SECURITIES PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”)
is
dated as of October 31, 2007, between Kings Road Entertainment, Inc., a Delaware
corporation (the “Company”)
and
West Coast Pictures, LLC, a California limited liability company (the
“Purchaser”).
RECITALS
WHEREAS,
the Company has authorized the sale and issuance to the Purchaser of an
aggregate of 4,450,000 shares (the “Shares”)
of the
Company’s Common Stock, par value $0.01 (the “Common
Stock”);
and
WHEREAS,
the Purchaser desires to purchase and the Company desires to sell the Shares
on
the terms and conditions set forth herein.
NOW,
THEREFORE, in consideration of the foregoing recitals and the mutual promises,
representations, warranties and covenants hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. SALE
OF SHARES AND CLOSING.
1.1 PURCHASE
AND SALE. Pursuant to the terms and conditions set forth in this Agreement,
the
Company agrees to sell to the Purchaser, and the Purchaser hereby agrees to
purchase the Shares in exchange for (i) Three Hundred Twenty Five Thousand
US Dollars ($325,000) (the “Purchase
Price”)
and
(ii) the Purchaser’s commitment to contribute the five (5) film assets
listed on Schedule 3.5 (the “Purchaser
Film Assets”)
to
joint ventures (“Joint
Ventures”)
in
which the Company will participate. The Purchaser believes that the Company
will
earn a minimum of Three Hundred Twenty-Five Thousand Dollars ($325,000) from
its
participation in the Joint Ventures as a producer or executive
producer.
1.2 CLOSING.
Subject to the terms and conditions herein, the closing of the transactions
contemplated hereby (“Closing”)
shall
take place at 10 a.m., Pacific Standard Time, on November 7, 2007 or on such
other date mutually acceptable to the parties (the “Closing
Date”)
at the
offices of Xxxxxx, Xxxxx & Davidoff Incorporated at 0000 Xxxxxx xx xxx
Xxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000. At the Closing, the Company
shall deliver the Shares to the Purchaser free and clear of all liens, pledges
and encumbrances of every kind, character and description whatsoever
(“Liens”),
and
the Purchaser shall deliver the Purchase Price to the Company.
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2. COMPANY
REPRESENTATIONS AND WARRANTIES. The
Company hereby represents and warrants to the Purchaser as follows:
2.1 ORGANIZATION,
GOOD, STANDING AND QUALIFICATION. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
The
Company is not in violation of any of the provisions of its Restated Certificate
of Incorporation (“Charter”)
or
bylaws (“Bylaws”).
The
Company is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not,
individually or in the aggregate: (i) adversely affect the legality, validity
or
enforceability of this Agreement, (ii) have or result in or be reasonably
likely to have or result in a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise)
of
the Company, taken as a whole, or (iii) adversely impair the Company’s ability
to perform fully on a timely basis its obligations under this Agreement (any
of
(i), (ii) or (iii), a “Material
Adverse Effect”).
2.2 CAPITALIZATION;
VOTING RIGHTS; SUBSIDIARIES.
(a) The
authorized capital stock of the Company, as of the date hereof consists of
12,000,000 shares of common stock par value $0.01 of which approximately
6,210,000 shares are issued and outstanding.
(b) There
are
no outstanding options, warrants, rights (including conversion or preemptive
rights and rights of first refusal), proxy or stockholder agreements, or
arrangements or agreements of any kind for the purchase or acquisition from
the
Company of any of its securities other than this Agreement and Shares owed
to
current and former directors of the Company for past services in an amount
not
in excess of Five Hundred Thousand (500,000) Shares.
(c) All
issued and outstanding shares of the Company’s Common Stock (a) have been duly
authorized and validly issued and are fully paid and nonassessable and (b)
were
issued by the Company in full compliance with all applicable state and federal
laws concerning the issuance of securities.
(d) The
Company does not own, directly or indirectly any stock, partnership interest,
membership interest, joint venture interest, ownership interest or other
security, investment or interest in any corporation, partnership, limited
liability company, joint venture, organization or other entity other than the
Company’s one hundred per cent (100%) ownership of the single purpose production
company “The Big Easy II Film, LLC”.
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2.3 AUTHORIZATION
AND BINDING OBLIGATIONS. All corporate action on the part of the Company
(including the respective officers and directors) necessary for the
authorization of this Agreement, the performance of all obligations of the
Company hereunder at the Closing and, the authorization, sale, issuance and
delivery of the Shares has been taken or will be taken prior to the Closing.
This Agreement is the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
2.4 NO
CONFLICTS. The Company is not in violation or default of (i) any material
term of its Charter or Bylaws, or (ii) of any provision of any indebtedness,
mortgage, indenture, contract, agreement or instrument to which it is party
or
by which it is bound or of any judgment, decree, order or writ (“Order”),
which
violation or default, in the case of this clause (ii), has had, or could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. The execution, delivery and performance of and
compliance with this Agreement, and the issuance and sale of the Shares by
the
Company pursuant hereto, will not, with or without the passage of time or giving
of notice, result in any such material violation, or be in conflict with or
constitute a default under any such term or provision, or result in the creation
of any mortgage, pledge, lien, encumbrance or charge upon any of the properties
or assets of the Company or the suspension, revocation, impairment, forfeiture
or nonrenewal of any permit, license, authorization or approval applicable
to
the Company, its business or operations or any of its assets or
properties.
2.5 FILINGS,
CONSENTS AND APPROVALS. The Company is not required to obtain any consent,
waiver, authorization or Order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority (“Governmental
Authority”)
or
other Person (as defined in Section 2.9) in connection with the execution,
delivery and performance by the Company of this Agreement, other than (i) a
current report on Form 8-K announcing the transactions contemplated under this
Agreement and (ii) any applicable Blue Sky filings (collectively, the
“Required
Approvals”).
2.6 LITIGATION.
Except as set forth on Schedule 2.6 hereto, there is no action, suit, proceeding
or investigation pending or, to the Company’s knowledge, currently threatened
against the Company that prevents the Company from entering into this Agreement,
or from consummating the transactions contemplated hereby, or which has had,
or
could reasonably be expected to have, either individually or in the aggregate,
a
Material Adverse Effect or any change in the current equity ownership of the
Company, nor is the Company aware that there is any basis to assert any of
the
foregoing. The Company is not a party or subject to the provisions of any Order
of any Governmental Authority. Other than as set forth on Schedule 2.6, there
is
no action, suit, proceeding or investigation by the Company currently pending
or
which the Company intends to initiate.
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2.7 LIABILITIES.
The Company has no liabilities (including, without limitation, contingent
liabilities) or commitments except as previously disclosed to the Purchaser
in
writing.
2.8 MATERIAL
CONTRACTS. Copies of all material contracts of the Company (“Material
Contracts”)
have
previously been delivered to the Purchaser. A “change in control” of the Company
will not, with or without the passage of time or giving of notice, result in
any
material violation of, or be in conflict with or constitute a default under
any
Material Contract.
2.9
RELATED
PARTY TRANSACTIONS. There are no agreements, understandings or proposed
transactions between the Company and any of its employees, officers, directors,
Affiliates or any Affiliate thereof other than (i) as is subject to litigation
as described on Schedule 2.6 or (ii) as disclosed in writing to the Purchaser.
No Affiliate, employee, officer or director of the Company, or any Family Member
of an Affiliate, employee, officer or director of the Company, is indebted
to
the Company or has any direct or indirect ownership interest in any entity
with
which the Company is affiliated or with which the Company has a business
relationship, or any entity which competes with the Company. No Affiliate,
employee, officer or director of the Company, nor any family member of any
Affiliate, employee, officer or director of the Company, is, directly or
indirectly, interested in any contract or agreement to which the Company is
a
party (other than such contracts as relate to any such Person’s ownership of
Common Stock of the Company). As used herein, “Person”
means
any corporation, partnership, limited liability company, trust, individual,
unincorporated organization or a governmental agency or political subdivision
thereof, as the context may require, and “Affiliate”
means
(x) an “affiliate” as defined under Rule 12b-2 of the Securities Exchange Act of
1934, as amended (the “Exchange
Act”),
(y) a
Person who directly or indirectly controls, is controlled by or is under common
control with the Person specified and (z) any Person owning directly or
indirectly at least five percent (5%) of the outstanding equity interests of
any
other Person.
2.10 TITLE
TO
PROPERTIES AND ASSETS; LIENS, ETC. The Company has good and marketable title
to
its properties and assets, and good title to its leasehold estates, in each
case
subject to no mortgage, pledge, lien, lease, encumbrance or charge, other
than:
(a) those
resulting from taxes which have not yet become delinquent;
(b) minor
liens and encumbrances which do not materially detract from the value of the
property subject thereto or materially impair the operations of the Company;
and
(c) those
that have otherwise arisen in the ordinary course of business.
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2.11 FILM
ASSETS; OTHER ASSETS; INTELLECTUAL PROPERTY.
(a) Set
forth
on Schedule 2.11 is a complete list of all motion pictures owned by the Company
(“Company
Film Assets”).
To
the best of the Company’s knowledge and belief, and apart from as otherwise
disclosed to the Purchaser or as otherwise noted on Schedule 2.11, there are
no
existing obligations, agreements whether written or oral or liabilities to
third
parties concerning the Company Film Assets, (ii) the Company has good and
marketable title to the Company Film Assets, and (iii) the Company owns all
prequel, sequel and remake rights to the Company Film Assets.
(b) The
Company has previously supplied to the Purchaser in writing a list of all
material assets of the Company (including, without limitation, cash on hand)
other than the Company Film Assets.
(c) The
Company owns or possesses sufficient legal rights to all patents, trademarks
(including, without limitation, the trademark “KING’S ROAD ENTERTAINMENT”),
service marks, trade names, copyrights, trade secrets, licenses, information
and
other proprietary rights and processes necessary for its business as now
conducted, as presently proposed to be conducted (the “Intellectual
Property”),
without any infringement of the rights of others. There are no outstanding
options, licenses or agreements of any kind relating to the foregoing
proprietary rights, nor is the Company bound by or a party to any options,
licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information
and
other proprietary rights and processes of any other Person other than such
licenses or agreements arising from the purchase of “off the shelf” or standard
products.
(d) The
Company is not in breach of any intellectual property right of any third party
nor has the Company received any communications alleging that the Company has
violated any of the patents, trademarks, service marks, trade names, copyrights
or trade secrets or other proprietary rights of any other Person, nor is the
Company aware of any basis therefor.
(e) To
the
best of the Company’s knowledge and belief and apart from as otherwise
previously disclosed in writing, no Person is challenging, infringing upon
or
otherwise violating any right of the Company with respect to any Intellectual
Property owned by and/or licensed to the Company other than is currently being
disputed by the Company in litigation.
2.12 TAX
RETURNS AND PAYMENTS. The Company has timely filed all tax returns (federal,
state, local, and foreign) required to be filed by it. All taxes shown to be
due
and payable on such returns, any assessments imposed, and all other taxes due
and payable by the Company on or before the Closing, have been paid or will
be
paid prior to the time they become delinquent. The Company has not been
advised:
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(a) that
any
of its returns, federal, state, local, foreign, or other are being audited
as of
the date hereof; or
(b) of
any
deficiency in assessment or proposed judgment to its federal, state, local,
foreign, or other taxes.
The
Company has no knowledge of any liability for any tax to be imposed upon its
properties or assets as of the date of this Agreement for which there are not
adequate reserves established.
2.13 EMPLOYEES.
The Company is not party to any collective bargaining agreements. There is
no
labor union organizing activity pending or, to the Company’s knowledge,
threatened with respect to the Company. Except as previously disclosed to the
Purchaser in writing, the Company is not a party to or bound by any currently
effective employment contract, deferred compensation arrangement, bonus plan,
incentive plan, profit sharing plan, retirement agreement or other employee
compensation plan or agreement. Except for employees who have a current
effective employment agreement with the Company, no employee of the Company
has
been granted the right to continued employment by the Company or to any material
compensation following termination of employment with the Company.
2.14
COMPLIANCE WITH LAWS; PERMITS; SEC REPORTS. The Company is not in violation
of
any applicable statute, rule, regulation, Order or restriction of any
Governmental Authority in respect of the conduct of its business or the
ownership of its properties which has had, or could reasonably be expected
to
have, either individually or in the aggregate, a Material Adverse Effect. No
governmental Orders, permissions, consents, approvals or authorizations are
required to be obtained and no registrations or declarations are required to
be
filed in connection with the execution and delivery of this Agreement and the
issuance of any of the Shares, except such as has been duly and validly obtained
or filed, or with respect to any filings that must be made after the Closing,
as
will be filed in a timely manner. The Company has all material franchises,
permits, licenses and any similar authority necessary for the conduct of its
business as now being conducted by it, the lack of which could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company is not current in its filings of reports required
to
be filed with the SEC under the Exchange Act (“Exchange
Act Reports”)
and is
approximately three (3) years delinquent in its annual reports on Form 10-KSB
and quarterly reports on Form 10-QSB.
2.15 ENVIRONMENTAL
AND SAFETY LAWS.
(a) Neither
the Company nor, to the Company’s knowledge, any other Person (including,
without limitation, any previous owner, lessee or sublessee) has treated, stored
or disposed of any material amounts of petroleum products, hazardous waste,
hazardous substances, pollutants or contaminants on any real property previously
or currently owned, leased, subleased or used by the Company in the operation
of
its business, in violation of any applicable foreign, federal, state or local
statutes, regulations or ordinances, or common law, in each case as in existence
at or prior to the Closing. To the Company’s knowledge, there have been no
releases of any material amounts of hazardous substances on, at or from any
assets or properties owned, leased, subleased or used by the Company in the
operation of its business during the time such assets or properties were owned,
leased, subleased or used by the Company (or, to the Company’s knowledge, prior
to such time), including, without limitation, any releases of any material
amounts of Hazardous Substances in violation of any law. As used herein,
“Hazardous
Substances”
means
petroleum, petroleum products, hazardous waste, pollutants, contaminants or
substances that constitute hazardous substances under the Comprehensive
Environmental Response, Compensation and Liability Act.
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(b) The
Company is not in violation of any applicable statute, law or regulation
relating to occupational health and safety, and no material expenditures are
or
will be required in order to comply with any such existing statute, law or
regulation.
2.16 BOOKS
AND
RECORDS. The minute books and other similar records of the Company as made
available to the Purchaser contain a true and complete record, in all material
respects, of all action taken at all meetings and by all written consents in
lieu of meetings of the stockholders, board of directors and committees of
the
board of directors of the Company. The stock transfer ledgers and other similar
records of the Company as made available to the Purchaser accurately reflect
all
record transfers prior to the date hereof in the capital stock of the Company.
None of the books and records of the Company are recorded, stored, maintained,
operated or otherwise wholly or partly dependent upon or held by any means
(including any electronic, mechanical or photographic process, whether
computerized or not) which (including all means of access thereto and therefrom)
are not under the exclusive ownership and direct control of the
Company.
2.17 BROKERS.
All negotiations relative to this Agreement and the transactions contemplated
hereby have been carried out by the Company directly with the Purchaser without
intervention of any individual or entity on behalf of the Company in such manner
as to give rise to any valid claim by any individual or entity against the
Purchaser or the Company for a finder’s fee, brokerage commission or similar
payment.
2.18 DISCLOSURE.
All material facts relating to the Company and the Company Film Assets have
been
disclosed to the Purchaser. No representation or warranty contained in this
Agreement, and no statement in any schedule to this Agreement or in any
certificate, list or other writing furnished to the Purchaser pursuant to this
Agreement, contains any untrue statement of a material fact or omits to state
a
material fact necessary in order to make the statements herein or therein,
in
light of the circumstances under which they were made, not misleading.
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3. PURCHASER
REPRESENTATIONS AND WARRANTIES. The
Purchaser hereby represents and warrants to the Company as follows:
3.1 ORGANIZATION,
GOOD, STANDING AND QUALIFICATION. The Purchaser is a limited liability company
validly existing and in good standing under the laws of the State of California,
with the requisite power and authority to own and use its properties and assets
and to carry on its business as currently conducted.
3.2 AUTHORIZATION;
ENFORCEABILITY. The Purchaser has the power and authority to purchase the Shares
and to execute and deliver this Agreement and to perform the provisions hereof.
This Agreement constitutes the Purchaser’s valid and legally binding obligation,
enforceable in accordance with its terms.
3.3 NO
CONFLICT WITH OTHER INSTRUMENTS. The (i) execution, delivery and performance
of
this Agreement, and (ii) consummation of the transactions contemplated hereby
by
the Purchaser has not and will not result in default (and to the knowledge
of
the Purchaser, no event has occurred which, with notice or lapse of time or
both, would constitute a default) under any provision of any instrument or
contract to which the Purchaser is a party or by which the Purchaser or any
of
its property is bound, or in violation of any provision of any governmental
requirement applicable to the Purchaser.
3.4 FILINGS,
CONSENTS AND APPROVALS. The Purchaser is not required to obtain any consent,
waiver, authorization or Order of, give any notice to, or make any filing or
registration with, any Governmental Authority or other Person in connection
with
the execution, delivery and performance by the Purchaser of this Agreement,
other than the Required Approvals or any other filing or notice required under
federal or state securities laws to report the transactions contemplated in
this
Agreement.
3.5 PURCHASER
FILM ASSETS. The Purchaser Film Assets are in the stages of development and
production set forth in Schedule 3.5.
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4. COVENANTS
4.1 CONDUCT
OF BUSINESS IN THE ORDINARY COURSE. Prior to the Closing Date, the Company
shall
operate only in the ordinary course consistent with past practice. Without
limiting the generality of the foregoing, the Company shall not:
(a) Amend
the
Company’s Charter or Bylaws in any manner;
(b) Issue
or
sell any shares, warrants, share-options, bonds, notes, or other securities
of
the Company;
(c) Sell,
assign, or transfer any of the Company's assets, tangible or intangible, except
in the ordinary course of business;
(d) Mortgage,
pledge, create a security interest in, or otherwise encumber any of the
Company's assets, tangible or intangible;
(e) Declare
or pay any dividends or other distributions to the Company shareholders, whether
in case, corporate shares, or kind, or purchase or redeem any of its
shares;
(f) Authorize
and/or permit the Company to purchase the shares or securities of any other
corporation or entity;
(g) Authorize
and/or permit the Company to merge or consolidate with or into any other
corporation, or liquidate or dissolve;
(h) Authorize
and/or permit the Company to lend any of its funds or act as a guarantor or
surety;
(i) Authorize
and/or permit the Company to borrow any funds other than in the ordinary course
of business from any source whatsoever, whether secured or
unsecured;
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(j) Authorize
and/or permit the Company to enter into any contract or transaction other than
that in the ordinary course of business; and
(k) Divert
any business opportunities of the Company to any other Person.
4.2 EXCHANGE
ACT REPORTS FOR COMPANY AND PURCHASER. The Company shall use its best efforts
to
become current in its filing of Exchange Act Reports. After the Company becomes
current in filing its Exchange Act Reports, the Company shall use its best
efforts to file Exchange Act Reports in a timely manner and refrain from
terminating its status as an issuer required to file Exchange Act Reports even
if the Exchange Act or the rules or regulations thereunder would permit such
termination. The Company shall prepare and timely file with the SEC, at the
Company’s expense, any filings pursuant to Section 13 or 16 of the Exchange Act
that are required for the Purchaser in connection with the transactions
described in this Agreement or in the future.
4.3 RULE 144
REPORTING. With a view to making available the benefits of certain rules and
regulations of the SEC that may at any time permit the sale by the Purchaser
of
the Company’s securities to the public without registration, the Company agrees
that once it has become current in filing its Exchange Act Reports, the Company
shall use its best efforts to:
(a)
make
and
keep public information available, as those terms are understood and defined
in
Rule 144 under the Securities Act of 1933, as amended (the “Securities
Act”),
at
all times;
(b)
file
with
the SEC in a timely manner all Exchange Act Reports; and
(c)
furnish
to the Purchaser forthwith upon reasonable request a written statement by the
Company as to its compliance with the reporting requirements of Rule 144,
the Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company and other information in the possession of or reasonably obtainable
by
the Company as the Purchaser may reasonably request in availing itself of any
rule or regulation of the SEC allowing the Purchaser to sell any securities
without registration. The Company shall take all action reasonably requested
by
the Purchaser to facilitate the transfer of the Company’s securities pursuant to
Rule 144.
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4.4 DIRECTORS
AND OFFICERS INSURANCE. The Company shall obtain directors and officer’s
insurance covering the Purchaser’s designee(s) on the Board of Directors as soon
as practicable after the Company is in compliance with its Exchange Act Reports.
Such D&O Insurance shall be from a carrier reasonably acceptable to the
Purchaser and be in an amount and have deductibles in amounts reasonably
satisfactory to the Purchaser.
4.5 BOARD
SEATS. Within thirty (30) days of the date hereof, the Board shall take such
actions as are legally required to allow the Purchaser to appoint such number
of
individuals designated by the Purchaser to the Company’s Board of Directors to
fill such number of either vacant or newly created seats as is required to
grant
the Purchaser representation on the Board which is pro rata with its
shareholding in the Company as of the Closing.
4.6 AMENDMENT
OF CHARTER AND BYLAWS. The Company shall, as soon as practicable, but not later
than ninety (90) days from the Closing Date, hold a shareholders meeting to:
(i)
restate the Company’s Charter to eliminate the requirement of a classified board
of directors; (ii) restate the Company’s Bylaws to update and standardize as
recommended by Purchaser’s counsel; and (iii) take and ratify any other clean-up
measures recommended by Purchaser or its agents.
4.7 KICKBOXER
CHAIN OF TITLE. Within thirty (30) days of the Closing, the Company shall
demonstrate the chain of title to the “Kickboxer” film series and establish, to
the satisfaction of the Purchaser, the Company’s (A) sole and exclusive
ownership of (i) all prequel, sequel and remake rights relating to the
“Kickboxer” film series in any and all media now existing or hereafter devised
(including, without limitation, theatrical, television, home video, Internet,
mobile phone and wireless media) and all ancillary rights related to any such
prequels, sequels or remakes (including, without limitation, video game,
novelization, legitimate stage, theme park and sound track) and (ii) the name
“Kickboxer” as it relates to motion pictures (collectively, (i) and (ii),
“Kickboxer
Rights”)
and
(B) unencumbered right to exploit all Kickboxer Rights throughout the universe
in perpetuity. If the Company fails to comply with the immediately preceding
sentence, then the Company shall within forty (40) days of the Closing deliver
an additional Five Hundred Fifty Thousand Shares (550,000) (the “Additional
Shares”)
to the
Purchaser for no additional consideration, financial or otherwise. Any
Additional Shares issued to the Purchaser shall be in addition to the 4.45
million Shares delivered at Closing so that in the event Additional Shares
are
issued to the Purchaser, the aggregate amount of Shares issued by the Company
pursuant to this Agreement with 5 million.
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4.8 PURCHASER
FILM ASSETS. The Purchaser agrees to permit the Company’s participation as
Executive Producer and Producer in these projects so that the Company is able
to
receive aggregate fees from the Purchaser Film Assets of not less than $325,000;
provided,
however,
that
the Purchaser does not guaranty the actual financing or production of each
individual film.
4.9 EXPENSES.
The aggregate expenses of the Company and the Purchaser in connection with
this
Agreement and the transactions contemplated hereby, including the fees and
expenses of its counsel and its certified public accountants and other experts
will be shared 50:50 by the Company and the Purchaser.
4.10 FULFILLMENT
OF CONDITIONS.
Each
party shall take all commercially reasonable steps necessary or desirable and
proceed diligently and in good faith to satisfy each condition to the
obligations of the other party contained in this Agreement and will not take
or
fail to take any action that could reasonably be expected to result in the
nonfulfillment of any such condition.
4.11 TAXES.
All transfer, documentary, sales, use, stamp registration and other similar
taxes imposed by any Governmental Authority (including any state, county, local
or other taxing authority) as a result of the purchase of the Shares shall
be
duly and timely paid by the Company. The Company shall duly and timely file
all
tax returns in connection with such taxes. The Company shall give a copy of
each
such tax return to the Purchaser for its review with sufficient time for the
provision of comments prior to filing.
4.12 NO
SOLICITATIONS. The Company shall not take, nor shall it permit any of its
Affiliates (or authorize or permit any investment banker, financial advisor,
attorney, accountant or other Person retained by or acting for or on behalf
of
the Company or any such Affiliate) to take, directly or indirectly, any action
to solicit, encourage, receive, negotiate, assist or otherwise facilitate
(including by furnishing confidential information with respect to the Company or
permitting access to the assets, properties or books and records of the Company)
any offer or inquiry from any Person concerning the direct or indirect
acquisition of the Company, the assets of the Company, the Company Film Assets
or any equity interest in the Company other than the Purchaser. If the Company
or any of its Affiliates (or any Person acting for or on their behalf) receives
from any Person any offer, inquiry or informational request referred to above,
the Company shall promptly advise such Person, by written notice, of the terms
of this Section
4.12
and
shall promptly, orally and in writing, advise Purchaser of such offer, inquiry
or request and deliver a copy of such notice to Purchaser.
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4.13 OCTOBER
31, 2007 FINANACIAL INFORMATION. The Company shall deliver the following
financial statements to the Purchaser as soon as each is available: (i) the
balance sheet of the Company as of October 31, 2007, (ii) the income
statement of the Company for the six months ending October 31, 2007 and
(iii) the cash flow statement of the Company for the six months ending
October 31, 2007. Such financial statements shall be prepared in a manner
consistent with prior Company financial statements that have been delivered
to
the Purchaser and may be unaudited.
4.14
REGISTRATION RIGHTS.
(a) If
at any
time or from time to time the Company shall determine to register any of its
securities, either for its own account or the account of a security holder
or
holders, other than (i) a registration relating solely to stock option or
other employee benefit plans or (ii) a registration relating solely to a
transaction described under Rule 145 as promulgated under the Securities
Act,, the Company shall:
(i) promptly
(and in any event at least thirty (30) days prior to the filing date) give
the
Purchaser written notice thereof (a “Registration
Notice”);
and
(ii) include
in such registration (and any related qualification under Blue Sky laws or
other
compliance), and in any underwriting involved therein, all Shares specified
in a
written notice delivered by the Purchaser to the Company within twenty (20)
days after the Purchaser’s receipt of a Registration Notice from the
Company.
From
and after the date hereof, the Company shall not, without the prior written
consent of the Purchaser enter into any agreement with any Person who holds
securities of the Company extending registration rights to such Person, if
the
extension of such registration rights would be senior or pari
passu
to the rights of the Purchaser under this Agreement. The Company shall bear
all
expenses associated with any registration described in this Section 4.14.
(b) The
Company shall indemnify (i) the Purchaser, (ii) the Purchaser’s officers,
directors, partners and agents, and (iii) each person controlling the Purchaser
within the meaning of Section 15 of the Securities Act ((i), (ii) and
(iii), collectively “Purchaser
Parties”)
with
respect to whom registration, qualification or compliance has been effected
pursuant to this Agreement, against all expenses, claims, losses, damages or
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising
out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus, offering circular
or
other document, or any amendment or supplement thereto, incident to any
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which
they were made, not misleading, or any violation by the Company of the
Securities Act, state securities or Blue Sky laws or any rule or regulation
promulgated under any of the foregoing applicable to the Company in connection
with a registration, qualification or compliance, and the Company shall
reimburse the Purchaser Parties for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any claim,
loss, damage, liability or action, provided,
however,
that
the Company shall not be liable in any case to the extent that any claim, loss,
damage, liability or expense arises out of or is based on any untrue statement
or omission or alleged untrue statement or omission, made in reliance upon
and
in conformity with written information furnished to the Company by the
Purchaser.
13
(c) If
the
indemnification provided for in this Section 4.14 shall for any reason be
unavailable to an Purchaser Party in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then the
Company shall, in lieu of indemnifying that Purchaser Party, contribute to
the
amount paid or payable by that Purchaser Party as a result of the loss, claim,
damage or liability, or action in respect thereof, in such proportion as shall
be appropriate to reflect the relative fault of the Company on the one hand
and
the Purchaser Party on the other with respect to the statements or omissions
that resulted in the loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied specifically for use in any registration
statement, prospectus, offering circular or other similar document by the
Company on the one hand or the Purchaser Party on the other, the intent of
the
parties and their relative knowledge, access to information and opportunity
to
correct or prevent such statement or omission, but not by reference to any
Purchaser Party’s stock ownership in the Company. In no event, however, shall a
Purchaser Party be required to contribute in excess of the amount of the net
proceeds received by such Purchaser Party in connection with the sale of Shares
in the offering that is the subject of the loss, claim, damage or liability.
The
amount paid or payable by a Purchaser Party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
paragraph shall be deemed to include, for purposes of this paragraph, any legal
or other expenses reasonably incurred by the Purchaser Party in connection
with
investigating or defending the action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of fraudulent misrepresentation.
5. CONDITIONS
TO CLOSING.
5.1 CONDITIONS
TO OBLIGATIONS OF PURCHASER.
(a) Representations
and Warranties. The
representations and warranties set forth in Article 2 shall be true and correct
in all material respects as of the date hereof and as of the Closing
Date.
(b) Covenants. The
Company shall have performed and complied with all of its covenants hereunder
in
all material respects through the Closing Date.
(c) Officer’s
Certificate. The
Purchaser shall have received a certificate, executed by the President and
the
Secretary of the Company, certifying that (i) the
representations and warranties set forth in Article 2 are true and correct
in
all material respects as of the date hereof and as of the Closing Date and
(ii)
the Company has performed and complied with all of its covenants hereunder
in
all material respects through the Closing.
(d) Secretary’s
Certificate.
The
Purchaser shall have received a certificate, executed by the Secretary of the
Company, with the following attachments: (i) a certificate issued by the State
of California evidencing the good standing of the Company as of a date not
more
than ten (10) days prior to the Closing Date, (ii) a certified copy of the
Company’s Charter, (iii) a certified copy of the Company’s Bylaws, and
(iv) a certified copy of resolutions duly adopted by the Board of
Directors of the Company authorizing the execution, delivery and performance
of
this Agreement and the consummation of the transactions contemplated by this
Agreement (the “Transactions”),
which
resolutions shall not have been amended, modified or supplemented and be in
full
force and effect as of the Closing Date.
(e) Stock
Certificates. (i)
The
Purchaser shall have received a
stock
certificate, registered in Purchaser’s name, representing the 3.99 million
Shares. Such certificate shall bear the following legend:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW
OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO KINGS ROAD ENTERTAINMENT, INC.
THAT SUCH REGISTRATION IS NOT REQUIRED.”
14
(ii)
Xxxxx Xxxxxxx shall have received a stock certificate, registered in the name
of
Xxxxx Behring, representing Four Hundred Sixty Thousand (460,000) Shares. Such
certificate shall bear the following legends:
THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW
OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO KINGS ROAD ENTERTAINMENT, INC.
THAT SUCH REGISTRATION IS NOT REQUIRED.
THE
SHARES REPRESENTED BY THIS STOCK CERTIFICATE ARE SUBJECT TO (1) AN IRREVOCABLE
PROXY IN FAVOR OF WEST COAST PICTURES, LLC (“WEST COAST”) AND (2) A RIGHT OF
FIRST REFUSAL IN FAVOR OF WEST COAST AS SET FORTH IN THE RECAPITALIZATION
AGREEMENT, DATED AS OF OCTOBER 24, 2007 AMONG WEST COAST, XXXXX XXXXXXX AND
XXXX
XXXXXXX.
The
foregoing stock certificate evidencing Four Hundred Sixty Thousand (460,000)
Shares is to be issued to Behring at the direction of the Purchaser, and the
Shares evidenced by such stock certificate comprise a portion of the 4.45
million Shares being purchased by the Purchaser pursuant to this Agreement.
(f) Transfer
Agent Statement.
The
Purchaser shall have received a statement from the Company’s transfer agent
evidencing that approximately 10,660,000 shares of Company common stock will
be
outstanding immediately after giving effect to the issuances of Shares to the
Purchaser and Xxxxx Xxxxxxx on the Closing Date.
(g) Legal
Opinion.
The
Purchaser shall have received a copy of the legal opinion from counsel to the
Company to the transfer agent of the Company relating to the issuance of the
Shares with language allowing the Purchaser to rely on such
opinion.
15
(h) Lien
Search.
The
Purchaser shall have received the results of a recent lien search in each of
the
jurisdictions where the Company’s assets are located, and such search shall
reveal no Liens on any of Company assets other than any Liens in favor of guilds
or trade unions that are released in the normal course of the Company’s
business.
(i) No
Proceedings.
No
action, suit or proceeding shall be pending or threatened before any
Governmental Authority wherein an Order would (i) prevent consummation of
any of the Transactions, (ii) cause any of the Transactions to be rescinded
following consummation, (iii) affect adversely the right of the Purchaser
to own the Shares, or (iv) affect adversely the right of the Company to own
its assets and to operate its businesses, and no such Order shall be in
effect.
(j) No
Material Adverse Change. There
shall have occurred since September 30, 2007 any event or development, which
individually or in the aggregate, could reasonably be expected to result in
a
Material Adverse Effect.
5.2 CONDITIONS
TO OBLIGATIONS OF THE COMPANY.
(a) Representations
and Warranties. The
representations and warranties set forth in Article 3 shall be true and correct
in all material respects as of the date hereof and as of the Closing
Date.
(b) Covenants. The
Purchaser shall have performed and complied with all of its covenants hereunder
in all material respects through the Closing Date.
(c) Officer’s
Certificate. The
Company shall have received a certificate, executed by a member of the
Purchaser, certifying that (i) the
representations and warranties set forth in Article 3 are true and correct
in
all material respects as of the date hereof and as of the Closing Date and
(ii)
the Purchaser has performed and complied with all of its covenants hereunder
in
all material respects through the Closing.
(d) Good
Standing Certificate.
The
Company shall have received a certificate issued by the State of California
evidencing the good standing of the Purchaser as of a date not more than ten
(10) days prior to the Closing Date.
16
6. TERMINATION.
6.1 TERMINATION.
This Agreement may be terminated and the Transactions may be abandoned at any
time prior to the Closing:
(a) Mutual
Consent.
By
written agreement of the Purchaser and the Company;
(b) Delay.
By
either
the Company or the Purchaser if the Closing shall not have occurred on or before
November 30, 2007;
(c) Injunction.
By
either the Company or the Purchaser if any Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any Order which remains in
effect, and which has the effect of making the Transactions illegal or otherwise
prohibiting consummation of the Transactions and such Order is or will have
become non appealable;
(d) Breach
by the Purchaser.
By the
Company if any representation or warranty of the Purchaser is untrue in any
material respect, or the Purchaser has breached any of its covenants or
agreements hereunder in any material respect, and the breach remains uncured
for
more than seven (7) days after written notice thereof from the Company;
or
(e) Breach
by the Company.
By the
Purchaser, if any representation or warranty of the Company is untrue in any
material respect, or the Company has breached any of its covenants or agreements
hereunder in any material respect, and the breach remains uncured for more
than
seven (7) days after written notice thereof from the Purchaser.
6.2 EFFECT
OF
TERMINATION. If this Agreement is terminated as provided herein, this Agreement
will become void and of no further force and effect, except for the provisions
of (a) Section 4.9 relating to expenses, (b) Section 8.2 relating to
governing law, (c) Section 8.3 relating to arbitration,
(d) Section 8.8 relating to notices, and (e) this Section 6.2.
Nothing in this Section 6.2 shall be deemed to release any party from any
liability for any breach by such party of the terms and provisions of this
Agreement.
17
7. INDEMNIFICATION.
The
Company shall indemnify and hold harmless the Purchaser and its Affiliates
and
each of its or their directors, officers, members, managers, employees,
advisors, shareholders, representatives, agents successors and assigns
(collectively, the “Indemnified
Parties”)
from
and against any and all losses, damages, liabilities, judgments, objections,
costs, and expenses, including but not limited to reasonable attorneys' fees
sustained, suffered, or incurred by or imposed upon any Indemnified Party as
a
result of any claim, action, suit or proceeding arising out of, based upon
or
related to: (i) liabilities of the Company or its Affiliates other than those
previously disclosed to the Purchaser in writing; (ii) any tax liability of
the
Company or its Affiliates (other than taxes for which the Purchaser is expressly
responsible pursuant to this Agreement); and (iii) any breach of any
representation, warranty, covenant, agreement or obligation made by the Company
pursuant to this Agreement.
8. MISCELLANEOUS.
8.1 ENTIRE
AGREEMENT. This Agreement, the exhibits and schedules hereto and thereto and
the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by
any
representations, warranties, covenants and agreements except as specifically
set
forth herein and therein.
8.2 CHOICE
OF
LAW. This Agreement shall be governed under the laws of the State of California,
without regard to conflicts of law.
8.3
ARBITRATION. In the event of any controversy, dispute or claims arising out
of
or related to this Agreement, or the interpretation, breach, termination or
validity hereof, the parties shall submit such controversy, dispute or claim
to
binding arbitration hereunder. All arbitration proceedings pursuant to this
section shall be before a retired judge of JAMS. In the event that the parties
are unable to agree upon the selection of any arbitrator, any party may request
JAMS to appoint such arbitrator. Arbitration of the dispute shall commence
no
later than thirty (30) days after the selection or appointment of such
arbitrator. The arbitrator shall be bound by the express terms of this Agreement
and shall endeavor to reach his decision as quickly as possible, which decision
shall be final and binding on the parties to this Agreement. The arbitrator
shall also have the power to award costs and expenses (including, without
limitation, reasonable attorneys’ fees and disbursements) to the prevailing
party. Application to enforce the arbitrator’s decision can be made in any court
or other tribunal of competent jurisdiction; any other application or dispute
shall be submitted to the United States District Court for the Central District
of California, Los Angeles Division or the Los Angeles County Superior Court
for
determination. The rules of discovery then pertaining to the United States
District Court for the Central District of California, Los Angeles Division,
or
a California State Court of Law, as the case may be, shall apply to any such
arbitration, including, without limitation, sections 1283.01 and 1283.05 of
the
California Code of Civil Procedure, the provisions of which are hereby
incorporated herein and made a part hereof by reference. The provisions of
the
California Arbitration Statute, contained in the California Code of Civil
Procedure Section 1280 et
seq.
shall
apply. The parties hereby irrevocably consent to arbitration to be held within
Los Angeles County, California and irrevocably waive any objections that they
may have based on improper venue or inconvenient forum in Los Angeles
County.
18
|
NOTICE:
BY SIGNING THIS AGREEMENT, YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING
OUT OF THE MATTERS INCLUDED IN THE MANDATORY ARBITRATION OF DISPUTES’
PROVISION DECIDED BY NEUTRAL ARBITRATION AND YOU ARE GIVING UP ANY
RIGHTS
YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY
TRIAL.
BY SIGNING THIS AGREEMENT, YOU ARE WAIVING YOUR RIGHT TO A JURY TRIAL
AND
GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH
DISCOVERY RIGHTS ARE SPECIFICALLY INCLUDED IN THE ARBITRATION OF
DISPUTES’
PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING
TO THIS
PROVISION YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF
THE
APPLICABLE STATE STATUTE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION
IS
VOLUNTARY.
EACH
PARTY TO THIS AGREEMENT REPRESENTS THAT HE, SHE OR IT HAS READ AND
UNDERSTANDS THE FOREGOING AND AGREES TO SUBMIT DISPUTES ARISING OUT
OF THE
MATTERS INCLUDED IN THE ARBITRATION OF DISPUTES’ PROVISION TO NEUTRAL
ARBITRATION.
|
8.4 COUNTERPARTS.
This Agreement may be signed in one (1) or more counterparts, each of which
shall constitute an original but all of which together shall be one (1) and
the
same document. Signatures received by facsimile shall be deemed to be original
signatures.
8.5 PARTIAL
INVALIDITY. Each provision of this Agreement will be valid and enforceable
to
the fullest extent permitted by law. If any provision of this Agreement or
the
application of the provision to any Person or circumstance will, to any extent,
be invalid or unenforceable, the remainder of this Agreement, or the application
of the provision to Persons or circumstances other than those as to which it
is
held invalid or unenforceable, will not be affected by such invalidity or
unenforceability, unless the provision or its application is essential to this
Agreement.
19
8.6 HEADINGS.
The headings used in this Agreement have been inserted for convenience of
reference only and do not define or limit the provisions hereof.
8.7 DRAFTING
AMBIGUITIES. Each party to this Agreement and their legal counsel have reviewed
and revised this Agreement. The rule of construction that any ambiguities are
to
be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any amendments or exhibits to this
Agreement.
8.8 NOTICES.
Any notice from one party to another shall be delivered either personally,
via
facsimile or by United States mail, postage fully prepaid, addressed as set
forth under each party’s signature block. Any notice being delivered within the
continental United States shall be deemed delivered upon (a) personal service,
(b) transmission via facsimile (with the original thereof to be immediately
sent via mail, postage prepaid), or (c) forty eight (48) hours after the time
of
deposit in the mail, as the case may be. In the event any Party changes its
address, such change of address shall be communicated to the other Party in
the
manner set forth in this Section.
8.9 DEFINITION
OF KNOWLEDGE. For the purposes of this Agreement, the Company shall only be
deemed to have “knowledge” of a particular fact or other matter, if an executive
officer of the Company is actually aware of such fact or matter, or a reasonably
prudent individual operating in the capacity of an executive officer of the
Company could be expected to discover or otherwise become aware of such fact
or
matter in the ordinary course of fulfilling the responsibilities of an executive
officer.
8.10 INTERPRETATION/REPRESENTATION.
Wherever the context of this Agreement requires, all words used in the singular
shall be construed to have been used in the plural, and vice versa, and the
use
of any gender specific pronoun shall include any other appropriate gender.
The
conjunctive “or” shall mean “and/or” unless otherwise required by the context in
which the conjunctive “or” is used.
8.11 SURVIVAL
OF REPRESENTATIONS AND WARRANTIES. Each of the parties to this Agreement
covenants and agrees that its respective representations, warranties, covenants
and statements and agreements contained in this Agreement and the exhibits
hereto, and in any documents delivered in connection herewith, shall survive
the
Closing Date indefinitely.
20
8.12 SUCCESSORS.
Except as otherwise expressly provided herein, the provisions hereof shall
inure
to the benefit of, and be binding upon, the successors, heirs, executors and
administrators of the parties hereto and shall inure to the benefit of and
be
enforceable by each Person who shall be a holder of the Shares from time to
time, other than any holders of Common Stock which has been sold by the
Purchaser pursuant to Rule 144 or an effective registration
statement.
8.13 AMENDMENT
AND WAIVER. The parties may by mutual agreement amend this Agreement in any
respect, and any party may (a) extend the time for the performance of any
of the obligations of any other party, and (b) waive (i) any inaccuracies
in representations by the other party, (ii) compliance by the other party with
any of the agreements contained herein and performance by the other party of
its
obligations contained herein, and (iii) the fulfillment of any condition that
is
precedent to the performance by such party of any of its obligations under
this
Agreement. To be effective, any such amendment or waiver must be in writing
and
be signed by the party against whom enforcement of the same is
sought.
8.14 DELAYS
OR
OMISSIONS. It is agreed that no delay or omission to exercise any right, power
or remedy accruing to any party, upon any breach, default or noncompliance
by
another party under this Agreement, shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default
or
noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. All remedies, either under this
Agreement, by law or otherwise afforded to any party, shall be cumulative and
not alternative.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK.]
21
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
set forth in the first paragraph hereof.
| KINGS ROAD ENTERTAINMENT, INC. | ||
| |
|
|
| /s/ Xxxxxx Xxxxxx | ||
|
Name: Xxxxxx Xxxxxx |
||
| Title: President | ||
| Address for Notices: | ||
|
Kings
Road Entertainment, Inc.
000
Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxx Xxxxxx, President
|
||
| WEST COAST PICTURES, LLC | ||
| /s/ Xxxx Xxxxxxx | ||
|
Name: Xxxx Xxxxxxx |
||
| Title: Member | ||
| Address for Notices: | ||
|
West
Coast Pictures, LLC
0
XxXx Xxxxx
Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention:
Xxxx Xxxxxxx
|
||
| With a copy to: | ||
|
Xxxxxx,
Xxxxx and Davidoff Incorporated
0000
Xxxxxx xx xxx Xxxxx, Xxxxx 0000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxx X. Xxxxxx
|
||
22
SCHEDULE
2.6 -- Litigation
Xxxx
Xxxxxxx vs. KRE and certain Directors
Refer
to
current SEC filings for details - 8-K dated
Retained
Counsel: Xxx Xxxxxxxxx of Xxxxxxx & Xxxxxxxxx, Xxxxxxx Hills.
Xxxxxxxxx
XxXxxxx vs KRE and certain Directors
Refer
to
current SEC filings for details
Retained
Counsel: Xxx Xxxxxxxxx of Xxxxxxx & Xxxxxxxxx, Xxxxxxx Hills.
KRE
vs Xxxxxxxxx XxXxxxx
Refer
to
current SEC filings for details
Retained
Counsel: Xxxxxxx Xxxxxxxx Esq. of Ropers, Majeski, Xxxx & Bentley, Los
Angeles.
The
Company is not aware of any further pending claims or assessments, other than
as
described above, which may have a material adverse impact on the Company’s
financial position or results of operations.
SCHEDULE
2.6
As
of
October 31, 2007 the Company has produced or co-produced twenty-five pictures,
eighteen of which were theatrically released in the domestic market and eight
of
which were released directly to video or pay television in the domestic market,
as follows:
|
Title
|
Principal
Cast
|
Release
Date
|
Remake
Rights*
|
|
All
of Me
|
Xxxxx
Xxxxxx, Xxxx Xxxxxx
|
September
1984
|
N/A
|
|
Creator
|
Xxxxx
X'Xxxxx, X. Xxxxxxxxx way
|
September
1985
|
Available
|
|
Enemy
Mine
|
Xxxxxx
Xxxxx, Xxxxx Xxxxxxx, Xx.
|
December
1985
|
N/A
|
|
The
Best of Times
|
Xxxxx
Xxxxxxxx, Xxxx Xxxxxxx
|
January
1986
|
Available
|
|
Touch
& Go
|
Xxxxxxx
Xxxxxx, X. Xxxxxx
|
August
1986
|
N/A
|
|
Xxxxxx
Xxxxxxx'x Coming Home
|
Xxx
Xxxxx, Xxxx Xxxxxxxx
|
February
1987
|
Available
|
|
The
Big Easy
|
Xxxxxx
Xxxxx, Xxxxx Xxxxxx
|
August
1987
|
Available
|
|
In
the Mood
|
Xxxxxxx
Xxxxxxx, D'Angelo
|
September
1987
|
N/A
|
|
Rent-A-Cop
|
Xxxx
Xxxxxxxx, Xxxx Xxxxxxx
|
January
1988
|
Available
|
|
The
Night Before
|
Xxxxx
Xxxxxx, Xxxx Xxxxxxx
|
March
1988
|
Available
|
|
My
Best Friend is a Vampire
|
Xxxxxx
Xxxx Xxxxxxx, Xxxxxxx
|
May
1988
|
Available
|
|
Jacknife
|
Xxxxxx
XxXxxx, Xx Xxxxxx
|
March
1989
|
Available
|
|
Time
Flies When You’re Alive
|
Xxxx
Xxxxx
|
July
1989
|
Available
|
|
Kickboxer
|
Xxxx
Xxxxxx Xxx Xxxxx
|
August
1989
|
Available
|
|
Xxxxx
& Xxxxx
|
Xxxxxx
Xxxxxxxx, X. Xxxxxxx
|
December
1989
|
Available
|
|
Blood
of Heroes
|
Xxxxxx
Xxxxx, Xxxx Xxxx
|
February
1990
|
Available
|
|
Kickboxer
II
|
Xxxxx
Xxxxxxxx, Xxxxx Xxxxx
|
June
1991
|
Available
|
|
Kickboxer
III
|
Xxxxx
Xxxxxxxx
|
June
1992
|
Available
|
|
Paydirt
|
Xxxx
Xxxxxxx, X. X'Xxxx
|
August
1992
|
N/A
|
|
Knights
|
Xxxx
Xxxxxxxxxxxxx, Xxxxx Xxxx
|
November
1993
|
Available
|
|
Brainsmasher.
A Love Story
|
Xxxxxx
Xxxx Xxxx, X. Xxxxxxx
|
November
1993
|
Available
|
|
Kickboxer
IV
|
Xxxxx
Xxxxxxxx
|
July
1994
|
Available
|
|
The
Stranger
|
Xxxxx
Xxxx
|
March
1995
|
Available
|
|
The
Redemption (Kickboxer 5)
|
Xxxx
Xxxxxxxx
|
August
1995
|
Available
|
|
Ticker
|
Xxxxxx
Xxxxxx, X. Xxxxxxxx
|
April
2001
|
Available
|
Additionally
the Company has profit participation in the following theatrical film
releases:
|
·
|
SLAP
SHOT (1977). Starring Xxxx Xxxxxx and Xxxxxxx Xxxxxxx. Directed by
Xxxxxx
Xxx Xxxx (famous for “Xxxxx Xxxxxxx and the Sundance
Kid”).
|
|
·
|
FAST
BREAK (1979). Starring Xxxx Xxxxxx
|
|
·
|
LITTLE
DARLINGS (1980). Starring Xxxxx X’Xxxx, Xxxxxx XxXxxxxx and Xxxx
Xxxxxx
|
|
·
|
THE
HAUNTED HEART (1996). Starring Xxxxx Xxxx, Xxxxxxx
Xxxxxxx
|
Remake
rights:
As a
general rule, all rights are controlled or owned solely by Kings Road, or
jointly by Kings Road and Icon, with respect to feature film remakes, prequels,
and sequels. The exceptions are noted in the table) and the above four
co-productions in which the Company has profit participation.
SCHEDULE
2.11
SCHEDULE
3.5 - PURCHASER FILM ASSETS
PROJECT
1.
Working
Title/Genre:
Sophie
and the Dream Bandits / Family Entertainment 3D animation
Underlying
Rights:
WCP
Status:
Early
pre-production: Shooting script available, key character design finalized,
service production studio (US) determined (contract in negotiation), contract
in
negotiation for production score and soundtrack.
Estimated
Timetable:
ADR and
preproduction 1-6/2008, principle production completed by 5/2009. Estimated
release October 2009.
Budget
Range:
US $8 -
10 million.
Kings
Road Entertainment’s Participation:
Producers/Executive Producers, Fees to be determined. Backend
participation.
Existing
Commitments*: Script
polishing $10k 5/2008
PROJECT
2.
Working
Title/Genre:
Myth of
Darkness / Historical Thriller
Underlying
Rights:
WCP
Status:
In
development:
Estimated
Timetable:
Beginning of preproduction 2Q/2008, principle photography completed begin
4Q/2008. Estimated release October 2009.
Budget
Range:
US $6 -
8 million.
Kings
Road Entertainment’s Participation:
Producers/Executive Producers, Fees to be determined. Backend
participation.
Existing
Commitments*: Option
extension fee $40k. Outstanding re-write fee $5k.
PROJECT
3.
Working
Title/Genre:
Desolate
/ Horror Thriller
Underlying
Rights:
WCP
& Partner / Candy Heart Productions / Xxxx Xxxxxxx Productions
Status:
Shooting
script available.
Estimated
Timetable:
Start
preproduction 2Q/2008 Principle photography 4Q/2008. Release Summer
2009.
Budget
Range:
US $4 -
6 million.
Kings
Road Entertainment’s Participation:
Producers/Executive Producers, Fees to be determined. Backend
participation.
Existing
Commitments*: None.
Currently in negotiation is the sale of the underlying rights to the project
partners by WCP.
PROJECT
4.
Working
Title/Genre:
Cold
Season / Crime Thriller
Underlying
Rights:
WCP
Status:
In
development: First draft script available. Rewrite under
negotiation.
Estimated
Timetable:
Preproduction 3Q/2008, principle production completed by 4Q/2008. Estimated
release Summer 2009.
Budget
Range:
US $4 -
6 million.
Kings
Road Entertainment’s Participation:
Producers/Executive Producers, Fees to be determined. Backend
participation.
Existing
Commitments*: None,
but
script rewrite ca. $18k.
SCHEDULE
3.5
PROJECT
5.
Working
Title/Genre:
Vukovar
/ Balkan War Drama
Underlying
Rights:
None.
Status:
Service
Production Job. Optional; Co-/Executive producer
Estimated
Timetable:
2009
Budget
Range:
US $ 0 -
00 xxxxxxx.
Xxxxx
Xxxx Entertainment’s Participation:
Service
production fee + producer fees and backend to be negotiated.
Existing
Commitments*: None.
*Existing
commitments
includes
only those amounts that are committed and would be non-recoverable if production
did not proceed.
SCHEDULE
3.5
