrate (i) is generally available to
or known by the public other than as a result of improper disclosure by the
first party or (ii) is obtained by the first party from a source other than the
other party, PROVIDED that such source
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was not bound by a duty of confidentiality to the other party or another party
with respect to such information. If this Letter of Intent is terminated
pursuant to SECTION 12 below, the first party shall promptly return to the other
party any Confidential Information in its possession. The parties shall enter
into a mutually acceptable updated confidentiality and non-disclosure agreement
concurrent with the execution and delivery of the Definitive Agreement.
11. CONSENTS. The Buyer and the Seller shall cooperate with each
other and proceed, as promptly as is reasonably practicable, to seek to obtain
all necessary consents and approvals from any government or regulating
authorities or lenders, landlords or other third parties, and to endeavor to
comply with all other legal or contractual requirements for or preconditions to
the execution and consummation of the Transaction.
12. TERMINATION. This Letter of Intent may be terminated:
(a) by mutual written consent of the Buyer and the Seller;
(b) upon written notice by any party to the other party if the
Definitive Agreement has not been executed by December 15, 1998;
(c) by either party when the other party is in material default of
this Letter of Intent; or
(d) by the Buyer in the event that the United States Bankruptcy Court
declines to accept the terms of the Buyer's offer to acquire the Assets of
Seller as set forth herein.
Upon termination, the parties hereto will have no further obligation,
except SECTION 10 above shall survive such termination.
13. INDEMNIFICATION. From and after the date hereof, Seller shall
indemnify, save and hold harmless Buyer and its affiliates, and its respective
Representatives, from and against any and all losses or damages caused by,
arising out of, asserted against resulting from or incurred or suffered by Buyer
or any of its affiliates or Representatives in connection with (i) any
misrepresentation or breach of any representation or warranty by Seller in or
pursuant to this Letter of Intent, (ii) the non-fulfillment of any covenant or
agreement made by Seller in or pursuant to this Letter of Intent, or (iii) any
liabilities of Seller, which are not being assumed by Buyer.
Please sign and date this Letter of Intent in the space provided below
to confirm the mutual agreements set forth herein, and return a signed copy to
the undersigned.
Very truly yours,
BUYER:
GENESIS MEDIA GROUP, INC.
By:/s/ Xxxx Xx-Batrawi
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Xxxx Xx-Xxxxxxx
Chief Executive Officer
Xxxxxxxxxxxx and agreed as to the foregoing.
Date: October 27, 1998 SELLER:
ANIMAGIC CORPORATION
By: /s/ Xxx Xxxxxxx
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Xxx Xxxxxxx
(SEAL)
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