STOCK PURCHASE AGREEMENT
BY AND BETWEEN
MSH ENTERTAINMENT CORPORATION
AND
XXXXXX XXXXXX
August 27, 1998
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") dated August 27, 1998 is
entered into by and between MSH Entertainment Corporation, a Utah corporation
("Buyer"), and Xxxxxx Xxxxxx ("Seller");
RECITALS
A. Seller owns 44.01 shares of the Common Stock (the "Purchased
Shares") of Xxxxxx\Xxxxxxx Entertainment, Inc., a New York corporation (the
"Company");
B. Seller desires to sell the Purchased Shares to Buyer and Buyer
desires to purchase the Purchased Shares from Seller, on the terms and
conditions set forth herein;
In consideration of the promises, representations, warranties and
agreements contained herein, the parties agree as follows:
1. PURCHASE AND SALE OF SHARES
1.1 TRANSFER OF SHARES. At the Closing (as that term is defined
herein), Seller agrees to sell, convey, assign, transfer and deliver the
Purchased Shares to Buyer, and Buyer agrees to purchase, acquire and accept the
Purchased Shares from Seller.
1.2 PURCHASE PRICE. As full consideration for the sale of the
Purchased Shares to Buyer, at or before the Closing Buyer shall deliver to
Seller $5,000,000 in cash and property (the "Purchase Price"), as follows:
1.2.1 $349,500 in cash, previously delivered to Seller (the
"Xxxxxxx Money Deposit");
1.2.2 $3,400,500 in cash, to be delivered at the Closing
(the "Closing Cash Payment");
1.2.3 300,000 newly issued shares of Common Stock of Buyer,
with an agreed value of $120,000 (or $.40 per share),
previously delivered to Seller (the "Pre-Closing
Shares"); and
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1.2.4 2,825,000 newly issued shares of Common Stock of
Buyer, with an agreed value of $1,130,000 (or $.40
per share), to be delivered at the Closing (the
"Closing Shares");
1.3 PAYMENT OF PURCHASE PRICE. The Closing Cash Payment shall be paid
by Buyer to Seller at the Closing, at Buyer's election, by means of a wire
transfer or cashier's check. The obligation of Buyer with respect to issuance of
the Closing Shares shall be satisfied by delivery to Seller of a certificate
representing the Closing Shares, duly registered in the name of Seller and
executed and countersigned by duly authorized representatives of Buyer.
2. CLOSING.
2.1 TIME AND PLACE. The consummation of the purchase and sale of the
Shares (the "Closing") shall be held at 10:00 a.m. local time on September 4,
1998 at the offices of Rubin, Bailin, Ortoli, Mayer, Xxxxx & Xxx LLP, 000 Xxxx
Xxxxxx, Xxx Xxxx, X.X. 00000. If the Closing does not occur by the Closing Date,
and such failure is not a result of any material breach of this Agreement by
Seller, then Seller may retain, as liquidated damages, the Xxxxxxx Money Deposit
and the Pre-Closing Shares. In such event, Buyer and Seller shall each pay all
of its own costs and expenses, and neither Buyer nor Seller shall thereafter
have any further obligation to the other under this Agreement.
2.2 DELIVERIES AT THE CLOSING. At the Closing, the each of the parties
hereto shall deliver the various certificates, consents, instruments and
documents provided for in this Agreement, Seller shall deliver executed stock
certificates representing the Closing Shares and such other instruments which,
in the reasonable opinion of counsel to Buyer, are required for issuance of the
Shares to Buyer, and Buyer shall deliver the consideration for the Shares to
Seller.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Except as disclosed in a disclosure schedule delivered concurrently
herewith in which all exceptions are noted by specific reference to the Section
for which the exception is being made (the "Disclosure Schedule") Seller hereby
makes the following representations and warranties to Buyer, acknowledging that
Buyer is relying on such representations and warranties in entering into the
transactions contemplated by this Agreement. The representations and warranties
set forth in Sections 3.5 through 3.25 of this Agreement are to the best
knowledge of Seller after due inquiry:
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3.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York, has all requisite corporate power and authority to own, operate and
lease its properties and carry on its business as now conducted, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the failure to so qualify would likely have a
material adverse effect upon it. Seller has delivered to Buyer complete and
accurate copies of the Articles of Incorporation and Bylaws of the Company, each
as amended to date.
3.2 SUBSIDIARIES. The Company does not own, directly or indirectly,
any shares of capital stock, or any right to acquire any shares of capital
stock, of, or any participation in, any corporation, partnership, joint venture
or other entity.
3.3 CAPITALIZATION. The authorized capital stock of the Company
consists of 200 shares of common stock. As of the date hereof, there are 88
shares of common stock of the Company issued and outstanding all of which are
owned, beneficially and of record, free and clear of all liens, encumbrances,
security agreements, equities, options, claims, charges and restrictions, as
follows:
PERCENTAGE
NAME SHARES INTEREST
--------------- --------------- ---------------
Xxxxxx Xxxxxx 44.01 50.01136
Xxxxxxx Xxxxxxx 20.64 23.45454
Xxxx Xxxxxxx 20.64 23.45454
Xxxxx Xxxxxxx 2.71 3.07954
Such Shares are duly and validly authorized and issued, are frilly
paid and nonassessable and are not now in violation of or subject to any
preemptive rights.
As of the date hereof, there are no warrants, options, calls,
commitments, or other rights to subscribe for or to purchase from the Company
any capital stock of either or any securities convertible into or exchangeable
for any shares of either, or any other securities or agreements pursuant to
which the Company is or may become obligated to issue any shares of its capital
stock, nor is there outstanding any commitment, obligation or agreement on the
part of the Company to repurchase, redeem or otherwise acquire any of the
outstanding shares of its capital stock. When purchased in accordance with the
terms of this Agreement, the Purchased Shares will constitute 50.01136% of the
outstanding capital stock and voting power of the Company immediately following
the Closing.
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3.4 TITLE TO SHARES; AUTHORIZATION. Seller has good and marketable
title to the Purchased Shares, free and clear of any liens, restrictions,
marital rights, options or encumbrances, and upon consummation of the purchase
contemplated herein, Buyer will acquire from Seller good and marketable title to
the Purchased Shares, free and clear of all liens, charges, options or other
encumbrances, excepting only such restrictions upon transfer, if any, as may be
imposed by Federal or state securities laws and restrictions imposed by the
Shareholders' Agreement among the shareholders of The Company. Seller has full
legal right, power and capacity to enter into, execute, deliver and perform this
Agreement and all attendant documents and instruments contemplated hereby,
without the consent of any person. This Agreement has been duly executed and
delivered and constitutes the legal, valid and binding obligation of Seller and
is enforceable with respect to Seller in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, priority or other laws or
court decisions relating to or affecting generally the enforcement of creditors'
rights or affecting generally the availability of equitable remedies. The
execution and delivery of this Agreement by Seller, and the consummation of the
transactions contemplated hereby by Seller in accordance with the terms hereof
shall not: (i) conflict with or result in a breach of, violation of, or default
under, (or constitute an event that with notice, lapse of time, or both, would
constitute a breach or default under) any of the terms, conditions or provisions
of the Articles of Incorporation or Bylaws of the Company, or any note, bond,
mortgage, indenture, license, lease, credit agreement or other agreement,
document, instrument or obligation to which Seller or the Company is a party or
by which any of their respective assets or properties are bound, (ii) violate
any judgment, order, injunction, decree, statute, rule or regulation applicable
to the Company or Seller, or any of their respective assets or properties, (iii)
permit any party to terminate any agreement or accelerate the maturity of any
debt or other obligation of the Company or Seller, (iv) create any lien, charge
or encumbrance on any property of the Company or Seller, or (iv) result in a
loss or adverse modification of any license, membership, franchise, permit or
other authorization granted to or otherwise held by the Company.
No consent, approval, authorization, order, registration,
qualification or filing of or with any court or any regulatory authority or any
other governmental body is required for the consummation by Seller of the
transactions contemplated by this Agreement.
3.5 FINANCIAL STATEMENTS. Seller has previously delivered to Buyer (i)
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the audited balance sheets of the Company as of December 31, 1997 and 1996 (the
"Balance Sheets"), together with the related statements of income, retained
earnings, and changes in cash flow for each of the two years then ended,
certified by the Company's independent auditors, and (ii) the unaudited balance
sheet prepared on a cash basis of the Company as of June 30, 1998 (the
"Unaudited Balance Sheet"), together with the related statements of income and
retained earnings. (collectively the "Financial Statements"). The Financial
Statements have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods indicated, except as
otherwise set forth therein and the notes thereto; provided, however, that the
unaudited portions of the Financial Statements are subject to normal recurring
year-end audit adjustments, and they do not contain all footnotes required under
generally accepted accounting principles. The Audited Financial Statements
present fairly the financial condition and results of operations of the Company
as of the dates thereof and for the periods covered thereby.
3.6 ABSENCE OF UNDISCLOSED LIABILITIES. The Company does not have any
debt, liability, or obligation of any nature, whether accrued, absolute,
contingent, or otherwise, and whether due or to become due, that is not
reflected or reserved against in the Closing Balance Sheet or set forth in the
Disclosure Schedule, except for those that may have been incurred after the date
of the Closing Balance Sheet. All debts, liabilities, and obligations incurred
after the date of the Closing Balance Sheet were incurred in the ordinary course
of business, and are usual and normal in amount both individually and in the
aggregate.
3.7 ABSENCE OF SPECIFIED CHANGES. Since the date of the Closing
Balance Sheet, there has not been any:
(i) Transaction by the Company except in the ordinary course
of business as conducted on that date;
(ii) Capital expenditure by the Company exceeding $50,000;
(iii) Destruction, damage to, or loss of any asset of the
Company (whether or not covered by insurance) that materially and adversely
affects the financial condition, business, or prospects of the Company;
(iv) Labor trouble or other event or condition of any
character materially and adversely affecting the financial condition, business,
assets, or prospects of the Company;
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(v) Change in accounting methods or practices (including
without limitation, any change in depreciation or amortization policies or
rates) by the Company;
(vi) Revaluation by the Company of any of its assets;
(vii) Declaration, setting aside, or payment of a dividend or
other distribution in respect to the capital stock of the Company, or any direct
or indirect redemption, purchase, or other acquisition by the Company of any of
its shares of capital stock;
(viii) Increase in the salary or other compensation payable or
to become payable by the Company to any of its officers, directors, agents, or
independent contractors, or the declaration, payment, commitment or obligation
of any kind for the payment, by the Company, of a bonus or other additional
salary or compensation to any such person except to employees who are not
officers, in the ordinary course of business;
(ix) Sale or transfer of any asset or cancellation of any
claim of the Company, except in the ordinary course of business;
(x) Amendment or termination of any contract, agreement or
license to which the Company is a party;
(xi) Loan by the Company to any person or entity;
(xii) Mortgage, pledge, or other encumbrance of any asset of
the Company, except liens for taxes not yet due;
(xiii) Waiver, termination or release of any right or claim of
the Company;
(xiv) Material adverse change in the financial condition,
business, assets, or prospects of the Company;
(xv) Issuance or sale by the Company of any shares of is
capital stock of any class, or of any other of its securities; or
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(xvi) Any commitment by the Company to issue any shares of its
capital stock or other equity securities, or any options, rights to purchase, or
securities convertible into any capital stock or other equity securities of the
Company;
(xvii) Indebtedness incurred for borrowed money or commitment
to borrow money, or any guaranty or commitment to guaranty the indebtedness of
others entered into by the Company;
(xviii) Agreement by the Company to do any of the things
described in the preceding clauses (i) through (xvii).
The Company has within the times and in the manner prescribed by law,
including extensions, filed and will continue to file up through the Closing
Date all federal, state, local and other governmental (both domestic and
foreign) tax returns and similar reports required to be filed by it, and has
paid and will continue to pay up through the Closing Date all taxes shown
thereon which are due and payable including, without limitation, income tax. All
taxes, assessments and levies which the Company is required by law to withhold,
collect or pay, including, without limitation, federal and state employee income
tax withholding, have been withheld or collected and paid over to the proper
governmental authorities. The provisions for taxes reflected in the Financial
Statements are adequate for any and all federal, state, county, local and
foreign taxes for the periods ending on the date of the statements and for all
prior periods, whether or not disputed. To Seller's best knowledge, there are
not any present disputes as to taxes of any nature payable by the Company.
3.8 LEASE. The copy of the lease, dated November 13, 1996, between the
Company and Ascot Properties Co. (the "Lease") is true and accurate, and has not
been amended or modified.. The Company has received no notice that the landlord
under the Lease intends to cancel or terminate the Lease or to exercise or not
to exercise any option under the Lease. The Lease is in full force and effect as
of the date hereof, and the Company has performed all of its obligations, and is
not in default under, the Lease. All rent and other monies required to be paid
under the Lease have been duly and timely paid.
3.9 TANGIBLE PERSONAL PROPERTY. Schedule 3.9 hereto sets forth a
complete list of all items of tangible personal property owned or leased and
used by the Company in the current conduct of its business, where the net book
value as reflected in its Balance Sheet is $5,000 or more. The Company has good
and marketable title to, or in the case of leased equipment a valid leasehold
interest in, and is in possession of, all such items of personal property owned
or leased by it, free and clear of all title defects, mortgages, pledges,
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security interests conditional sales agreements, liens, restrictions or
encumbrances whatsoever. Included in Schedule 3.9 is a list of all outstanding
equipment leases and maintenance agreements to which the Company is party as
lessee and which individually provide for future lease payments in excess of
$1,000 per month, with the identities of the other parties to all such leases
and agreements shown thereon. All leases of tangible personal property to which
the Company is a party and which are material to the business of the Company are
fully effective in accordance with their respective terms, and there exists no
default on the part of the Company or any other party thereto. Each item of
capital equipment reflected in the Closing Balance Sheet which is used in the
current conduct of the Company's business is, and on the date of the Closing
will be, in good operating and usable condition and repair, ordinary wear and
tear excepted, and is and will be suitable for use in the ordinary course of the
Company's business and fit for its intended purposes.
3.10 LICENSES. Schedule 3.10 lists all licenses and permits held by
the Company. All such licenses and permits are fully in effect and constitute
all of the approvals, authorizations, consents, licenses, orders and other
permits of all governmental agencies, whether federal, state, local or foreign,
required to permit the operation of the Company `s business as presently
conducted and as proposed to be conducted. The Company is in compliance with the
terms of all such licenses and permits. None of such licenses, permits and
related approvals require the consent of any third party to the transactions
provided for herein and all of such licenses, permits and approvals will be in
full force and effect immediately after the Closing. Neither Seller nor the
Company has received any notice by any party that has granted the Company any of
the foregoing licenses or permits that it intends to restrict, cancel or
otherwise modify such license or permit, nor are Seller or the Company aware of
any facts which would indicate that any such party has any intention to take
such action.
3.11 ACCOUNTS RECEIVABLE. Schedule 3.11 sets forth a complete and
accurate report of all of the Company's accounts receivable outstanding as of a
date not more than 15 days prior to the date hereof. All such accounts
receivable arose from valid transactions, were recorded in the ordinary course
of business, and are not subject to any set-off or counter claim. No accounts
receivable are contingent upon the future performance of service or the future
delivery of products. The Company has not assigned, factored or otherwise
transferred any of its accounts receivable, or any interest therein, and holds
all rights, title and interest in and to said accounts receivable. All of the
accounts receivable reflected on Schedule 3. 11 are collectible in frill subject
to the "allowance for doubtful accounts" shown on the Schedule which is
sufficient to cover all doubtful accounts.
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3.12 CUSTOMERS AND VENDORS. INTENTIONALLY OMITTED
3.13 CONTRACTS AND COMMITMENTS. Schedule 3.13 hereto lists all
contracts, agreements, obligations and commitments, written or oral, expressed
or implied, to which the Company is a party or by which it is bound which
involve a commitment or liability in excess of $50,000 or for a term of more
than twelve months (other than obligations which are included in accounts
payable), and any union contracts, employee or consulting contracts, financing
agreements, debtor or creditor arrangements, licenses, franchises, leases other
than those described in Section 3.9, or bonus, health or stock option plans.
True and complete copies of all contracts and other agreements listed on
Schedule 3.13 have been made available to Buyer prior to the execution hereof.
As of the date hereof, there exist no circumstances which would affect the
validity or enforceability of any of the Company's contracts and other
agreements in accordance with their respective terms. The Company has performed
and complied in all material respects with all obligations required to be
performed by it to date under, and is not in default (without giving effect to
any required notice or grace period) under, or in breach of, the terms,
conditions or provisions of any of its contracts and other agreements. The
validity and enforceability of any contract or other agreement of the Company
has not been and shall not in any manner be affected by the execution and
delivery of this Agreement without any further action.
3.14 PROPRIETARY RIGHTS. The Company does not have any patents,
applications for patents, trademarks, applications for trademarks, trade names,
copyrights, licenses or service marks relating to its business except as set
forth in Schedule 3.14 hereto. The Company has the unrestricted right to use,
free and clear of any claims or rights of others, all trade secrets, customer
lists, computer programs, characters, likenesses, and processes reasonably
necessary to conduct its business as presently conducted. The continued use
thereof by the Company following the Closing will not conflict with, infringe
upon, or otherwise violate any rights of others. The Company has not used nor is
it making use of any confidential information or trade secrets of any present or
past employee or shareholder.
3.15 NO PENDING MATERIAL LITIGATION OR PROCEEDINGS. Except as set
forth on Schedule 3.15 hereto, there are no actions, suits or proceedings
pending or threatened against or affecting the Company or Seller (including
actions, suits or proceedings where liabilities may be adequately covered by
insurance) at law or in equity or before or by any federal, state, municipal or
other governmental department, commission, court, board, bureau, agency or
instrumentality, domestic or
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foreign, which might result in any material adverse change in the business,
properties or assets, or in the condition (financial or otherwise) of the
Company or Seller, or which question or challenge the sale of the Shares by
Seller to Buyer. Neither Seller nor the Company is subject to any voluntary or
involuntary proceeding under the United States Bankruptcy Code or has made an
assignment for the benefit of creditors.
3.16 INSURANCE. The Company maintains insurance with reputable
insurance companies on such of its equipment and properties as are usually
insured by companies similarly situated and to the extent customarily insured,
and maintains such other insurance against hazards, risks and liability to
persons and property as is customary for companies similarly situated. All such
insurance policies are in full force and effect. There are no outstanding unpaid
claims under any such policies which have gone unpaid for more than 60 days or
as to which the carrier has disclaimed liability. Neither Seller nor the Company
has received notice of cancellation or non-renewal of any such policies and the
transactions contemplated hereby will not permit any carrier to cancel any
existing policy. Neither Seller nor the Company has received notice from any of
the Company's carriers that any insurance premiums will be materially increased
in the future or that the insurance coverage currently in effect will not be
available in the future on substantially the same terms.
3.17 ARRANGEMENTS WITH PERSONNEL. No stockholder, director, officer
or employee of the Company is presently a party to any transaction with the
Company, including without limitation any contract, loan or other agreement or
arrangement providing for the furnishing of services by, the rental of real or
personal property from or to, or otherwise requiring loans or payments to, any
such stockholder, director, officer or employee, or to any member of the family
of any of the foregoing, or to any corporation, partnership, trust or other
entity in which any stockholder, director, officer or employee or any member of
the family of any of them has a substantial interest or is an officer, director,
trustee, partner or employee. There is set forth on Schedule 3.17 hereto a list
showing the name, title, date and amount of last compensation increase, and
aggregate compensation, including amounts paid or accrued pursuant to any bonus,
pension, profit sharing, commission, deferred compensation or other plans or
arrangements in effect as of the date of this Agreement, of each officer,
employee, agent or contractor of the Company whose salary and other
compensation, in the aggregate, received from the Company or accrued is at an
annual rate (or aggregated for the most recently completed fiscal year) in
excess of $100,000, as well as any employment agreements relating to any such
persons.
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3.18 LABOR RELATIONS. The Company has no obligations under any
collective bargaining agreement or other contract with a labor union, under any
employment contract or consulting agreement, or under any executive's
compensation plan, agreement or arrangement, nor is any union, labor
organization or group of employees of the Company presently seeking the right to
enter into collective bargaining with the Company on behalf of any of its
employees. Seller has furnished Buyer with a copy of all written personnel
policies, including without limitation vacation, severance, bonus, pension,
profit sharing and commissions policies, applicable to any employees of the
Company.
3.19 COMPLIANCE WITH LAWS. The Company holds all licenses, franchises,
permits and authorizations necessary for the lawful conduct of its business as
presently conducted, has complied with all applicable statutes, laws,
ordinances, rules and regulations of all governmental bodies, agencies and
subdivisions having, asserting or claiming jurisdiction over it, with respect to
any part of the conduct of its business and corporate affairs, where the failure
to so comply might have consequences that could materially adversely affect the
Company's condition (financial or otherwise), business, assets, properties or
prospects.
3.20 BANK ACCOUNTS. Schedule 3.20 sets forth (i) the name of each
bank, trust company, securities or other broker or other financial institution
with which the Company has an account, credit line or safe deposit box or vault,
or otherwise maintains relations; (ii) the account number of each account
maintained thereat; (iii) the name of each person authorized by the Company to
draw thereon or to have access to any safe deposit box or vault; (iii) the names
of all persons authorized by proxy or otherwise to act on behalf of the Company;
and (iv) all outstanding powers of attorney and proxies held by Seller. None of
the foregoing proxies or powers of attorney are irrevocable.
3.21 EMPLOYEE BENEFIT PLANS. The plans described in Schedule 3.21
hereto are the only employee benefit plans (within the meaning of Section 3(1)
of ERISA), and the plans, programs, policies, practices, arrangements or
contracts (whether group or individual) providing for payments, benefits or
reimbursements to employees of the Company ("Employees") former Employees, their
beneficiaries and dependents under which such Employees, former Employees, their
beneficiaries and dependents are covered through an employment relationship with
the Company ("Benefit Plans"), and such Benefit Plans cover only those persons
indicated on Schedule 3.21. The Company is in full compliance with ERISA with
respect to the Benefit Plans and have performed all of its obligations under
such plans. No actions against the Company
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based on the Benefit Plans are pending or to the best of the Seller's knowledge
threatened (other than routine claims for benefits).
3.22 ENVIRONMENTAL QUALITY. To the best knowledge of Seller, the
Company has not used, generated, manufactured, installed, released, discharged,
stored or disposed of any "Hazardous Materials," as defined below. The term
"Hazardous Materials" shall mean any substance, material or waste which is
regulated by any local government authority, the State of New York, or the
United States Government, including, without limitation, any material or
substance which is (a) defined as a "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste" or "restricted hazardous
waste" under any provision of New York law, (b) petroleum, (c) asbestos, (d)
designated as a "hazardous substance" pursuant to Section 311 of the Clean
WaterAct, 33 U.S.C. ss. 1251 ET SEQ. (33 U.S.C. ss. 1321) or listed pursuant to
Section 307 of the Clean Water Act (33 U.S.C. ss. 1317), (e) defined as a
"hazardous waste" pursuant to Section 1004 of the Resource Conservation and
Recovery Act, 42 U.S.C. ss. 6901 ET SEQ. (42 U.S.C. ss. 6903), or (f) defined as
a "hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. ss. 9601 ET
SEQ. (42 U.S.C. ss.9601). All such real property at which the Company conducts
its business, to the best of its and the Shareholder's knowledge after due and
diligent inquiry and investigation, complies with all applicable Federal, state
and local laws, ordinances and regulations pertaining to air and water quality,
Hazardous Materials, waste, disposal or other environmental matters, including
the Clean Water Act, the Clean Air Act, the Federal Water Pollution Control Act,
the Solid Waste Disposal Act, the Resource Conservation Recovery Act, the
Comprehensive Environmental Response, Compensation, and Liability Act, and the
rules, regulations and ordinances of the city and county in which such Real
Property is located, the California Department of Health Services, the Regional
Water Quality Control Board, the State Water Resource Control Board, the
Environmental Protection Agency and all other applicable Federal, state,
regional and local agencies and bureaus.
3.23 BROKERAGE. Neither Seller nor the Company has any obligation to
any person or entity for brokerage commissions, finder's fees or similar
compensation in connection with the transactions contemplated by this Agreement,
and each party shall indemnify and hold the other party harmless against any
liability or expenses arising out of a breach of the foregoing representation.
3.24 ASSETS NECESSARY TO BUSINESS. The assets owned or leased by the
Company (all of which after the Closing Date will continue to be owned or leased
by the Company) are sufficient to carry on the business conducted by the
Company. All such
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assets are fit for the purposes for which they are being used and are in good
operating condition and repair, reasonable wear and tear excepted. The
transactions contemplated hereby will not deprive the Company of the benefits of
any assets used, or available for use in its business.
3.25 DISCLOSURE. Neither this Agreement, nor any certificate, exhibit,
or other written document or statement, furnished to Buyer by or on behalf of
Seller in connection with the transactions contemplated by this Agreement
contain any untrue statement of a material fact or omit to state a material fact
necessary to be stated in order to make the statements contained herein or
therein not misleading. Seller has no knowledge of any fact which has not been
disclosed in writing to Buyer which may reasonably be expected to materially and
adversely affect the business, properties, operations, and/or prospects of the
Company or the ability of Seller to perform all of his obligations under this
Agreement and/or any other agreement between Buyer and Seller to be entered into
pursuant to any provision of this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
4.1 AUTHORITY. Buyer has full legal right, power and capacity to enter
into, execute, deliver and perform this Agreement and all attendant documents
and instruments contemplated hereby. This Agreement has been duly executed and
delivered and constitutes the legal, valid and binding obligation of Buyer and
is enforceable with respect to Buyer in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, priority or other laws or
court decisions relating to or affecting generally the enforcement of creditors'
rights or affecting generally the availability of equitable remedies.
4.2 NO VIOLATION OF AGREEMENTS. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereunder
by Buyer will violate or conflict with any judgment, order, decree, statute,
rule or regulation applicable to Buyer or its assets or properties.
4.3 BROKERAGE. Buyer has no obligation to any person or entity for
brokerage commissions, finder's fees or similar compensation in connection with
the transactions contemplated by this Agreement, and shall indemnify and hold
Seller harmless against any liability or expense arising out of such a claim
asserted against Seller by any party.
4.4 MSH SHARES. The Pre-Closing Shares are, and the Closing Shares,
when issued pursuant to this Agreement will be, duly authorized, fully-paid,
validly issued shares of Common Stock of Buyer.
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5. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment at or prior to Closing of
each of the conditions set forth below, any or all of which may be waived by
Buyer in whole or in part without prior notice; provided, however, that no such
waiver or a condition shall constitute a waiver by Buyer of any other condition
or of any of its rights or remedies, at law or in equity, if Seller is in
default or breach of any of his representations, warranties or agreements
hereunder:
5.1 CONVEYANCE AND ASSIGNMENT. Seller shall have duly executed and
delivered to Buyer the certificates for the Shares duly endorsed for transfer
and such other instruments of transfer and conveyance as shall be necessary or
desirable, in the reasonable opinion of Buyer's counsel, to transfer
unencumbered and absolute ownership of the Shares to Buyer.
5.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Seller contained in this Agreement shall be accurate and
complete on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date and Seller
shall have delivered to Buyer a certificate to that effect executed by him and
dated as of the Closing Date.
5.3 PERFORMANCE OF AGREEMENTS. Each and all of the conditions
precedent and agreements of Seller subject to satisfaction on or before the
Closing Date pursuant to the terms of this Agreement shall have been performed
or satisfied and Seller shall have delivered to Buyer a certificate to such
effect executed by him and dated as of the Closing Date.
5.4 ACTIONS OR PROCEEDINGS. No action, suit or other proceeding before
a court, tribunal or other governmental agency or body shall have been
instituted or threatened to restrain or prohibit the consummation of the
transactions contemplated by this Agreement, or seeking to obtain substantial
damages in respect thereof, or involving a claim that consummation thereof would
result in the violation of any law, decree or regulation of any governmental
authority having appropriate jurisdiction, or in connection with any material
claim against any the Company or Seller not disclosed on the Schedules hereto.
14
5.5 NO ADVERSE CHANGE. There shall have been no event which has
occurred or which has been disclosed to Buyer which has had or could be
reasonably expected to have a material adverse effect on the business, book
value, assets, properties, results of operations, financial condition or
prospects of the Company.
5.6 COURT ORDERS. No preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent jurisdiction or by a
government, regulatory or administrative agency or commission nor any statute,
rule, regulation or executive order promulgated or enacted by any governmental
authority shall be in effect which would (a) make the acquisition or holding by
Buyer of the Shares illegal or impose material limitations on its ability to
exercise full rights of ownership with respect to such Shares or (b) otherwise
prevent the consummation of the transactions contemplated hereby.
5.7 EMPLOYMENT AGREEMENTS. All written and oral employment, consulting
and other agreements of any nature between Seller (or any parties related
thereto) and the Company (or any parties related thereto) shall have been
canceled without cost or charge to the Company, except as set forth in this
Agreement.
5.8 ADDITIONAL DOCUMENTS. Seller shall have delivered to Buyer such
documents and instruments as Buyer may reasonably request in connection with
this Agreement and the consummation of the transactions contemplated hereby.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction of each of the conditions
set forth below, any or all of which may be waived by Seller in whole or in part
without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by Seller of any other condition or of any of Seller's
rights or remedies, at law or in equity, if Buyer shall be in default or breach
of any of its representations, warranties or agreements under this Agreement:
6.1 PURCHASE PRICE. Buyer shall deliver the Purchase Price at the
Closing as provided in Section 1.2.
6.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Buyer contained in this Agreement shall be accurate and
complete on and as of the Closing Date with the same effect as through such
representations and warranties had been made on or as of such date and Buyer
shall have delivered to Seller a certificate to that effect signed by Buyer's
chief executive officer, and dated as of the Closing Date.
15
6.3 PERFORMANCE OF AGREEMENTS. Each and all of the conditions
precedent and agreements of Buyer subject to satisfaction on or before the
Closing Date pursuant to the terms of this Agreement shall have been performed
or satisfied and Buyer shall have delivered to Seller a certificate to that
effect signed by Buyer's chief executive officer, and dated as of the Closing
Date.
7. INDEMNIFICATION
7.1 SELLER'S OBLIGATION TO INDEMNIFY. Seller agrees to indemnify,
defend and hold harmless Buyer, and its officers, directors, successor and
agents from and against all claims, demands, losses, liabilities, costs,
expenses, obligations, interest, penalties and damages, including, without
limitation, reasonable attorneys' fees and other costs and expenses of
investigating and defending any actions or threatened actions (collectively
"Claims"), which arise out of, are based upon, or are related to (i) any
material inaccuracy in or material breach of any representation, warranty or
agreement of Seller contained herein or in any other document delivered pursuant
hereto, or (ii) any claim by or through Xxxxx Xxxxxx or Xxxxxx Xxxxxx relating
to the ownership of the Purchased Shares or the assets or properties of the
Company.
7.2 BUYER'S OBLIGATION TO INDEMNIFY. Buyer agrees to indemnify, defend
and hold harmless Seller, and his heirs, successor and agents from and against
all claims, demands, losses, liabilities, costs, expenses, obligations,
interest, penalties and damages, including, without limitation, reasonable
attorneys' fees and other costs and expenses of investigating and defending any
actions or threatened actions (collectively "Claims"), which arise out of, are
based upon, or are related to any material inaccuracy in or material breach of
any representation, warranty or agreement of Seller contained herein or in any
other document delivered pursuant hereto.
7.3 PROCEDURE. If any action or claim is brought or asserted against
an indemnified party in respect of which indemnity may be sought pursuant to the
preceding Section 7.1 or Section 7.2, the indemnified party shall promptly
notify the indemnifying parties in writing, and the indemnifying parties shall
assume the defense thereof, (including the employment of counsel reasonably
acceptable to the indemnified party) and the payment of all fees and expenses on
a current basis, including expenses incurred by the indemnified party in
connection with investigating, preparing to defend, or defending any such action
or claim prior to the tender of the
16
same to the indemnifying parties. Should the indemnified party fail to promptly
notify the indemnifying parties of the claim or action, such failure shall not
affect the parties obligations to indemnify hereunder unless such failure has
materially prejudiced their ability to properly defend against the claim or
action.
The indemnified party shall have the right to employ separate counsel
reasonably acceptable to the indemnifying parties in any proceeding concerning
the action or claim and to participate in the defense thereof. The fees and
expense of such counsel incurred by the indemnified party following acceptance
of the defense of the action or claim shall be borne by such indemnified party
unless (a) the employment has been specifically authorized by the indemnifying
parties, (b) the indemnifying parties have failed to assume the defense and
employ counsel, or (c) the named parties to any such action (including any
impleaded parties) included both the indemnified party and the indemnifying
parties and the indemnified party has been advised by counsel that the
representation of the indemnified party and the indemnifying parties by the same
counsel would be inappropriate under applicable standards of professional
conduct due to actual or potential conflicts of interest between them.
The indemnified party shall not be liable for settlement of any action
or claim entered into without its prior written consent.
The indemnified party and the indemnifying parties shall cooperate
with each other in the defense of any claim or action, making available to each
other any books, records or other documents in their possession or control that
are necessary or appropriate for such defense.
7.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; LIMITATION ON
INDEMNITY. The representations and warranties contained in or made pursuant to
this Agreement shall survive the Closing and shall expire on the second
anniversary of the Closing, except that the representations and warranties
contained in Sections 3.1 through 3.4, and Sections 4.1 and 4.2 shall remain in
full force and continue indefinitely. If a claim for indemnity under Sections
7.1 or 7.2 of this Agreement has been asserted in writing prior to such
expiration, such representation or warranty shall continue indefinitely until
the applicable claim is finally resolved.
8. TRANSACTIONS PENDING CLOSING; ADDITIONAL AGREEMENTS
8.1 CONDUCT OF BUSINESS PENDING CLOSING. Except as provided herein,
Seller shall cause the Company to (i) conduct its business up to the Closing
according to and conforming with all applicable laws and regulations, (ii) to
operate and maintain
17
its business in the normal and customary manner, (iii) not violate the terms of
any lease or contract connected with such its business, and (iv) not terminate
any employees, contracts, licenses, permits or agreements without Buyer's prior
written consent.
8.2 TRANSACTIONS PRIOR TO CLOSING; EXCLUDED ASSETS. It is contemplated
that certain assets of the Company shall be distributed or otherwise transferred
prior to, concurrently with or after the Closing, as follows:
8.2.1 POWER GLOVE. The Company shall transfer to Freedom
Multimedia, LLC, a Delaware limited liability company, (the
"Power Glove Company") all of its right title and interest
in and to the Power Glove product line and associated
technology, patents and trademarks (but excluding the
television, video, music and similar entertainment rights,
`which shall remain in the Company, or be licensed to the
Company pursuant to an exclusive, worldwide, royalty-free
license). The equity interests in the new entity shall be
allocated 43.75% to Seller, 37.5% to Xxxxxxx Xxxxxxx, Xxxx
Xxxxxxx and Xxxxx Xxxxxxx (collectively) and 1 8.7 5% to
Buyer, it being understood that voting control over Buyer's
interest will rest will Seller or Seller's designee. The
parties acknowledge that the Company has borrowed $300,000
from its Chase Credit line for development of the Power
Glove; upon organization of the Power Glove Company, all
cash remaining from such borrowing shall be transferred to
the Power Glove Company, and the Power Glove Company shall
issue a promissory note to the Company for $300,000, payable
upon such terms as the parties may mutually agree, but due
in any event within two years of the Closing. In the event
that the Power Glove Company shall cease operations or
development for a period of more than six months, the
members shall cause the Power Glove Company to use best
efforts to sell its assets and the first $300,000 raised
from such sale shall be utilized to repay its promissory
note to the Company. The parties shall negotiate in good
faith with respect to the terms of the organization of the
Power Glove Company. The operating agreement for the Power
Glove Company shall provide that the members shall have the
option (exercisable within 10 days) to avoid dilution of
their equity percentages in the Power Glove Company by
investing additional capital on the same basis (at the same
price per percentage interest) as is offered to new
18
third party investors. Furthermore, if the assets or
business (or capital stock) of Up Up & Away America, Inc.
are merged into or contributed to the Power Glove Company as
part of the financing of such company, there will be an
independent valuation made of such assets or stock, and the
owners of the shares of Up Up & Away, Inc. shall receive
additional percentage interests in the Power Glove Company
based upon such valuation.
8.2.2 MICRONAUTS. The Company and Kaleidoscope Media Group
("KMG") are currently negotiating an agreement for the
production and distribution of an animated series based on a
Company property known as "Micronauts" (the "KMG
Agreement"), which provides for organization of a new entity
to exploit the property, and the Company and KMG are
currently negotiating with Xxxx Entertainment, Inc. to
finance the series. It is anticipated that, if these
arrangements are consummated, Giocchi Xxxxxxxx ("GP") will
provide between $1.5 million and $2.4 million toward the
production, as an advance against toy royalties. If GP
provides such an advance, Seller will be entitled to receive
50% of all net proceeds received by the Company from
exploitation of the Micronauts series (i.e. net after
reimbursement to AGE of all amounts expended by it with
respect to the series) as well as a 50% ownership of all
series episodes retained by AGE.
8.2.3 OTHER PRODUCTS. The Company shall assign to Up Up &
Away America, Inc. all of its right, title and interest in
and to the License Agreement, dated February 4,1998, with
Xxxxx Toys/Canada, relating to "Snoring Snoopy", and all of
its right, title and interest to the product lines and
associated intellectual property known as "Kindergarten",
"Knitters", "Smunchies" and "POPS".
8.3 CONSULTING AGREEMENT. At the Closing, Seller shall execute and
deliver a one-year Consulting Agreement with Buyer in the form of EXHIBIT A
hereto.
8.4 REGISTRATION RIGHTS AGREEMENT. At the Closing, Buyer shall execute
and deliver a Registration Rights Agreement with Seller in the form of EXHIBIT B
hereto (the "Registration Rights Agreement").
8.5 HALLMARK LOAN INDEMNITY AGREEMENT. At the Closing, Buyer shall
execute and deliver a Hallmark Loan Indemnity Agreement with Seller in the form
of EXHIBIT C hereto.
19
8.6 GAUMONT CLAIM. The parties acknowledge that Gaumont Multimedia has
asserted claims against the Company arising out of certain co-production
agreements between the Company and Gaumont Multimedia arising out of the
production and distribution of the "Sky Dancers" and "Dragon Flyz" animated
television series (the "Gaumont Claim"). If, on the Closing Date, the Gaumont
Claim has not been settled or otherwise disposed of to the satisfaction of
Buyer, then at the Closing Seller shall deposit with Buyer's counsel a
certificate representing 400,000 shares of Buyer's Common Stock (the "Escrowed
Shares") for the purpose of assisting in settlement of the Gaumont Claim. Buyer
shall use its best efforts to settle the Gaumont Claim, utilizing the Escrowed
Shares and its cash. If Buyer is able to settle the claim, it shall pay the full
settlement amount and shall be entitled to retain a portion of the Escrowed
Shares (valued at $.40 per share) equal in value to 50% of the settlement
amount, including attorneys' fees. If the Gaumont Claim is settled for a lesser
amount, then any remaining Escrowed Shares shall be promptly returned to Seller.
If, despite Buyer's best efforts to cause a settlement of the Gaumont Claim, an
action, arbitration or other proceeding is commenced by Gaumont Multimedia or
its affiliates relating to the Gaumont Claim within 180 days of the Closing
Date, then at the end of such 180 day period Buyer shall be entitled to retain
the Escrowed Shares, in full satisfaction of Seller's obligations with respect
to the Gaumont Claim.
8.7 ACCESS TO RECORDS. Between the date of this Agreement and the
Closing Date and during regular business hours, Seller shall cause the Company
to afford to Buyer and its employees, accountants, counsel and other authorized
representatives free and full access to the properties, books, records
(including tax returns filed and those in preparation), contracts, commitments
and affairs of the Company and shall furnish Buyer with such additional
financial and operating data and copies of all documents and other information
concerning the business, affairs, assets and properties of the Company as Buyer
may from time to time reasonably request. Notwithstanding the foregoing, any
such investigation made by Buyer pursuant to this Section 8.7 shall not affect
or otherwise diminish any of the representations and warranties of Seller
hereunder.
8.8 INCORPORATION OF SCHEDULES AND EXHIBITS. All schedules, exhibits
and other documents and written information required to be delivered pursuant to
this Agreement are incorporated into this Agreement by this reference and are
warranted by the party or parties which deliver the same to be accurate and
complete in all material respects. In the event that any material changes shall
occur with respect to any information disclosed in any schedule furnished by
Seller hereunder following the date of the delivery thereof and prior to the
Closing Date, Seller shall promptly notify Buyer thereof in writing.
20
8.9 GOVERNMENTAL DOCUMENTS. If, after the date of Closing, in order
properly to prepare its tax returns or other documents or reports required to be
filed with governmental authorities or its financial statements, it is necessary
that a party to this Agreement be furnished with additional information relating
to the Company or Seller and such information is in possession of the other
party or any related party and can reasonably be furnished to the party in need
of such information, then the other party will, promptly upon request, furnish
such information to the party in need of such information.
8.10 COOPERATION. Each party will take all reasonable actions
necessary to comply promptly with all legal requirements which may be imposed on
it with respect to the consummation of the transactions contemplated by this
Agreement and will promptly cooperate with and furnish information to any other
party in connection with any such requirements imposed upon any of them in
connection with the consummation of the transactions contemplated by this
Agreement. Each party will take all reasonable actions necessary to obtain (and
will cooperate with any other party in obtaining) any consent, approval, order
or authorization of, or any registration, declaration or filing with, any
governmental entity, domestic or foreign, or other person, required to be
obtained or made by such party (or by any other party) in connection with the
taking of any action contemplated by this Agreement.
8.11 FULFILLMENT OF CONDITIONS TO CLOSING. Each party hereto shall
use its best efforts to cause the conditions to Closing to be fulfilled by the
Closing Date.
8.12 ASSISTANCE WITH AUDITS. Seller shall cause the Company, if
requested by Buyer, to give Buyer and its independent accountants access to (and
to cause access to be given by its independent public accountants) the work
papers of the Company and its accountants pertaining to the conduct of the
business of the Company in connection with the preparation of any financial
statements, internal reports or audits by Buyer, and to assist Buyer and its
independent accountants in understanding such work papers.
8.13 COLLECTION OF ACCOUNTS. After the date of Closing, Seller shall
cooperate with Buyer to collect for the account of the Company all accounts and
other collectible items reflected in the books and records of the Company.
Seller agrees promptly to transfer or deliver to the Company any cash or other
property received directly or indirectly by him in respect of any such accounts
and other items, including any
21
amounts payable as interest. Seller agrees to cooperate fully in order to allow
the maintenance of records necessary to conduct the Company's business and
agrees to provide such reports and information to Buyer as are reasonably
requested and reasonably related to the business of the Company.
8.14 CHASE LINE OF CREDIT. Seller shall cooperate with Buyer and AGE
to maintain AGE's existing credit arrangements with Chase Manhattan Bank, and
shall take no action (or omit to take any action) (other than the transactions
contemplated hereunder) that would cause Chase Manhattan Bank to revoke, rescind
or reduce such credit.
8.15 POSSIBLE CONTINGENT ISSUANCE OF SHARES. If, on the first
anniversary of the date of the Closing, the aggregate Market Value (as defined
herein) of the Pre-Closing Shares and the Closing Shares is less than
$1,250,000, then within 30 days thereafter, Buyer shall issue to Seller such
additional number of fully paid, non-assessable shares of Common Stock of Buyer
as may be necessary to bring the aggregate Market Value (determined as of the
date of such first anniversary) of the Pre-Closing Shares, the Closing Shares,
and such additional shares, to $1,250,000. For the purposes of this Section, the
Market Value of the Common Stock shall be the average closing price (or the
average of the bid and asked price, if there is no reported closing price) of
the Common Stock of Buyer for the twenty trading days preceding such first
anniversary, as reported by any securities exchange on which Buyer's Common
Stock is listed, or on NASDAQ or the OTC Bulletin Board, as the case may be, if
not so listed. For the purposes of this calculation, Seller shall be deemed to
own all of the Pre-Closing Shares and the Closing Shares (including the Escrowed
Shares), adjusted for any stock splits, stock dividends or recapitalizations, on
such first anniversary, irrespective of whether Seller has disposed of all or a
portion thereof in the interim. This Section shall be of no further force or
effect if, prior to such anniversary, Seller either (i) sells or disposes of
some or all of the Pre-Closing Shares and/or Closing Shares for a net aggregate
consideration in excess of $1,250,000, or (ii) Seller becomes entitled to sell
the Pre-Closing Shares and the Closing Shares for a net aggregate consideration
in excess of $1,250,000 pursuant to the Registration Rights Agreement.
9. MISCELLANEOUS
9.1 EXPENSES AND TAXES. Each party shall bear and pay his, her or its
own expenses, including legal, accounting and other professional fees, and taxes
incurred in connection with the transactions referred to in this Agreement. The
party responsible under applicable law shall bear and pay in their entirety all
other taxes and registration and transfer fees, if any, payable by reason of the
sale and conveyance of the Shares.
22
Each party will cooperate to the extent practicable in minimizing all taxes and
fees levied by reason of the sale or assignment of the Shares.
9.2 PUBLIC ANNOUNCEMENTS. Buyer will be responsible for the issuance
of press releases or trade releases, and the making of such other public
statements with respect to this Agreement and the transactions contemplated
hereby as may, in Buyer's reasonable judgment, be necessary or appropriate,
provided, however, that the initial such press release or public announcement
shall also be subject to Sellers prior approval which shall be exercised in a
reasonable manner, recognizing Buyer's obligations under the securities laws to
make full and fair disclosure to the public. Prior to Closing, Seller shall not
issue any press releases or trade releases or make any public statements with
respect to the transactions contemplated hereby.
9.3 ENTIRE AGREEMENT; MODIFICATIONS; WAIVER. This Agreement, together
with the related agreements, Schedules referenced herein and Exhibits hereto,
constitutes the final, exclusive and complete understanding of the parties with
respect to the subject matter hereof and supersedes any and all prior
agreements, understandings and discussions with respect thereto. No variation or
modification of this Agreement and no waiver of any provision or condition
hereof, or granting of any consent contemplated hereby, shall be valid unless in
writing and signed by the party against whom enforcement of any such variation,
modification, waiver or consent is sought.
9.4 REPRESENTATIONS AND WARRANTIES. The representations and warranties
hereunder shall not be affected or diminished by any investigation at any time
by or on behalf of the party for whose benefit such representations and
warranties were made. All statements contained herein or in any schedule,
exhibit, certificate, list or other document delivered pursuant hereto or in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties.
9.5 FURTHER ASSURANCES. The parties hereto shall use their best
efforts, and shall cooperate with one another, to secure all necessary consents,
approvals, authorizations, exemptions and waivers from third parties as shall be
required in order to consummate the transactions contemplated hereby, and shall
otherwise use their best efforts to cause such transactions to be consummated in
accordance with the terms and conditions hereof. At any time or from time to
time after the Closing Date, each party hereto, shall execute and deliver any
further instruments or documents and take all such further action as such
requesting party may reasonably request in order to consummate and document the
transactions contemplated hereby.
9.6 CAPTIONS. The captions in this Agreement are for convenience only
and shall not be considered a part of or affect the constructing or
interpretation of any provision of this Agreement.
23
9.7 SECTION REFERENCES. Unless otherwise noted, all section references
herein are to sections of this Agreement.
9.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed shall constitute an original copy
hereof, but all of which together shall constitute one agreement.
9.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of Seller, his successors and any assigns to which Buyer
consents in writing. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
9.10 PARTIES IN INTEREST. Nothing in this Agreement, whether express
or implied, is intended to confer any rights or remedies under or by reason of
this Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over against any party to this Agreement.
9.11 NOTICES. All notices, requests, demands and other communications
hereunder ("Notices") shall be in writing and shall be deemed to have been duly
given if delivered by hand, by facsimile, or by registered or certified mail,
postage prepaid, return receipt requested, but only upon receipt of such return
receipt, as follows:
If to Buyer: MSH Entertainment Corporation
0000 Xxxxx Xxxx Xxxxxxxxx
Xxxxx 000X
Xxxxx Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Fax No.: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxxx LLP
0000 XxxXxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Fax No.: (000) 000-0000
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If to Seller: Xx. Xxxxxx Xxxxxx
c/o Abrams/Xxxxxxx Entertainment, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
With a copy to: Xxxx Xxxxxx, Esq.
Rubin, Bailin, Ortoli, Mayer, Xxxxx & Xxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Fax No.: (000) 000-0000
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt. All notices shall be deemed received on the date
of delivery or, if mailed, on the date appearing on the return receipt therefor.
9.12 LAW GOVERNING; VENUE. This Agreement shall be governed by, and
construed and enforced in accordance with the laws of the State of New York,
without regard to its choice-of-laws or conflicts-of-law rules.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of date first above written.
MSH Entertainment Corporation
By /s/XXXXXX X. XXXXX
----------------------------------------
Xxxxxx X. Xxxxx, Chief Executive Officer
/s/XXXXXX XXXXXX
----------------------------------------
Xxxxxx Xxxxxx
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LIST OF SCHEDULES AND EXHIBITS
SCHEDULES:
3.9 Tangible Personal Property and Equipment Leases
3.10 Licenses and Permits
3.11 Accounts Receivable
3.12 Customers/Vendors
3.13 Contracts
3.14 Proprietary Rights
3.15 Litigation
3.17 Executive Compensation
3.20 Bank Accounts
3.21 Employee Benefit Plans
EXHIBITS:
A Consulting Agreement
B Registration Rights Agreement
C Hallmark Loan Indemnity Agreement
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ASSET LOCATION NOTE
The following AGE materials are located in lab storage at the
following facility:
Bonded Service Ltd. P. (000) 000-0000
000 Xxxx Xxxxxx F. (000) 000-0000
Xxxx Xxx, XX 00000 Customer #3138
Materials stored:
1. Visionaires - 13 Beta Masters
2. Bucky X'Xxxx - 13 Beta Master Episodes
Audio Masters
3. Happy Ness - 13 D2 Masters Episodes
Split Track Audio Masters
14 Dat Song Masters
4. Jelly Bean Jungle - 14 Digibeta Master Episodes
Split Track Audio Masters
5. Sky Dancer* - 14 D2 Master Episodes
Split Track Audio Masters
6. Dragon Flyz* - 13 D2 Master Episodes
Split Track Masters
7. Vanpires - 13 Digibeta Master Episodes
Split Track Masters
CG 1 Output Reels
14 Dat Song Masters
8. Audio/Video Promo Masters and Commercial Reels (Dz, Digibeta & Beta
Formats)
1 Guardian Angels 3 Bucky X'Xxxx
1 Micronauts 4 Visionaires
1 Hammer Storage Zone 2 Fazz
1 Radko Christmas 1 Suprize-a-Lots
1 Pappaazzi Samurai 1 Popcorn Pretties
1 Open Call 1 Men of Metal
1 Sci-Com City 1 NitroBat
1 Power Glove 1 Cave Man
1 Power Slam 1 Barbie Talk
8 Sky Dancers 2 Plastic Elastic
4 Dragon Flyz 3 Rambo
2 Jelly Bean Jungle 4 Happy Ness
1 Xxxxx 1 Disney Bubble Camera
*Upon Settlement of Gaumont each series will have a total of 26 episodes each
for a total of 52 broadcast masters.
27
