EXHIBIT 10.21
AGREEMENT FOR THE
PURCHASE AND SALE OF AN INTEREST
IN
BEACON COMMUNICATIONS, LLC
THIS AGREEMENT (the "Agreement") is made and entered into as of the 20th
day of January, 1999, by and among ASCENT ENTERTAINMENT GROUP, INC., a Delaware
corporation (the "Ascent"); ASCENT BEACON CORPORATION, a Delaware corporation
("ABC") (Ascent and ABC are individually and collectively sometimes hereinafter
referred to as "Seller"); BEACON COMMUNICATIONS, LLC, a Delaware limited
liability company ("Beacon LLC"); and BOOMTOWN INVESTMENTS, LLC, a Delaware
limited liability company ("BT Investments"), and ANG CAPITAL CORPORATION, a
Delaware corporation ("ANG") (BT Investments and ANG are individually and
collectively sometimes hereinafter referred to as "Buyer"). This Agreement is
made with reference to the following facts:
R E C I T A L S
A. Beacon Communications Corp. ("BCC") was ninety percent (90%) owned by
Ascent and ten percent (10%) owned by ABC, and has been merged with and into
Beacon LLC, and Beacon LLC is owned entirely by Ascent (as to 90% of the
membership interests) and ABC (as to 10% of the membership interests). Prior to
the merger of BCC into Beacon LLC, Club Pictures, Inc. and Beacon Music
Publishing were merged into single- or two-member limited liability companies
wholly-owned by BCC and/or Beacon LLC and a subsidiary corporation or limited
liability company. 16th Round Production Corp., Lucifilms, Inc. and Lazarus
Pictures, Inc. have remained wholly-owned subsidiaries of Beacon LLC.
Individually and collectively, whether remaining in corporate form or merged
into limited liability companies, Club Pictures, Beacon Music Publishing, 16th
Round Production Corp., Lucifilms, Inc. and Lazarus Pictures, Inc. are referred
to as "Beacon Sub LLC."
B. BCC was, and Beacon LLC is, directly and through their respective
wholly-owned corporations and limited liability companies (all references to BCC
or Beacon LLC throughout this Agreement, including without limitation,
Paragraphs 4 and 5 and Schedule 2.1, shall include BCC or Beacon LLC and each of
their direct and indirect respective subsidiary corporations and subsidiary
limited liability companies), engaged in the business of the development,
financing, production and exploitation of theatrical and television films, music
sound tracks, and other related areas of the entertainment business (the
"Business").
C. After the merger of BCC into Beacon LLC, Ascent desires to sell, and
Buyer desires to purchase, ninety percent (90%) of all of the membership
interests in Beacon LLC (the "Interest") from Ascent.
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AGREEMENT
NOW, THEREFORE, in consideration of the covenants, agreements,
representations and warranties contained herein, and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties agree as
follows:
1. PURCHASE AND SALE OF MEMBERSHIP INTEREST. Subject to the terms and
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conditions hereof, Ascent hereby agrees to sell, transfer, deliver and assign to
Buyer, and Buyer agrees to purchase and receive from Seller, ninety percent
(90%) of all of the membership interests in Beacon LLC. ABC shall retain the
other ten percent (10%) of the membership interests in Beacon LLC. The Beacon
LLC Operating Agreement shall be amended and restated at the Closing, and the
Operating Agreement attached hereto as Exhibit "A" will become the new Operating
Agreement of Beacon LLC, effective as of the Closing.
2. ASSETS; ASSUMED LIABILITIES; EXCLUDED LIABILITIES.
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2.1 Prior to the merger of BCC into Beacon LLC, Seller (which for
purposes of this Section 2.1, includes all subsidiaries and entities owned or
controlled by Seller, other than BCC) contributed to BCC any assets, tangible or
intangible, of whatever kind or nature, of Ascent that were being used by BCC
solely in the Business, the life and disability policies on Xxxxxx Xxxxxxxxx and
the life insurance policy on Xxxx Xxxxxxx, or related to the Assumed Liabilities
(as defined below), including, without limitation, all claims, offsets, defenses
and causes of action Seller has or may have related to the claims listed on
Exhibit 2.1A. After the merger, Beacon LLC owns all of the assets of BCC (the
"Assets"), wherever located, including, without limitation, cash, receivables,
all notes, securities, shares and ownership interests in subsidiaries and other
entities, completed and in-progress motion pictures, films, television projects,
music and record rights, music soundtracks and music publishing rights, all
copyrights, all intellectual property rights, all trade secrets, contracts,
scripts, development projects, intellectual property rights, story ideas, rights
to ideas created by employees or agents, or others, equipment, automobiles,
machines, supplies, trademarks, service marks, trade names, goodwill, name,
reputation, fictitious business names, the names "Beacon" and "Beacon
Communications," logos, designs, producing and production agreements, financing
and lending contracts, contracts for distribution of films, contracts for music,
songs, music soundtracks, music publishing (whether as to ownership obligations
or distribution), contracts for the services of actors, directors, writers and
other service providers, contracts and agreements for BCC and Beacon LLC to
provide services, contracts and options for stories, scripts and other
properties, the Universal Pictures and Sony Pictures agreements and contract
rights, rights to receive monies (including producer's fees, profits from motion
pictures, residuals, participations, cost and expense reimbursements), all other
contracts and rights related to the Business and the Assets (including any and
all rights under any insurance policy now or previously held by Seller or
COMSAT), deposits, claims, causes of action, the existing life insurance
policy(ies) on Xxxxxx Xxxxxxxxx and the existing life insurance policies(ies) on
Xxxx Xxxxxxx, the disability policy on Xxxxxx Xxxxxxxxx, corporate shares in all
BCC and Beacon LLC subsidiary corporations, membership and partnership interests
in all partnerships and limited liability companies in which BCC or Beacon LLC
directly or indirectly have any interest, computer software, accounting
software, books and records, files, ledgers, employee manuals, safety manuals
and plans, and all other proprietary, financial, legal, or relevant or helpful
information, documents and agreements relating to Beacon LLC, BCC, the Assets,
the Business, and the Assumed Liabilities (including, without limitation, any
liability, casualty, errors and omissions, and other insurance policies solely
related to any films in production, all BCC or Beacon LLC insurance policies
(but not Ascent Group policies covering BCC) and Beacon LLC under the merger has
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assumed and is subject to all of the debts, liabilities, commitments and
obligations of BCC, except for the Excluded Liabilities (as hereinafter defined)
(hereinafter referred to as the "Assumed Liabilities"). The Assumed Liabilities
also specifically include the claims described on Exhibit 2.1A(i) The Excluded
Liabilities are set forth on Schedule 2.1. All Excluded Liabilities shall remain
the sole obligation of Seller, and neither Beacon LLC, Buyer nor the owners of
Buyer (the "Principals") shall have any obligation with respect thereto (except
as otherwise provided on Schedule 2.1B), nor shall any payments from the Assets
be made with respect thereto. Seller, jointly and severally, agree to indemnify
Beacon LLC, Buyer, and Principals from any Excluded Liabilities and all matters
related thereto.
Notwithstanding anything to the contrary, Seller and Buyer agree
that the "Assets" do not include actual out-of-pocket bridge production
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financing (but excluding development/pre-production expenditures) actually
advanced by Ascent for the films "Hurricane Xxxxxx" and "End of Days." Ascent
shall be entitled to receive from any third party production financing or other
funds received by BCC or Beacon LLC for any such project, as and when received,
whether before or after the Closing, an amount equal to the amount of bridge
production financing (but excluding development/pre-production expenditures)
advanced by Ascent as of the Closing for the films "Hurricane Xxxxxx" and "End
of Days." All amounts (if any) received over and above (i.e., any Production
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Overages) development/pre-production expenditures (which will be for the benefit
of Buyer) and out-of-pocket bridge production financing (which will be for the
benefit of Seller) shall be for the sole benefit of Buyer.
Notwithstanding anything to the contrary, Seller and Buyer and
the Principals agree that the following amounts, whenever received, whether
before or after Closing, shall be for the sole benefit of, and belong to, Buyer,
and Seller shall not be entitled to retain any such amounts: (a) all producer's
fees due or paid to BCC or Beacon LLC for the films "G's Trippin,'" "Love of the
Game," "Hurricane Xxxxxx," and "End of Days" or other films in progress as of
the Closing, including, without limitation, "13 Days" and "Family Man"; (b) all
accrued development expenditures advanced by Ascent, BCC or Beacon LLC prior to
Closing, and (c) all Production Overages. Prior to the Closing, any such
producer's fees or development expenditures or Production Overages received by
Ascent, BCC or Beacon LLC shall be credited against (and reduce) the Purchase
Price (as defined in Section 3) on a dollar-for-dollar basis. After the Closing,
(i) any such producer's fees or development expenditures or Production Overages
received by Beacon LLC shall be delivered by Beacon LLC to Buyer, (ii) any such
producer's fees or development expenditures or Production Overages received by
Seller shall be immediately delivered to Buyer by wire transfer or endorsement
of the check received, and (iii) any out-of-pocket bridge production financing
advanced by Ascent (and not previously paid to Ascent) for the films "Hurricane
Xxxxxx" and "End of Days" received by Beacon LLC shall be immediately delivered
to Ascent by wire transfer or endorsement of the check received.
With respect to the $2,000,000 production investment to be made
for the Beacon LLC asset "G's Trippin,'" Seller shall contribute $500,000,
towards the cost thereof (to be made by a credit against the Purchase Price) and
Buyer shall fund the entire "G's Trippin'" investment obligation as and when
due. If such obligation is paid by Seller, BCC or Beacon LLC (other than from
funds to be transferred to Buyer at the Closing) prior to the Closing, then such
investment amount shall be added to (and increase) the Purchase Price to be paid
by Buyer on a dollar-for-dollar basis, less the $500,000 credit against the
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Purchase Price with respect to "G's Trippin.'"
2.2 Except as specifically set forth in Section 2.1, above, BCC,
Beacon LLC, Buyer and the Principals have not agreed to assume, pay, perform or
discharge any debts, liabilities, commitments or
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obligations of Seller, and Seller shall indemnify and hold Buyer, Beacon LLC and
the Principals harmless from any debts, liabilities, commitments or obligations
of Seller other than those described in Section 2.1, above.
At the time of the assumption of the Assumed Liabilities by
Beacon LLC, Seller, BCC and Beacon LLC agreed that as between Beacon LLC and any
third parties, assumption by Beacon LLC of certain debts, liabilities,
commitments and obligations of Seller and BCC shall, in any event, be construed
and limited with reference to the aggregate of business and activities
previously carried on by Seller through BCC and to be acquired by Beacon LLC;
and, with respect to said assumption, none of the debts, liabilities,
commitments and obligations of the Seller or BCC are intended by Buyer and
Seller be expanded, increased, broadened or enlarged as to rights or remedies of
third parties against Beacon LLC as compared to such rights or remedies which
such parties would have had against the Seller or BCC had the acquisition of its
business and assets by Beacon LLC not taken place. Nothing contained in the
assumption of liabilities shall be deemed to foreclose Beacon LLC or Buyer from
contesting in good faith the Seller's or BCC's and Beacon LLC's duties and
liabilities to third parties.
2.3 Ascent will cooperate with Beacon LLC (to the extent legally
possible) to permit Beacon LLC, after the Closing, to continue any employee
benefit programs now currently offered to BCC or Beacon LLC employees [e.g.,
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health insurance, life insurance, etc.] that Beacon LLC chooses to participate
in. During the period that Beacon LLC's employees participate in any such
employee benefit plans, Beacon LLC will prepay to Ascent, within ten (10)
business days of presentation of an invoice with an explanation of the estimated
costs, the full amount of such estimated costs. Any difference between the
actual costs to Ascent of such benefits for Beacon LLC employees, plus Ascent's
out-of-pocket costs in administering such benefit programs for Beacon LLC, and
the estimated costs shall be paid by Beacon LLC, or refunded by Ascent, as the
case may be, within ten days after a final reconciliation by Ascent. It is the
parties' intent that Beacon LLC terminate its participation in the Seller's
group plans and adopt its own "mirror" plans (to the extent it chooses to
continue such benefit program for Beacon LLC employees). Seller shall pay in
the normal course and in accordance with the terms of such plans any forfeitures
or positive account balances for Beacon LLC employees in any employee benefit
plans to Beacon LLC or Beacon LLC employees, as appropriate.
3. PURCHASE PRICE. Subject to the terms and conditions hereof, and less
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credits to be given by Seller against the Purchase Price, in consideration of
the transfer of the Interest to Buyer, Buyer shall pay Seller at the Closing by
electronic transfer to an account to be designated by Ascent, the sum of
Nineteen Million Dollars ($19,000,000) (the "Purchase Price").
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND ABC. As of the Closing,
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Seller, jointly and severally, hereby represents and warrants to Buyer with
respect to Seller, ABC, BCC and Beacon LLC that:
4.1 AUTHORITY AND LEGALITY; NO CHANGES BY SELLER. Each of Ascent,
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BCC and ABC are a corporation, and Beacon LLC is a limited liability company,
duly organized and validly existing and in good standing under the laws of the
State of Delaware with all requisite corporate or entity power to enter into
this Agreement and to perform all of their respective obligations hereunder and
to own, lease or operate their properties and assets which they now own, lease
or operate. All of the shares, of all classes, of ABC are owned by Ascent. Set
forth on Schedule 4.1 is a true and complete list of all the direct and indirect
subsidiary corporations and limited liability companies and all entities BCC or
Beacon LLC have an
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ownership interest in, and the percentage and class of ownership in each entity.
Except as otherwise contemplated herein, the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, and
compliance with the terms hereof, have been duly authorized by all necessary
corporate action by Ascent, BCC and ABC and by all entity actions by Beacon LLC
or any affiliate; will not violate any existing provision of any law, rule, or
governmental regulation, or violate any existing term or provision of any order,
writ, judgment, injunction or decree of any government, governmental
instrumentality, public authority or court applicable to Ascent, BCC, ABC, or
Beacon LLC; will not require the prior consent, approval or action of any other
corporation or any person, firm, company, or public authority, except for
Seller's lenders, which consent has been obtained; will not conflict with or
result in a breach or default (or give any party the right to declare a breach
or default upon notice or passage of time, or both), and will not result in the
creation or imposition of any lien, charge, security interest or encumbrance of
any nature upon or in any of the Assets, of or pursuant to any of the terms,
conditions or provisions of the Certificate of Incorporation or Bylaws of
Seller, BCC or ABC, or the Certificate of Formation and Operating Agreement of
Beacon LLC, or of any indenture, mortgage, deed of trust, or any material
agreement or instrument to which Seller or BCC, or Beacon LLC or ABC is a party;
and this Agreement constitutes the legal, valid and binding agreement of Seller,
ABC, and Beacon LLC. Seller, ABC, and Beacon LLC each is, and BCC was, qualified
to do business and is (and BCC was) in good standing in each material
jurisdiction in which the nature of its business or the character of its
properties makes such qualification necessary. Except as otherwise disclosed on
Schedule 4.1.A, neither Seller nor any of its affiliates (other than BCC) have
entered into any material agreements or incurred any material obligations
binding on BCC or Beacon LLC, or affecting the Assets, and with respect to BCC
and Beacon LLC, has entered into any material agreements or incurred any
material obligations binding on BCC or Beacon LLC, or affecting the Assets,
other than through officers of BCC or of Beacon LLC excluding Xxxxxxx Xxxxx,
Xxxxx X. Xxxxxx, III, Xxxxx Xxxxxx or Xxxxxx Xxxxx.
4.2 TAXES. Seller, ABC, BCC and Beacon LLC have filed all tax
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returns required by law to have been filed and have paid all taxes, federal,
state, local or foreign, and penalties and interest due with respect to all
periods ending on or before the Closing Date, for returns and taxes due as of
that date, and will timely file all returns and pay all taxes, federal, state,
local or foreign, and penalties and interest due with respect to all periods up
through and including the Closing Date. Except as set forth on Schedule 4.2,
neither Seller or any of its subsidiaries or affiliates, nor BCC or Beacon LLC
has waived any statute of limitations applicable to its tax returns or tax
liabilities. Seller, BCC and Beacon LLC have withheld and paid all taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, officer, director, creditor or third
party of BCC, Beacon LLC or any affiliated entity with respect to BCC's and
Beacon LLC's business. There are no liens or levies for taxes upon the Assets.
Except as set forth in Schedule 4.2, there has been no tax audits or
examinations of Ascent and its affiliates, including BCC, and no adjustments
made with respect to any previously filed tax returns. There are no pending
assessments.
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4.3 CERTIFICATES OF FORMATION AND OPERATING AGREEMENTS.
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4.3.1 Prior to Closing, Seller has delivered to Buyer true,
accurate and complete copies of Beacon LLC's Certificate of Formation and
Operating Agreement, together with all amendments to each of same, and will
permit Buyer to examine the minute books of Beacon LLC, which contains complete
and accurate records of any and all proceedings and actions at all meetings or
taken by the written consent of Beacon LLC's members and manager(s). Seller
represents and warrants that at all times since formation (1) such Beacon LLC
has been and will be treated as, and will file income tax returns as, a
partnership for all federal, state and local taxing jurisdictions; (2) such
Beacon LLC has not made, and will not make, an election under Section 754 of the
United States Internal Revenue Code (the "Code") or any corresponding provision
of any state or local law; and (3) such Beacon LLC has elected to make any
allocations under Section 704(c) of the Code (and any state or local law) under
the "traditional" method.
4.3.2 Prior to Closing, Seller has delivered to Buyer true,
accurate and complete copies of each Beacon Sub LLC's Certificate of Formation
and Operating Agreement, together with all amendments to each of same, and will
permit Buyer to examine the minute books of each Beacon Sub LLC, which contains
complete and accurate records of any and all proceedings and actions at all
meetings or taken by the written consent of such Beacon Sub LLC's members and
manager(s). With respect to each Beacon Sub LLC, Seller represents and warrants
that at all times since formation, such (1) Beacon Sub LLC has been and will be
treated as, and will file income tax returns as, a partnership or a disregarded
entity for all federal, state and local taxing jurisdictions; (2) Beacon Sub LLC
has not made, and will not make, an election under the Code or any corresponding
provision of any state or local law; and (3) Beacon Sub LLC has elected to make
any allocations under Section 704(c) of the Code (and any state or local law)
under the "traditional" method.
4.4 OUTSTANDING MEMBERSHIP INTERESTS OF BEACON LLC; OUTSTANDING
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OPTIONS AND WARRANTS.
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4.4.1 The authorized membership interests of Beacon LLC are as
set forth on Schedule 4.4.1. All such interests will be validly issued, fully
paid and non-assessable and issued and outstanding. All of such issued and
outstanding membership interests of Beacon LLC's membership interests are held
by Ascent and ABC, and owned by them in the proportions set forth on Schedule
4.4.1.
4.4.2 Seller and ABC are the lawful owners of all right, title
and interest in and to all of the issued and outstanding membership interests of
Beacon LLC and have good and marketable title thereto free and clear of any
claims, liens, pledges, encumbrances, equities or adverse rights of any kind
whatsoever. Ascent and ABC have the right, power and authority to sell, assign
and transfer the Interest (consisting of 90% of the membership interests of
Beacon LLC) pursuant to the terms of this Agreement and will convey same to
Buyer free and clear of any claims, liens, pledges, encumbrances, equities or
adverse rights of any kind whatsoever, except those granted to Xxxxxx Xxxxxxxxx
and Xxxx Xxxxxxx.
4.4.3 There are not any options, warrants, subscriptions or
other contracts, agreements, rights or claims outstanding for the purchase or
acquisition of, nor any securities convertible into, membership or other
interests in Beacon LLC whether issued, unissued, held in the treasury or
otherwise, and whether exercisable against Beacon LLC or any of its members.
There are no outstanding stock appreciation, phantom stock, profit participation
or similar rights with respect to BCC or Beacon LLC except those granted to
Xxxxxx Xxxxxxxxx and Xxxx Xxxxxxx.
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4.5 OUTSTANDING OWNERSHIP INTERESTS OF BEACON SUBSIDIARIES.
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4.5.1 The authorized membership interests of each Beacon Sub LLC
are as set forth on Schedule 4.5.1. All such interests will be validly issued,
fully paid and non-assessable and issued and outstanding. All of such issued and
outstanding membership interests of each Beacon Sub LLC's membership interests
are held by Beacon LLC alone or in conjunction with another Beacon Sub LLC, and
owned by them in the proportions set forth on Schedule 4.5.1.
4.5.2 Beacon LLC and/or a Beacon Sub LLC are the lawful owners
of all right, title and interest in and to all of the issued and outstanding
membership interests of each Beacon Sub LLC and have good and marketable title
thereto free and clear of any claims, liens, pledges, encumbrances, equities or
adverse rights of any kind whatsoever. All of the membership interests in each
Beacon Sub LLC are owned by Beacon LLC alone or in conjunction with another
Beacon Sub LLC.
4.5.3 There are not any options, warrants, subscriptions or
other contracts, agreements, rights or claims outstanding for the purchase or
acquisition of, nor any securities convertible into, membership or other
interests in any Beacon Sub LLC whether issued, unissued, held in the treasury
or otherwise, and whether exercisable against Beacon LLC or any of its members.
There are no outstanding stock appreciation, phantom stock, profit participation
or similar rights with respect to any Beacon Sub LLC.
4.6 OFFICERS, DIRECTORS AND MANAGERS.
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4.6.1 The managers and officers of Beacon LLC prior to the
Closing will be as set forth in Schedule 4.6 A attached hereto. Each of the
managers and officers of Beacon LLC (except for those listed on Schedule 4.6B
[the "Retained Officers"]) will resign effective on the Closing Date and will
release such Beacon LLC from any claims which he, she or it may have against
Beacon LLC in a form mutually acceptable to the parties.
4.6.2 The managers and officers of each Beacon Sub LLC prior to
the Closing will be as set forth in Schedule 4.6 attached hereto. Each of the
managers and officers of each Beacon Sub LLC (except for the Retained Officers)
will resign effective on the Closing Date and will release Beacon LLC and each
Beacon Sub LLC from any claims which he, she or it may have against Beacon LLC
or any Beacon Sub LLC in a form mutually acceptable to the parties.
4.6.3 At the Closing, Seller will deliver a release of all
claims against BCC or Beacon LLC from all former directors and officers of BCC,
except for the Retained Officers, in a form mutually acceptable to the parties.
4.7 BOOK VALUE AND TAX BASIS. The Seller's and BCC's respective book
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values and tax basis of each category of the Assets and each material Assets and
any other assets held by BCC on November 30, 1998 is attached hereto as Schedule
4.7. Seller will update this Schedule, values and basis as of the Closing Date
and will deliver it to Buyer as soon as practical after the Closing Date. The
parties agreed that the Chairman of BCC and Beacon LLC, shall determine which,
if any, projects are to be abandoned for the periods from January 1, 1998
through the Closing.
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4.8 LITIGATION. Except as set forth on Schedule 4.8 prepared and
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delivered by Seller's management, there are no actions, suits, investigations,
or proceedings pending or, to the knowledge of Seller, threatened against
Seller, BCC or Beacon LLC with respect to, or arising out of, this Agreement or
the transactions contemplated hereby, or which could have a material adverse
effect on the Assets or the business or operations of BCC or Beacon LLC, at law
or in equity, or before or by any federal, state, municipal, or other
governmental department, commission, board, bureau, agency or instrumentality,
or before any arbitrator or private judge.
4.9 SALE BY SELLER ON AN "AS-IS, WHERE-IS" BASIS. Except for the
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specific representations made by Seller herein and in any other document or
certificate delivered by Seller pursuant to this Agreement, it is the intention
of Seller that its sale of the Interest is on an "as is, where is" basis.
Notwithstanding the foregoing, Seller does not have knowledge of any facts which
would make any representation or warranty of BCC or Beacon LLC contained in
this Agreement or in any certificate or schedule furnished pursuant hereto
untrue in any material respect or materially misleading, including, with respect
to representations or warranties made to the knowledge of BCC or Beacon LLC,
facts which would make sure representation or warranty untrue in any material
respect or materially misleading if known to BCC or Beacon LLC. To the
knowledge of Seller, Seller (which for purposes hereof includes all
subsidiaries and entities owned or controlled by Seller other than BCC or Beacon
LLC) has not taken any action, or omitted to take any action, which would have
the effect of making any of the representations or warranties of BCC or Beacon
LLC untrue in any material respect or materially misleading. Seller has made
its own determination as to the value of the Interest and is relying solely
thereon and not on any representation or warranty of any other person or party
in entering into this Agreement and selling the Interest.
4.10 KNOWLEDGE OF SELLER. Knowledge of Seller means actual
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knowledge of Xxxxxxx Xxxxx, Xxxxx X. Xxxxxx III, Xxxxx Xxxxxx or Xxxxxx Xxxxx
(collectively, "Seller's Executives"), and specifically excludes information
only known to directors or officers of BCC or Beacon LLC who are not officers or
directors of Ascent and which information they have not disclosed to any of
Seller's Executives.
4.11 MATERIAL MISSTATEMENTS OR OMISSIONS. No representation or
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warranty by Seller contained in this Agreement or in any certificate or schedule
furnished by Seller pursuant hereto contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statement of fact
contained therein not misleading.
5. REPRESENTATIONS AND WARRANTIES OF BEACON LLC. As of the Closing,
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Beacon LLC hereby represents and warrants to Buyer with respect to BCC and
Beacon LLC that:
5.1 FINANCIAL STATEMENTS. BCC has heretofore delivered to Seller,
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Buyer and the Principals the financial statement of BCC as of November 30, 1998
(the "Statement Date"). Said financial statement has been prepared by BCC
management in accordance with the books and records of BCC and common industry
accounting practices for a subsidiary of a parent company, applied on a basis
consistent with the financial statements of prior periods, contains and reflects
all necessary adjustments for a fair presentation of the financial condition of
BCC at the Statement Date, and with respect to any of BCC's contracts and
commitments, contains and reflects reserves for all material liabilities and for
all reasonably anticipated material losses and costs in excess of expected
receipts. For purposes of this Agreement, BCC's financial statements as of the
Statement Date shall be treated as Beacon LLC's financial statement as of that
date. Except as otherwise disclosed on Schedule 5.1, since the Statement Date
neither BCC nor Beacon LLC nor any of their controlled affiliates have entered
into any material agreements or incurred any material
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obligations binding on BCC or Beacon LLC, or affecting the Assets, other than
through Xxxxxx Xxxxxxxxx, in his capacity as Chairman of BCC and Manager of
Beacon LLC.
5.2 ABSENCE OF CERTAIN CHANGES. Other than as specifically permitted
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by this Agreement, since the Statement Date, there has not been: (a) any
material adverse change in the financial condition, assets, liabilities or
business or prospects of BCC or Beacon LLC; (b) any damage, destruction or loss,
whether or not covered by insurance, adversely affecting the Assets or Beacon
LLC's properties or the Business; (c) except as set forth on Schedule 5.2, any
increase in the compensation payable or to become payable by Beacon LLC to any
of Beacon LLC's employees or agents, or any bonus payment or arrangement made to
or with any thereof; (d) any mortgage, pledge or subjection to lien, charge or
encumbrance of any kind of any of the Assets or Beacon LLC's assets, tangible or
intangible; (e) any sale or transfer of any of the Assets or BCC's or Beacon
LLC's assets, tangible or intangible, or any cancellation by BCC or Beacon LLC
of debts owed to BCC or Beacon LLC or claims by Beacon LLC against others,
except in the ordinary course of business, including transactions among BCC and
Beacon LLC, on one hand, and Seller and Seller's division, controlled-entities
and subsidiaries, on the other, consistent with past practices; (f) any
amendment, modification or termination of any contract, agreement or license to
which BCC or Beacon LLC is a party or by which it or any of the Assets are bound
or directly or indirectly affected, otherwise than in the ordinary course of
business, including transactions among Seller's divisions and subsidiaries
consistent with past practices; (g) any cash payments by BCC or Beacon LLC to
Seller or any affiliate other than for services provided or funds advanced for
bridge production financing in accordance with past practices of BCC and the
terms of this Agreement; and (h) any event or condition of any character
materially and adversely affecting BCC's or Beacon LLC's financial condition,
assets, liabilities, business, properties or prospects.
5.3 AUTHORITY TO CONDUCT BUSINESS. BCC and Beacon LLC are duly
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authorized to conduct the business of BCC and Beacon LLC as is presently or was
conducted under all material applicable laws, orders and regulations. BCC and
Beacon LLC each is in compliance in all material respects with all laws, orders
and regulations applicable to the Assets, properties (including the Assets),
business and operations of BCC and Beacon LLC, the noncompliance with which
would have a materially adverse impact on BCC or Beacon LLC, and no formal or
informal notice of any violation of any such laws, orders and regulations has
been received by BCC or Beacon LLC. To BCC's and Beacon LLC's knowledge, there
are no situations involving BCC or Beacon LLC which involved or involves (i) the
use of funds for unlawful contributions or unlawful expenses related to
political activity, or (ii) the making of any direct or indirect unlawful
payment to government officials or others, or the establishment or maintenance
of any unlawful or unrecorded funds, or (iii) the receipt of any illegal
discounts or rebates.
5.4 TITLE TO AND CONDITION OF ASSETS. BCC management has prepared
--------------------------------
and delivered to Buyer and Seller Schedule 5.4 which is a true and complete list
of all of the Assets containing an accurate description of the Assets and an
accurate summary of the principal terms of all leases and options to purchase
property included among the Assets, including the names of BCC's and Beacon
LLC's lessors, if any, and persons or entities against whom options to purchase
property are or will be exercisable. Except as set forth in Schedule 5.4,
neither BCC nor Beacon LLC has leased or licensed others to use any of the
Assets nor are the Assets subject to any such lease or license. Beacon LLC has
good and marketable title to all of the Assets and all other assets of Beacon
LLC free and clear of all liens, pledges, charges, encumbrances or equities of
any nature whatsoever except as set forth on Schedule 5.4.
5.5 CONTRACTS. BCC management has prepared and delivered to Buyer
---------
and Seller Schedule 5.5 which is a true and complete schedule of all material
contracts and commitments to which each
9
of BCC and Beacon LLC is a party, by which it is bound, or under which it may be
directly or indirectly affected, insofar as the same relate to the Assets or the
Business. For the purposes of this Section 5.5, the term "material contracts and
commitments" shall be defined as (a) all contracts or commitments arising
outside of the ordinary course of business; (b) all contracts or commitments
involving an obligation which cannot, or in reasonable probability will not, be
performed or terminated within six (6) months from the date hereof; (c) all
other contracts or commitments providing for payments based in any manner upon
the receipts or profits of BCC or Beacon LLC; (d) all contracts or commitments
between BCC or Beacon LLC and Seller or any of Seller's subsidiaries or
affiliates; and (e) all contracts or commitments, whether in the ordinary course
of business or not, which contracts or commitments involve future payments,
performance of services or delivery of goods or materials to or by Beacon LLC of
an aggregate amount or value in excess of Twenty-five Thousand Dollars
($25,000). Except as set forth on Schedule 5.5, neither BCC nor Beacon LLC is in
default, nor is there any claim of default, under any such contracts made or
obligations owed by BCC or Beacon LLC, and neither BCC nor Beacon LLC has waived
any material right under any such contracts or obligations, nor is there any
basis for the other party or parties to any such contracts canceling the same.
All such contracts are fully assignable to Beacon LLC, and have been assigned
(or will be before Closing) and the transactions described herein shall not
affect the contracts (e.g., constituting a default or triggering any change in
---
the terms or conditions thereof).
5.6 COPYRIGHTS. BCC management has prepared and delivered to Buyer
----------
and Seller Schedule 5.6 which is a true and complete list of all of the foreign
and domestic copyright registrations or applications for registration thereof
for motion pictures, films, records, materials, designs or other copyrightable
subject matter used in the conduct of the business of BCC and/or Beacon LLC as
now conducted or in which either BCC or Beacon LLC has rights. Except as set
forth in Schedule 5.6, all copyrights used in the conduct of the business as now
conducted, including all copyrights with respect to all motion pictures, films,
records, materials, advertising, software and photographs (collectively, the
"Copyrights"), are solely owned by BCC and/or Beacon LLC, and will be owned by
Beacon LLC on the Closing Date. Neither BCC nor Beacon LLC (nor any affiliate,
including Seller) has received any notice from a third party asserting any
allegations of infringement of any copyrights held by third parties. Neither
BCC nor Beacon LLC has sold, licensed or transferred to Seller, any employee or
other person or entity any rights to any of the Copyrights, except as set forth
on Schedule 5.6. No person has asserted, and which has not been completely
resolved, that either Seller, BCC or Beacon LLC is infringing or has infringed,
any foreign or domestic copyright in connection with the Business.
5.7 PATENTS, TRADEMARKS, LICENSES AND CERTIFICATES. Beacon LLC uses
----------------------------------------------
no patents in the operation of its business. Beacon LLC owns, all of its right,
title and interest to the name "Beacon" and "Beacon Communications" and to any
copyrights, trademarks, trade names, service marks, logos, designs, domain names
and similar items, both foreign and domestic, using the name or term "Beacon" or
"Beacon Communications" (the "Marks"). Neither the Seller nor any of its
affiliates, nor any other person or entity, has any rights to license or use any
of the Marks or any derivation thereof. No Xxxx is the subject of any pending,
or to the knowledge of BCC or Beacon LLC threatened, litigation, arbitration,
interference, cancellation, adverse claim, or hearing. Neither BCC nor Beacon
LLC has infringed upon or violated the rights of any other person respecting
copyrights, patents, trademarks, trade names, logos, names or service marks.
Neither BCC nor Beacon LLC (nor any affiliate, including Seller) has received
any notice of any claim of infringement or violation.
5.8 LITIGATION. Except as set forth on Schedule 5.8 prepared and
----------
delivered by BCC management, there are no actions, suits, investigations, or
proceedings pending or, to the knowledge of BCC
10
or Beacon LLC, threatened against Seller, BCC or Beacon LLC with respect to, or
arising out of, this Agreement or the transactions contemplated hereby, or which
could have a material adverse effect on the Assets or the business or operations
of BCC or Beacon LLC, at law or in equity, or before or by any federal, state,
municipal, or other governmental department, commission, board, bureau, agency
or instrumentality, or before any arbitrator or private judge.
5.9 EMPLOYEE RELATIONS. Except as set forth on Schedule 5.9
------------------
prepared and delivered by BCC management, neither BCC nor Beacon LLC is, or will
be at the Closing, subject to any agreements or employment contracts with any of
their employees or to any bonus arrangements, pension or other retirement plans,
or other similar benefit plans covering any of said employees. Beacon LLC will
have no obligations with respect to wage continuation, health insurance,
severance pay or accrued vacation obligations to any employee of BCC or Beacon
LLC or Seller for any period prior to and including the Closing Date. Except as
set forth on Schedule 5.9, none of BCC's or Beacon LLC's employees is
represented by any labor union or other collective bargaining agent; and neither
BCC nor Beacon LLC has any knowledge of any attempt to organize any of such
employees or any unit pursuant to any state or federal law such as, but not
limited to, the National Labor Relations Act. None of Seller, BCC, Beacon LLC or
an affiliate of any of them under the Employee Retirement Income Security Act
("ERISA") is or has ever been obligated to contribute to any employee benefit
plan or arrangement which constitutes a "multi-employer plan" as defined in
Section 3(37) of ERISA or a plan described in Section 4063(a) of ERISA. Seller,
BCC and Beacon LLC have made or accrued all contributions required under the
terms of such employee benefit plans to have been paid or accrued for services
ending on or prior to the Closing, and no accumulated funding deficiency (as
defined in Section 302 of ERISA and/or Section 412 of the Internal Revenue Code)
exists (whether or not waived). No plans of Seller, BCC or Beacon LLC are or
have ever been required to pay premiums to the Pension Benefit Guaranty
Corporation.
5.10 INSURANCE. There is listed on Schedule 5.10, prepared and
---------
delivered by BCC management, a true and complete list of all policies of fire,
liability, warranty, use and occupancy and other forms of insurance obtained by
BCC (including those to cover those films in production that are included in the
Assets, the "Film Policies") and all other insurance policies covering the
Assets, the Business, the properties, employees or business of BCC and Beacon
LLC, including any policies obtained and owned by Ascent and COMSAT and covering
BCC, Beacon LLC and the Assets as a result of BCC and Beacon LLC being
subsidiaries of Ascent (the "Beacon Policies") since December 1, 1994. Except
as noted, all Beacon Policies are duly in force and they are in amounts and
insure against such losses and risks as are generally maintained for comparable
businesses and properties. All Film Policies and other insurance policies
covering BCC, Beacon LLC, the Business, the Assets, the properties or employees
thereof (but excluding any policies obtained by Ascent and covering BCC and
Beacon LLC as a subsidiary of Ascent) ["Beacon-Specific Policy(ies)"], and
specifically including the life and disability policies on Xxxxxx Xxxxxxxxx and
the life insurance policy on Xxxx Xxxxxxx, have been, assigned to Beacon LLC,
and the sale of the Interest will not cause any Film Policy or Beacon-Specific
Policy to be terminated or canceled, and such policy shall remain in force until
the normal expiration of its terms (subject to payment of the normal premiums),
unless Beacon LLC elects to terminate the policy prior to that date. All of the
other Beacon Policies will continue to cover Beacon LLC and BCC for occurrences
prior to the Closing Date on the same terms as if the sale described herein had
not occurred. Seller will assist and cooperate with Beacon LLC in obtaining, at
Beacon LLC's expense, coverage with respect to occurrences on or prior to the
Closing Date. On or before the Closing, Buyer will be provided a summary of all
Beacon policies, and copies of each Beacon policy (including any policies
obtained by Ascent).
11
5.11 BANKS. Schedule 5.11 prepared and delivered by BCC management
-----
sets forth (a) the name of each bank, trust company, stock and other broker with
which BCC or Beacon LLC have an account, credit line, or safe deposit box or
value or maintain any relations, (b) the name of all persons authorized to draw
thereon or to have access to any safe deposit box or vault, (c) the purpose of
each such account, safe deposit box or vault, and (d) the names of all persons
authorized by proxy, power of attorney or like instrument, to act on behalf of
either of BCC or Beacon LLC in matters concerning the Business or the Assets.
5.12 ENVIRONMENTAL AND HEALTH LAWS. Neither BCC nor Beacon LLC is
-----------------------------
in violation of any environmental law or any order or requirement of any court
or governmental authority to the extent such order or requirement pertains to
health or the environment, nor are the operations or assets of either BCC or
Beacon LLC, or the Assets subject to any remedial obligations under any
environmental law.
5.13 MATERIAL MISSTATEMENTS OR OMISSIONS. No representation or
-----------------------------------
warranty by BCC or Beacon LLC contained in this Agreement or in any certificate
or schedule furnished by BCC or Beacon LLC pursuant hereto contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statement of fact contained therein not misleading. To the knowledge of BCC
and Beacon LLC, there is no fact that would materially adversely affect the
operations, business, assets or projects of BCC or Beacon LLC that has not been
disclosed in this Agreement or a Schedule thereto.
6. OBLIGATIONS AND COVENANTS OF SELLER, BCC AND BEACON LLC. Each of
-------------------------------------------------------
Seller, BCC and Beacon LLC hereby covenants and agrees as follows:
6.1 ACCESS AND INFORMATION. Seller, BCC and Beacon LLC will give
----------------------
Buyer and its counsel, accountants and other representatives full access, during
normal business hours, to all of the properties, books, contracts, commitments
and other records of BCC and Beacon LLC, and will furnish Buyer and such
representatives during such periods with all such information and data
concerning the Assets, the Assumed Liabilities and the assets, properties and
affairs of Beacon LLC as Buyer or such representatives shall request, and Buyer
and its representative, shall keep confidential (except to the extent that
disclosure may be required by law) any confidential information obtained under
this Agreement. Seller shall also provide all schedules, work papers and other
information showing the depreciation and the methodology therefor for the
amortization and depreciation of all Assets, and BCC's and Beacon LLC's methods
of accounting, and all information relating to differences in reporting for
financial (i.e.., book) purposes and income tax purposes and other matters
----
necessary or helpful in the preparation of BCC's and Beacon LLC's financial
statements and tax returns. Also, Seller and Beacon LLC will cooperate with
Buyer and use Seller's best reasonable efforts to have Seller's auditors and tax
preparers provide Buyer and its representatives access to, and copies of, all
information, schedules and work papers relating to BCC and Beacon LLC tax
returns, financial statements, methods of accounting, tax basis and book values,
methods of depreciation and amortization, and other matters necessary or helpful
for Buyer and Beacon LLC to prepare its books and records, financial statements
and tax returns. Post-Closing, Beacon LLC, shall cooperate in providing
information reasonably requested by Seller for Seller to prepare its financial
statements and tax returns.
7. REPRESENTATIONS AND WARRANTIES OF BUYER. As of the Closing, Buyer
---------------------------------------
hereby represents and warrants that:
12
7.1 AUTHORITY AND LEGALITY. BT Investments is a limited liability
----------------------
company duly organized and validly existing and in good standing under the laws
of the State of Delaware with all requisite entity power to enter into this
Agreement and to perform all of its obligations hereunder. ANG is a corporation
organized, validly existing and in good standing under the laws of the State of
Delaware, with all requisite corporate power to enter into this Agreement and to
perform all of its obligations hereunder. Except as otherwise contemplated
herein, the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby by Buyer, and compliance with the terms
hereof, have been duly authorized by all necessary entity action; will not
violate any existing provision of any law, rule, or governmental regulation, or
violate any existing term or provision of any order, writ, judgment, injunction
or decree of any government, governmental instrumentality, public authority or
court applicable to Buyers, or require the prior consent, approval or action of
any other corporation or any person, firm or public authority; will not conflict
with or result in a breach or default (or give any party the right to declare a
breach or default upon notice or passage of time, or both) of any of the terms,
conditions or provisions of the Certificate of Formation or the Operating
Agreement of BT Investments or the Certificate of Incorporation or Bylaws of ANG
or of any indenture, mortgage, deed of trust, or any material agreement or
instrument to which Buyer is a party; and this Agreement constitutes the legal,
valid and binding agreement of Buyer.
7.2 MATERIAL MISSTATEMENTS OR OMISSIONS. No representation or
-----------------------------------
warranty of Buyer contained in this Agreement or in any certificate or schedule
furnished pursuant hereto contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statement of fact
contained therein not misleading.
7.3 LITIGATION. Except as set forth on Schedule 7.3 prepared and
----------
delivered by Buyer, there are no actions, suits, investigations, or proceedings
pending or, to the knowledge of Buyer, threatened against Buyer, with respect
to, or arising out of, this Agreement or the transactions contemplated hereby,
or which could have a material adverse effect on the assets or businesses of
Buyer, or at law or in equity, or before or by any federal, state, municipal, or
other governmental department, commission, board, bureau, agency or
instrumentality, or before any arbitrator or private judge.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by Buyer or Seller (or their respective owners) shall survive
the Closing Date for a period of eighteen (18) months and any voluntary or
involuntary act of Buyer, the Principals, Beacon LLC or Seller. Notwithstanding
the preceding, (i) Seller's representations, warranties and agreements as to the
Membership Interests of Beacon LLC set forth in Paragraphs 4.4 and 4.5 hereof
shall survive indefinitely, and (ii) all representations, warranties and
agreements as to all tax obligations and tax matters of Seller, BCC and Beacon
LLC for all periods ending on and before the Closing shall survive for the
period of all relevant statutes of limitations. All representations, warranties
and agreements made by BCC or Beacon LLC shall survive the Closing Date for a
period of four (4) years and any voluntary or involuntary act of Buyer, the
Principals, Seller or Beacon LLC. Any investigation made by Buyer shall not
affect the representations and warranties hereunder or their survival as herein
contemplated.
9. FEDERAL SECURITIES ACT. The parties hereto understand that the
----------------------
membership interests to be transferred pursuant to the provisions of this
Agreement will not be registered under the Securities Act of 1933, as amended
(hereinafter referred to as the "Securities Act"), in reliance upon exemptions
contained in the Securities Act and General Rules and Regulations under the
Securities Act and promulgated by the Securities and Exchange Commission. Each
of Buyer hereby represents and warrants
13
that the membership interests to be purchased pursuant to the terms of this
Agreement are not being acquired with a view to any distribution in violation of
the Securities Act and the Rules and Regulations promulgated thereunder. The
certificates for the membership interests to be delivered at the Closing will
bear an appropriate legend required by the Securities Act.
10. CLOSING. The sale and purchase of the membership interests shall
-------
place at a closing (the "Closing") which shall take place on January 15, 1999 at
5:00 p.m. at the offices of XxXxxxxx & Xxxxxx, A Professional Corporation, 00000
Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, or at such other time
and place as shall be determined by Seller and Buyer (the "Closing Date").
10.1 At the Closing, in addition to all of the other documents set
forth herein, Seller shall deliver to Buyer
(a) resignations and releases of each of the managers and
officers of Beacon LLC and each Beacon LLC Sub;
(b) an assignment sufficient to transfer the Interest on the
books of Beacon LLC to Buyer;
(c) the books and records of BCC and Beacon LLC;
(d) certificates, dated the Closing Date, executed by the
Chairman or a Vice President and by the Chief Financial Officer of such
corporation or two Managers of the Beacon LLC certifying that all
representations and warranties of Seller and Beacon LLC contained herein or in
any schedule, statement or certificate delivered in connection herewith are true
and correct on of the Closing, and that Seller and Beacon have duly performed
all obligations and covenants to be performed by each of them hereunder;
(e) an instrument from each of Seller's lenders or other
parties having a security interest or other lien or interest in the Interest,
any of the Assets or any of the other assets of BCC or Beacon LLC or having a
security interest in any significant Ascent assets releasing its security or
other lien or interest therein as of the Closing and a fully-executed UCC-3
forms (and/or other documents) and release of guarantees or other obligations of
Beacon LLC, BCC, and or any Beacon LLC Sub for such purpose. The liens for the
production loans for "G's Trippin,'" "Hurricane Xxxxxx" and "End of Days" shall
be excluded;
(f) an opinion of Seller's Vice President, business and legal
affairs, dated the Closing Date, in form reasonably satisfactory to Buyer's
counsel;
(g) an opinion of Seller's intellectual property counsel,
dated the Closing Date, in form satisfactory to Buyer's counsel, regarding the
Marks; and
(h) checks for 1998 bonuses for employees of BCC and Beacon
LLC.
10.2 Buyer's Delivery. At the Closing, Buyer shall deliver to Seller (a)
----------------
confirmation of the wire transfer of or delivery of a certified cashier's check
in the amount of the Purchase Price (less credits) as provided in Section 3.1,
above, and (b) a certificate, dated the Closing Date, executed by its Manager
and
14
each of the Principals certifying that (i) all representations and warranties of
Buyer and the Principals contained herein or in any schedule, statement or
certificate delivered in connection herewith are true and correct as of the
Closing; and (ii) each of Buyer and the Principals shall have duly performed all
obligations and covenants to be performed by each of them hereunder.
10.3 Adjustments. From and after December 21, 1998, the Assets shall also
-----------
include all cash receipts of any type, including overhead contributions from
MCA, profit participations, fees, residuals, reimbursement and payments received
with respect to the Assets, the Business, and the operations of BCC and Beacon
LLC, including from all motion pictures and films that BCC or Beacon LLC is or
was involved with (other than recoveries of bridge production financing which
Ascent is entitled to keep under the terms of Paragraph 2.1) less direct
operating overhead (excluding interest on any intercompany advances, if any is
normally charged) expenditures of BCC and Beacon LLC for period after that date.
Expenditures are to be the usual and customary expenditures and within the
budget, and, in no event, are any Excluded Liabilities to be paid or any
expenditures which are to be paid by Seller under this Agreement to be paid.
All expenses of BCC or Beacon LLC related to the Assets or the Business which
are due and payable in the ordinary course up through and including the Closing
Date shall be paid by BCC or Beacon LLC in the ordinary course, without any
delay from past practices, and Seller shall provide the funds to make such
payments, if needed. Notwithstanding anything to the contrary, all items of
Excluded Liabilities and expenses which are to be paid by Seller under this
Agreement shall be paid by Seller and not by BCC or Beacon LLC. Except as
expressly set forth in the Agreement, there will be no liability or obligation
of Beacon LLC to reimburse or in any manner to repay any intercompany account
payable to Seller as of the Closing. No distributions shall be made to Seller,
except to reimburse Seller for the cost of salaries and other operating overhead
expenditures (consistent with past practices and prorated for periods extending
beyond January 1999)of BCC or Beacon LLC paid by Ascent plus recoveries of
bridge production financing which Ascent is entitled to keep under the terms of
Paragraph 2.1. Ascent may have BCC or Beacon LLC use any such funds received to
fund production (including development/financing) for "13 Days" and "Family
Man," but any BCC or Beacon LLC funds so used shall reduce on a dollar-for-
dollar basis Buyer's reimbursement obligations to Seller at the Closing with
respect to such financing, unless Ascent has funded BCC or Beacon LLC operating
and overhead expenditures in excess of receipts from December 21, 1998, in which
case, Buyer will reimburse Seller for the BCC or Beacon LLC funds used to fund
production for "13 Days" and "Family Man," but in no event shall such amount
exceed the out-of-pocket amount contributed by Ascent to fund BCC or Beacon LLC
operating expenditures.
11. SELLER'S INDEMNIFICATIONS. Seller, jointly and severally, shall
-------------------------
indemnify the Principals, Beacon LLC and Buyer as follows:
11.1 INDEMNIFICATION. Seller shall indemnify and hold the
---------------
Principals, Buyer and Beacon LLC harmless against and from any losses, costs,
damages, or liabilities, including in each case the costs and expenses
reasonably incurred by the Principals, Buyer or Beacon LLC for legal and
accounting services in defending actions or claims giving rise to such right of
indemnification, arising out of or based upon (a) the Excluded Liabilities; or
(b) any breach of any of Seller's warranties or agreements provided in this
Agreement or any misrepresentation in any certificate or document delivered by
Seller to Buyer hereunder. Recovery of the Principals, Buyer or Beacon LLC will
also include any legal fees and costs of the Principals, Buyer or Beacon LLC in
asserting their rights against Seller hereunder.
11.2 OPPORTUNITY TO DEFEND LITIGATION. If, after the Closing, any
--------------------------------
claim is made against the Principals, Beacon LLC or Buyer which, if sustained,
would constitute an Excluded Liability or a breach
15
of warranty or agreement by Seller or which would give rise to a right of
indemnification, the Principals, Beacon LLC or Buyer shall cause written notice
of the claim to be mailed to Seller within thirty (30) days after the
Principals, Beacon LLC or Buyer receives a formal written demand for payment of
such claim. If Seller wishes to join in defending or compromising the claim and
so advises the Principals, Beacon LLC or Buyer in writing within ten (10) days
after receipt of the notice, the Principals, Beacon LLC or Buyer shall afford
Seller an opportunity to join therein at the sole expense of Seller and to
undertake the sole defense thereof. If Seller does elect to join therein and to
undertake the sole defense thereof with counsel reasonably acceptable to the
Principals, Beacon LLC and Buyer, the Principals, Beacon LLC or Buyer will not
compromise or settle such claim without Seller's consent. If Seller does not
elect to join in the defense and undertake the sole defense, the Principals,
Beacon LLC or Buyer shall have the right to make any settlement or compromise
which it, in its sole discretion, deems reasonable (including payment in full of
such claim) and obtain indemnification from Seller for the full amount thereof
and in such event the validity of such claim or amount of such settlement may
not then be challenged by Seller. In the event and for so long as Seller
actively is contesting or defending against any indemnified action or claim,
each of the Principals, Buyer and Beacon LLC will cooperate with the contest and
defense, and Seller's counsel in the contest or defense, make available its
personnel, and provide such testimony and access to its books and records as
shall be necessary in connection with the contest or defense, at no cost and
expense to Seller. The indemnified party shall have the right to employ counsel
separate from counsel employed by the indemnifying party in any such action and
to participate therein, but the fees and expenses of such counsel employed by
the indemnified party shall be at its expense.
11.3 LOSSES BY SUBSIDIARIES. For all purposes of this Agreement, any
----------------------
loss, liability, cost or expense suffered or incurred by any entity owned by
Buyer (including Beacon LLC) or Beacon LLC shall be deemed suffered or incurred
by Buyer, but Seller shall not be responsible for reimbursing more than one (1)
party for the same loss, liability, cost or expense or for paying any amount in
excess of the total loss, liability, cost or expense actually suffered or
incurred.
12. INDEMNIFICATION BY BUYER AND BEACON LLC. Buyer and Beacon LLC shall
---------------------------------------
jointly and severally indemnify Seller as follows:
12.1 INDEMNIFICATION. Buyer and Beacon LLC shall jointly and
---------------
severally indemnify and hold Seller harmless against and from any losses, costs,
damages, or liabilities, including in each case the costs and expenses
reasonably incurred by Seller for legal and accounting services in defending
actions or claims giving rise to such right of indemnification, arising out of
or based upon (a) any Assumed Liabilities; and (b) any breach of any of the
warranties of Buyer provided in this Agreement or any misrepresentation by Buyer
in any certificate or document delivered to Seller. Seller's recovery will
also include any legal fees and costs of Seller in asserting its rights against
Buyer and Beacon LLC hereunder.
12.2 OPPORTUNITY TO DEFEND LITIGATION. If, after the Closing, any
--------------------------------
claim is made against Seller which, if sustained, would arise out of an Assumed
Liability or constitute a breach of warranty or misrepresentation by Buyer or
which would give otherwise rise to a right of indemnification by Buyer or Beacon
LLC to Seller under this Agreement, Seller shall cause written notice of the
claim to be mailed to Buyer and Beacon LLC within thirty (30) days after Seller
receives a formal written demand for payment of such claim. If Buyer and/or
Beacon LLC wishes to join in defending or compromising the claim and so advises
Seller in writing within ten (10) days after receipt of the notice, Seller shall
afford them an opportunity to join therein at the sole expense of Buyer and
Beacon LLC and to undertake the sole defense thereof. If Buyer and Beacon LLC,
or any of them, elect to join therein and to undertake the sole defense
16
thereof with counsel reasonably acceptable to Seller, then Seller will not
compromise or settle such claim without the consent of the defending party. If
neither Buyer nor Beacon LLC elect to join in the defense and undertake the sole
defense, Seller shall have the right to defend the action and to make any
settlement or compromise which it, in its sole discretion, deems reasonable
(including payment in full of such claim) and to obtain indemnification jointly
and severally from Buyer or Beacon LLC for the full amount thereof, and in such
event the validity of such claim or the amount of such settlement may not then
be challenged by Buyer or Beacon LLC. In the event and for so long as Buyer or
Beacon LLC actively is contesting or defending against any indemnified action or
claim, Seller will cooperate with the contest and defense, and counsel in the
contest or defense, make available Seller's personnel, and provide such
testimony and access to Seller's books and records as shall be necessary in
connection with the contest or defense, at no cost and expense to Buyer or
Beacon LLC. The indemnified party shall have the right to employ counsel
separate from counsel employed by the indemnifying party in any such action and
to participate therein, but the fees and expenses of such counsel employed by
the indemnified party shall be at its expense.
12.3 LOSSES BY SUBSIDIARIES. For all purposes of this Agreement, any
----------------------
loss, liability, cost or expense suffered or incurred by any Subsidiary of
Seller shall be deemed suffered or incurred by Seller, but Buyer and Beacon LLC
shall not be responsible for reimbursing more than one (1) party for the same
loss, liability, cost or expense or for paying any amount in excess of the total
loss, liability, cost or expense actually suffered or incurred.
13. INDEMNIFICATION BY BEACON LLC. Beacon LLC shall indemnify Buyer and
-----------------------------
the Principals as follows:
13.1 INDEMNIFICATION. Beacon LLC shall indemnify and hold Buyer and
---------------
the Principals harmless against and from any losses, costs, damages, or
liabilities, including in each case the costs and expenses reasonably incurred
by Buyer or the Principals for legal and accounting services in defending
actions or claims giving rise to such right of indemnification based upon any
breach of any of the warranties of BCC or Beacon LLC provided in this Agreement
or any misrepresentation by BCC or Beacon LLC in any certificate or document
delivered to Buyer or the Principals by either of them. Buyer's or the
Principal's recovery will also include any of their respective legal fees and
costs in asserting their rights against Beacon LLC hereunder.
13.2 OPPORTUNITY TO DEFEND LITIGATION. If, after the Closing, any
--------------------------------
claim is made against Buyer or the Principals which, if sustained, would
constitute a breach of warranty or agreement by Beacon LLC or which would give
rise to a right of indemnification, Buyer or the Principals shall cause written
notice of the claim to be mailed to Beacon LLC within thirty (30) days after any
of them receives a formal written demand for payment of such claim. If Beacon
LLC wishes to join in defending or compromising the claim and so advises Seller
in writing within ten (10) days after receipt of the notice, Buyer and the
Principals shall afford Beacon LLC an opportunity to join therein at the sole
expense of Beacon LLC and to undertake the sole defense thereof. If Beacon LLC
elects to join therein and to undertake the sole defense thereof with counsel
reasonably satisfactory to Buyer and the Principals, neither Buyer not the
Principals will compromise or settle such claim without Beacon LLC's consent.
If Beacon LLC does not elect to join in the defense and undertake the sole
defense, Buyer and the Principals shall have the right to defend the action and
to make any settlement or compromise which they, in their sole discretion, deem
reasonable (including payment in full of such claim) and to obtain
indemnification jointly and severally from Beacon LLC for the full amount
thereof, and in such event the validity of such claim or the amount of such
settlement may not then be challenged by Beacon LLC. In the event and for so
long as Beacon LLC actively is contesting or defending
17
against any indemnified action or claim, Buyer and the Principals will cooperate
with the contest and defense, and counsel in the contest or defense, make
available their personnel, and provide such testimony and access to Buyer's
books and records as shall be necessary in connection with the contest or
defense, at no cost and expense to Beacon LLC. The indemnified party shall have
the right to employ counsel separate from counsel employed by the indemnifying
party in any such action and to participate therein, but the fees and expenses
of such counsel employed by the indemnified party shall be at its expense.
13.3 LOSSES BY SUBSIDIARIES. For all purposes of this Agreement, any
----------------------
loss, liability, cost or expense suffered or incurred by any Subsidiary of Buyer
shall be deemed suffered or incurred by Buyer, but Beacon LLC shall not be
responsible for reimbursing more than one (1) party for the same loss,
liability, cost or expense or for paying any amount in excess of the total
loss, liability, cost or expense actually suffered or incurred.
14. FEES AND EXPENSE. Each of the parties to this Agreement shall pay its
----------------
own expenses in connection with the transactions contemplated hereby. Seller
shall pay any transfer, documentary, sales or other taxes, fees, and expenses
which may be due with respect to the transfers described herein.
15. BROKER'S AND FINDER'S FEE. Seller and Buyer each represents and
-------------------------
warrants to the other that it (and with respect to Seller it represents that
each of BCC and Beacon LLC) has not incurred any broker's or finder's fee in
connection with the transactions contemplated hereby, and each agrees to
indemnify and hold the other harmless from any broker's or finder's fee or
alleged broker's or finder's fee incurred by the other or any claim by any party
that the other entered into any agreement calling for a broker's or finder's
fee.
16. PUBLIC STATEMENTS. Buyer, Seller and the Principals agree that to the
-----------------
fullest extent permitted by law, the terms of this Agreement are CONFIDENTIAL.
Buyer and Seller shall consult with each other with regard to all publicity,
general employee announcements and public announcements concerning this
Agreement and the transactions contemplated hereby and, except as required by
applicable law or the applicable rules or regulations of any governmental body
or stock exchange (including, without limitation, the NASDAQ Stock Market), no
party shall issue a press release or announcement concerning this Agreement and
the transactions contemplated hereby without the prior consent of the other
parties hereto, which consent shall not be unreasonably withheld. Prior to
making any filing with regard to this Agreement, Seller will redact as many of
the terms of this Agreement as may be permitted by law and shall provide Buyer
the opportunity to comment on the proposed disclosure prior to filing.
17. SUCCESSORS AND ASSIGNS. All covenants, representations, warranties
----------------------
and agreements of the parties contained herein shall be binding upon and inure
to the benefit of their respective successors and permitted assigns.
18. REMEDIES NOT EXCLUSIVE. Except as expressly provided, no remedy
----------------------
conferred by any entity of the specific provisions of this Agreement is
intended to be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or otherwise. The
election of any one or more remedies by Buyer, Beacon LLC or Seller shall not
constitute a waiver of the right to pursue other available remedies.
18
19. NOTICES. All notices, requests, demands and other communications
-------
required or permitted hereunder shall be in writing and shall be deemed given or
delivered to the parties at the following addresses (or at such other address as
shall be given in writing by either party to the other) (i) when delivered
personally, (ii) if transmitted by facsimile when confirmation of transmission
is received, if received during normal business hours on a business day,
otherwise on the next business day, or (iii) if sent by United States certified
or registered mail, postage prepaid or by private courier, when received:
Buyer: BOOMTOWN INVESTMENTS, LLC
c/x XxXxxxxx & Xxxxxx, A Professional Corporation
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn.: Xxxxx X'Xxxxxxx, Manager
Fax No.: (000) 000-0000
and to: Xxxxxx Xxxxxxxxx, Member-Manager
c/x XxXxxxxx & Xxxxxx, A Professional Corporation
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
ANG: ANG Capital Corporation
c/x XxXxxxxx & Xxxxxx, A Professional Corporation
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax: (000) 000-0000
With copies to: XxXxxxxx & Xxxxxx, A Professional Corporation
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn.: Xxxxxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
Seller: Ascent Entertainment Group, Inc.
0000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attn.: Xxxxxxx Xxxxx, Chairman
Fax No.: (000) 000-0000
With copies to: Xxxxxx Xxxxx, Esq.
c/o Ascent Entertainment Group, Inc.
0000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
19
Beacon LLC: Beacon Communications, LLC
000 Xxxxxxxx
Xxxxx Xxxxxx, XX 00000
Attn.: Xxxxxx Xxxxxxxxx, Chairman
with copies to: XxXxxxxx & Xxxxxx, A Professional Corporation
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn.: Xxxxxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
20. ENTIRE AGREEMENT. This Agreement, together with all schedules,
exhibits, certificates and documents delivered in connection herewith or
referred to herein, contain the entire agreement between the parties hereto with
respect to the transactions contemplated herein, supersede all prior
negotiations between the parties, and cannot be amended, supplemented or
modified except by an instrument in writing signed by the party against whom the
enforcement of any such amendment, supplement or modification is sought.
21. CONSTRUCTION. This Agreement shall be construed and enforced in
------------
accordance with the laws of the State of California.
22. CAPTIONS AND SECTION HEADINGS. Captions and section headings used
-----------------------------
herein are for convenience only and are not a part of this Agreement and shall
not be used in construing it.
23. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The delivery of a
facsimile copy of an executed copy by a party hereto shall be deemed an
equivalent of delivery of any original signature by such party. Such party
shall also deliver an original copy of the executed document within three (3)
business days.
24. CORPORATE AUTHORITY. Any corporation signing this Agreement
-------------------
represents and warrants that said Agreement is executed in compliance with a
resolution of the Board of Directors of said corporation, duly adopted by said
Board and transcribed in full in the minutes of said corporation. Any
individual signing this Agreement on behalf of an entity represents and warrants
that he has full authority to do so.
25. INTERPRETATION. No provision of this Agreement is to be interpreted
--------------
for or against either party because that party or that party's legal
representative drafted such provision.
26. DISPUTE RESOLUTION. In the event of a dispute or disagreement among
------------------
the parties as to whether there has been a breach or default under this
Agreement, each party agrees to notify in writing the other party of the alleged
breach or default and both parties agree to discuss, negotiate and attempt to
resolve the alleged breach or default for a period of thirty (30) days after
notice. In the event the parties cannot reach an agreement to settle and
resolve their dispute, each party agrees to use the alternative dispute
mechanism set forth on Schedule 26 attached hereto as the exclusive means of
resolving the dispute.
20
Notwithstanding anything to the contrary, either party may use a court
proceeding to seek and obtain a temporary restraining order or injunctive
relief.
27. FURTHER ASSURANCES. The parties hereto agree to execute such
------------------
additional documents and take such further action as may be reasonably necessary
to carry out the provisions of this Agreement. Without limiting the foregoing,
from time to time, at Buyer's request, whether on or after the Closing Date and
without further consideration or cost to Buyer or Beacon LLC, (a) Seller shall
execute and deliver such further instruments of conveyance and transfer and take
such other action as Buyer reasonably may require to more effectively convey and
transfer to Buyer the Interests and to Beacon LLC the Assets and the Business
which has been transferred and assigned to Beacon LLC and, if necessary, will
assist Beacon LLC, at Beacon LLC's request, in the collection or reduction to
possession of such property and to assist Buyer in understanding, contesting and
defending any Assumed Liabilities and any Excluded Liabilities; and (b) Seller
shall execute and deliver such documents and take all other actions reasonably
necessary or helpful for Beacon LLC, BT Investments or any Principal to assert
any claims it may have under any insurance policy now or previously held by
Seller or COMSAT).
28. NAME CHANGE. Not later than the next business day immediately
-----------
following the Closing, each Seller shall file an amendment to its respective
Certificate of Incorporation to change its respective corporate name so as not
to include the word "Beacon" or any other name or xxxx that has such a near
resemblance thereto as may be likely to cause confusion or mistake to the
public, or to otherwise deceive the public. Each such amendment shall be in a
form acceptable for filing with the appropriate public official or agency of the
respective State of incorporation of such Seller. A copy of the filed Amendment
shall promptly be supplied to Buyer.
29. TAX RETURNS AND EXAMINATIONS. All tax returns for BCC and Beacon LLC,
----------------------------
and their respective corporation subsidiaries and limited liability companies,
for periods up to and including the Closing Date which have not yet been filed
as of the date of this Agreement ("Pre-Closing Tax Returns") shall be prepared
in a manner consistent with past practices and applicable law, and in accordance
with the provisions of this Agreement and the agreements of the parties, and
shall be provided to Buyer to allow for Buyer's review prior to filing as to
matters that do or may affect Beacon LLC and/or Beacon Sub LLC (including,
without limitation, tax basis of Assets, expensing or capitalization of
expenditures, changes in methods of accounting, depreciation and amortization of
films and other assets, and abandonment of development projects).
Notwithstanding the above, Buyer and Seller agree that Buyer shall prepare all
Beacon LLC tax returns and Beacon Sub LLC tax return (but not for corporate
entities for periods ending on or before the Closing, which shall be prepared by
Seller) for periods after December 31, 1998. Any Pre-Closing Tax Returns
prepared by Seller shall be provided to Buyer for review and consultation; any
pre-Closing Tax Returns prepared by Buyer shall be provided to Seller for review
and consultation. Buyer and Seller intend and agree that such returns be filed
in a manner that reflects that Beacon LLC has a carryover tax basis in the
Assets of BCC, and that the merger of BCC into Beacon LLC is treated as a tax-
free contribution of assets by BCC to Beacon LLC and a distribution of
membership interests to Ascent. With respect to each merger or liquidation of
any BCC or Beacon LLC subsidiary corporation into a limited liability company,
there will also be a carryover basis in the assets. Seller will take all
reasonable steps to preserve Buyer's tax positions. Seller and Buyer agree to
consult and resolve in good faith any issue arising as a result of the review of
such Pre-Closing Tax Returns. In the event the parties are unable to resolve
any dispute within ten (10) days following the delivery of such Pre-Closing Tax
Returns, the parties shall jointly request Seller's or Buyer's accountants
(depending on whether Seller or Buyer prepared the tax return) to resolve any
issue at least five (5) days before the due date of any such Pre-Closing Tax
Return, in order that
21
such Pre-Closing Tax Return may be timely filed. Except as expressly permitted
by this Paragraph 32, neither Seller nor any affiliate of Seller shall, without
the prior written consent of Buyer, file, or cause to be filed, any tax return
or amended tax return or claim for tax refund for any pre-Closing period, which
reasonably may materially adversely affect Beacon LLC or any subsidiary entity.
Buyer's consent may be withheld to the extent that any such tax return or claim
refund reasonably could materially adversely affect BCC, Beacon LLC or any
subsidiary entity of either (such as by increasing its income or decreasing its
deductions in years subsequent to the year involved in the return or claim for
refund or changing the tax basis of Beacon LLC's assets or methods of
accounting). The Seller has delivered to Buyer on or before the Closing, copies
of all tax returns of BCC, Beacon LLC, or portions of Seller's group returns
related to or affecting BCC or Beacon LLC, and all schedules and work papers,
and all material records and other documents relating thereto, and the parties
shall retain such documents until the expiration of the statute of limitation
(and, to the extent notified by any party, any extensions thereof) of the
taxable years to which such returns and other documents relate until the final
determination of any tax in respect of such years. Buyer shall have the right to
participate with Seller and represent the interests of BCC or Beacon LLC and any
transferred subsidiary of either in any tax audit or administrative or court
proceeding relating to any tax returns or portions thereof (including any
examination or proceeding relating to the income, methods of accounting,
properties or operations of the BCC, Beacon LLC, and any subsidiary entities of
either, for pre-Closing periods) relating to BCC, Beacon LLC or any subsidiary
entity, and Seller shall give Buyer prompt and timely notice of any such audit
or proceeding. In the event that Seller desires to compromise or settle any tax
claim, or to consent or agree to any adjustment, relating to BCC or Beacon LLC
or any transferred subsidiary entity for any pre-Closing period, Buyer and
Beacon LLC shall have the right to review and approve such compromise,
settlement, consent or agreement. Notwithstanding anything to the contrary
contained or implied in this Agreement, without the prior written approval of
Buyer, neither Seller nor any affiliate of Seller shall agree or consent to
compromise or settle, either administratively or after the commencement of
litigation, any issue or claim arising in any such audit or proceeding, or
otherwise agree or consent to any tax liability that will adversely affect
Beacon LLC or any transferred subsidiary entity should Beacon LLC or Buyer pick
up and pay for the defense; if Buyer does not do so, Seller may compromise or
settle.
30. SEVERABILITY. In the event that any covenant, condition or other
------------
provision herein contained is held to be invalid, void or illegal by any court
of competent jurisdiction, the same shall be deemed severable from the remainder
of this Agreement and shall in no way affect, impair or invalidate any other
covenant, condition or other provision herein contained. If such condition,
covenant or other provision shall be deemed invalid due to its scope or breadth,
such covenant, condition or other provision shall be deemed valid to the extent
of the scope or breadth permitted by law.
22
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
Ascent: ASCENT ENTERTAINMENT GROUP, INC.
A Delaware Corporation
By: /s/ Xxxxxxx Xxxxx
---------------------------------------------
Xxxxxxx Xxxxx, Chairman
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx, Vice President
ABC: ASCENT BEACON CORP.
A Delaware Corporation
By: /s/ Xxxxx X. Xxxxxx, III
---------------------------------------------
Authorized Officer
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Authorized Officer
Beacon LLC: BEACON COMMUNICATIONS LLC
A Delaware Limited Liability Company
By: /s/ Xxxxx X. Xxxxxx, III
---------------------------------------------
Authorized Member-Manager
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Authorized Member-Manager
23
Buyer: BOOMTOWN INVESTMENTS, LLC
A Delaware Limited Liability Company
By: /s/ Xxxxx X'Xxxxxxx
---------------------------------------------
Xxxxx X'Xxxxxxx, Manager
By: /s/ Xxxxxx Xxxxxxxxx
---------------------------------------------
Xxxxxx Xxxxxxxxx, Manager
and ANG CAPITAL CORPORATION
A Delaware Corporation
By: /s/ Xxxxxx Xxxxxxxxx
---------------------------------------------
Xxxxxx Xxxxxxxxx, President
24
