ASSET PURCHASE AGREEMENT
by and among
XX0.XXX INC.,
QUICKBAND, INC.,
and
DVD MAGS, INC.
Dated as of March 9, 2000
2
TABLE OF CONTENTS
Page
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ARTICLE I PURCHASE AND SALE OF ASSETS...........................................................1
1.1 Purchase and Sale of Assets............................................................1
1.2 Limited Assumption of the Seller's Obligations.........................................2
1.3 Purchase Price.........................................................................2
1.4 Closing. Deliveries....................................................................3
1.5 Closing Date...........................................................................3
1.6 Allocation Schedule....................................................................3
1.7 Transfer and Sales Taxes...............................................................3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLERS........................................3
2.1 Validity and Execution of Agreement....................................................3
2.2 No Conflict............................................................................4
2.3 Good Title Conveyed....................................................................4
2.4 Assets Necessary to The Business.......................................................4
2.5 Financial Statements; Books and Records...............................................4
2.6 No Material Adverse Change.............................................................5
2.7 Tax Matters............................................................................5
2.8 Litigation.............................................................................5
2.9 Contracts and Other Agreements.........................................................5
2.10 Transactions with Affiliates........................................................6
2.11 Operations..........................................................................6
2.12 Library Rights......................................................................7
2.13 Library Tangible Assets.............................................................8
2.14 Licenses............................................................................8
2.15 Tangible Property...................................................................9
2.16 Intellectual Property; Proprietary Rights: Employee Restrictions....................9
2.17 Licenses and Permits...............................................................11
2.18 Compliance with Laws...............................................................11
2.19 Brokers............................................................................11
2.20 Acquisition of Xx0.Xxx Shares......................................................11
2.21 Disclosure.........................................................................12
2.22 Representative.....................................................................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER.........................12
3.1 Organization and Qualification........................................................12
3.2 No Conflict; Required Filings and Consents............................................12
3.3 Validity and Execution of Agreement...................................................13
3.4 Reports...............................................................................13
3.5 Brokers...............................................................................13
3.6 Disclosure............................................................................14
ARTICLE IV PRE-CLOSING COVENANTS...............................................................14
4.1 Examinations and Investigation .......................................................14
4.2 Conduct of Business...................................................................14
4.3 Preservation of Business..............................................................14
4.4 No Solicitations......................................................................15
4.5 Consents..............................................................................15
4.6 Assistance Prior to the Closing.......................................................15
4.7 Other Agreements......................................................................15
ARTICLE V CONDITIONS PRECEDENT TO THE CLOSING..................................................16
5.1 Conditions Precedent to the Obligations of the Purchaser to Complete the Closing......16
5.2 Conditions Precedent to the Obligations of the Seller to Complete the Closing.........17
ARTICLE VI POST-CLOSING COVENANTS..............................................................18
6.1 Further Information...................................................................18
6.2 Record Retention......................................................................18
6.3 Post-Closing Assistance...............................................................18
6.4 SEC Reporting.........................................................................18
6.5 Restrictions on Transferability.......................................................19
ARTICLE VII SURVIVAL; INDEMNIFICATION..........................................................19
7.1 Survival of Agreements, Representations and Warranties................................19
7.2 Indemnification by the Seller.........................................................19
7.3 Purchaser's Indemnity.................................................................20
7.4 Method of Asserting Claims............................................................20
7.5 Limitations on the Seller's Obligations...............................................21
7.6 General Provisions....................................................................21
7.7 Character of Indemnity Payments.......................................................22
ARTICLE VIII TERMINATION OF AGREEMENT..........................................................22
8.1 Termination...........................................................................22
8.2 Survival After Termination............................................................23
ARTICLE IX.....................................................................................23
ARTICLE X MISCELLANEOUS........................................................................23
10.1 Certain Definitions................................................................23
10.2 Expenses...........................................................................28
10.3 Further Assurances.................................................................28
10.4 Bulk Sales Waiver..................................................................29
10.5 Notices............................................................................29
10.6 Publicity..........................................................................30
10.7 Entire Agreement...................................................................30
10.8 Severability.......................................................................30
10.9 Waivers and Amendments.............................................................30
10.10 Governing Law......................................................................31
10.11 Jurisdiction.......................................................................31
10.12 Binding Effect, No Assignment......................................................31
10.13 Variations in Pronouns.............................................................31
10.14 Counterparts.......................................................................31
10.15 Exhibits and Schedules.............................................................31
10.16 Headings...........................................................................31
EXHIBITS
EXHIBIT A Designations of Powers, Preferences and Rights of
Series B Preferred Stock
EXHIBIT B Escrow Agreement
EXHIBIT C Investment Letter
EXHIBIT D Xxxx of Sale
EXHIBIT E Registration Rights Agreement
SCHEDULES
SCHEDULE 1.6 Purchase Price Allocation
SCHEDULE 2.2 Conflicts
SCHEDULE 2.5(a) Financial Statements
SCHEDULE 2.5 Books and Records
SCHEDULE 2.6 Material Adverse Changes
SCHEDULE 2.7 Tax Matters
SCHEDULE 2.8 Litigation
SCHEDULE 2.9 Material Contracts
"Required Consents/Contracts"
SCHEDULE 2.10 Transactions with Affiliates
SCHEDULE 2.11 Operations
SCHEDULE 2.12(a) Library Programs/Library Content Inventory
"Required Consents/Library Rights"
SCHEDULE 2.12(b) "Permitted Liens"
"Litigation or Guild Encumbrances/ Library Programs"
SCHEDULE 2.12(c) Legal Violations
SCHEDULE 2.12(d) Library Program Rights
SCHEDULE 2.12(e) Library Music Rights
SCHEDULE 2.13 Locations of Library Properties
SCHEDULE 2.14 Licenses
"Required Consents/Licenses"
SCHEDULE 2.15 Tangible Property
"Required Consents/Tangible Property"
SCHEDULE 2.16 Intellectual Property; Proprietary Rights; Employee
Restrictions "Required Consents/Intellectual Property"
SCHEDULE 2.17 Licenses and Permits
"Required Consents/Permits"
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of March 9, 2000,
by and among Xx0.xxx Inc. ("Parent"), a Colorado corporation, Quickband, Inc.
(the "Purchaser"), a Delaware corporation having its principal address at 000
Xxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 and a wholly owned
subsidiary of Parent, and DVD Mags, Inc. (the "Seller"), a California
corporation, having its principal address at 0000 Xxxxx Xxxxxxxxx Xxxxxx, Xxx
Xxxxxxx, XX 00000.
WHEREAS, DVD Mags, Inc. is a California corporation in the business of
aggregating and producing short-form entertainment content for distribution
across digital and traditional channels (collectively, the "Business"); and
WHEREAS, the Seller wishes to sell, and the Purchaser wishes to
purchase, all of the assets that the Seller has used, uses or intends to use in
any way relating to the Business, or are useful in the Business (the "Purchased
Assets"), on the terms and subject to the conditions hereinafter set forth in
this Agreement;
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Purchaser and the Seller hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 PURCHASE AND SALE OF ASSETS. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, at the Closing (as
defined in Section 1.5), the Seller will sell, assign, convey, transfer and
deliver to the Purchaser, and the Purchaser will purchase and acquire from the
Seller, free and clear of all Liens (other than Permitted Liens), all of the
Seller's right, title and interest in, to and under personal property, tangible
or intangible, owned by the Seller and constituting the Purchased Assets
including, but not limited to, the following:
(a) the Library;
(b) all cash, cash equivalents and marketable securities;
(c) all equipment (including computer hardware and computer
terminals) and fixed assets utilized by the Seller and dedicated primarily to
the Business;
(d) all accounts receivable, inventory and supplies relating
to the ownership, operation and maintenance of the Business;
(e) all software programs and files utilized in the Business;
(f) all informational, promotional and advertising materials
(in whatever form) utilized in the Business, and all rights in the context
thereof and designs therefor;
(g) any and all prepaid expenses of the Seller relating to the
Business;
(h) all manufacturers' warranties and/or vendors' warranties
in effect with respect to any of the Purchased Assets and/or related inventories
and supplies, and/or the software programs included in the Purchased Assets;
(i) all rights under the Licenses by the Seller;
(j) all availability lists, customer lists, supplier lists,
operating manuals, trade secrets, technical information, and other such
knowledge and information constituting the "know-how" of the Business, and the
good will of the Business;
(k) all Intellectual Property Rights, including the tradenames
"Quickband Networks" and "Xxxxxxxxx.xxx"; and
(l) all Books and Records, printouts, drawings, data, files,
notes, notebooks, correspondence and memoranda relating to the foregoing
Purchased Assets.
1.2 LIMITED ASSUMPTION OF THE SELLER'S OBLIGATIONS.
(a) From and after the Closing Date the Purchaser will perform
and discharge (i) all obligations of the Seller under the Licenses and the
Library Outstanding Agreements, (ii) certain sales and transfer taxes as set
forth in Section 1.7 and (iii) all liabilities and payables incurred by the
Seller in the ordinary course of the Seller's business (the "Assumed
Obligations"), but excluding the Excluded Liabilities (as defined in Section
1.2(b) below). Except for the Assumed Obligations, the Purchaser is not assuming
any of the Seller's liabilities or obligations, whether known or unknown,
contingent or realized; PROVIDED, that all liabilities incurred after the
Closing Date in connection with the Purchaser's operations after the Closing
Date or the business and assets acquired by the Purchaser hereunder shall be
liabilities of the Purchaser.
(b) Notwithstanding any other provision of this Agreement, the
Purchaser shall not assume and shall have no liability for (i) any loans or
advances payable to any shareholder of the Seller, including the Major
Shareholders and (ii) any obligation, whether or not incurred in the ordinary
course of the Seller's business, that had been outstanding for 60 days or more
as of the date of this Agreement (collectively, the "Excluded Liabilities").
1.3 PURCHASE PRICE. The purchase price (the "Purchase Price") of
the Purchased Assets shall be 34,100 shares of Series B Preferred Stock, no
par value, of Xx0.xxx (the "Preferred Stock") and 136,339 shares of Xx0.xxx
Common Stock (collectively, the "Share Consideration"). The shares of
Preferred Stock shall have those powers, preferences and rights as are set
forth in Exhibit A. The shares that comprise the Share Consideration will be
"restricted shares" as defined in Rule 144 and shall have the benefit of the
Registration Rights Agreement. Notwithstanding any provision of this
Agreement to the contrary, a portion of the Share Consideration will be
subject to return to the Purchaser pursuant to the terms of the Escrow
Agreement, and accordingly at the Closing, the Seller will deposit in escrow
34,100 shares of Preferred Stock (the "Escrowed Shares").
1.4 CLOSING. DELIVERIES. At the Closing (as defined in
Section 1.5).
(a) Parent shall sell, issue and deliver shares of the
Parent's Common Stock (other than the Escrowed Shares) to the Seller together
with the certificates, opinions and other agreements and instruments
contemplated by Section 5.2;
(b) Parent shall issue, sell and deliver the Escrowed Shares
to the Escrow Agent named in the Escrow Agreement to be held under the terms
thereof;
(c) The delivery, issue and sale of the Share Consideration to
the Seller and the Escrow Agent shall be made by delivery of stock certificates
evidencing the Share Consideration on the Closing Date; and
(d) The Seller shall sell and deliver the Purchased Assets to
the Purchaser, together with the Xxxx of Sale and such other certificates,
opinions and other agreements and instruments contemplated by Section 5.1, free
and clear of all Liens (other than Permitted Liens).
1.5 CLOSING DATE. The consummation of the purchase and sale of the
Purchased Assets (the "Closing") shall be held at 10:00 a.m. at the offices of
the Purchaser's Counsel, 0 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The
closing date (the "Closing Date") shall be the business day immediately after
the conditions set forth in Article 5 have been satisfied, but in no event later
than April 3, 2000, or such other time as shall be mutually agreed to by the
Purchaser and the Seller.
1.6 ALLOCATION SCHEDULE. The Purchaser and the Seller agree that
the Purchase Price will be allocated among the Purchased Assets as set forth
in SCHEDULE 1.6, which schedule shall be agreed to prior to the Closing. No
party shall take any position with the Internal Revenue Service or other
taxing authority that is inconsistent with SCHEDULE 1.6.
1.7 TRANSFER AND SALES TAXES. The Seller and the Purchaser shall
each be responsible for the payment of fifty percent of any and all sales and
use taxes that may be imposed on the transfer of the Purchased Assets.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
To induce the Purchaser to enter into this Agreement, to purchase the
Purchased Assets and to perform its other obligations under this Agreement, the
Seller represents and warrants to the Purchaser as follows:
2.1 VALIDITY AND EXECUTION OF AGREEMENT. The Seller has the full
legal right, capacity and power required to enter into, execute and deliver
this Agreement and each of the Ancillary Agreements to which it is a party
and to perform fully its obligations hereunder and thereunder. This Agreement
and each of the Ancillary Agreements to which it is a party have been duly
executed and delivered by the Seller, and, assuming this Agreement and each of
the Ancillary Agreements constitutes a valid and binding obligation of the
Purchaser and each other party thereto, constitutes a valid and binding
obligation of the Seller, enforceable in accordance with its terms, subject to
the qualifications that enforcement of the rights and remedies created hereby is
subject to (a) bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting the rights and remedies of creditors and (b)
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
2.2 NO CONFLICT. Except as described in SCHEDULE 2.2, neither the
execution and delivery of this Agreement and each of the Ancillary Agreements by
the Seller nor the performance by the Seller of the transactions contemplated
hereby or thereby will: (a) violate, conflict with, result in the acceleration
of, or entitle any party to accelerate the maturity or the cancellation of the
performance of any obligation under, or result in the creation or imposition of
any Lien in or upon any of the properties or assets of the Seller or constitute
a default (or an event which might, with the passage of time or the giving of
notice, or both, constitute a default) under any mortgage, indenture, deed of
trust, lease, contract, loan or credit agreement, license or other instrument to
which the Seller is a party or by which it or any of its respective properties
or assets may be bound or affected; or (b) violate or conflict with any
provision of any Law or Order applicable to the Seller or the Business or
require any consent or approval of or filing or notice with any Governmental or
Regulatory Body by the Seller or the Business, as the case shall be.
2.3 GOOD TITLE CONVEYED. The Xxxx of Sale endorsements,
assignments and other instruments to be executed and delivered by the Seller
to Purchaser at the Closing will be valid and binding obligations of the
Seller, enforceable in accordance with their respective terms, and will
effectively vest in Purchaser good, valid and marketable title to all the
Purchased Assets to be transferred to Purchaser pursuant to and as
contemplated by this Agreement free and clear of all Liens (other than
Permitted Liens).
2.4 ASSETS NECESSARY TO THE BUSINESS. Except for government
permits, licenses and other consents and authorizations of any Governmental
or Regulatory Body required to be obtained by the Purchaser, the Purchaser
will have all necessary assets and rights, including rights to be conveyed
under the Ancillary Agreements, to carry on the Business in all material
respects in the same manner and to the same extent as conducted by the Seller
at the date hereof.
2.5 FINANCIAL STATEMENTS; BOOKS AND RECORDS. (a) Schedule 2.5 sets
forth the following: (a) an unaudited balance sheet of the Seller as at June 30,
1998 and 1999 and the related unaudited statement of income, retained earnings
and cash flows for the years then ended, and (b) an unaudited balance sheet of
the Seller as at December 31, 1999 and the related unaudited statement of income
for the six months then ended. Except as set forth on Schedule 2.5(a), such
financial statements have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied throughout the periods
indicated. Each such balance sheet fairly presents the financial condition of
the Seller as at the respective date thereof and reflects all claims against and
all obligation, debts and liabilities of the Seller, fixed or contingent, as at
the date thereof, required to be shown thereon in accordance with GAAP, and the
related statements of income, retained earnings and cash flows fairly present
the results of operations, retained earnings and cash flows of the Seller for
the periods indicated.
(b) The Seller has made available to Parent or the Purchaser copies of
all of the Books and Records of the Seller. Except as described in SCHEDULE 2.5,
to the best knowledge of the Seller, each of the Books and Records as supplied
to Parent or the Purchaser is true, correct, complete and current in all
material respects and, as applicable, accurately reflects all actions taken by
the Seller since the date of inception of the Business, and all signatures
contained therein are the true signatures of the Persons whose signatures they
purport to be.
2.6 NO MATERIAL ADVERSE CHANGE. Except as described in SCHEDULE
2.6, since January 1, 2000, there has been no material adverse change in the
business, operations, income or condition (financial or otherwise), assets or
properties of the Seller, nor is any such change threatened, nor has there
been any damage, destruction or loss which could reasonably be expected to
have a Material Adverse Effect on the Seller, whether or not covered by
insurance.
2.7 TAX MATTERS. Except as described in SCHEDULE 2.7, (i)
Seller has properly and timely filed or caused to be filed all Tax Returns
required by applicable law to be filed by it and has paid all Taxes properly
due for the periods covered by such Tax Returns; (ii) all such Tax Returns
were correct and complete; (iii) there are no security interests in any of
the Purchased Assets that arose in connection with any failure (or alleged
failure) to pay any Tax (except for Liens for Taxes not yet due); and (iv)
Seller has not been a party to any tax allocation or sharing arrangement.
2.8 LITIGATION. There are no outstanding Orders by which the
Seller, or any of the assets or properties of the Seller are bound, and,
except as described in SCHEDULE 2.8, there is no Action or Proceeding pending
or, to the knowledge of the Seller, threatened (whether or not the defense
thereof or liabilities in respect thereof are covered by insurance) against
or affecting the Seller or any of the assets or properties of the Seller,
nor, to the knowledge of the Seller, are there any facts which are likely to
give rise to any such Action or Proceeding which if adversely decided, would
have a Material Adverse Effect on the Seller.
2.9 CONTRACTS AND OTHER AGREEMENTS. SCHEDULE 2.9 sets forth the
Material Contracts to which the Seller is a party or to which any of the assets
or properties of the Seller, is bound or subject. The Seller has delivered true
and complete copies of all of the Material Contracts to Parent or the Purchaser.
All of the Material Contracts are valid, subsisting, in full force and effect
and binding upon the Seller and, to the knowledge of the Seller, the other
parties thereto in accordance with their terms, subject to the qualifications
that enforcement of the rights and remedies created thereby is subject to (i)
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and (ii) general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law). The Seller has satisfied in full or provided
for all of its liabilities and obligations under such Material Contracts
requiring performance prior to the date hereof in all material respects, and is
not in default under any of them, nor, to the knowledge of the Seller, does any
condition exist that with notice or lapse of time or both would constitute such
a default. To the knowledge of the Seller, no other party to any such Material
Contract is in default thereunder, nor does any condition exist that with notice
or lapse of time or both would constitute such a default. Except as set forth
on SCHEDULE 2.9 under the heading "Required Consents/Contracts," no approval or
consent of any Person is needed for any of the Material Contracts to continue to
be in full force and effect. Assuming receipt of all consents set forth
under the heading "Required Consents/Contracts" in SCHEDULE 2.9, all of the
Seller's rights under such Material Contracts will be in full force and effect
following consummation of the transactions contemplated by this Agreement.
2.10 TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE
2.10, no Affiliate of the Seller has: (a) borrowed money from or loaned money to
the Seller which remains outstanding; (b) had any contractual or other claim,
express or implied, of any kind whatsoever against the Seller; (c) had any
interest in any property or assets used by the Seller; (d) engaged in any other
transaction with the Seller; or (e) owned, directly or indirectly, any interest
in (except not more than five percent (5%) stockholdings for investment purposes
in securities of publicly held and traded companies), or served as a director,
employee or consultant of or otherwise received remuneration from, any Person
which is, or has engaged in business as, a competitor, lessor, lessee, customer
or supplier of the Seller.
2.11 OPERATIONS. Except as expressly authorized by this
Agreement or as set forth on SCHEDULE 2.11, since January 1, 2000, the Seller
has not:
(a) merged with or into or consolidated with any other Person,
or changed or agreed to rearrange in any material manner the character of the
Business;
(b) issued, sold or purchased options or rights to subscribe
to, or enter into any contracts or commitments to issue, sell or purchase, any
shares of its equity interests;
(c) entered into, amended or terminated any (i) employment
agreement or collective bargaining agreement, (ii) adopted, entered into or
amended any arrangement which is, or would be, a plan or arrangement adopted for
the benefit of some or all of its employees or (iii) made any change in any
actuarial methods or assumptions used in funding any such plan or arrangement or
in the assumptions or factors used in determining benefit equivalencies
thereunder;
(d) issued any note, bond or other debt security, created,
incurred or assumed any indebtedness for borrowed money other than in the
ordinary course of business in connection trade payables;
(e) made any distributions of any kind to any shareholder
(other than tax distributions) or made any direct or indirect redemption,
retirement, purchase or other acquisition of its equity interests, other than
salaries paid in the ordinary course of business;
(f) knowingly waived any right of material value to the
Seller;
(g) made any change in its accounting methods or practices or
made any changes in depreciation or amortization policies or rates adopted by it
or made any material write-down of inventory or material write-off as
uncollectable of accounts receivable;
(h) made any wage or salary increase or bonus, or increase in
any other direct or indirect compensation, for or to any of its managers,
employees, consultants, agents or other representatives, or any accrual for or
commitment or agreement to make or pay the same, other than increases made in
the ordinary course of business consistent with past practice;
(i) entered into any transactions with any of the Seller's
Affiliates, shareholders, employees, consultants, agents or other
representatives (other than employment arrangements made in the ordinary course
of business consistent with past practice), or with any Affiliate of any
managers, consultant, employee, agent or other representative;
(j) made any payment or commitment to pay any severance or
termination pay to any Person or any of its officers, directors, employees,
consultants, agents or other representatives, other than payments or commitments
to pay such Persons or their officers, directors or employees in the ordinary
course of business;
(k) (i) entered into any lease (as lessor or lessee), (ii)
sold, abandoned or made any other disposition of any of its assets or properties
other than in the ordinary course of business consistent with past practice,
(iii) granted or suffered any Lien on any of its assets or properties or (iv)
entered into or amended any Material Contract;
(l) made any acquisition of, or contract to purchase, all or
any part of the assets, properties, capital stock or business of any other
Person, except in the ordinary course of business;
(m) paid, directly or indirectly, any of its Liabilities
before the same became due in accordance with their terms or otherwise than in
the ordinary course of business, except to obtain the benefit of discounts
available for early payment;
(n) except in the ordinary course of business, created,
incurred or assumed any indebtedness for borrowed money, or guaranteed any
indebtedness for borrowed money or any capitalized lease obligation, in each
case in excess of $5,000 individually or in the aggregate; or
(o) terminated, failed to renew, amended or entered into any
Material Contract or other agreement of a type required to be disclosed pursuant
to Section 2.9.
2.12 LIBRARY RIGHTS.
(a) SCHEDULE 2.12(a) sets forth a list of all Library
Programs. The Seller possesses the right, title and interest in the Library
Programs such that after giving effect to the transactions contemplated by this
Agreement the Purchaser will have the unconditional right, under Applicable
Copyright Law, to exploit, broadcast and distribute, or license others to
exploit, broadcast or distribute the Library Programs in the media specified in
SCHEDULE 2.12(a), for the time period and in the territory or territories
specified in SCHEDULE 2.12(a).
(b) Except as set forth in SCHEDULE 2.12(b) under the heading
"Permitted Liens", there are no Liens that encumber or relate to any of the
Library Programs other than the Permitted Liens. Except as described in SCHEDULE
2.12(b) under the heading "Litigation or Guild Encumbrances/ Library Programs",
there are no lawsuits, whether pending or, to the best of the Seller's
knowledge, threatened, involving or against any of the Library Programs and none
of the Library Programs are subject to any Guild Encumbrances.
(c) Except as described in SCHEDULE 2.12 (c), to the best
knowledge of the Seller, none of the Library Programs, nor any element thereof,
nor the exploitation thereof by the Sellers libel, defame, violate the rights of
privacy or publicity, or violate any copyright, patent, trademark or service
xxxx, common law or other similar right, including without limitation any
literary, dramatic, comedic, musical, distribution, exhibition or photoplay
right, of any person or violates any other applicable Law. Neither the Seller
nor any of its Affiliates has received any notice relating to any claim thereof.
(d) Except as set forth in SCHEDULE 2.12(d), all material
contained in the Library Programs is either (A) wholly original and not copied,
in whole or in part, from any other work, (B) duly licensed to, or otherwise
acquired by, the Seller, (C) in the public domain throughout the world, (D)
permitted to be exploited by the Seller pursuant to the provisions of 17 U.S.C.
Section 107, as judicially interpreted for all uses to the full extent of the
Library Programs or (E) a combination of any of the foregoing.
(e) Except as set forth in SCHEDULE 2.12(e), to the extent
that the Library Rights include Library Music Rights, all such Library Music
Rights are: (A) controlled by American Society of Composers, Authors and
Publishers Broadcast Music Inc. or SESAC; (B) in the public domain throughout
the world; or (C) duly licensed (with public performance licenses) to, or
otherwise owned by, the Seller with sufficient right to permit their public
performance in connection with the exhibition of the related Library Programs.
(f) Any credits that are contained in the Library Programs are
complete and correct in all material respects.
(g) Except as set forth on SCHEDULE 2.12(A) under the heading
"Required Consents/Library Rights," no approval or consent of any Person is
needed so that the interest of the Seller in any of the Library Rights shall
continue to be in full force and effect and enforceable following the
transactions contemplated by this Agreement.
(h) The information set forth in the content library inventory
attached as SCHEDULE 2.12(a) is compete and correct in all material respects.
2.13 LIBRARY TANGIBLE ASSETS. An original master of each of the
Library Properties is in a commercially reasonable condition and all such
original masters that currently exist are included in the Library Tangible
Assets. SCHEDULE 2.13 sets forth a list, which is true, accurate and complete
in all material respects, of the physical location of the Library Properties.
2.14 LICENSES.
(a) SCHEDULE 2.14 sets forth a true, accurate and complete
list of Contracts concerning the licensing, distribution or exhibition of any
Library Programs, either as licensor, licensee, distributor, grantor or grantee,
or any other similar Contract relating to the Business (a "License"), currently
in effect to which the Seller is a party, is otherwise bound or is otherwise a
beneficiary, or to which any of its properties is subject, or which otherwise
constitute part of the Business.
(b) The Seller has delivered or made available to Parent or
the Purchaser a true and correct copy of each License set forth in SCHEDULE
2.14, in each case as in effect and together with all amendments or
modifications thereof. Each such License is in full force and effect and is
valid, binding and enforceable in accordance with its terms against the Seller
or, to the best of the Seller's knowledge, any other party thereto. Neither the
Seller nor, to the best of the Seller's knowledge, any other party to any such
License is in material breach or default thereunder, and to the best knowledge
of Seller, no event has occurred on the part of any party to any such License
which with notice or lapse of time or both would constitute a material breach or
default thereunder. Neither the Seller, nor to the best of the Seller's
knowledge, any other party to any such License has threatened to, or taken, any
action that would cause or result in a material default, a breach or an
anticipatory breach by such party thereunder nor has any such party alleged any
such default or breach. Except as set forth on SCHEDULE 2.14 under the heading
"Required Consents/Licenses," no approval or consent of any Person is needed so
that the interest of the Seller in the Licenses shall continue to be in full
force and effect and enforceable by the Purchaser following the transactions
contemplated by this Agreement.
2.15 TANGIBLE PROPERTY. SCHEDULE 2.15 sets forth a true, complete and
correct list of all categories of tangible personal property with an aggregate
undepreciated book value in excess of $5,000, which is material to the Business
(other than inventory), including, without limitation, equipment, furniture,
leasehold improvements, fixtures, vehicles, structures, any related capitalized
items and other similar tangible property, in each case owned or leased by the
Seller and material to the Business (collectively, the "Tangible Property"),
together with a description of all material leases or subleases of Tangible
Property to which the Seller is the lessor, sublessor, lessee or sublessee and
all options to purchase or sell the underlying property. The Tangible Property
is in good operating condition, subject to continued repair and replacement in
accordance with past practice. The Seller has not received notice that any of
the Tangible Property is in violation of any existing Law or Order. During the
past three years there has not been any material interruption of the operations
of the Business due to inadequate maintenance of the Tangible Property. Except
as set forth on SCHEDULE 2.15 under the heading "Required Consents/Tangible
Property," no approval or consent of any Person is needed so that the interest
of the Seller in the Tangible Property shall continue to be in full force and
effect and enforceable by the Purchaser following the transactions contemplated
by this Agreement.
2.16 INTELLECTUAL PROPERTY; PROPRIETARY RIGHTS: EMPLOYEE RESTRICTIONS.
(a) The Seller has disclosed in SCHEDULE 2.16 all trademark
registrations and applications for registration, patents and patent
applications, trademarks, service marks, trade names, trade secrets, Internet
domain names or other proprietary rights (collectively, the "Intellectual
Property Rights" and together with any and all licenses, databases, computer
programs and other computer software user interfaces, know-how, trade secrets,
customer lists, proprietary technology, processes and formulae, source code,
object code, algorithms, architecture, structure, display screens, layouts,
development tools, instructions, templates, marketing materials, inventions,
trade dress, logos and designs and all documentation and electronic media
constituting, describing or relating to the foregoing, the "Intellectual
Property Rights") used in the Business, including, without limitation, all
licenses, assignments and releases of Intellectual Property Rights of others in
material works embodied in its products. SCHEDULE 2.16 separately lists the (i)
owned Intellectual Property Rights and (ii) licensed
Intellectual Property Rights. Except as set forth on SCHEDULE 2.16 under the
heading "Required Consents/Intellectual Property," no approval or consent of any
Person is needed so that the interest of the Seller in the Intellectual Property
Rights shall continue to be in full force and effect and enforceable by the
Purchaser following the transactions contemplated by this Agreement. All
Intellectual Property Rights purported to be owned by the Seller held by any
employee, director or consultant have been validly assigned to the Seller. The
Seller's Intellectual Property Rights are sufficient to carry on the Business as
presently conducted. The Seller has exclusive ownership of or license to use all
Intellectual Property Rights identified in SCHEDULE 2.16 or has obtained any
licenses, releases or assignments reasonably necessary to use all third parties'
Intellectual Property Rights in works embodied in its products. To the knowledge
of the Seller, the business activities or products of the Business do not
infringe any Intellectual Property Rights of others. The Seller has not received
any notice or other claim from any Person asserting that any of the Seller's
activities infringe or may infringe any Intellectual Property Rights of such
Person.
(b) The Seller has the right to use, free and clear of claims
or rights of others, all trade secrets, customer lists, hardware designs,
programming processes, software and other information required for or incident
to its products or its business as presently conducted or contemplated. The
Seller has taken all reasonable measures to protect and preserve the security
and confidentiality of its Intellectual Property Rights. The Purchaser
understands that no employees or consultants of the Seller involved in the
design, review, evaluation or development of products or Intellectual Property
Rights have executed nondisclosure or deeds or assignment of inventions
agreements sufficient to protect the confidentiality of the Seller's
Intellectual Property Rights and to vest in the Seller exclusive ownership of
such Intellectual Property Rights. All material trade secrets and other material
confidential information of the Seller are presently valid and protectable and
are not part of the public domain or knowledge, nor, have they been used,
divulged or appropriated for the benefit of any Person other than the Seller or
otherwise to the detriment of the Seller or the Business. No employee or
consultant of the Seller has used any material trade secrets or other material
confidential information of any other Person in the course of their work for the
Business.
(c) The Seller is the exclusive owner of all right, title and
interest in its Intellectual Property Rights as purported to be owned by the
Seller, and such Intellectual Property Rights are valid and in full force and
effect. No university, government agency (whether federal or state) or other
organization has sponsored research and development conducted by the Seller or
has any claim of right to or ownership of or other encumbrance upon the
Intellectual Property Rights of the Seller. The Seller is not aware of any
infringement by others of its copyrights or other Intellectual Property Rights
in any of its products, technology or services, or any violation of the
confidentiality of any of its proprietary information. The Seller is not making
unlawful use of any confidential information or trade secrets of any past or
present employees of the Seller.
(d) The Purchaser understands that no key employees, including
all developers (contract or otherwise) of or to the Seller, have executed and
delivered to and in favor of the Seller agreements regarding the protection of
confidential and proprietary information and the assignment to the Seller of
Intellectual Property Rights arising from the services performed for the Seller
by such persons.
2.17 LICENSES AND PERMITS. SCHEDULE 2.17 sets forth a list of the
government permits, licenses, domain name and other registrations and other
consents and authorizations (federal, state, local and foreign) of any
Governmental or Regulatory Body (collectively, "Permits") which the Seller has
obtained in connection with the assets and properties used in the Business.
Except as set forth on SCHEDULE 2.17 under the heading "Required
Consents/Permits," no material Permit is required to be obtained by the Seller
in connection with the properties or assets used in the Business. The Company
has not received any notice of any claim of revocation of any such Permit. The
Seller has no knowledge of any event which would be likely to give rise to such
a claim.
2.18 COMPLIANCE WITH LAWS. The Seller (a) is in compliance with all,
and not in violation of any, and has not received any claim or notice that it is
not in compliance in any material respect with, or that it is in violation in
any material respect of, any Law or Order to which the Seller or any of the
assets or properties of the Seller (including the use and occupancy thereof) are
subject and (b) has not failed in any material respect to obtain or to adhere to
the requirements of any Permit necessary in connection with its assets or
properties.
2.19 BROKERS. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out by the Seller directly
with the Purchaser, without the intervention of any other Person on behalf of
the Seller in such manner as to give rise to any valid claim by any Person
against the Seller or the Purchaser for a finder's fee, brokerage commission or
similar payment.
2.20 ACQUISITION OF XX0.XXX SHARES.
(a) The Seller represents and warrants that the Share
Consideration is being acquired for its own account, with no intention of
transferring or assigning any participation or any interest therein, and without
a view to the distribution of any portion thereof, except in accordance with the
Securities Act. The Seller will not sell, assign, transfer or encumber any of
such shares unless (i) a registration statement under the Securities Act with
respect thereto is in effect and the prospectus included therein meets the
requirements of Section 10 of the Securities Act or (ii) the Purchaser has
received a written opinion of its counsel that, after an investigation of the
relevant facts, such counsel is of the opinion that such proposed sale,
assignment, transfer or encumbering does not require registration under the
Securities Act; PROVIDED, that the Seller may transfer the Share Consideration
to its Shareholders in accordance with their holdings of the Company pursuant to
a plan of complete liquidation.
(b) The Seller understands that (i) the Share Consideration is
not being registered under Securities Act and must be held indefinitely unless
the Share Consideration is subsequently registered thereunder or any exemption
from such registration is available and therefore (ii) the Seller may be
required to bear the economic risk of its investment in the Share Consideration
for an indefinite period of time, (iii) the Share Consideration is not being
registered under the Securities Act in part on the ground that the issuance
thereof is exempt under Section 4(2) of the Securities Act as a transaction by
an issuer not involving any public offering and (iv) the Purchaser's reliance on
such exemption is predicated in part on the foregoing representation and
warranty of the Seller.
(c) The Seller understands that the Purchaser will have an
appropriate stop order placed on its stock records indicating the existence of
the terms of this Agreement, and that each certificate representing the Share
Consideration, shall bear the following or a substantially similar legend:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED
OR ENCUMBERED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT, OR UNLESS
THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT THAT SUCH
SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT."
(d) The Seller has received copies of the Purchaser's
Transition Report on SEC Form 10-KSB for the period from October 1, 1998 to
December 31, 1998, as amended, and the Purchaser's Quarterly Reports on SEC Form
10-QSB for its quarters ended June 30, 1999 and September 30, 1999 (the "Xx0.xxx
SEC Reports").
2.21 DISCLOSURE. To the knowledge of the Seller, none of the
representations, warranties or covenants contained in this Agreement, or any
Schedule or Exhibit to this Agreement, made by the Seller contains an untrue
statement of a material fact or omits a material fact necessary to make the
statements contained herein or therein not misleading.
2.22 REPRESENTATIVE. From and after liquidation of the Seller pursuant
to a plan of complete liquidation, East-West Capital Associates, Inc. shall be
the duly authorized representative of the Seller for purposes of this Agreement,
to take any and all actions and to make any and all decisions required or
permitted to be taken on the Seller's behalf under this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
To induce the Seller to enter into this Agreement, to sell the
Purchased Assets and to perform their other obligations under this Agreement,
Parent and the Purchaser hereby jointly and severally represent and warrant to
the Seller as follows:
3.1 ORGANIZATION AND QUALIFICATION. Each of Parent and the Purchaser is
a duly organized and validly existing corporation in good standing under the
laws of its jurisdiction of incorporation, with all corporate power and
authority to own its properties and conduct its business as currently conducted.
3.2 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. Neither the execution
and delivery of this Agreement nor the performance by Parent and the Purchaser
of their obligations hereunder, nor the consummation of the transactions
contemplated hereby, will: (i) conflict with the Certificate of Incorporation or
By-laws (or other governing documents) of either of Parent or the Purchaser;
(ii) violate any Law applicable to either of Parent or the Purchaser; or (iii)
violate, breach, be in conflict with or constitute a default (or an event which,
with notice or lapse of time
or both, would constitute a default) under any note, bond, indenture, mortgage,
deed of trust, lease, franchise, permit, authorization, license, contract,
instrument or other agreement or commitment or any Judgment to which either of
Parent and the Purchaser is a party, except in each case to the extent such
matter would not materially impair or delay, or reasonably could be expected to
materially impair or delay, the ability of Parent and the Purchaser to
consummate the transactions contemplated by this Agreement or to perform their
obligations under this Agreement.
3.3 VALIDITY AND EXECUTION OF AGREEMENT. The Purchaser has the full
legal right and power required to enter into, execute and deliver this Agreement
and each of the Ancillary Agreements to which it is a party and to perform fully
its obligations hereunder and thereunder. Upon approval by the board of
directors of Xx0.xxx, which approval will be given on or before March 20, 2000,
this Agreement, and each of the Ancillary Agreements to which it is a party,
will have been duly executed and delivered by the Purchaser, and, assuming this
Agreement and each of the Ancillary Agreements to which it is a party will
constitute a valid and binding obligation of the Sellers and each other party
thereto, constitutes the valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms, subject to the
qualifications that enforcement of the rights and remedies created hereby is
subject to (a) bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting the rights and remedies of creditors and (b)
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
3.4 REPORTS.
(a) Since June 30, 1999, Parent has filed all required forms,
reports and documents with the Commission. Each of the Xx0.xxx SEC Reports
complied at the time such forms, reports or documents were filed, in all
material respects with all applicable requirements of the Exchange Act, as
appropriate. None of the Xx0.xxx SEC Reports contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The financial statements of Xx0.xxx contained in the
Xx0.xxx SEC Reports have been prepared in accordance with GAAP consistently
applied throughout the periods indicated. Each balance sheet contained therein
fairly presents the financial condition of Xx0.xxx as at the respective date
thereof and reflects all claims against and all obligations, debts and
liabilities of the Seller, fixed or contingent, as at the date thereof, required
to be shown thereon in accordance with GAAP, and each statement of income,
retained earnings and cash flows fairly presents the results of operations,
retained earnings and cash flows of Xx0.xxx for the periods indicated.
3.5 BROKERS. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out by Parent and the
Purchaser directly with the Seller without the intervention of any other Person
on behalf of Parent or the Purchaser in such manner as to give rise to any valid
claim by any Person against the Seller for a finder's fee, brokerage commission
or similar payment.
3.6 DISCLOSURE. To the knowledge of the Purchaser, none of the
representations, warranties or covenants contained in this Agreement, or in any
Schedule or Exhibit hereto, made by the Purchaser, contains any untrue statement
of a material fact or omits a material fact if necessary to make the statements
contained herein or therein not misleading.
ARTICLE IV
PRE-CLOSING COVENANTS
The Seller and the Purchaser hereby covenant and agree as
follows:
4.1 EXAMINATIONS AND INVESTIGATION .
(a) At or prior to the Closing Date, the Purchaser shall be
entitled to make such investigation of the assets, properties and operations of
the Seller and such examination of the books, records, Tax Returns, financial
condition and operations of the Seller as the Purchaser may wish. Any such
investigation and examination shall be conducted at reasonable times and under
reasonable circumstances and the Seller shall cooperate fully therein. In order
that the Purchaser may have full opportunity to make such a business, accounting
and legal review, examination or investigation as they may wish of the Seller
and the Business, the Seller shall furnish to the Purchaser during such period
all such information and copies of such documents concerning the affairs of the
Seller as the Purchaser may reasonably request and cause the Seller's managers,
employees, consultants, agents, accountants and attorneys to cooperate fully
with the Purchaser in connection with such review and examination and to make
full disclosure to the Purchaser of all material facts affecting the financial
condition and operations of the Business.
(b) Until the Closing and if the Closing shall not occur,
thereafter, the Purchaser and its Affiliates shall keep confidential and shall
not use in any manner inconsistent with the transactions contemplated by this
Agreement and after termination of this Agreement, the Purchaser and its
Affiliates shall not disclose, nor use for their own benefit, any information or
documents obtained from the Seller concerning the assets, properties, business
and operations of the Seller, unless (i) readily ascertainable from public or
published information, or trade sources, (ii) received from a third party not
under an obligation to the Seller to keep such information confidential or (iii)
required by any Law or Order. If this transaction does not close for any reason,
the Purchaser and its Affiliates shall return or destroy all such confidential
information and compilations thereof and shall certify such destruction or
return to the Seller.
4.2 CONDUCT OF BUSINESS. From the date hereof through the Closing Date,
the Seller shall cause the Business to be conducted in the ordinary course in
the same manner as it has been conducted since January 1, 2000.
4.3 PRESERVATION OF BUSINESS. From the date hereof through the Closing
Date, the Seller shall use commercially reasonable efforts to (i) preserve
intact the assets, properties and organizations of the Seller, (ii) keep
available the services of the present managers, employees, consultants and
agents of the Seller; and (iii) maintain the present suppliers and customers and
preserve the goodwill of the Seller in the Business.
4.4 NO SOLICITATIONS. The Seller shall not take any action to solicit,
initiate, seek, encourage or support any inquiry, proposal or offer from,
furnish any information to, or participate in any negotiations with, any
corporation, partnership, person or other entity or group regarding any
acquisition of the Seller or the Business, any merger or consolidation with or
involving the Seller, or any acquisition of any material portion of the equity
interest or assets of the Seller, or any equity or debt financing of the Seller
or any material license of Intellectual Property Rights (any of the foregoing
being referred to in this Agreement as an "Acquisition Transaction") or enter
into an agreement concerning any Acquisition Transaction with any party other
than the Purchaser. If between the date of this Agreement and the earlier of (a)
the Closing Date and (b) termination of this Agreement pursuant to Article 8,
the Seller receives from a third party any offer to negotiate or consummate an
Acquisition Transaction, the Seller shall immediately (i) notify the Purchaser
(orally and in writing) of such offer, including the identity of such party and
the terms of any proposal therein, (ii) notify such third party in writing of
the Seller's obligations under this Agreement, and (iii) keep the Purchaser
informed with respect to such offer.
4.5 CONSENTS. The Seller and the Purchaser shall cooperate, and use
their reasonable commercial efforts, to make filings and obtain licenses,
permits, consents, approvals, authorizations, qualifications and orders of
governmental authorities and other third parties necessary to consummate the
transactions contemplated by this Agreement as soon as reasonably practicable
following the date hereof. Notwithstanding the foregoing, nothing herein shall
obligate or be construed to obligate either the Seller or the Purchaser to make
any payment to any third party or to agree to any material variation or
termination of any existing agreement or arrangement in order to obtain the
consent or approval of such third party or to transfer any contract, license or
permit in violation of its terms.
4.6 ASSISTANCE PRIOR TO THE CLOSING. Prior to the Closing, the Seller
will afford the Purchaser access to the Seller's Books and Records so that the
Purchaser and its representatives may undertake their legal, financial, tax and
business due diligence investigation of the Seller, the Business and the
Library, including agreements that underlie the Seller's right to use its
Library Programs.
4.7 OTHER AGREEMENTS. The Seller and the Purchaser agree to take, or
cause to be taken, all actions and to do, or cause to be done, all things
reasonably necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including, without limitation, the obtaining of all necessary waivers, consents
and approvals and the effecting of all necessary registrations and filings,
including, but not limited to, submissions of information requested by
Governmental or Regulatory Bodies and any other Persons required to be obtained
by them for the consummation of the closing and the continuance in full force
and effect of the permits, contracts and other agreements set forth on the
Schedules to this Agreement.
ARTICLE V
CONDITIONS PRECEDENT TO THE CLOSING
5.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER TO
COMPLETE THE CLOSING. The obligations of the Purchaser to perform its
obligations under this Agreement at the Closing are subject to the fulfillment
of the following conditions, any one or more of which may be waived by the
Purchaser:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Seller contained in this Agreement shall
be deemed to have been made again at and as of the Closing Date and shall then
be true and correct in all material respects, except to the extent the same may
be limited to an earlier date, in which case such representation and warranty
shall be true and correct in all material respects as of such earlier date.
(b) COVENANTS. The Seller shall have performed and complied in
all material respects with each of its agreements and conditions required by
this Agreement to be performed or complied with by it by or prior to the Closing
Date.
(c) CLOSING CERTIFICATE OF THE SELLER. The Seller shall have
delivered to the Purchaser a certificate signed by the President or any Vice
President, dated the Closing Date, certifying the fulfillment of the conditions
set forth in subsections 5.1(a) and (b).
(d) XXXX OF SALE. The Seller shall execute and deliver to the
Purchaser the Xxxx of Sale. In addition, to the extent that specific assignments
may be necessary or appropriate in respect of any of the Purchased Assets,
and/or to the extent that any of the Purchased Assets are represented by
certificates of title or other documents, then the Seller shall execute and
deliver to the Purchaser any and all additional transfer documents, and shall
endorse to and in the name of the Purchaser all certificates of title and other
such documents, as may be necessary or appropriate in order to effect the full
transfer to the Purchaser of all of the Purchased Assets.
(e) NO LITIGATION. No Action or Proceeding shall be pending in
which it is sought to restrain or prohibit the consummation of the transactions
contemplated hereby. No Order which restrains or prohibits the transactions
contemplated hereby shall be in effect. No Governmental or Regulatory Body shall
be seeking such an Order or threatening to do so.
(f) REQUIRED CONSENTS. Each of the Required Consents shall
have been obtained.
(g) LOANS FROM DIRECTORS AND STOCKHOLDERS. All loans to the
Seller from its directors or shareholders or any of their respective Affiliates
shall have been canceled, paid in full or duly converted into equity of the
Seller.
(h) NET WORKING CAPITAL. The Seller's Net Working Capital
(determined in accordance with generally accepted accounting principles, applied
on a consistent basis and without including debt to shareholders as a current
liability) should not be less than negative One Hundred Thousand Dollars
(-$100,000.00).
(i) REGISTRATION RIGHTS AGREEMENT. The Seller shall have
entered into and delivered the Registration Rights Agreement to the Purchaser.
(j) ESCROW AGREEMENT. The Seller and the Escrow Agent shall
have entered into the Escrow Agreement.
(k) OPINION OF COUNSEL. The Purchaser shall have received an
opinion of counsel from the Seller's Counsel as to such matters as it shall
reasonably request.
(l) APPROVAL OF DOCUMENTS. The form and substance of all legal
proceedings, documents, or papers used or delivered hereunder by the Seller
shall be reasonably satisfactory to the Purchaser's Counsel.
5.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER TO COMPLETE
THE CLOSING. The obligations of the Seller to perform its obligations under this
Agreement at the Closing are subject to the fulfillment on or prior to the
Closing Date, of the following conditions, any one or more of which may be
waived by the Seller:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Purchaser contained in this Agreement
shall be deemed to have been made again at and as of the Closing Date, and shall
then be true and correct in all material respects, except to the extent the same
may be limited to an earlier date, in which case such representation and
warranty shall be true and correct in all material respects as of such earlier
date.
(b) COVENANTS. The Purchaser shall have performed and complied
with all if its agreements and conditions required by this Agreement to be
performed or complied with by it by or prior to the Closing Date.
(c) CLOSING CERTIFICATE OF THE PURCHASER. The Purchaser shall
have delivered to the Seller a certificate signed by it, dated the Closing Date,
certifying the fulfillment of the conditions set forth in subsections 5.2(a) and
(b).
(d) PURCHASER'S DELIVERY. The Purchaser shall have delivered
certificates representing all shares comprising the Share Consideration other
than the Escrowed Shares to the Seller, or as the Seller may direct in writing
at or prior to the Closing, and the certificates representing the balance of the
consideration to the Escrow Agent.
(e) ESCROW AGREEMENT. Parent, the Purchaser and the Escrow
Agent shall have entered into the Escrow Agreement.
(f) REGISTRATION RIGHTS AGREEMENT. Parent shall have entered
into and delivered the Registration Rights Agreement.
(g) XXXX OF SALE. The Purchaser shall have executed the Xxxx
of Sale.
(h) NO LITIGATION. No Action or Proceeding shall be pending in
which it is sought to restrain or prohibit the consummation of the transactions
contemplated hereby. No
Order which restrains or prohibits the transactions contemplated hereby shall be
in effect. No Governmental or Regulatory Body shall be seeking such an Order or
threatening to do so.
(i) OPINION OF COUNSEL. The Seller shall have received an
opinion from the Purchaser's Counsel as to such matters as the Seller shall
reasonably request.
(j) APPROVAL OF DOCUMENTS. The form and substance of all legal
proceedings, documents, or papers used or delivered hereunder by the Purchaser
shall be reasonably satisfactory to the Seller's Counsel.
ARTICLE VI
POST-CLOSING COVENANTS
The parties covenant to take the following actions after the
Closing Date:
6.1 FURTHER INFORMATION. Following the Closing, each party will afford
to the other party, its counsel and its accountants, during normal business
hours, reasonable access to the books, records and other data relating to the
Business and the Purchased Assets in its possession with respect to periods
prior to the Closing and the right to make copies and extracts therefrom, to the
extent that such access may be reasonably required by the requesting party (a)
to facilitate the investigation, litigation and final disposition of any claims
which may have been or may be made against any party or its Affiliates and (b)
for any other reasonable business purpose.
6.2 RECORD RETENTION. Each party agrees that for a period of not less
than five years following the Closing Date, such party shall not destroy or
otherwise dispose of any of the Books and Records relating to the Business and
the Purchased Assets in its possession with respect to periods prior to the
Closing Date. Each party shall have the right to destroy all or part of such
Books and Records after the fifth anniversary of the Closing Date or, at an
earlier time by giving each other party hereto 30 days prior written notice of
such intended disposition and by offering to deliver to the other party or
parties, at the other party's expense, custody of such Books and Records as such
party may intend to destroy.
6.3 POST-CLOSING ASSISTANCE. The Seller, on the one hand, and the
Purchaser, on the other hand, will provide each other with such assistance as
may reasonably be requested in connection with the preparation of any Tax
Return, any audit or other examination by any taxing authority, or any judicial
or administrative proceedings relating to liability for Taxes, and each will
retain and provide the requesting party with any records or information that may
be reasonably relevant to such return, audit or examination, proceedings or
determination. The party requesting assistance shall reimburse the other party
for reasonable out-of-pocket expenses incurred in providing such assistance. Any
information obtained pursuant to this Section 6.3 or pursuant to any other
Section hereof providing for the sharing of information or the review of any Tax
Return or other schedule relating to Taxes shall be kept confidential by the
parties hereto.
6.4 SEC REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Share Consideration
and other securities of Xx0.xxx to the public without registration, from and
after the Closing, Parent will:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times;
(b) file with the Commission in a timely manner all reports
and other documents required of Parent under the Exchange Act; and
(c) request that its Parent's counsel issue one or more
opinions as to the compliance of the Sellers with Rule 144, such opinions to be
issued at the Seller's expense.
6.5 RESTRICTIONS ON TRANSFERABILITY. Following the Closing, the Seller
will not distribute any of the Share Consideration to any Shareholder pursuant
to a plan of liquidation until such Shareholder has, as a condition to receipt
thereof, entered into and delivered the Investment Letter.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
7.1 SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND WARRANTIES.
Notwithstanding any investigation conducted or notice or knowledge obtained by
or on behalf of any party hereto, each agreement in this Agreement shall survive
the Closing without limitation as to time until fully performed and each
representation and warranty in this Agreement or in the Exhibits, Schedules or
certificates delivered pursuant to this Agreement shall survive the Closing for
a period of one (1) year from the Closing Date (other than the representations
and warranties contained in Sections 2.3 and 2.7 which shall survive the Closing
without limitation as to time). Notice must be given to the party from whom
indemnification is sought of any claim for indemnification under Article 7 prior
to the termination of the relevant survival period.
7.2 INDEMNIFICATION BY THE SELLER. From and after the Closing Date,
subject to the limitations set forth in Section 7.5, the Seller will indemnify,
hold harmless and defend Parent, the Purchaser and their respective Affiliates
(and their respective directors, officers, agents and employees, successors and
assigns) (each, a "PURCHASER INDEMNIFIED PARTY") in accordance with the
provisions of this Article 7 from and against:
(i) any and all Damages incurred and actually paid by
any of them arising out of, relating to or based upon any
inaccuracy in, or breach of, any of the representations or
warranties, covenants or agreements of the Seller contained in
or incorporated into this Agreement, in the Schedules hereto
or in certificates delivered pursuant to this Agreement; and
(ii) any and all Damages arising out of or in any way
related to any debts, liabilities or obligations (absolute or
contingent) of any kind related to the Seller or the operation
of the Business other than the Assumed Obligations; and
(iii) any Cost incurred and actually paid by the
Purchaser in connection with the enforcement of this
Agreement.
The right of the Purchaser Indemnified Parties to be indemnified hereunder shall
not be limited or affected by any investigation conducted or notice or knowledge
obtained by or on behalf of any such Persons.
7.3 PURCHASER'S INDEMNITY. From and after the Closing Date, the
Purchaser will indemnify, hold harmless and defend the Seller and the
Shareholders from and against;
(i) any and all Damages incurred by the Seller or any
Shareholder arising out of, relating to or based upon any
inaccuracy in, or breach of, any of the representations or
warranties, covenants or agreements of Parent or the Purchaser
contained in or incorporated into this Agreement or in
certificates delivered pursuant to this Agreement;
(ii) any and all Damages arising out of the
Purchaser's failure to perform the Assumed Obligations that
arise after the Closing Date; and
(iii) any Cost incurred by the Seller or any
Shareholder in connection with the enforcement of this
Agreement.
The rights of the Seller and the Shareholders to be indemnified hereunder shall
not be limited or affected by any investigation conducted or notice or knowledge
obtained by or on behalf of such persons.
7.4 METHOD OF ASSERTING CLAIMS. The party making a claim under this
Article 7 is referred to as the "Indemnified Party" and the party against whom
such claims are asserted under this Article 7 is referred to as the
"Indemnifying Party". All claims by any Indemnified Party under this Article 7
shall be asserted and resolved as follows:
(a) Whenever an Indemnified Party becomes aware of a claim for
which an Indemnifying Party would be liable to an Indemnified Party hereunder,
the Indemnified Party shall with reasonable promptness notify in writing the
Indemnifying Party of such claim, identifying the representation or warranty on
which such claim is based, the basis for such claim or demand, and the amount or
the estimated amount thereof to the extent then determinable (which estimate
shall not be conclusive of the final amount of such claim and demand; the "Claim
Notice"); PROVIDED, that any failure to give a Claim Notice will not be deemed a
waiver of any rights of the Indemnified Party except to the extent the rights of
the Indemnifying Party are actually prejudiced by such failure. If the basis of
such claim is a claim or demand by a third party, the Indemnifying Party, upon
request of the Indemnified Party, shall retain counsel (who shall be reasonably
acceptable to the Indemnified Party) to represent the Indemnified Party and
shall pay the reasonable fees and disbursements of such counsel with regard
thereto; PROVIDED, that any Indemnified Party is hereby authorized prior to the
date on which it receives written notice from the Indemnifying Party designating
such counsel, to retain counsel, whose fees and expenses shall be at the expense
of the Indemnifying Party, to file any motion, answer or other pleading and take
such other action which it reasonably shall deem necessary to protect its
interests or those of the Indemnifying Party until the date on which the
Indemnified Party
receives such notice from the Indemnifying Party. After the Indemnifying Party
shall retain such counsel, the Indemnified Party shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (x) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel or
(y) representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. The Indemnifying
Party shall not, in connection with any proceedings or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one such
firm for the Indemnified Party (except to the extent the Indemnified Party
retained counsel to protect its (or the Indemnifying Party's) rights prior to
the selection of counsel by the Indemnifying Party). If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any claim or demand which the
Indemnifying Party defends. A claim or demand may not be settled by either party
without the prior written consent of the other party (which consent shall not be
unreasonably withheld) unless, as part of such settlement, the Indemnified Party
shall receive a full and unconditional release reasonably satisfactory to such
Indemnified Party.
(b) Whenever any Indemnified Party shall have a claim against
any Indemnifying Party hereunder which does not involve a claim or demand being
asserted against or sought to be collected from it by a third party, the
Indemnified Party shall send a Claim Notice with respect to such claim to the
Indemnifying Party.
(c) After delivery of a Claim Notice, so long as any right to
indemnification exists pursuant to this Article 7, the affected parties each
agree to retain all Books and Records related to such Claim Notice. In each
instance, the Indemnified Party shall have the right to be kept fully informed
by the Indemnifying Party and its legal counsel with respect to any legal
proceedings. Any information or documents made available to any party hereunder
and designated as confidential by the party providing such information or
documents and which is not otherwise generally available to the public and not
already within the knowledge of the party to whom the information is provided
(unless otherwise covered by the confidentiality provisions of any other
agreement among the parties hereto, or any of them), and except as may be
required by applicable law, shall not be disclosed to any third Person (except
for the representatives of the party being provided with the information, in
which event the party being provided with the information shall request its
representatives not to disclose any of such information which it has agreed
hereunder to keep confidential).
7.5 LIMITATIONS ON THE SELLER'S OBLIGATIONS. Notwithstanding the
provisions of Section 7.2, no claim for indemnification under Section 7.2 may be
made (a) unless the aggregate amount of Damages or Taxes (aggregating all claims
for indemnification under such Section) exceeds Fifty Thousand dollars
($50,000), and then only to the extent that this threshold is exceeded, claims
may be made from first dollar from and after such threshold has been exceeded.
In no event shall the Seller be liable for claims in excess of the value of the
Escrowed Shares.
7.6 GENERAL PROVISIONS. The following general provisions shall apply to
any claim for indemnification under this Article 7:
(a) The amount of any claim subject to indemnification shall
be determined after taking into account the present value of any tax benefits
(net of tax detriments) accruing to the Indemnified Party or any Affiliate as a
result of such claim.
(b) Except as otherwise set forth in this Section 7.6(b), with
respect to any breach, violation or nonfulfillment of or default in the
performance of any representation, warranty or covenant of this Agreement for
which a right to claim indemnification is provided in this Article 7, after the
Closing a claim or an action under and pursuant to the terms, conditions and
limitations of this Article 7 shall be the sole and exclusive right and remedy
of the Purchaser and the Seller, and neither the Purchaser nor the Seller shall
have any other claim, cause of action, right, or remedy for such breach,
violation, non-fulfillment or default against the other based upon this
Agreement, any provision of any securities or other statute, law, rule or
regulation or based upon any other cause of action arising at law or in equity;
PROVIDED, that if for any reason a court of competent jurisdiction shall refuse
to enforce this provision, and shall permit the Purchaser or the Seller to
assert any action based other than upon the right to claim indemnification as
provided in this Article 7, the Purchaser and the Seller agree that the amount
of such other claim shall be subject to and limited by the provisions of this
Article 7. The provisions of this Section 7.6(b) shall not preclude the
prosecution of any action or proceeding based on fraud that, if found to exist,
would be sufficient to give rise to the right of rescission with respect to the
transactions contemplated by this Agreement.
(c) The obligations of the Seller shall be satisfied as
provided in the Escrow Agreement.
7.7 CHARACTER OF INDEMNITY PAYMENTS. All amounts paid pursuant to
Article VII shall be treated by such parties as adjustments to the consideration
paid with respect to the Purchased Assets sold by the Seller.
ARTICLE VIII
TERMINATION OF AGREEMENT
8.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing as follows:
(a) by mutual written consent of the Purchaser and the Seller;
and
(b) by the Purchaser, on the one hand, or by the Seller, on
the other hand, by written notice to the other party hereto, if the Closing
shall not have occurred on or prior to the close of business on April 3, 2000
(unless such delay has been caused by a breach of this Agreement by the party
seeking such termination); and
(c) by the Purchaser or by the Seller, if any Judgment shall
have been enacted, entered, promulgated or enforced which prohibits or enjoins
the consummation of the sale and purchase of the Share Consideration and such
Judgment is or shall have become final and nonappealable.
8.2 SURVIVAL AFTER TERMINATION. If this Agreement is terminated
pursuant to Section 8.1, (a) this Agreement shall become null and void and of no
further force and effect, except for the provisions of Article 4 relating to the
obligation to keep confidential certain information and (b) there shall be no
liability on the part of the Seller or the Purchaser or their respective
Affiliates.
ARTICLE IX
[intentionally deleted]
ARTICLE X
MISCELLANEOUS
10.1 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms have the following meanings unless the context otherwise requires:
"ACTION OR PROCEEDING" means any action, suit, proceeding or
arbitration by any Person or any investigation or audit by any Governmental or
Regulatory Body.
"ACQUISITION TRANSACTION" has the meaning specified in Section 4.4.
"AFFILIATE" with respect to any Person, means any other Person
controlling, controlled by or under common control with such Person.
"AGREEMENT" means this Agreement.
"ANCILLARY AGREEMENTS" means the Xxxx of Sale, the Registration Rights
Agreement, the Investment Letter, the Escrow Agreement and any other documents,
certificates or opinions executed in connection with the Purchase Agreement.
"AMEX" means the American Stock Exchange.
"APPLICABLE COPYRIGHT LAW" means the Copyright Act of 1976, as amended,
the Copyright Act of 1909, as amended, the Universal Copyright Convention and
the Berne Convention, as applicable.
"ASSUMED OBLIGATIONS" has the meaning specified in Section 1.2(a).
"XXXX OF SALE" means the Xxxx of Sale and Limited Assumption of
Liabilities, to be dated the Closing Date, between the Purchaser and the Seller,
substantially in the form of Exhibit D.
"BOOKS AND RECORDS" of any Person means, to the extent they exist and
have been maintained by such Person, all material files, documents, instruments,
papers, books and records relating to the business, operations, condition
(financial or other), results of operations, assets or properties of such
Person, including, without limitation, financial statements, Tax Returns and
related work papers and letters from accountants, budgets, pricing guidelines,
ledgers, journals,
deeds, title policies, contracts and other agreements, licenses, customer lists,
computer files and programs, retrieval programs, operating data and plans and
environmental studies and plans.
"BUSINESS" has the meaning specified in the recitals.
"CLAIM NOTICE" has the meaning specified in Section 7.4(a).
"CLOSING" has the meaning specified in Section 1.5.
"CLOSING DATE" has the meaning specified in Section 1.5.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the U.S. Securities and Exchange Commission.
"CONTRACTS" means all executory contracts, agreements, notes,
understandings, indentures, bonds, loans, instruments, leases, mortgages,
franchises, licenses, commitments or other legally binding arrangements.
"COSTS" means costs, fees and expenses.
"DAMAGES" shall mean any and all losses, costs, claims, damages,
Liabilities, Judgments, settlements, demands, offsets, Taxes, reasonable
out-of-pocket costs, expenses and attorneys' fees and penalties and interest, if
any, incurred by any indemnified party, but shall not include any incidental or
consequential damages unless assessed against an Indemnified Party as a result
of a third party claim or attorneys' fees incurred in enforcing any Indemnified
Party's right to indemnification under this Agreement.
"ESCROW AGENT" mean the escrow agent named in the Escrow Agreement.
"ESCROW AGREEMENT" means the Escrow Agreement, to be dated the Closing
Date, among Parent, the Purchaser, the Seller and the Escrow Agent,
substantially in the form of Exhibit B.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCLUDED LIABILITIES" has the meaning specified in Section 1.2(b).
"GAAP" means generally accepted accounting principles in the United
States of America.
"GOVERNMENTAL OR REGULATORY BODY" means any court, tribunal, arbitrator
or any government or political subdivision thereof, whether federal, state,
county, local or foreign, or any agency, authority, official or instrumentality
of any such government or political subdivision.
"GUILD ENCUMBRANCES" means any right, including, without limitation,
so-called "separated rights" and rights similar thereto, obtained pursuant to
the terms of any guild, union or other collective bargaining agreement
(including, without limitation, any agreement with any
guild, union or labor organization) applicable to any assets included in the
Library, whether such right is obtained directly or by implication or reference
in an individual Contract, to: (i) receive money or any other valuable
consideration for merchandising any such assets; or (ii) limit or prohibit the
exercise of any or all of the rights of exploitation of any such assets; or
(iii) receive money or other valuable consideration for the exercise of any or
all of the rights of exploitation of any or all of such assets.
"INDEMNIFIED PARTY" has the meaning specified in Section 7.4.
"INDEMNIFYING PARTY" has the meaning specified in Section 7.4.
"INTELLECTUAL PROPERTY RIGHTS" has the meaning specified in Section
2.16(a).
"INVESTMENT LETTER" means the Investment Letter substantially in the
form of Exhibit C.
"IRS" means the Internal Revenue Service.
"JUDGMENT" means any judgments, orders, injunctions (temporary or
permanent), decrees, rulings or awards of any federal, state, local or foreign
court, arbitrator or other judicial authority or any federal, state, local or
foreign governmental, administrative or regulatory authority.
"LAW" means any law, statute, rule, regulation, ordinance and other
pronouncement having the effect of law of the United States, any foreign country
or any domestic or foreign state, county, city or other political subdivision or
of any Governmental or Regulatory Body.
"LIBRARY" means, collectively, all Library Programs and all Library
Tangible Assets.
"LIBRARY LITERARY PROPERTIES" means all scripts, treatments and formats
of any kind with respect to the Library Programs and any rights therein in which
the Seller has rights.
"LIBRARY MUSIC RIGHTS" means all music synchronization, performance,
mechanical, publication and other rights with respect to any of the Library
Programs.
"LIBRARY OUTSTANDING AGREEMENTS" means all Contracts now in effect
pursuant to which the Seller has any rights to distribute, exhibit, use,
exercise or exploit, any rights in or to, or providing for the acquisition,
sale, purchase, lease, license or other disposition by or to the Seller or of,
any of the Library Programs.
"LIBRARY PROGRAMS" means any and all audio, visual and/or audio-visual
works of any kind or character in which the Seller has exploitative rights,
produced for dissemination in digital or analog media, for broadcast on radio or
television or for any other form of exhibition or distribution now known or
hereafter devised.
"LIBRARY PROPERTIES" means all physical properties of, or relating to,
any Library Program, including, without limitation, audio tapes and audio
tracks, master tapes and other duplicating materials of any kind, all various
language dubbed and titled versions, prints and negatives of stills, all promos
and other advertising and publicity materials, and continuities, including,
without limitation, any of the foregoing in the possession, custody or control
of the Seller or in any storage facilities or other third parties.
"LIBRARY RIGHTS" means all Library Programs, Library Literary
Properties, and Library Music Rights.
"LIBRARY TANGIBLE ASSETS" means all Library Properties and all written
Contracts and other documents evidencing, memorializing or otherwise relating to
the Library Programs.
"LIBRARY UNDERLYING AGREEMENTS" means all Contracts with third parties,
including directors and crew members, relating to the preparation or production
of any of the Library Programs, pursuant to which the Seller has any rights in
or obligations relating to the Library Programs or any element thereof.
"LICENSE" has the meaning specified in Section 2.14.
"LIEN" means any lien, pledge, hypothecation, mortgage, security
interest, claim, lease, fixed or floating charge, option, right of first
refusal, easement, servitude, transfer restriction under any agreement,
encumbrance or any other restriction or limitation whatsoever, including,
without limitation, Guild Encumbrances.
"MAJOR SHAREHOLDERS" means Xxxxxxx Investors, LLC and Xxxxx & Company
Incorporated.
"MATERIAL ADVERSE EFFECT" means, in the case of any Person, any change
or changes or effect or effects that individually or in the aggregate are or may
reasonably be expected to be materially adverse to (i) the assets, properties,
business, operations, income or condition (financial or otherwise) of such
Person or (ii) the ability of such Person to perform its obligations under this
Agreement.
"MATERIAL CONTRACT" shall mean any Contract of the following categories
to which the Seller is a party or by which the Seller or any of its assets or
properties is bound (exclusive of Licenses and Library Outstanding Agreements):
(i) employment Contracts, including Contracts to employ executive officers and
other Contracts with officers, directors or shareholders, and all severance,
change in control or similar arrangements with any officers, employees or agents
that will result in any obligation (absolute or contingent) to make any payment
to any officers, employees or agents following either the consummation of the
transactions contemplated hereby, termination of employment, or both; (ii)
Contracts with organizations representing employees; (iii) Contracts out of the
ordinary course of business; (iv) Contracts which, individually, involve an
aggregate yearly amount in excess of $25,000 and are not cancelable (without
material penalty, cost or other liability) within ninety days; (v) Contracts the
duration of which exceeds three years and involving an annual amount in excess
of $25,000; (vi) other Contracts that create a right and/or an obligation with
respect to the Seller in excess of $25,000; (vii) Contracts (and in particular,
promissory notes, loan agreements, indentures or other evidence of indebtedness)
providing for the lending of money, whether as borrower, lender or guarantor;
(viii) Contracts containing covenants limiting the freedom to engage in any line
of business or compete with any Person or operate at any location; (ix) joint
venture or partnership agreements or joint development or similar agreements
involving a commitment in excess of $25,000 (x) Contracts
providing for the acquisition, directly or indirectly (by merger or otherwise),
of substantially all of the assets or any part of the capital stock of another
Person; (xi) Contracts including a change of control or similar provision,
pursuant to which the other party to such Contract has the right, as a mere
result of the transactions contemplated by this Agreement, to substantially
modify the terms of such Contract (including accelerate any payment thereunder),
or to terminate such Contract; and (xii) Contracts providing for powers of
attorney or similar authorizations that have been entered into out of the
Seller's ordinary course of business.
"XX0.XXX" means a Colorado corporation, having its principal address at
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx, Xxxxxx Xxxxxx of America
10013.
"XX0.XXX COMMON STOCK" means the common stock, no par value, of
Xx.0.xxx.
"XX0.XXX SEC REPORTS" has the meaning given it in Section 2.20(d).
"ORDER" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Body, in each case whether preliminary or
final.
"PERMITS" has the meaning specified in Section 2.17.
"PERMITTED LIENS" means the Liens set forth in Schedule 2.12(b).
"PERSON" means any individual, corporation, limited liability company,
partnership, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental or Regulatory Body or other entity.
"PER SHARE PRICE" means the arithmetic average of the daily closing
price of Xx0.xxx Common Stock as quoted on the AMEX for the period beginning on
the day which is the fifteenth trading day prior to the day on which the
determination of value is to be made and ending on the fifth trading day prior
to the day on which the determination of value is to be made.
"PURCHASE PRICE" has the meaning given it in Section 1.3.
"PURCHASED ASSETS" has the meaning set forth in the recitals.
"PURCHASER" means Quickband, Inc., a Delaware corporation having it
municipal address at 000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
"PURCHASER INDEMNIFIED PARTY" has the meaning specified in Section 7.2.
"PURCHASER'S COUNSEL" means McGuire, Woods, Battle & Xxxxxx, LLP of 0
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement
to be entered into by Parent and the Seller substantially in the form of
Exhibit E.
"REQUIRED CONSENTS" means any approvals or consents of any Person to
the transactions contemplated by this Agreement required under (a) any Material
Contract, as set forth on Schedule 2.9 under the heading "Required
Consents/Contracts," (b) any License, as set forth on Schedule 2.14 under the
heading "Required Consents/Licenses," (c) any Library Right, as set forth on
Schedule 2.12 under the heading "Required Consents/Library Rights" (d) any right
or interest of the Company relating to Tangible Property, as set forth on
Schedule 2.15 under the heading "Required Consents/Tangible Property," (e) any
right or interest of the Company relating to Intellectual Property Rights, as
set forth on Schedule 2.16 under the heading "Required Consents/Intellectual
Property," or (f) any Permit, as set forth on Schedule 2.17 under the heading
"Required Consents/Permits."
"RULE 144" means Rule 144 promulgated under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" has the meaning given it in the initial paragraph of this
Agreement.
"SELLER'S COUNSEL" means O'Melveny & Xxxxx LLP, 000 Xxxxx Xxxx Xxxxxx,
Xxx Xxxxxxx, XX 00000-0000.
"SHAREHOLDERS" means the shareholders of the Seller.
"SHARE CONSIDERATION" has the meaning specified in Section 1.3.
"TANGIBLE PROPERTY" has the meaning specified in Section 2.15.
"TAX RETURN" means any return, report, declaration, information return,
or other document (including any related or supporting information schedule or
attachment) filed or required to be filed with any federal, state, local, or
foreign governmental entity or other authority in connection with the
determination, assessment or collection of any Tax or the administration of any
laws, regulations or administrative requirements relating to any Tax.
"TAX" and "TAXES" means all taxes, charges, fees, levies, imposts,
duties or other assessments imposed by any federal, state, local or foreign
taxing authority, whether disputed or not, including, without limitation,
income, profits, gross receipts, license, stamp, occupation environmental,
customs duties, ad valorem, recapture, capital, estimated, (including estimated
tax default forms) excise, property, sales, use transfer, withholding, social
security, employment, unemployment, disability, payroll, franchise value added
or minimum taxes and such terms shall include any interest, penalties or
additions attributable to or imposed on or with respect to such assessments and
any expenses incurred in connection with the settlement of any tax liability.
10.2 EXPENSES. Each of the parties to this Agreement shall pay his own
expenses (including, without limitation, attorney's and accountants' fees and
out-of-pocket expenses) incident to this Agreement and the transactions
contemplated hereby.
10.3 FURTHER ASSURANCES. At any time and from time to time after the
Closing Date at the request of the Purchaser, and without further consideration,
the Seller will execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation and
take such other action as the Purchaser may reasonably deem necessary or
desirable in order to transfer, convey and assign the Purchased Assets to the
Purchaser and to assist the Purchaser in exercising all rights with respect
thereto. The parties shall use their best efforts to fulfill or obtain the
fulfillment of the conditions to the Closing, including, without limitation, the
execution and delivery of any documents or other papers, the execution and
delivery of which are conditions precedent to the Closing.
BULK SALES WAIVER. (a) Inasmuch as the Purchaser is to assume the
Assumed Obligations and the Seller has agreed to duly pay, perform and discharge
the Excluded Liabilities, the Purchaser and the Seller hereby mutually agree to
waive compliance with the provisions of Article 6 of the California Uniform
Commercial Code, entitled "Uniform Commercial Code - Bulk Transfers," and of the
corresponding laws of any other jurisdiction, to the extent applicable to the
transactions contemplated hereby. Subject to the limitations set forth in
Section 10.4(b), the Seller covenants and agrees to indemnify and save harmless
the Purchaser from and against any and all loss, liability, cost and expense
(including reasonable attorney's fees) arising out of noncompliance with said
Bulk Transfers laws except to the extent arising out of the Purchaser's failure
to pay, perform and discharge the Assumed Obligations as and when due.
(a) (b) Notwithstanding Section 10.4(a), no claim for
indemnification under Section 10.4(a) may be made to the extent that such claim
would be entitled to indemnification under Section 7.5 or would, if aggregated
with all other claims for indemnification by the Purchaser Indemnified Parties
exceed the limit set forth in Section 7.5. (a) unless the aggregate amount of
loss, liability, cost and expense (aggregating all claims for indemnification
under such section exceeds Fifty Thousand dollars ($50,000), and then only to
the extent that this threshold is exceeded, claims may be made from the first
dollar after such threshold has been exceeded. In no event shall the Seller be
liable for claims in excess of the value of the Escrowed Shares.
10.4 NOTICES. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
given personally, sent by facsimile transmission or sent by prepaid air courier
or certified or express mail, postage prepaid. Any such notice shall be deemed
to have been given (a) when received, if delivered in person or sent by
facsimile transmission (if clearly received in full) or (b) three business days
following the mailing thereof, if sent by prepaid air courier or certified or
express mail, postage prepaid, return receipt requested, in any such case as
follows (or to such other address or addresses as a party may have advised the
other in the manner provided in this Section 10.5):
If to the Seller:
DVD Mags, Inc.
0000 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
with a copy to:
O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxx, Xx.
If to the Shareholders:
East-West Capital Associates, Inc.
00000 Xxxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxx Xxxxx
If to the Purchaser:
Xx0.xxx Inc.
000 Xxxxxxxxx Xxxxxx, 0xxXxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
with a copy to:
McGuire, Woods, Battle & Xxxxxx, LLP
0 Xxxx 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
10.5 PUBLICITY. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be made without advance
approval thereof by the Purchaser and the Seller, except as may be required by
applicable law.
10.6 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules) and the agreements, certificates and other documents delivered
pursuant to this Agreement contain the entire agreement among the parties with
respect to the transactions described herein, and supersede all prior
agreements, written or oral, with respect thereto.
10.7 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
10.8 WAIVERS AND AMENDMENTS. This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by the Purchaser and the Seller or, in the case of a
waiver, by the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof
10.9 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to
principles of conflicts of law.
10.10 JURISDICTION. Each of the Purchaser and the Seller hereby
irrevocably and unconditionally consents and submits to the exclusive
jurisdiction of any state or federal court located within the County of New
York, State of New York, in connection with any, actions, suits or proceedings
arising out of or relating to this Agreement or any of the agreements delivered
in connection herewith or the transactions contemplated hereby or thereby. Each
of the Purchaser and the Seller hereby waives any objection to venue in such
jurisdiction, and agrees that service of any summons, complaint, notice or other
process relating to such proceeding may be effected as provided by Section 10.4,
or to their respective attorneys at their respective addresses set forth in
Section 10.4 by recognized overnight express service.
10.11 BINDING EFFECT, NO ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement is not assignable by any party hereto without
the prior written consent of the other parties hereto except by operation of law
and any other purported assignment shall be null and void.
10.12 VARIATIONS IN PRONOUNS. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the context
may require.
10.13 COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
10.14 EXHIBITS AND SCHEDULES. The Exhibits and Schedules are a part of
this Agreement as if fully set forth herein. All references herein to Sections,
subsections, clauses, Exhibits and Schedules shall be deemed references to such
parts of this Agreement, unless the context shall otherwise require.
10.15 HEADINGS. The headings in this Agreement are for reference only,
and shall not affect the interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
PARENT:
XX0.XXX INC.
By: /s/
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
THE PURCHASER:
QUICKBAND, INC.
By: /s/
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
THE SELLER:
DVD MAGS, INC.
By: /s/
-----------------------------------------
Name: Xxxxx X. Xxx
Title: Vice President
EXHIBIT A
