ASSET PURCHASE AGREEMENT
This
Asset Purchase Agreement (the “Agreement”)
is
entered into as of March __, 2007, by and among Point.360, a California
corporation (“Buyer”),
Eden
FX., a California corporation (“Seller”),
Xxxx
Xxxxxx, as an individual, and Xxxx Xxxxx, as an individual (the individuals
shall hereinafter be collectively referred to as “Shareholders”).
RECITAL
Seller
is
engaged in the business of 3D animation for the broadcast and film industries.
Buyer desires to purchase, and Seller and Shareholders desire to sell to Buyer,
substantially all of the assets and goodwill of Seller upon the terms and
conditions of this Agreement. Buyer’s and Seller’s intent is that Buyer will
purchase Seller’s goodwill and only the assets that are identified in schedules
to this Agreement in exchange for cash, other potential consideration and the
assumption of only those liabilities of Seller specifically set forth
herein.
NOW,
THEREFORE, in
consideration of the foregoing and other good and valuable consideration, the
receipt of which hereby is acknowledged, Buyer, Seller and Shareholders hereby
agree as follows:
ARTICLE
1
PURCHASE
AND SALE OF ASSETS
1.1 Purchased
Assets.
Subject
to the terms and conditions of this Agreement, at the Closing (as defined in
Section 5.1 below), Buyer agrees to purchase from Seller, and Seller agrees
to
sell and convey to Buyer, good and marketable title and interest in and to
Seller’s goodwill and substantially all of Seller’s assets, including without
limitation, those assets listed in Schedule 1.1, (but excluding those accounts
receivable, personal property of Seller or Shareholders and other assets listed
in Schedule 1.2), including any and all rights to the name “Eden FX”
(collectively, the “Purchased
Assets”),
provided that the Purchased Assets shall be transferred to Buyer free and clear
of all liens, claims, security interests and other encumbrances. It is
understood that the Purchased Assets will be operated as a stand alone,
independent division of Buyer (“the Division”), the assets, liabilities and
employees of which may vary from time to time.
1.2 No
Other Assets Purchased by Buyer; Accounts Receivable and Accounts
Payable.
Buyer
has not agreed to purchase (and under no circumstances shall be deemed to have
purchased) any of Seller’s assets that are listed in Schedule 1.2; however,
Buyer will purchase Seller’s goodwill. The following sets forth the parties’
agreement with respect to accounts receivable and accounts payable:
(a) The
Purchased Assets do not include accounts receivable and loans receivable of
Seller to the extent the goods and services or loans they relate to have been
provided to the customer or debtor on or before the Closing Date (the “Retained
Receivables”). The Purchased Assets do include accounts receivable of the Seller
to the extent the goods and services they relate to have not been provided
to
the customer on or after the Closing Date (the “Transferred
Receivables”).
1
(b) Buyer
shall initially assume responsibility for collecting all Receivables (the
Retained Receivables and Transferred Receivables).
(c) Seller
and Buyer shall cooperate in the collection of the Retained Receivables and
Transferred Receivables, and in the event Seller receives payment of any
Transferred Receivables, Seller shall promptly remit the same to Buyer, and
in
the event Buyer receives payment of any Retained Receivables, Buyer shall
promptly remit the same to Seller.
(d) Payments
from a customer shall be allocated to the work order being paid. Each of Seller
and Buyer shall provide an accounting to the other, in reasonable detail,
showing the amount of Retained Receivables and Transferred Receivables received
by each, on the request of the other, with copies of all applicable back-up
and
documentation.
(e) Seller
shall be responsible for the payment of, and shall timely pay, accounts payable
and accrued expenses for services performed prior to the Closing Date (“Prior
Costs”). To the extent that such Prior Costs exceed Retained Receivables, Seller
shall pay Buyer the difference in cash.
(f) Schedule
1.2(f) contains a complete and accurate list of Retained Receivables, accounts
payables of Seller and Prior Costs of Seller as of March 6, 2007.
1.3 Limited
Assumption of Liabilities.
With
the
exception of those certain liabilities more particularly described in Schedule
1.3 attached hereto, Buyer shall not assume or be liable for any debts,
obligations or liabilities of Seller or Shareholders, whether related to the
Purchased Assets or to Seller’s other assets and whether known or unknown, and
Seller shall indemnify Buyer from and against all such debts, obligations and
liabilities not described in Schedule 1.3. Without limiting the generality
of
the preceding sentence, Buyer shall not assume or be liable for (i) any tax
liabilities of Seller related to the operation by Seller at any time of its
business, (ii) any tax liabilities assessed on or related to the Purchased
Assets for the period prior to Closing; (iii) any tax liabilities assessed
on or
related to Seller’s other assets for the period prior to and after the Closing,
(iv) any other liabilities of Seller with respect to the period prior to the
Closing, or (v) any liabilities of Seller to its employees with respect to
the
period prior to or after the Closing. At the Closing, Buyer shall assume,
discharge and perform and be solely liable for the liabilities described in
Schedule 1.3 attached hereto (the “Assumed Liabilities”).
1.4 Purchase
Price.
The
purchase price for the Purchased Assets shall be $2,158,133 minus $358,124.75
(the amount of debt set forth on Schedule 1.3 assumed by Buyer), to be paid
at
Closing, plus any earnouts paid pursuant to Section 1.5 hereof (collectively,
the “Purchase Price”). The Purchase Price shall be paid by bank wire of
immediately available funds.
1.5 Earnout.
Provided the actual EBITDA (i.e., earnings before interest, taxes, depreciation
and amortization as determined under generally accepted accounting principles,
but subject to adjustment as provided in this Agreement) of the Division exceeds
70% of the following EBITDA targets of the Division in connection with the
period from Closing through December 31, 2007, or the calendar years 2008
or 2009, as applicable, Buyer shall make earnout payments to Seller within
sixty
(60) days after the end of any such calendar year as follows:
(a) With
respect to calendar year 2007, $685,000 (“2007 Target Earnout”), if the
Division’s actual EBITDA for 2007 (“2007 Actual EBITDA”) equals $951,000 (“2007
Target EBITDA”). Notwithstanding any other provision of this Section 1.5, it is
agreed that 2007 Target Earnout and 2007 Target EBITDA will be adjusted to
amounts equal to the numbers in the preceding sentence multiplied by a fraction,
the numerator of which shall be the number of days between the Closing Date
and
December 31, 2007, and the denominator of which is 365. 2007 Actual EBITDA
will
be EBITDA of the Division for the period from the Closing Date to December
31,
2007.
(b) With
respect to calendar year 2008, $922,000 (“Year 2008 Target Earnout”), if the
Division’s actual EBITDA for 2008 (“Year 2008 Actual EBITDA”) equals $1,279,000
(“2008 Target EBITDA”);
(c) With
respect to calendar year 2009, $1,185,000 (“2009 Target Earnout”), if the
Division’s actual EBITDA for 2009 (“2009 Actual EBITDA”) equals $1,644,000
(“2009 Target EBITDA”).
(d) If
the
Division achieves more than 70% but less than 100% of any Target EBITDA for
Years 2007, 2008 or 2009, the earnout payments payable to Seller in connection
with such year shall be computed by multiplying the applicable Target Earnout
by
a fraction, the numerator of which is the amount by which the applicable actual
EBITDA exceeds 70% of the applicable Target EBITDA and the denominator of which
is the difference between the applicable Target EBITDA and 70% of the applicable
Target EBITDA. For illustration purposes only, if hypothetically year 2007
actual EBITDA is $800,000 (before any adjustment for proration) the total
earnout payment for 2007 would be computed as follows:
|
2007
Target Earnout
|
$685,000
|
(A)
|
|
2007
Target EBITDA
|
$951,000
|
|
|
Numerator:
|
||
|
2007
Actual EBITDA
|
$800,000
|
|
|
70%
of 2007 Target EBITDA
|
(666,000)
|
|
|
Difference
|
$135,000
|
(B)
|
|
Denominator:
|
||
|
2007
Target EBITDA
|
$951,000
|
|
|
70%
of 2007 Target EBITDA
|
(666,000)
|
|
|
Difference
|
$285,000
|
(C)
|
|
Fraction
(B divided by C)
|
47.02%
|
(D)
|
|
Earnout
To Be Paid (A x D)
|
$322,000
|
(e) No
earnout payments shall be made with respect to 2007, 2008 or 2009 for any such
period in which the Division achieves 70% or less of Target EBITDA for 2007,
2008 or 2009, respectively.
(f) If
the
Division achieves more than 100% of Target EBITDA for years 2007, 2008 or 2009,
total earnout payment for such year shall be equal to the sum of the Target
Earnout for such year plus 80% of the difference between the actual EBITDA
achieved and the Target EBITDA.
(g) In
the
event the determination of the earnout for any applicable period has not become
final within sixty (60) days from the end of any applicable period by reason
of
the implementation by Seller of the procedures for objecting to a Determination
set forth in Section 1.7, then the amount of the earnout set forth in the
Determination shall be paid within such sixty (60)-day period. The balance
of
the earnout, if any, shall be paid to Seller or refunded to Buyer, as
applicable, within thirty (30) days after the Determination becomes
final.
(h) Seller
and Buyer shall act in good faith with respect to operations of the Division
during the Earnout Period, as defined in Section 1.6 hereof, and Buyer shall
use
reasonably commercial efforts consistent with its past practices and policies
to
not negatively impact the earnout.
(i) In
the
event that any Shareholder materially breaches the Noncompetition Agreement
dated as of the date hereof to which he is a party (the “Noncompetition
Agreement”) and, in the event such breach is curable, fails to cure such breach
within 10 days after receipt of written notice of such breach from Buyer, Seller
shall not be entitled to 50% of any further earnout payments pursuant to this
Agreement. In the event that both Shareholders materially breach the
Noncompetition Agreements, and, in the event such breach is curable, fails
to
cure such breach within 10 days after receipt of written notice of such breach
from Buyer, Seller shall not be entitled to any further earnout payments
pursuant to this Agreement.
(j) In
determining actual EBITDA for purposes of the earnout, Buyer’s costs for
accounting, legal and administrative functions shall be charged to the Division
only to the extent such services are specifically provided to the Division
as
set forth in Section 1.6 hereof. Buyer shall not charge or allocate any other
overhead of Buyer to the Division for the purpose of calculating
EBITDA.
1.6 Conduct
of Business During Earnout Period.
Immediately after the Closing, Buyer will form the Division, comprised of the
Purchased Assets and the employees of Seller who will become employees of Buyer.
Buyer shall make offers of employment to all employees of Seller (except for
Xxxx Xxxxxx and Xxxx Xxxxx whose services will be rendered pursuant to the
terms
of a Loan Out Agreement to be entered into between Seller and Buyer at the
Closing). Such employees shall be offered at least the same compensation they
are presently receiving and shall receive credit for time served as employees
of
Seller in determining their employee benefits under Buyer’s employee benefit
plans. During the period commencing on the Closing Date and ending on
December 31, 2009 (the “Earnout Period”):
(a) The
Division shall be operated as a stand alone, independent division of Buyer.
Buyer shall continue to conduct its business in the ordinary course of business,
and the Division shall be subject to Buyer’s standard reporting
requirements.
(b) Without
limiting the generality of Section 1.6(a) hereof, Buyer agrees to provide the
Division with at least the financial resources described in the pro-forma budget
attached hereto as Schedule 1.6(b) and the capital investments described in
the
capital expenditures budget attached to such pro-forma budget (collectively,
the
“Budget”). The Division will be allocated interest based upon the book value of
its fixed assets compared to Buyer’s fixed assets; however, such interest
allocation shall not affect the calculation of EBITDA.
(c) The
Division will be charged with the expenses relating to employee benefit plans,
including health, 401(k) matching, life insurance, vacation, sick pay, employer
payroll taxes and other costs, relating to the Division’s
employees.
(d) Except
as
otherwise provided herein, Buyer shall not charge or allocate any overhead
of
Buyer to the Division for the purpose of calculating EBITDA.
(e) Buyer
may
provide specific support services to the Division, such as engineering or
information technology at the rates agreed to between Seller and Buyer. The
Division may provide support services to Buyer at rates to be agreed to between
Seller and Buyer.
(f) Buyer
shall provide accounting and administrative services to the Division including,
but not limited to, the provision of monthly financial statements within thirty
(30) business days of any month other than December (for December the monthly
financial statements shall be provided within forty-five (45) business days).
For the purpose of this Agreement, cost of sales and general and administrative
expenses directly related to the Division’s operations shall be determined in
accordance with generally accepted accounting principles (“GAAP”). Buyer shall
maintain a separate set of books for the Division. The Division shall also
be
charged for actual rent and other identifiable expenses consumed by the Division
and shall be allocated a pro-rata portion of other expenses directly consumed
by
the Division (e.g., billing, human resources, payroll administration, credit
and
collection, and general accounting, etc.).
(g) Pursuant
to the Loan Out Agreement, Xxxx Xxxxxx and Xxxx Xxxxx will be responsible for
the day-to-day operations of the Division, including the Budget, subject to
the
senior management and Board of Directors of Buyer. Buyer agrees that the working
conditions of the Division will be substantially the same as the working
conditions of Seller in accordance with Seller's past practices and Buyer
acknowledges that the personnel of Seller are talent that work essentially
on a
project basis and that past practices with respect to work hours, vacation,
time
off and comp time will be continued.
1.7 Earnout
Determination.
As soon
as practical after December 31 of each year during each Earnout Period, but
in
no event later than sixty (60) days after Buyer shall have received from the
Division all information, books and records reasonably requested in order to
make an EBITDA calculation, the Buyer shall prepare a statement of the EBITDA
of
the Division for each period of the earnout, prepared in accordance with GAAP
(the “Determination”). If Seller does not agree that such Determination
correctly states EBITDA of the Division for the relevant period, Seller shall
promptly (but not later than thirty (30) days after delivery of the
Determination) give written notice to Buyer of any exception thereto. If the
Seller and the Buyer reconcile their differences, the EBITDA for such period
shall be adjusted accordingly and shall thereupon become final and conclusive
upon all the parties hereto. If Seller and the Buyer are unable to reconcile
their differences in writing within thirty (30) days after written notice of
the
exceptions is delivered to the Buyer, the items in dispute shall be submitted
to
a mutually acceptable accounting firm for final determination (the “Determining
Accountants”) and the EBITDA shall be deemed adjusted in accordance with the
determination of the Determining Accountants and shall become final and
conclusive upon all parties hereto. The Determining Accountants shall consider
only the items in dispute and shall be instructed to act within thirty (30)
days
(or such longer period as Seller and the Buyer may agree) to resolve all claims
and dispute. If Seller does not give notice of any exception within thirty
(30)
days after the delivery of the Determination, or if Seller gives written notice
of its acceptance of the Determination prior to the end of such thirty (30)
day
period, the EBITDA calculations set forth in the Determination shall thereupon
become final and conclusive.
(a) The
Determining Accountants shall determine the party (i.e., the Buyer or Seller
as
the case may be) whose asserted position as to the EBITDA for the period under
examination before the Determining Accountants is furthest from the
determination of EBITDA by the Determining Accountants, which non-prevailing
party shall pay the reasonable fees and expenses of the Determining Accountants.
(b) In
the
event the parties are unable to agree upon a mutually acceptable accounting
firm
to act as Determining Accountant, either Seller or Buyer may request that the
Determining Accountant be selected by JAMS. Seller and Buyer shall each
designate up to three accounting firms. JAMS shall select one of such accounting
firms to act as the Determining Accountants. To the extent consistent with
the
foregoing, and the limited role of JAMS, the Streamlined Arbitration Rules
and
Procedures of JAMS shall be applicable. In the first instance, each party shall
pay one-half (1/2) of the fees and expenses of JAMS. The non-prevailing party,
as determined pursuant to Subsection 1.7(a) shall reimburse the other party
for
such fees and expenses (including JAMS) paid by such other party upon delivery
of the Determination by the Determining Accountants.
1.8 Taxes.
Seller
and Buyer shall each be liable for the payment of 50% of any and all sales
and
use taxes arising out of the transfer of the Purchased Assets and Seller
shall
be liable for all other taxes related to the Purchased Assets with respect
to
the period prior to the Closing.
1.9 Relocation
of the Division.
In the
event that Buyer relocates the Division to Buyer’s existing WoodHolly facility
in Hollywood, California, Buyer shall pay all costs and expenses of the
relocation and build-out of such facility (including infrastructure, cabling,
signage, etc.), including without limitation, the cost for movers and tenant
improvements to such facility, and the Division’s resulting rent expense shall
not exceed the square foot charge contained in Buyer’s current lease or as such
lease may be extended. To the extent Buyer relocates the Division to a location
other than the WoodHolly facility, Buyer shall pay all moving costs in
connection with such relocation, and the Division shall pay the lease costs
for
such location.
1.10 Allocation
of Purchase Price.
The
Purchase Price shall be allocated among the Purchased Assets as set forth
in
Schedule 1.10 hereof, which has been arrived at by arm’s length negotiation as
required by Section 1060 of the Code and the Treasury regulations promulgated
thereunder. Buyer and Seller shall (i) timely file all forms and tax returns
required to be filed in connection with such allocation, and (ii) prepare
and
file tax returns on a basis consistent with such allocation. Seller and Buyer
hereby agree to allocate $20,000 to the Noncompetition Agreements.
ARTICLE
2
SELLER’S
AND SHAREHOLDERS’ REPRESENTATIONS AND WARRANTIES
Seller
and each Shareholder, jointly and severally, hereby represent and warrant
to
Buyer as follows:
2.1 Organization
and Good Standing of Seller.
Seller
is
a corporation duly organized, validly existing and in good standing under
the
laws of the State of California.
2.2 Capitalization
of Seller.
The
percentage ownership interest in Seller held by each Shareholder, is listed
in
Schedule 2.2 attached hereto.
2.3 Powers.
Seller
has and holds the appropriate right and power, and all licenses, permits,
authorizations and approvals (governmental or otherwise), necessary to entitle
it to use its name and to own the Purchased Assets.
2.4 Authority.
Seller
has the full right, power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. All acts and other
proceedings required to be taken by Seller in order to enable it to carry
out
this Agreement and the transactions contemplated hereby have been taken.
Shareholders have approved in writing Seller’s execution and delivery of this
Agreement and consummation of the transactions contemplated hereby.
7
2.5 Binding
Effect.
This
Agreement has been duly executed and delivered by Seller and Shareholders
and
constitutes a legal, valid and binding obligation of Seller and Shareholders,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency and other similar laws affecting
the enforcement of creditors’ rights generally, general equity principles and
the discretion of courts in granting equitable remedies.
2.6 No
Breach.
Neither
the execution and delivery of this Agreement nor the consummation of any
transaction contemplated hereby will (i) violate any law, regulation, judgment
or order applicable to Seller, (ii) result in the acceleration of obligations,
breach or termination of, or constitute a default under, any operating
agreement, loan agreement, articles of organization, other charter document,
lease, deed of trust or other agreement to which Seller is subject, or (iii)
result in the creation of any lien or other encumbrance upon any of the
Purchased Assets, except that the consent of (a) Technicolor Creative Services,
the sublessor under the Sublease between sublessor and Seller, (b) the lessors
of equipment leased or rented by Seller, (c) the licensors of third party
software used by Seller (e.g., Microsoft) and (d) Sony Pictures Imageworks
under
the Independent Contractor Deal Memorandum dated February 15, 2007 is required
but has not been sought nor obtained. To Seller's and Shareholder's knowledge,
there are no defaults under the contracts to which Seller is a party (except
for
the uncashed rent checks issued to Tehnicolor Creative Services as described
in
Schedule 1.3) and Seller expects such contracts to continue after the Closing.
2.7 Consents.
Neither
the execution and delivery of this Agreement nor the consummation of any
transaction contemplated hereby requires Seller to obtain any consent, permit
or
approval, or to make any filing or registration, under any law, regulation,
judgment or order applicable to Seller or under any lease, deed of trust
or
other agreement to which Seller is subject, except that the consent of (a)
Technicolor Creative Services, the sublessor under the Sublease between
sublessor and Seller, (b) the lessors of equipment leased or rented by Seller,
(c) the licensors of third party software used by Seller (e.g., Microsoft)
and
(d) Sony Pictures Imageworks under the Independent Contractor Deal Memorandum
dated February 15, 2007 is required but has not been sought nor obtained.
2.8 Charter
Documents.
Schedule
2.8 is a copy of (i) the Articles of Incorporation of Seller, as amended
to
date, certified as true, correct and complete by the Secretary of State of
California, and (ii) the Bylaws of Seller, as amended to date, certified
as
true, correct and complete by a duly authorized officer of Seller.
2.9 Interests
of Shareholders.
No
Shareholder of Seller or any relative of any Shareholder of Seller has any
direct or indirect ownership interest in any of the Purchased Assets (other
than
solely by reason of the Shareholder’s ownership interest in
Seller).
8
2.10 Ownership
and Use of Assets.
Seller
is the lawful owner of, and has the right to use and transfer to Buyer, the
Purchased Assets; Seller owns each of the Purchased Assets free and clear
of all
liens, security interests or other claims or encumbrances; the delivery to
Buyer
of the instruments of transfer of ownership contemplated by this Agreement
will
vest good and marketable title to the Purchased Assets in Buyer, free and
clear
of all liens, security interests and other claims and encumbrances; and the
Purchased Assets that consist of machinery, equipment or other tangible personal
property or fixtures will be free of material defects, commercially usable
and
in good operating condition and repair. The leased or rented equipment of
Seller
is subject to the rights of the lessors/owners of such equipment.
2.11 Litigation.
Except
as
described in Schedule 2.11 attached hereto, there is no litigation, arbitration,
investigation or other proceeding pending or, to the best knowledge of
Shareholders, threatened against Seller or any of the Purchased
Assets.
2.12 Compliance
with Laws.
To
the
best knowledge of Shareholders, Seller is in compliance with all applicable
statutes, regulations, ordinances and other laws pertaining to the Purchased
Assets. No claim has been made to Seller by any governmental authority (and
no
such claim is anticipated) to the effect that a license, permit, certificate
or
authorization (which has not promptly thereafter been obtained) is required
with
respect to the Purchased Assets.
2.13 Environmental
Matters.
All
operations and activities of Seller with respect to the Purchased Assets
have
been in all material respects in compliance with all state, federal and local
laws and regulations and any and all permits or authorizations governing,
or in
any way relating to, the generation, handling, manufacturing, treatment,
storage, use, transportation, spillage, leakage, dumping, discharge, emission,
release or disposal (whether accidental or intentional) of any toxic or
hazardous substances, materials or wastes, any petroleum or oil or any pollutant
(“Hazardous
Substances”).
Seller has not received any written notice of claims or actions pending or
threatened against it by any governmental entity or agency or any person
relating to Hazardous Substances.
2.14 Proprietary
Information.
Schedule
2.14 attached hereto sets forth a list of all United States and foreign
copyrights, service marks, trademarks, trademark applications, trade names,
logos, patents, patent applications, licenses and royalty rights that relate
to
the Purchased Assets and in which Seller possesses an interest (collectively,
the “Proprietary
Rights”).
Except as described in Schedule 2.14: (i) there are no assignments, licenses
or
sublicenses with respect to any of the Proprietary Rights; (ii) there are
no
pending or, to the best knowledge of Shareholders, threatened claims by any
person with respect to Seller’s use of the Proprietary Rights; (iii) the
Proprietary Rights are in good standing and are freely transferable to Buyer;
and (iv) to the best knowledge of Shareholders, the Proprietary Rights do
not
infringe on the rights of any other person.
2.15 Finders
and Brokers.
No
person
has acted as a finder, broker or other intermediary on behalf of Seller or
Shareholders in connection with this Agreement. No person is entitled to
any
broker’s or finder’s fee or similar fee with respect to this Agreement or such
transactions as a result of actions taken by Seller or
Shareholders.
9
2.16 Exclusivity.
Seller
shall not, through the Closing Date, negotiate with any other party for the
sale
of the Purchased Assets and shall not have entered or enter into any
understanding about such a sale, whether binding or not. Unless this Agreement
is first terminated, Seller shall not negotiate for the sale of or offer
to sell
the Purchased Assets to any other party without Buyer’s prior written consent.
Through the Closing Date, Seller shall promptly notify Buyer if Seller is
contacted by any person or group regarding a possible sale of the Purchased
Assets.
2.17 Accuracy
and Completeness.
No
representation or warranty of Seller or Shareholders in this Agreement or
in any
schedule, exhibit, agreement or document delivered pursuant hereto contains,
or
will contain, any untrue statement of a material fact or omits, or will omit,
to
state a material fact necessary to make the statements contained therein,
in
light of the circumstances under which they are made, not
misleading.
2.18 EBITDA.
Schedule
2.18 is Seller’s income statement and a compilation of Seller’s EBITDA for the
12 months ended December 31, 2006. Schedule 2.18: (i) was prepared from the
books and records of Seller, presents fairly in all material respects, the
operations and EBITDA of Seller, (ii) is in accordance with GAAP, and (iii)
reflects the consistent application of such accounting principles throughout
the
12 month period presented.
2.19 No
Other Representations or Warranties.
EXECPT
AS SET FORTH IN THIS ARTICLE 2, (a) SELLER AND SHAREHOLDERS MAKE NO OTHER
REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ALL OF WHICH
ARE
HEREBY DISCLAIMED, INCLUDING, WITHOUT LIMITATION, WARRANTIES REGARDING
MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE,
SUITABILITY, DURABILITY, CONDITION, QUALITY, OR ANY OTHER CHARACTERISTIC,
AND
(b) BUYER TAKES THE PURCHASED ASSETS AND ASSUMED LIABILITIES “AS IS,” “WHERE IS”
AND “WITH ALL FAULTS.”
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES OF BUYER
Buyer
represents and warrants to Seller as follows:
3.1 Organization
and Good Standing.
Buyer
is
a corporation duly organized, validly existing and in good standing under
the
laws of the State of California.
3.2 Corporate
Powers.
Buyer
has
and holds the corporate right and power, and all licenses, permits,
authorizations and approvals (governmental or otherwise), necessary to entitle
it to use its corporate name, to own and operate its properties and to carry
on
its business as such business exists as of the date hereof.
3.3 Authority.
Buyer
has
the full right, power and authority to execute and deliver this Agreement
and to
consummate the transactions contemplated hereby. All acts and other proceedings
required to be taken by Buyer in order to enable it to carry out this Agreement
and the transactions contemplated hereby have been taken.
10
3.4 Binding
Effect.
This
Agreement has been duly executed and delivered by Buyer and constitutes its
legal, valid and binding obligation, enforceable in accordance with its
terms.
3.5 Consents.
Neither
the execution and delivery of this Agreement nor the consummation of any
transaction contemplated hereby requires Buyer to obtain any consent, permit
or
approval, or to make any filing or registration, under any law, regulation,
judgment or order applicable to Buyer or under any lease, deed of trust or
other
agreement to which Buyer is subject, other than any filings that are required
under applicable securities laws and regulations.
3.6 Finders
and Brokers.
No
person
has acted as a finder, broker or other intermediary on behalf of Buyer in
connection with this Agreement or the transactions contemplated hereby, and
no
person is entitled to any broker’s or finder’s fee or similar fee with respect
to this Agreement or such transactions as a result of actions taken by
Buyer.
ARTICLE
4
AGREEMENTS
OF THE PARTIES
In
addition to their agreements contained in other sections of this Agreement,
Buyer and Seller agree that:
4.1 Access
to Purchased Assets.
Prior to
the Closing, Buyer and its authorized representatives shall have full access
to
the Purchased Assets, the liabilities of Seller reflected in Schedule 1.3
hereto
and the books, records, agreements and other documents of Seller at all
reasonable hours, and Buyer shall be furnished with copies of all such books,
records, agreements and all other documents as may be requested by it. Prior
to
the Closing, Buyer shall maintain the confidentiality of such books, records,
agreements and documents and information about Seller that it acquires in
connection with such investigation, except to the extent that disclosure
thereof
is required by applicable law or such books, records, agreements, documents
and
information are otherwise publicly known. Prior to the Closing, Buyer (and
its
authorized representatives) shall also have the right to discuss the Purchased
Assets with the officers, Shareholders and managers of Seller.
4.2 Seller’s
Use of Purchased Assets Prior to the Closing.
Prior to
the Closing, Seller shall use the Purchased Assets only in the ordinary and
regular course of business consistent with previous practices without any
material change and shall not take any action with respect to any Purchased
Asset or liability of Seller assumed by Buyer that is adverse to Buyer’s
interests.
4.3 Reasonable
Efforts.
Each
party to this Agreement agrees to provide reasonable cooperation to the other
party in the performance of all obligations under this Agreement. Each party
shall use its reasonable efforts to satisfy or cause to be satisfied, at
or
prior to the Closing, the conditions to the other party’s Closing obligations
under this Agreement.
4.4 Publicity.
Without
the prior written approval of the other party, neither party shall disclose
the
existence and/or contents of any discussions between Buyer and Seller herein
nor
issue any press release or other public disclosure regarding the transactions
contemplated by this Agreement, except as required by applicable securities
or
other laws. Notwithstanding the foregoing, the parties to this Agreement
may
disclose the contents of this Agreement in any legal proceedings between
the
parties relating to this Agreement.
11
4.5 Confidentiality.
Seller
and Shareholders agree that neither Seller nor any of its Shareholders shall,
either before or after the Closing, use or disclose to any person, directly
or
indirectly, any confidential information concerning the business of Buyer,
including, without limitation, any business secret, trade secret, financial
information, software, internal procedure, business plan, marketing plan,
pricing strategy or policy or client list, except to the extent that such
use or
disclosure is (i) required by an order of a court of competent jurisdiction,
or
(ii) authorized in writing by a duly authorized executive officer of Buyer.
The
prohibition that is contained in the preceding sentence shall not apply to
any
information that is or becomes generally available to the public other than
through a disclosure by Seller or Shareholders.
ARTICLE
5
CLOSING
5.1 Time,
Place and Date.
The
closing of the transactions contemplated by this Agreement (the “Closing”)
shall
occur effective as of 12:01 a.m. on the date on which this Agreement is executed
and delivered by Buyer and Seller (the “Closing
Date”).
5.2 Conditions
Precedent to Buyer’s Closing Obligations.
Each
of
the following shall be a condition to the obligation of Buyer to consummate
the
transactions contemplated by this Agreement, except to the extent that Buyer
may
elect to waive any of such conditions in writing:
(a) Each
representation and warranty of Seller and Shareholders contained in this
Agreement (including any exhibit, schedule or other agreement or document
delivered pursuant hereto) shall be true and correct in all material respects
on
and as of the Closing Date with the same effect as if such representation
and
warranty had been made on and as of the Closing Date, and Seller and
Shareholders shall have performed or complied in all material respects with
all
agreements required by this Agreement to be performed or complied with by
Seller
prior to or at the Closing.
(b) Seller
and Shareholders shall have executed and delivered to Buyer a certificate
to the
effect that the conditions described in Section 5.2(a) above have been
satisfied. Seller’s certificate shall be signed by its duly authorized
officer.
(c) Seller
shall have executed and delivered the agreements and documents that are
described in Section 5.4 below.
(d) No
claim,
action, investigation or other proceeding shall be pending or threatened
before
any court or governmental agency that presents a substantial risk of the
restraint or rescission of the transactions contemplated by this Agreement
or
that imposes a substantial risk to Buyer’s ability to obtain title to and
possession of the Purchased Assets on the terms and conditions contemplated
by
this Agreement.
12
(e) There
shall have been obtained all permits, approvals and consents from governmental
agencies and third parties that Buyer determines are required in order to
transfer the Purchased Assets to it.
(f) All
actions required to be taken by Seller to authorize the execution, delivery
and
performance of this Agreement shall have been duly and validly
taken.
(g) Buyer
shall have conducted, at its expense, a due diligence examination of the
Purchased Assets and, in its sole discretion, shall not have disapproved
of the
results of its review.
(h) Each
of
the Shareholders shall have entered into a Noncompetition Agreement in the
forms
attached hereto as Exhibits A-1 and A-2.
(i) Seller
shall have entered into Loan Out Agreement in the form attached hereto as
Exhibits B pertaining to the services of Xxxx Xxxxxx and Xxxx
Xxxxx.
5.3 Conditions
Precedent to Seller’s and Shareholders’ Closing
Obligations.
Each of
the following shall be a condition to the obligation of Seller to consummate
the
transactions contemplated by this Agreement, except to the extent that Seller
may elect to waive any of such conditions in writing:
(a) Each
representation and warranty of Buyer contained in this Agreement (including
any
exhibit, schedule or other agreement or document delivered pursuant hereto)
shall be true and correct in all respects on and as of the Closing Date with
the
same effect as if such representation and warranty had been made on and as
of
the Closing Date, and Buyer shall have performed or complied with all agreements
required by this Agreement to be performed or complied with by it prior to
or at
the Closing.
(b) No
claim,
action, investigation or other proceeding shall be pending or threatened
before
any court or governmental agency that presents a substantial risk of the
restraint or rescission of the transactions contemplated by this
Agreement.
(c) All
actions required to be taken by Buyer to authorize the execution, delivery
and
performance of this Agreement shall have been duly and validly
taken.
(d) Buyer
shall have entered into Loan Out Agreement with Seller pertaining to the
services of Xxxx Xxxxxx and Xxxx Xxxxx.
(e) Buyer
shall have executed and delivered to Seller a certificate to the effect that
the
conditions described in Section 5.3 have been satisfied.
5.4 Closing
Deliveries of Seller.
(a) At
or
prior to the Closing, Seller shall execute and deliver to Buyer:
(i) Bills
of
sale and other such assignment instruments, in form and substance reasonably
satisfactory to Buyer, covering the Purchased Assets and effecting the full
sale
and conveyance of the Purchased Assets to Buyer, free and clear of all liens,
security interests and other encumbrances;
13
(ii) All
books, records, correspondence and other documents in Seller’s possession or
control that evidence or relate to the Purchased Assets;
(iii) The
Closing certificate described above in Section 5.2(b);
(iv) A
copy of
resolutions of Shareholders and of the governing body of Seller authorizing
the
execution, delivery and performance of this Agreement and the other agreements
and transactions contemplated hereby, which resolutions shall be certified
by
the Secretary (or comparable officer) of Seller and which certificate shall
state that such resolutions have not subsequently been amended or
rescinded;
(v) Such
other closing documents as Buyer may reasonably request in order to consummate
the transactions contemplated by this Agreement.
5.5 Termination
of the Agreement.
If the
Closing has not occurred, for any reason, prior to the close of business
on
March 1, 2007 or prior to such later Closing deadline as the parties may
mutually agree upon in writing, this Agreement automatically shall terminate
and, except as provided in this Section 5.6, the parties hereto shall have
no
further rights or obligations hereunder. Notwithstanding the termination
of this
Agreement pursuant to the preceding sentence, the obligations of the parties
described in the following Sections of this Agreement shall survive: 4.1
(second
sentence); 4.4; 4.5; 7.11; 7.14; 7.15, and 7.16. Furthermore, the termination
of
this Agreement shall not adversely affect any right that a party may have
against another party for breach of contract.
ARTICLE
6
INDEMNIFICATION
6.1 Survival
of Representations and Warranties.
All
representations and warranties of the parties hereto (except for those set
forth
in Sections 2.2 and 2.13) shall survive until December 31, 2009.
Representations and warranties set forth in Sections 2.2. and 2.13 hereof
shall
survive until the relevant statute of limitations has run. All representations,
warranties and agreements of the parties made in any exhibit or schedule
to this
Agreement or in any other agreement or document delivered pursuant to this
Agreement shall be deemed to be contained in this Agreement. A claim with
respect to a breach of a representation or a warranty shall not be foreclosed
if
the maker of such claim shall have made such claim in writing to the other
party
prior to the expiration of the survival period described above.
6.2
Indemnification by Seller and Shareholders.
Subject
to the provisions of this Article 6, Seller and each Shareholder, individually,
shall indemnify and hold harmless Buyer from and against any and all losses,
damages, liabilities, costs and expenses, including, without limitation,
settlement costs and reasonable legal, accounting and other expenses for
investigating or defending any actions (collectively, “Losses”)
that
Buyer may incur resulting from (i) any breach of any representation or warranty
of Seller or Shareholders made in this Agreement or the Xxxx of Sale, (ii)
any
breach of any agreement of Seller or Shareholders contained in this Agreement
or
the Xxxx of Sale, (iii) any violation of California’s Bulk Sales Law (if
applicable to this Agreement by Seller or Shareholders), (iv) any claim by
a
finder, broker or other intermediary representing Seller or Shareholders,
directors or officers in connection with this Agreement or the transactions
contemplated hereby; and (v) any liability of Seller not specifically described
in Schedule 1.3 attached hereto (including, without limitation, any claim
or
lawsuit by any governmental agency or other person or entity that is brought
against Buyer and that relates to a liability of Seller).
14
6.3 Indemnification
by Buyer.
Subject
to the provisions of this Article 6, Buyer shall indemnify and hold harmless
Seller and Shareholders from and against any and all Losses that Seller may
incur based upon, arising out of or resulting from (i) any breach of any
representation or warranty of Buyer made in this Agreement or the Xxxx of
Sale
or (ii) any breach of any agreement of Buyer contained in this Agreement
or the
Xxxx of Sale, (iii) the Assumed Liabilities, and (iv) the ownership or
operation of the Division after the Closing.
6.4 Notice
of Claims; Contest of Claims.
(a) If
the
indemnified party believes that it has incurred any Losses, or if any action
at
law or suit in equity is instituted by a third party with respect to which
the
indemnified party intends to claim any Losses under this Article 6, the
indemnified party shall so notify the indemnifying party. The notice shall
describe such Losses, the amount thereof, if known, and the method of
computation thereof, all with reasonable particularity and shall contain
a
reference to the provisions of this Agreement in respect of which such Losses
shall have been incurred; and, in the case of an action or suit by a third
party, shall include a copy of all documents received by the indemnified
party
in connection therewith and any other information known to the indemnified
party
with respect to such action or suit or the basis therefor. Such notice shall
be
given promptly after the indemnified party becomes aware of each such Loss,
action or suit, but failure to give such prompt notice shall not affect the
indemnifying party’s obligations hereunder unless such party has been prejudiced
thereby.
The
indemnifying party shall, within thirty days after receipt of such notice
of
Losses, (i) pay or cause to be paid to the indemnified party the amount of
Losses specified in such notice which the indemnifying party does not contest,
or (ii) notify the indemnified party if it wishes to contest the existence
or
amount of part or all of such Losses, stating with particularity the basis
upon
which it contests the existence or amount thereof. The indemnifying party
shall,
within thirty days after receipt of each notice with respect to an action
or
suit by a third party, notify the indemnified party if it elects to conduct
and
control such action or suit. If the indemnifying party does not give such
notice
in the case of an action or suit by a third party, the indemnified party
shall
have the right to defend, contest, settle or compromise such action or suit,
and
the indemnifying party shall, upon request from such indemnified party, promptly
pay to such indemnified party, in accordance with the other terms of this
Article 6, the amount of any Losses resulting from its liability to the third
party claimant. If the indemnifying party gives such notice in the case of
an
action or suit by a third party, the indemnifying party shall have the right
to
undertake, conduct and control, through counsel of its own choosing and at
the
sole expense of the indemnifying party, the conduct and settlement of such
action or suit, and the indemnified party shall cooperate with such indemnifying
party in connection therewith. So long as the indemnifying party is contesting
any such action or suit in good faith, the indemnified party shall not pay
or
settle any such action or suit. Notwithstanding the foregoing, the indemnified
party shall have the right to pay or settle any such action or suit, provided
that in such event the indemnified party shall waive any right to indemnity
therefor by the indemnifying party, and no amount in respect thereof shall
be
claimed as a Loss under this Article 6.
15
6.5 Limitations.
Notwithstanding any other provisions of this Agreement, including in this
Article 6 above, but subject to Section 6.5(h) below:
(a) No
party
to this Agreement shall have any liability under this Article 6 unless and
until the indemnified party has incurred Losses in excess of $40,000 (the
“Basket Amount”) and such party’s liability under this Article 6 shall apply
only to the amount in excess of the Basket Amount.
(b) Except
for actual fraud, no party to this Agreement shall have any liability under
this
Article 6 in excess of 80% of the Purchase Price (including the earnout
portion) paid by the Buyer.
(c) The
provisions of Section 6.2 and 6.3 shall not apply to any breaches that have
been
waived by the party claiming indemnification.
(d) EXCEPT
TO
THE EXTENT REQUIRED UNDER SECTIONS 6.2 AND 6.3 WITH RESPECT TO THIRD PARTY
CLAIMS, IN NO EVENT WILL ANY PARTY’S LIABILITY OF ANY KIND INCLUDE ANY SPECIAL,
INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE LOSSES OR DAMAGES, INCLUDING,
WITHOUT LIMITATION, LOST PROFITS, EVEN IF SUCH PARTY HAS BEEN ADVISED OF
THE
POSSIBILITY OF SUCH DAMAGES.
(e) The
calculation of Buyer’s Losses will be net of any tax benefits received or to be
received by Buyer in respect of such Buyer Losses.
(f) The
parties hereto shall have no obligations under this Article 6 for any claim
for
indemnification that is not made in compliance with this Article 6 prior
to
December
31, 2009, provided; however, that Buyer may bring claims for indemnification
for
Seller’s or Shareholders’ breaches of Sections 2.2 and 2.13 at any time prior to
the expiration of the applicable statute of limitations.
(g) The
indemnification provisions of this Article 6 shall be the parties’ sole and
exclusive remedy for any claims arising from this Agreement.
(h) The
provisions of Sections 6.5(a)-(g) above do not apply to Buyer’s obligation to
pay the Purchase Price, including the earnout, under this Agreement, and
such
obligation shall be independent of the provisions of Section 6.5(a)-(g)
above.
ARTICLE
7
GENERAL
PROVISIONS
7.1 Injunctive
Relief.
Each
party to this Agreement agrees that damages would be an inadequate remedy
for
the other party’s breach of Section 4.5 hereof, and that the breach of such
provision will result in immeasurable and irreparable harm to such party.
Therefore, in addition to damages and any other remedy to which a party may
be
entitled by reason of a breach of any such provision, such party shall be
entitled to seek and obtain temporary, preliminary and permanent injunctive
relief from any court of competent jurisdiction restraining the other party
from
committing or continuing any breach of Section 4.5 hereof.
16
7.2 Notices.
Any
notice required or permitted by this Agreement to be given by one party to
the
other must be in writing and personally delivered or sent by registered or
certified United States mail (postage prepaid and return receipt requested),
by
reputable overnight delivery service or by facsimile transmission, addressed
to
the address shown below or to such other address as such party may designate
in
the foregoing manner to the other party. Any such notice that is sent in
the
foregoing manner shall be deemed to have been delivered upon actual personal
delivery or actual receipt by facsimile transmission or three days after
deposit
in the United States mail or one day after delivery to an overnight delivery
service.
|
If
to Buyer:
|
Point.360
Attn:
CFO
0000
Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx,
XX 00000
With
a copy to:
Xxxxxxx
X. Xxxxx
Xxxx
& Xxxxx Professional Corp.
0000
Xxxxxxx Xxxx Xxxx
Xxx
Xxxxxxx, XX 00000
|
|
|
If
to Seller:
|
Eden
FX, Inc.
0000
X. Xxxxx Xxxxxx
Xxx
00, Xxxxxxxx 00
Xxxxxxxxx,
XX 00000
|
|
|
If
to Xxxx Xxxxxx:
|
Xxxx
Xxxxxx
000
Xxxxxxxx Xxxxx
Xxxx
Xxxxxx, XX 00000
|
|
|
If
to Xxxx Xxxxx:
|
Xxxx
Xxxxx
000
Xxxxxxx Xxxxx
Xxxx
Xxxxxxxxx, XX 00000
|
|
|
With
a copy to:
|
Silver
& Xxxxxxxx, APLC
0000
Xxxxxxx Xxxx Xxxx, 00xx
Xxxxx
Xxx
Xxxxxxx, XX 00000
Attn:
Xxxxxxx X. Xxxxxxx, Esq.
|
17
7.3 Amendments
and Termination; Entire Agreement.
This
Agreement may be amended or terminated only by a writing executed by each
party
hereto. Together with the exhibits, schedules and other agreements and documents
delivered pursuant hereto, this Agreement constitutes the entire agreement
of
the parties hereto relating to the subject matter hereof and supersedes all
prior oral and written understandings and agreements relating to such subject
matter.
7.4 Successors
and Assigns.
This
Agreement shall be binding upon, and shall benefit, the parties hereto and
their
respective successors and assigns. Notwithstanding the foregoing, (i) the
obligations of Seller and Shareholders hereunder are not assignable to another
person without Buyer’s prior written consent, and (ii) Buyer’s obligations
hereunder are assignable to another person without obtaining any other party’s
consent only in connection with a transfer of substantially all of the assets
of
the Division or similar transaction in which Buyer’s successor or assign assumes
all of Buyer’s obligations hereunder (whether by agreement or by operation of
law).
7.5 Calculation
of Time.
Wherever
in this Agreement a period of time is stated in a number of days, it shall
be
deemed to mean calendar days. However, when any period of time so stated
would
end upon a Saturday, Sunday or legal holiday, such period shall be deemed
to end
upon the next day following that is not a Saturday, Sunday or legal
holiday.
7.6 Further
Assurances.
Each
party shall perform any further acts and execute and deliver any further
documents that may be reasonably necessary or advisable to carry out the
provisions of this Agreement.
7.7 Severability.
(a) All
provisions of this Agreement shall be applicable only to the extent that
they do
not violate any applicable law, and are intended to be limited to the extent
necessary so that they will not render this Agreement invalid, illegal or
unenforceable under any applicable law. If any provision of this Agreement
or
any application thereof shall be held to be invalid, illegal or unenforceable,
the validity, legality and enforceability of other provisions of this Agreement
or of any other application of such provision shall in no way be affected
thereby.
(b) Without
limiting the generality of Section 7.7(a) above, if for any reason any term
or
provision containing a restriction set forth in this Agreement is held to
cover
an area or to be for a length of time which is unreasonable, or in any other
way
is construed to be too broad or to any extent invalid, such term or provision
shall not be determined to be null, void and of no effect, but to the extent
the
same is or would be valid or enforceable under applicable law, any arbitrator
or
court of competent jurisdiction shall construe and interpret or reform this
Agreement to provide for a restriction having the maximum enforceable area,
time
period and other provisions (not greater than those contained herein) as
shall
be valid and enforceable under applicable law.
7.8 Waiver
of Rights.
No party
to this Agreement shall be deemed to have waived any right or remedy that
it has
under this Agreement unless this Agreement expressly provides a period of
time
within which such right or remedy must be exercised and such period has expired,
or unless such party has expressly waived the same in writing. The waiver
by a
party of a right or remedy hereunder shall not be deemed to be a waiver of
any
other right or remedy or of any subsequent right or remedy of the same
kind.
18
7.9 Headings;
Gender and Number.
The
headings contained in this Agreement are for reference purposes only and
shall
not affect in any manner the meaning or interpretation of this Agreement.
Where
appropriate to the context of this Agreement, use of the singular shall be
deemed also to refer to the plural, and use of the plural to the singular,
and
pronouns of certain gender shall be deemed to comprehend either or both of
the
other genders. The terms “hereof,” “herein,” “hereby” and variations thereof
shall, whenever used in this Agreement, refer to this Agreement as a whole
and
not to any particular section hereof. The term “person” refers to any natural
person, corporation, partnership or other association or entity. Any form
of the
word “include” when used in this Agreement is not intended to be exclusive (that
is, the word “include” means “including, without limitation”). The disclosure of
any matter in any Schedule to this Agreement shall not be deemed to constitute
an admission by Seller or Shareholders.
7.10 Counterparts.
This
Agreement may be executed in counterparts, and by each party on a separate
counterpart, each of which shall be deemed an original but all of which taken
together shall constitute but one and the same instrument.
7.11 Expenses
Incurred in Preparing This Agreement.
Each of
Buyer and Seller shall bear its own costs and expenses incurred in connection
with the negotiation and preparation of this Agreement, whether or not Closing
occurs.
7.12 No
Strict Construction.
The
language of this Agreement is the language chosen by the parties hereto to
express their mutual intent, and this Agreement shall be construed without
regard to any presumption or rule requiring construction against the party
causing the instrument to be drafted.
7.13 No
Third Party Beneficiaries.
No
provision of this Agreement is intended to or shall create any rights with
respect to the subject matter of this Agreement in any third party.
7.14 Governing
Laws.
This
Agreement shall be governed by, and construed and enforced in accordance
with,
the internal laws of the State of California without giving effect to such
state’s conflict-of-law principles.
7.15 Attorneys’
Fees and Other Expenses.
The
unsuccessful party to any arbitration proceeding or to any court action that
is
permitted by this Agreement shall pay to the prevailing party all costs and
expenses, including, without limitation, reasonable attorneys’ fees, incurred
therein by the successful party, all of which shall be included in and as
a part
of the award rendered in such proceeding or action.
19
IN
WITNESS WHEREOF,
Buyer,
Seller and Shareholders have executed and delivered this Agreement as of
the
date first above written.
| POINT.360 (“BUYER”) | ||
| |
|
|
| By: | ||
|
Xxxx X. Steel |
||
| Chief Financial Officer | ||
| EDEN FX (“SELLER”) | ||
| |
|
|
| By: | ||
|
Xxxx Xxxxxx |
||
| Co-President | ||
| By: | ||
|
Xxxx Xxxxx |
||
| Co-President | ||
|
Xxxx
Xxxxxx,
as
an individual
|
||
| |
|
|
| By: | ||
|
Xxxx Xxxxxx, |
||
|
Xxxx
Xxxxx,
as
an individual
|
||
| |
|
|
| By: | /s/ | |
|
Xxxx Xxxxx |
||
20
Schedule
1.1 (Purchased Assets)
The
following assets of Seller:
All
of
the assets of Seller other than the assets listed in Schedule 1.2. The physical
assets of Seller are described in the attached spreadsheet.
21
Schedule
1.2 (Excluded Assets)
Corporate
books and records
Financial
and tax records (copies to be provided to Buyer at Seller’s cost.) Originals to
be made available to Buyer upon request. Seller will retain copies of such
financial and tax records for five years after the Closing Date.
Insurance
contracts and claims
Personal
property and effects, including, but not limited to, laptop computers,
furniture, awards, models, toys, accessories, etc.
Accounts
receivable in accordance with the Asset Purchase Agreement
Bank
accounts
Security
Deposits with landlords, which shall be paid over to Seller upon their return
by
the landlords. Seller shall be responsible for deductions from such security
deposits resulting from damages caused on or before the Closing Date and
Buyer
shall be responsible for deductions from such security deposits resulting
from
damages caused on or after the Closing Date.
22
Schedule
1.2(f)
Accounts
Receivable and Accounts Payable
23
Schedule
1.3 (Assumed Liabilities/Debts to be Paid by Buyer)
|
Debt
|
Amount
|
Date
to be paid by Buyer
|
|
1. Credit
Cards
American
Express Platinum
American
Express Blue
Advanta
Bank
of America
Fleet
Shell
|
$48,545.49
$26,827.85
$19,426.72
$23,658
$1,200.00
|
Within
5 days after the Closing
Within
5 days after the Closing
Within
5 days after the Closing
Within
5 days after the Closing
Within
5 days after the Closing
|
|
2.
Xxxx Xxxx
|
$23,300
|
On
the Closing Date by check
|
|
3.
Xxxx Xxxxx
|
$39,000
|
On
the Closing Date by check
|
|
4.
City National Bank
|
$152,166.69
|
On
the Closing Date by wire transfer
|
|
5.
Xxxxx Fargo Credit Line
|
$24,000
|
On
the Closing Date by check
|
|
Total:
|
$358,124.75
|
|
24
Assumed
Contracts
1. All
contracts and purchase orders with customers and vendors
2. Sublease
with Technicolor Creative Services - Hollywood for Building 50. This Sublease
was not executed by the parties and calls for a month to month tenancy with
a 5
month notice of termination.
3. All
equipment leases and rentals, which are as follows:
a. Global
Vantage (assigned to Tustin Community Bank)
Computer
related hardware and software
$1,296.33
per month
b. Global
Vantage (assigned to National City Commercial Capital Corporation)
Computer
related hardware
$5,498.30
per month
4. All
utilities after the Closing
5. Uncashed
Checks to Technicolor Build 50 for September, October, and December 2006
rent
($48,616.55). Buyer
shall assume this liability. To the extent that Technicolor claims all or
a any
portion of this amount and the Buyer pays Technicolor, such paid amount shall
be
deducted from the next earnout payment.
25
Schedule
1.6(b)
Budget
See
Attached
26
Schedule
1.10
Purchase
Price Allocation
See
Attached
27
Schedule
2.2 (Capitalization of Seller)
Xxxx
Xxxxxx =
50%
(500,000
SHARES OF COMMON STOCK, $0- PAR VALUE)
Xxxx
Xxxxx
= 50%
(500,000
SHARES OF COMMON STOCK, $0- PAR VALUE)
TOTAL
AUTHORIZED SHARES = 1,000,000- OF COMMON STOCK, $0- PAR
VALUE
28
Schedule
2.8 (Seller’s Charter Documents)
See
attached.
29
Schedule
2.11 (Seller’s Litigation)
NONE
30
Schedule
2.14 (Seller’s Intellectual Property)
The
name
“Eden FX”
Eden
FX
logo
Shot
Tracker software
Render
Controller software
31
Schedule
2.18
Financial
Statements
See
Attached
32
EXHIBIT
A-1
NON-COMPETITION
AGREEMENT WITH XXXX XXXXXX
33
EXHIBIT
A-2
NON-COMPETITION
AGREEMENT WITH XXXX XXXXX
34
EXHIBIT
B
LOAN
OUT AGREEMENT
35
