EXHIBIT 10.3 Asset Purchase Agreement dated as of January 5, 2003 by and
between Shutterport, Inc.Xxxxxxxxx Productions, Inc.
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement"), dated as of January 5,
2003, is by and between Shutterport, Inc., a Florida corporation (the
"Purchaser") and Xxxxxxxxx Productions, Inc., a Florida corporation (the
"Seller").
The Seller owns the "Howdy Xxxxx" Library, which includes 130 colored
episodes of the "Howdy Xxxxx" television show, where the principal photography
was shot in the mid-1970's and the rights to duplicate, sell, market and
broadcast said episodes (the "Purchased Assets"). The Purchaser desires to
acquire from the Seller, and the Seller desires to sell, convey, transfer,
assign and deliver to the Purchaser the Purchased Assets.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
hereby and the representations, warranties, covenants and agreements herein
contained, the Purchaser, the Seller agrees as follows:
ARTICLE I
TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES
1.1 Purchase and Sale of Assets. On the terms and subject to the
conditions herein set forth, at the Closing (as hereinafter defined), the Seller
shall sell, transfer, convey, assign and deliver to the Purchaser and the
Purchaser shall purchase the Purchased Assets, all as more fully set forth on
Schedule 1.1 hereto.
1.2 Method of Conveyance The sale, transfer, conveyance and assignment
by the Seller of the Assets to the Purchaser substantially in accordance with
Section 1.1 hereto shall be effected on the Closing Date (as hereinafter
defined) by the Seller's execution and delivery to the Purchaser of the Xxxx of
Sale in the form attached hereto as Exhibit A (the "Xxxx of Sale"). At the
Closing, all of the Purchased Assets shall be transferred by the Seller to the
Purchaser free and clear of any and all liens, encumbrances, mortgages, security
interests, pledges, claims, equities and other restrictions or charges of any
kind or nature whatsoever except as set forth in this Agreement.
1.3 No Assumption of Liabilities. The Purchaser shall not assume or
otherwise be responsible at any time for any liability, obligation, debt or
commitment of the Seller, whether absolute or contingent, accrued or unaccrued,
asserted or unasserted, or otherwise, including but not limited to any
liabilities, obligations, debts or commitments of the Seller (a) incident to,
arising out of or incurred with respect to this Agreement and the transactions
contemplated hereby (including any and all sales, use, income or other taxes
arising out of the transactions contemplated hereby) or (b) which otherwise
arise or are asserted or incurred by reason of events, acts or transactions
occurring, or the operation of the Seller's business prior to, on or after the
Closing Date. The Seller expressly agrees to satisfy and discharge all
liabilities, obligations, debts and commitments as the same shall become due.
ARTICLE II
PURCHASE PRICE
2.1 Purchase Price. Upon the sale, transfer and conveyance to the
Purchaser by the Seller of the Assets at the Closing (as hereinafter defined),
and in consideration therefor, the Purchaser shall deliver to the Seller (the
"Purchase Price"):
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(a) a note in the principal amount of Six Hundred Seventy Five Thousand
Dollars ($675,000) in the form of Exhibit B - hereto (the "Note");
(b) 40,000 shares of Common Stock as interest as provided in the Note
(the "Interest Shares"); and
(c) 200,000 shares of common stock of Purchaser (the "Shares").
2.2 Offsets to the Purchase Price. The Purchaser may offset against the
Note any direct out-of-pocket expenses paid by Purchaser, including legal fees,
used to defend any third party claims against the Purchased Assets relating to
the ownership of such assets, up to $75,000. Purchaser will provide Seller
documentation of such expenses.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller makes the following representations and warranties to the
Purchaser:
3.1 Corporate Organization, etc. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida with full corporate power and authority to carry on its business as it
is now being conducted and to own, operate and lease its properties and assets.
3.2 Authorization, Etc. The Seller has full power and authority to
enter into this Agreement and the agreements contemplated hereby and perform its
obligations hereunder and thereunder. The execution, delivery and performance of
this Agreement and all other agreements and transactions contemplated hereby
have been duly authorized by the Board of Directors and the shareholders of the
Seller and no other corporate proceedings on its part are necessary to authorize
this Agreement and the transactions contemplated hereby. This Agreement and all
other agreements contemplated hereby to be entered into by the Seller constitute
the legal, valid and binding obligations of the Seller enforceable in all
material respects against the Seller.
3.3 No Violation. The execution and delivery by the Seller of this
Agreement, and the fulfillment of and compliance with the respective terms
hereof and thereof by the Seller do not and will not, (a) conflict with or
result in a breach of the terms, conditions or provisions of, (b) constitute a
default or event of default under (with due notice, lapse of time or both), (c)
result in the creation of any Lien (as defined in Section 13.3) upon the Assets,
(d) give any third party the right to accelerate any obligation under, (e)
result in a violation of, or (f) require any authorization, consent, approval,
exemption or other action by or notice to any court or Authority (as defined in
Section 13.3) pursuant to, the charter or bylaws of the Seller or any Regulation
(as defined in Section 13.3), Order (as defined in Section 13.3) or Contract (as
defined in Section 13.3) to which the Seller is subject. The Seller will comply
in all material respects with all applicable Regulations and Orders in
connection with the execution, delivery and performance of this Agreement and
the transactions contemplated hereby.
3.4 Ownership of Assets. The Seller has good, valid and marketable
title to the Purchased Assets, free and clear of any and all liens,
encumbrances, mortgages, security interests, pledges, claims, or other
restrictions or charges whatsoever.
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3.5 Contracts. Schedule 3.5 contains a true and complete list of all
Agreements related to or involving the Purchased Assets or by which the Seller
is subject or bound in any respect relating to the Purchased Assets, including,
without limiting the generality of the foregoing, any and all: contracts and
agreements for the purchase, sale or lease of inventory, goods, materials,
equipment, hardware, supplies or other personal property, or for the performance
or furnishing of services; contracts and agreements for the sale or lease of
products or the furnishing of services for which the Seller has received payment
in advance of delivering such products or furnishings such services and have not
yet delivered such products or furnished such services; joint venture,
partnership or other contracts, agreements or arrangements involving the sharing
of profits; agreements containing any covenant or covenants which purport to
limit the ability or right of the Seller or any other person or entity to engage
in any aspects of the Business or compete in any aspect of the Business with any
person or entity; agreements, contracts or arrangements pursuant to which the
Seller has been appointed as a distributor or sales agent by any third party;
and licenses, sub-licenses and other contracts and agreements to which the
Seller is a party or otherwise subject.
A complete and accurate copy of each written contract, agreement and
other document or relationship identified on Schedule 3.5 has been delivered or
made available to the Purchaser. Except as set forth on Schedule 3.5, neither
Seller is in breach or default of under any of the Agreements and, to the best
knowledge of the Seller, no occurrence or circumstance exists which constitutes
(with or without the giving of notice or the lapse of time or both) a breach or
default by the other party thereto. The Seller has not been notified or advised
by any party to an Agreement of such party's intention or desire to terminate or
modify any such contract or agreement.
3.6 Litigation. There is no Claim (as defined in Section 13.3) pending
or, to the best knowledge of the Seller threatened against the Seller which
would prevent the Seller from entering into or performing its obligations under
this Agreement, or which, if adversely determined, would have a Material Adverse
Effect on the Purchased Assets. Nor is there any Order (as defined in Section
13.3) outstanding against the Seller having, or which, insofar as can be
reasonably foreseen, in the future may have, a Material Adverse Effect on the
Purchased Assets.
3.7 Compliance with Law and Applicable Government Regulations. The
Seller is presently complying in all material respects of its operations,
practices and property, with all applicable Regulations and Orders, including,
but not limited to, all Regulations relating to the safe conduct of business,
environmental protection, Taxes, consumer protection, equal opportunity, health,
sanitation, fire and occupational safety. There are no Claims pending, nor to
the best knowledge of the Seller are there any Claims threatened, nor has the
Seller received any written notice, regarding any violations of any Regulations
and Orders enforced by any Authority claiming jurisdiction over the Seller.
3.8 Consents. There are no consents of governmental and other
regulatory agencies, foreign or domestic, and of other parties required to be
received by or on the part of the Seller to enable the Seller to enter into and
carry out this Agreement in all material respects.
3.9 Brokerage. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement binding upon the Seller.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as follows:
4.1 Corporate Organization, etc. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida with full corporate power and authority to carry on its business as it
is now being conducted and to own, operate and lease its properties and assets.
4.2 Authorization, Etc. The Purchaser has full corporate power and
authority to enter into this Agreement and the agreements contemplated hereby
and perform its obligations hereunder and thereunder and to carry out the
transactions contemplated hereby. The Board of Directors of the Purchaser has
duly authorized the execution, delivery and performance of this Agreement and
the transactions contemplated hereby, and no other corporate proceedings on its
part are necessary to authorize this Agreement and the transactions contemplated
hereby. This Agreement and all other agreements contemplated hereby to be
entered into by the Purchaser constitute the legal, valid and binding
obligations of the Purchaser enforceable against it in accordance with its
terms. The Shares have been duly authorized and when issued in accordance with
the terms of this Agreement, will be validly issued, fully paid and
nonassessable.
4.3 No Violation. The execution, delivery and performance by the
Purchaser of this Agreement and all other agreements contemplated hereby, and
the fulfillment of and compliance with the respective terms hereof and thereof
by the Purchaser, do not and will not (a) conflict with or result in a breach of
the terms, conditions or provisions of, (b) result in a violation of, or (c)
require any authorization, consent, approval, exemption or other action by or
notice to any Authority pursuant to, the charter or bylaws of the Purchaser, or
any Regulation to which the Purchaser is subject, or any Contract or Order to
which the Purchaser or its properties are subject. The Purchaser will comply
with all applicable Regulations and Orders in connection with its execution,
delivery and performance of this Agreement and the transactions contemplated
hereby.
4.4 Governmental Authorities. The Purchaser has complied in all
material respects with all applicable Regulations and Orders in connection with
its execution, delivery and performance of this Agreement, the other agreements
and the transactions contemplated hereby. The Purchaser is not required to
submit any notice, report, or other filing with any governmental authority in
connection with its execution or delivery of this Agreement or the consummation
of the transactions contemplated hereby. No authorization, consent, approval,
exemption or notice is required to be obtained by the Purchaser in connection
with the execution, delivery, and performance of this Agreement, the other
agreements and the transactions contemplated hereby, except as the Purchaser
shall have obtained on or prior to the Closing Date.
4.5 Litigation. There is no Claim pending or, to the best knowledge of
the Purchaser threatened against the Purchaser which would prevent the Purchaser
from entering into or performing its obligations under this Agreement, or which,
if adversely determined, would have a Material Adverse Effect on the Purchaser.
Nor is there any Order outstanding against the Purchaser having, or which,
insofar as can be reasonably foreseen, in the future may have, a Material
Adverse Effect on the Purchaser.
4.6 Compliance with Law and Applicable Government Regulations. The
Seller is presently complying in all material respects of its operations,
practices and property, with all applicable Regulations and Orders, including,
but not limited to, all Regulations relating to the safe conduct of business,
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environmental protection, Taxes, consumer protection, equal opportunity, health,
sanitation, fire and occupational safety. There are no Claims pending, nor to
the best knowledge of the Seller are there any Claims threatened, nor has the
Seller received any written notice, regarding any violations of any Regulations
and Orders enforced by any Authority claiming jurisdiction over the Seller.
4.7 Acknowledgement of Rights. The Purchaser acknowledges that the
Purchased Assets consist of the video, broadcast and CD-Rom rights only to the
Howdy Xxxxx library and that such Assets specifically do not include any
copyright, merchandise and ancillary rights.
4.8 Completion of Due Diligence. The Purchaser represents that it has
performed all of its due diligence, including but limited to the agreements set
forth on Schedule 3.5 hereto.
ARTICLE V
CLOSING
5.1 Closing. Closing of the transactions contemplated by this Agreement
(the "Closing") shall occur on January __, 2003 or on such other date as
designated by the Purchaser, (the "Closing Date"), at the offices of the
Purchaser.
5.2 Closing Deliveries. At the Closing,
(a) the Seller shall deliver or cause to be delivered to the Purchaser:
(i) the Purchased Assets;
(ii) the Xxxx of Sale; and
(iii) such other certified resolutions, documents and
certificates as are required to be delivered by the Seller
pursuant to the provisions of this Agreement.
(b) The Purchaser shall deliver to the Seller:
(i) the Note;
(ii) the Shares;
(iii) the Interest Shares; and
(iv) such other certified resolutions, documents and
certificates as are required to be delivered by the Purchaser
pursuant to the provisions of this Agreement.
ARTICLE VI
CONDITIONS TO THE SELLER'S OBLIGATIONS
Each and every obligation of the Seller under this Agreement
to be performed on or before the Closing shall be subject to the satisfaction,
on or before the Closing, of each of the following conditions, unless waived in
writing by the Seller:
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6.1 Representations and Warranties True. The representations and
warranties of Purchaser contained herein shall be in all material respects true
and accurate as of the date when made and at and as of the Closing as though
such representations and warranties were made at and as of such date.
6.2 Performance. Purchaser shall have performed and complied with all
agreements, obligations and conditions required by this Agreement to be
performed or complied with by them on or prior to the Closing.
6.3 Delivery of Purchase Price. Purchaser shall have executed and
delivered the Purchase Price to Seller.
6.4 Miscellaneous Closing Documents. At the Closing, the Purchaser
shall deliver to the Seller the documents set forth in Section 5.2(b) above.
ARTICLE VII
CONDITIONS TO PURCHASER'S OBLIGATIONS
Each and every obligation of Purchaser under this Agreement to be
performed on or before the Closing shall be subject to the satisfaction, on or
before the Closing, of each of the following conditions, unless waived in
writing by Purchaser:
7.1 Representations and Warranties True. The representations and
warranties contained in Article III hereof, the Schedules and in all
certificates and other documents delivered and to be delivered by the Seller to
Purchaser in connection with the transactions contemplated hereby shall be true,
complete and accurate as of the date when made and at and as of the Closing
Date.
7.2 Performance. The Seller shall have performed and complied with all
agreements, obligations and conditions required by this Agreement to be
performed or complied with by them on or prior to the Closing.
7.3 No Litigation or Injunction. On the Closing Date there shall be no
Claim or Order directing that the transactions provided for herein or any of
them not be consummated as so provided or imposing any conditions on the
consummation of the transaction contemplated hereby which the Purchaser deems
unacceptable in its sole discretion.
7.4 Consents Obtained. Any consents referred to herein as are required
to complete the transactions contemplated by this Agreement shall have been
obtained.
7.5 Miscellaneous Closing Documents. At the Closing, the Seller shall
deliver to the Purchaser the documents set forth in Section 5.2(a) above.
ARTICLE VIII
COVENANTS OF THE SELLER
The Seller hereby covenant and agree with Purchaser:
8.1 General. Each of the Parties will use its reasonable best efforts
to take all action and to do all things necessary, proper, or advisable to
consummate and make effective the transactions
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contemplated by this Agreement (including satisfying the closing conditions set
forth in Articles VI and VII).
8.2 Notices and Consents. The Seller will give any notices to third
parties, and the Seller will use its reasonable best efforts to obtain any third
party consents, that the Purchaser reasonably may request in connection with the
transactions contemplated hereby. Each of the Parties will take any additional
action that may be necessary, proper, or advisable in connection with any other
notices to, filings with, and authorizations, consents, and approvals of
government agencies, and third parties that it may be required to give, make, or
obtain.
8.3 Preservation of Assets. The Seller will keep the Purchased Assets
intact.
8.4 Full Access. The Seller will permit representatives of the
Purchaser to have full access at all reasonable times, and in a manner so as not
to interfere with normal business operations of the Seller, to all premises,
properties, books, records, contracts, and documents pertaining to the Purchased
Assets.
8.5 Exclusivity. The Seller will not (i) solicit, initiate, or
encourage the submission of any proposal or offer from any person relating to
any merger, consolidation, acquisition or purchase of securities or assets or
similar transaction or business combination involving the Purchased Assets or
(ii) participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any person to do or seek any of the
foregoing. The Seller will notify the Purchaser immediately if any person makes
any proposal, offer, inquiry, or contact with respect to any of the foregoing.
8.6 Taxes in Connection with the Sale of the Purchased Assets. In no
event shall Purchaser be liable for any income, capital gain, franchise or other
similar tax arising or imposed as a result of the sale of the Assets
contemplated herein, and Seller shall pay all transfer, stamp and other similar
taxes or governmental charges with respect to the herein contemplated sale of
the Assets. Any sales taxes imposed on the sale of the Assets itself at Closing
shall be the responsibility of the Seller.
ARTICLE IX
TERMINATION
9.1 Termination of Agreement. The Parties may terminate this Agreement
as provided below:
(a) the Purchaser and the Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(b) the Purchaser may terminate this Agreement by giving written notice
to the Seller at any time prior to the Closing if the Closing shall not have
occurred on or before the 30th day following the date of this Agreement by
reason of the failure of any condition precedent under Section 6.1 hereof
(unless the failure results primarily from the Purchaser itself breaching any
representation, warranty, or covenant contained in this Agreement); or
(c) the Seller may terminate this Agreement by giving written notice to
the Purchaser at any time prior to the Closing if the Closing shall not have
occurred on or before the 60th day following the date of this Agreement by
reason of the failure of any condition precedent under Section 6.2 hereof
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(unless the failure results primarily from the Seller itself breaching any
representation, warranty, or covenant contained in this Agreement).
9.2 Effect of Termination. If any Party terminates this Agreement
pursuant to Section 9(a) above, all obligations of the Parties hereunder shall
terminate without any liability of any Party to any other Party (except for any
liability of any party then in breach).
ARTICLE X
SURVIVAL OF TERMS; INDEMNIFICATION
10.1 Survival. All of the terms and conditions of this Agreement,
together with the representations, warranties and covenants contained herein or
in any instrument or document delivered or to be delivered pursuant to this
Agreement, shall survive the execution of this Agreement and the Closing
notwithstanding any investigation heretofore or hereafter made by or on behalf
of any party hereto.
10.2 Purchaser Indemnification. The Purchaser and its officers,
directors, employees, shareholders, representatives and agents shall be
indemnified and held harmless by the Seller at all times after the date of this
Agreement, against and in respect of any and all damage, loss, deficiency,
liability, obligation, commitment, cost or expense (including the fees and
expenses of counsel) resulting from, or in respect of, any of the following:
(a) Any misrepresentation, breach of warranty, or non-fulfillment of
any obligation on the part of the Seller under this Agreement, any document
relating thereto or contained in any schedule or exhibit to this Agreement or
from any misrepresentation in or omission from any certificate, schedule, other
agreement or instrument by the Seller hereunder;
(b) Any and all liabilities of the Seller of any nature whether
accrued, absolute, contingent or otherwise, and whether known or unknown,
existing at the Closing Date, including, without limitation all liabilities for
taxes of the Seller, including federal, state and local taxes, together with any
interest or penalties thereon or related thereto, through the Closing Date. Any
Taxes, penalties or interest attributable to the operations of the Seller
payable as a result of an audit of any tax return shall be deemed to have
accrued in the period to which such Taxes, penalties or interest are
attributable; or
(c) All demands, assessments, judgments, costs and reasonable legal and
other expenses arising from, or in connection with any Claim incident to any of
the foregoing.
10.3 Seller Indemnification. The Seller and its officers, directors,
employees, shareholders, representatives and agents shall be indemnified and
held harmless by the Purchaser at all times after the date of this Agreement,
against and in respect of any and all damage, loss, deficiency, liability,
obligation, commitment, cost or expense (including the fees and expenses of
counsel) resulting from, or in respect of, any of the following:
(a) Any misrepresentation, breach of warranty, or non-fulfillment of
any obligation on the part of the Purchaser under this Agreement, any document
relating thereto or contained in any schedule or exhibit to this Agreement or
from any misrepresentation in or omission from any certificate, schedule, other
agreement or instrument by the Purchaser hereunder;
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(b) Any and all liabilities of the Purchaser of any nature from the
Closing Date, including, without limitation all liabilities for taxes of the
Purchaser, including federal, state and local taxes, together with any interest
or penalties thereon or related thereto. Any Taxes, penalties or interest
attributable to the operations of the Purchaser payable as a result of an audit
of any tax return shall be deemed to have accrued in the period to which such
Taxes, penalties or interest are attributable; or
(c) All demands, assessments, judgments, costs and reasonable legal and
other expenses arising from, or in connection with any Claim incident to any of
the foregoing.
10.4 Payment of Indemnification. All amounts due under this Article
VIII shall be paid promptly after such amounts are incurred. Seller's
indemnification obligation shall be limited to $75,000 and may be offset against
the Note as provided in Section 2.2 hereof and the Note.
10.5 Survival. Each representation, warranty, covenant and obligation
in this Agreement will survive the date hereof for a period of one year, except
as set forth in the Note.
ARTICLE XI
POST-CLOSING OBLIGATIONS
11.1 Further Assurances. The Seller covenants and agrees with the
Purchaser, its successors and assigns, that the Seller will do, execute,
acknowledge and deliver, or cause to be done, executed, acknowledged and
delivered, any and all such further acts, instruments, papers and documents as
may be necessary to carry out and effectuate the intent and purposes of this
Agreement.
11.2 Payment of Liabilities; Discharge of Liens.
(a) The Seller shall satisfy and discharge as the same shall become
due, all of its liabilities, obligations, debts and commitments including but
not limited to tax liabilities of the Seller, except for liabilities for taxes
being disputed by the Seller in good faith, which shall be satisfied and
discharged upon resolution of any such dispute.
(b) If following the Closing Date any other liens, encumbrances,
mortgages, security interests, pledges, claims, or other restrictions or charges
whatsoever arising out of acts or omissions of the Seller shall exist or be
levied upon the Purchaser or the Assets, the Seller shall promptly notify the
Purchaser and shall, at its own cost and expense, promptly take such action as
may be necessary duly to discharge the same by bond or otherwise. If the Seller
shall fail to discharge any such lien, encumbrance, mortgage, security interest,
pledge, claim, or other restriction or charge, the Purchaser may do so, in which
event the Seller shall pay to the Purchaser on demand the amount paid by the
Purchaser together with the Purchaser's losses, and reasonable costs and
expenses, including reasonable attorneys' fees and expenses.
ARTICLE XII
REGISTRATION RIGHTS
12.1 Definitions. As used in this ARTICLE 12, the following defined
terms shall mean:
(a) The term "Registrable Securities" means the Shares, the Interest
Shares and all other shares of Common Stock of Purchaser issued to Purchaser
pursuant to this Agreement or resulting from a dividend or a stock split of such
Common Stock.
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(b) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing with the Securities and Exchange
Commission ("SEC") a registration statement in compliance with the Securities
Act of 1933 (the "Securities Act") and the declaration or ordering of the
effectiveness of such registration statement or document.
12.2 Company Registration.
(a) Including Seller's Shares in a Company Registration. If at any time
Purchaser shall determine to register any of its debt or equity securities,
either for its own account or the account of a security holder or holders, in a
registration statement covering the sale of such securities to the general
public (except with respect to any registration filed on Form X-0, Xxxx X-0 or
any successor forms thereto), Purchaser shall do the following:
(i) give Seller written notice at least ten (10) days before
the initial filing of such registration (which shall include a
list of the jurisdictions in which Purchaser intends to
attempt to qualify such securities under the applicable blue
sky or other state securities laws); and
(ii) include in such registration, any related qualification
under blue sky laws and in any underwriting involved therein,
all the Registrable Securities specified in Seller's written
request or requests, made within five (5) days after the
delivery to Seller of such written notice from Purchaser,
except as set forth in SECTION 12.2(B).
(b) Underwriter's Ability to Limit the Number of Registrable Securities
Included in the Offering. To the extent a registration is an underwritten
offering the right of Seller to registration pursuant to this SECTION 12.2 shall
be conditioned upon Seller's participation in the underwriting to the extent
provided in this Agreement. Seller shall not be required to make any
representations or warranties to or agreements with Purchaser or the underwriter
other than those relating to Seller and its intended methods of distribution.
Notwithstanding any other provision of this SECTION 12.2, if the underwriter
determines that marketing factors require a limitation of the number of shares
to be underwritten, the underwriter may limit the number of shares to be
included in the registration and underwriting. The number of shares that may be
included in the registration shall be allocated first to the Seller and then
among any other participants in the offering.
(i) Seller's Right to Withdraw. If Seller, in its sole
discretion, disapproves of the terms of any such underwriting,
it may elect to withdraw from such underwriting by written
notice to Purchaser and the underwriter. Upon such withdrawal,
Seller's Registrable Securities shall not be transferred in a
public distribution prior to 90 days after the effective date
of such registration or such other shorter period of time as
the underwriter may require.
(ii) Company's Right to Withdraw. Purchaser shall have the
right, in its sole discretion, to terminate or withdraw any
registration initiated by it under this SECTION 12.2 prior to
the effectiveness of such registration whether or not Seller
has elected to include Shares in such registration. Nothing in
this SECTION 12.2 shall create any liability on the part of
Purchaser to Seller if Purchaser for any reason should decide
either to terminate or withdraw such registration statement.
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12.3 Registration on Form S-3.
(a) Seller's Request for S-3 Registration. At such time as Purchaser
shall have qualified for the use of Form S-3 (or any similar form or forms
promulgated under the Securities Act), Seller shall then have the right to
request an unlimited number of registrations of at least $250,000, but no more
than one (1) such registration every 12 months on Form S-3. Such request or
requests shall be in writing, shall specify the Registrable Securities intended
to be sold or disposed of by Seller, and shall state the intended method of
disposition of Registrable Securities by Seller. Purchaser shall be obligated to
use its best efforts to effect such registration or registrations on Form S-3.
(b) Limitations on Purchaser's Obligation to Register. Anything in this
Agreement to the contrary notwithstanding, Purchaser shall not be required to
effect a registration pursuant to this SECTION 12.3, or file any post-effective
amendment thereto:
(i) if in the opinion of counsel for Purchaser, Registrable
Securities for which registration has been requested may be
disposed of in the open market within a comparable time frame
without registration pursuant to Rule 144(k) under the
Securities Act and upon such disposition all legends on
certificates representing such shares which restrict transfer
under the Securities Act and applicable state securities laws
may be removed from such certificates; or
(ii) unless Purchaser shall have received from Seller of all
such information as Purchaser may reasonably request from
Seller concerning Seller and its method of distribution of
Registrable Securities to enable Purchaser to include in the
registration statement all material facts required to be
disclosed therein.
12.4 Expenses of Registration.
(a) Paid by Purchaser. All expenses incurred in connection with any
registration or qualification pursuant to this Agreement, including, without
limitation, all registration, filing and qualification fees, printing expenses,
fees and disbursements of counsel for Purchaser, and expenses and fees of any
special audits incidental to or required by such registration, shall be borne by
Purchaser, provided that Purchaser shall not be obligated to pay any underwriter
fees or commissions with respect to Registrable Securities.
12.5 Company's Obligations in Connection with Registration. (a) In the
case of each registration effected by Purchaser pursuant to this Agreement,
Purchaser shall keep Seller advised in writing as to the initiation of such
registration (and any state qualifications) and as to the completion thereof.
Purchaser shall:
(a) keep such registration or qualification pursuant to SECTIONS 12.2
or 12.3 effective for the later of (i) a period of nine months or (ii) until
Seller has completed any distribution described in the registration statement
relating thereto, and (b) furnish at its expense such number of prospectuses and
other documents incident thereto as Seller, from time to time, may reasonably
request.
(b) If and whenever Purchaser is required to use its best efforts to
effect the registration of any Registrable Securities under the Securities Act
pursuant to this Agreement, Purchaser will as promptly as is practicable:
11
(i) prepare and file with the SEC and use its best efforts to
cause to become effective, a registration statement under the
Securities Act relating to the Registrable Securities to be
offered on such form as Purchaser determines and for which
Purchaser then qualifies;
(ii) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such
registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all
Registrable Securities;
(iii) furnish to the Seller and to any underwriter of
Registrable Securities such number of conformed copies of such
registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such
number of copies of the prospectus included in such
registration statement (including each preliminary prospectus
and any summary prospectus), in conformity with the
requirements of the Securities Act, such documents
incorporated by reference in such registration statement or
prospectus, and such other documents, as the Seller or such
underwriter may reasonably request;
(iv) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of such registration
statement as early as possible;
(v) immediately notify the Seller in writing (A) upon the
filing of a registration statement relating to Registrable
Securities, (B) upon the effectiveness of such registration
statement, (C) upon the issuance of any order or notice
suspending the effectiveness of such registration statement or
the qualification of Registrable Securities in any
jurisdiction, (D) at any time when a prospectus relating to a
registration hereunder is required to be delivered under the
Securities Act of the happening of any event as a result of
which the prospectus included in such registration statement,
as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading, and (E) of any request by the SEC or any other
regulatory body or other body having jurisdiction for any
amendment of or supplement to any registration statement or
other document relating to such offering, and if either (D) or
(E) occurs, at the request of the Seller prepare and furnish
to such Seller a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they are made, not misleading;
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(vi) use its best efforts to list all such Registrable
Securities covered by such registration statement on each
securities exchange and inter-dealer quotation system on which
a class of common equity securities of Purchaser is then
listed, and to pay all fees and expenses in connection
therewith; and
(vii) upon the transfer of shares by the Seller in connection
with a registration hereunder, furnish unlegended certificates
representing ownership of the Registrable Securities being
sought in such denominations as shall be requested by the
Seller or the underwriters.
12.6 Indemnification.
(a) Indemnification of Purchaser by Seller. Seller shall, if
Registrable Securities held by or issuable to Seller are included in the
securities as to which such registration or qualification is being effected,
defend, indemnify and hold harmless Purchaser, each of its directors, officers
and employees, and each underwriter (if any) and each person, if any, who
controls Purchaser or any such underwriter within the meaning of the Securities
Act, against and in respect of all claims, losses, damages, liabilities,
penalties, costs and expenses, including reasonable attorneys' fees, and amounts
paid in settlement arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus or other document, or any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus or other document in reliance upon and in conformity with written
information furnished to Purchaser by Seller in a signed document stating that
such information is specifically for use therein or in the preparation thereof.
Seller shall reimburse Purchaser, and each of such directors, officers,
employees, persons or underwriters, for any legal or any other expenses incurred
by them in connection with investigating or defending any such claim, loss,
damage, liability or action, including reasonable attorneys' fees. The failure
on the part of Seller to comply with applicable laws in effecting the sale or
other disposition of such Registrable Securities shall also invoke Seller's
indemnification as prescribed above. Such indemnity shall be effective
notwithstanding any investigation made by or on behalf of Purchaser, any such
director, officer, employee, underwriters or controlling person and shall
survive the transfer of such securities by such seller.
(b) Limitation of Seller's Indemnification. Notwithstanding SECTION
12.6(A), the liability of Seller shall not exceed an amount equal to the
proceeds realized by Seller from Registrable Securities sold as contemplated in
this Agreement.
(c) Indemnification of Seller by Purchaser. Purchaser shall defend,
indemnify and hold harmless Seller and its direct and indirect parent
corporations, subsidiaries and affiliates and their respective each of Seller's
officers, directors, partners, members and employees, and each underwriter (if
any) and each person, if any, who controls Seller or any such underwriter within
the meaning of the Securities Act, with respect to any registration or
qualification effected pursuant to this Agreement and in which Registrable
Securities are included, against all claims, losses, damages, liabilities,
penalties, costs and expenses, including reasonable attorneys' fees, and amounts
paid in settlement arising out of or based on the following:
(i) any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, registration
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statement or other document incident to any such registration
or qualification, or based on any omission (or alleged
omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or
(ii) any violation by Purchaser of any rule or regulation
promulgated pursuant to any federal, state or common law rule
or regulation including, without limitation, the Securities
Act, applicable to Purchaser and relating to action or
inaction required of Purchaser in connection with any such
registration, qualification or compliance.
Purchaser shall reimburse Seller, each of Seller's officers, directors,
partners, members and employees, and each person controlling Seller, for any
legal and any other expenses reasonably incurred by them in connection with
investigating or defending any such claim, loss, damage, liability or action,
including reasonable attorneys' fees; provided, however, that Purchaser will not
be liable thereto in any such case to the extent that any such claim, loss,
damage or liability arises out of or is based on any untrue statement (or
alleged untrue statement) or omission (or alleged omission) based upon and in
conformity with written information furnished to Purchaser by Seller, in a
signed document stating that such information is specifically for use therein or
in the preparation thereof. Such indemnity shall be effective notwithstanding
any investigation made by or on behalf of Seller, or any such officer, director,
partner, employee or controlling person, and shall survive any transfer by
Seller of any of the Registrable Securities.
(d) Method of Seeking Indemnification.
Each party seeking indemnification under this Agreement (an "Indemnitee") shall
(i) provide the other party or parties (the "Indemnitor") written notice of any
claim or action by a third party arising after the Closing Date for which an
Indemnitor may be liable under the terms of this Agreement, within ten (10) days
after such claim or action arises and is known to Indemnitee, and (ii) give the
Indemnitor a reasonable opportunity to participate in any proceedings and to
settle or defend any such claim or action. The expenses of all proceedings,
contests or lawsuits with respect to such claims or actions shall be borne by
the Indemnitor. If the Indemnitor wishes to assume the defense of such claim or
action, the Indemnitor shall give written notice to the Indemnitee within ten
(10) days after notice from the Indemnitee of such claim or action, and the
Indemnitor shall thereafter assume the defense of any such claim or liability,
through counsel reasonably satisfactory to the Indemnitee, provided that
Indemnitee may participate in such defense at their own expense, and the
Indemnitor shall, in any event, have the right to control the defense of the
claim or action.
(e) Indemnitee's Right to Defend a Suit or Claim If Indemnitor Fails or
Refuses to Defend. If the Indemnitor shall not assume the defense of, or if
after so assuming it shall fail to defend, any such claim or action, the
Indemnitee may defend against any such claim or action in such manner as it may
deem appropriate and the Indemnitee may settle such claim or litigation on such
terms as it may deem appropriate but subject to the Indemnitor's approval, such
approval not to be unreasonably withheld. However, any such settlement shall be
deemed approved by the Indemnitor if the Indemnitor fails to object thereto, by
written notice to the Indemnitee, within fifteen (15) days after the
Indemnitor's receipt of a written summary of such settlement. The Indemnitor
shall promptly reimburse the Indemnitee for the amount of all expenses, legal
and otherwise, incurred by the Indemnitee in connection with the defense and
settlement of such claim or action.
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(f) Payment of Judgment By Indemnitor. If a non-appealable judgment is
rendered against any Indemnitee in any action covered by the indemnification
under this SECTION 12.6, or any lien attaches to any of the assets of any of the
Indemnitee, the Indemnitor shall immediately, upon such entry or attachment, pay
such judgment in full or discharge such lien unless, at the expense and
direction of the Indemnitor, an appeal is taken under which the execution of the
judgment or satisfaction of the lien is stayed. If and when a final judgment is
rendered in any such action, the Indemnitor shall pay such judgment or discharge
such lien before any Indemnitee is compelled to do so. The indemnification
payments required pursuant to this SECTION 12.6 for expenses of the
investigation or defense of a claim or lawsuit shall be made from time to time
during the course of the investigation or defense, as the case may be, upon
submission of reasonably sufficient documentation that any such expenses have
been incurred.
Failure to Give Notice or Take Action Not A Waiver. The failure of any
Indemnitee to give any notice or to take any action under this Agreement shall
not be deemed a waiver of any of the rights of such Indemnitee under this
Agreement, except to the extent that Indemnitor is actually prejudiced by such
failure.
12.7 Contribution to Indemnification Obligation.
(a) Proportion of Contribution. If the indemnification provided for in
SECTION 12.6 from the Indemnitor is unavailable to an Indemnitee in respect of
any losses, claims, damages, liabilities or expenses referred to in SECTION
12.7, the Indemnitor, in lieu of indemnifying such Indemnitee, shall contribute
to the amount paid or payable by such Indemnitor as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the Indemnitor in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable consideration.
(b) Relative Fault. The relative fault of an Indemnitor and Indemnitee
shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact,
has been made by, or relates to information supplied by, such Indemnitor or
Indemnitee, and the same relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable by an
Indemnitee as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such Indemnitee in connection with any investigation or
proceeding.
(c) No Excessive Contribution. The parties to this Agreement agree that
it would not be just and equitable if contribution pursuant to this SECTION 12.7
were determined by pro rata allocation or by any other method of allocation
which does not account for the equitable considerations referred to in SECTION
12.7(B) above. Notwithstanding the provisions of this SECTION 12.7, no
Indemnitor shall be required to contribute any amount in excess of the total
price at which the Shares of such Indemnitor were offered to the public.
(d) No Contribution for Fraud. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
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12.8 Information Provided by Seller in Connection with a Registration.
In the event that Registrable Securities are included in any registration,
Seller shall furnish in writing to Purchaser such information regarding Seller,
the Registrable Securities held by Seller, the distribution proposed by Seller,
as Purchaser may reasonably request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Agreement. Purchaser agrees to include in any such registration statement
all information concerning Seller and its intended distribution of Registrable
Securities as reasonably requested by Seller.
12.9 Company Obligation to Keep Rule 144 Reporting Current. With a view
to making available to Seller benefits of certain rules and regulations of the
SEC which may permit the sale of the Shares to the public without registration,
Purchaser agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, or any successor provision thereto, at
all times after the effective date that Purchaser becomes subject to the
reporting requirements of the Exchange Act;
(b) use its best efforts to file with the SEC, in a timely manner, all
reports and other documents required of Purchaser under the Securities Act and
the Exchange Act after the effective date that Purchaser becomes subject to the
reporting requirements of the Exchange Act;
(c) so long as Seller owns any Shares (or other securities of
Purchaser), furnish to Seller forthwith upon its request:
(i) a written statement by Purchaser as to Purchaser's
compliance with the reporting requirements of Rule 144 and of
the Securities Act and the Exchange Act after the effective
date that Purchaser becomes subject to the reporting
requirements of the Exchange Act;
(ii) a copy of the most recent annual or quarterly report of
Purchaser filed with the SEC, and such other reports and
documents so filed by Purchaser as Seller may reasonably
request; and
(iii) take any further action reasonably requested by Seller
to enable Seller to sell its Registrable Securities without
registration under Rule 144, under any successor provision, or
any similar rule or regulation promulgated by the SEC from
time to time.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 Amendment and Modification. This Agreement may be amended,
modified and supplemented only by written agreement of the parties hereto.
13.2 Entire Agreement. This Agreement, including the schedules and
exhibits hereto and the documents, certificates and instruments referred to
herein, embodies the entire agreement and understanding of the parties hereto in
respect of the transactions contemplated by this Agreement and supersedes all
prior agreements, representations, warranties, promises, covenants,
arrangements, communications and understandings, oral or written, express or
implied, between the parties with
16
respect to such transactions. There are no agreements, representations,
warranties, promises, covenants, arrangements or understandings between the
parties with respect to such transactions, other than those expressly set forth
or referred to herein.
13.3 Certain Definitions: The following capitalized terms used in this
Agreement have the meaning set forth below for each:
Affiliate" means, with regard to any Person, (a) any Person,
directly or indirectly, controlled by, under common control of, or
controlling such Person, (b) any Person, directly or indirectly, in
which such Person holds, of record or beneficially, five percent or
more of the equity or voting securities, (c) any Person that holds, of
record or beneficially, five percent or more of the equity or voting
securities of such Person, (d) any Person that, through Contract,
relationship or otherwise, exerts a substantial influence on the
management of such person's affairs, or (e) any director, officer,
partner or individual holding a similar position in respect of such
Person.
"Authority" means any governmental, regulatory or
administrative body, agency, arbitrator or authority, any court or
judicial authority, any public, private or industry regulatory agency,
arbitrator authority, whether international, national, federal, state
or local.
"Claim" means any action, claim, obligation, liability,
expense, lawsuit, demand, suit, inquiry, hearing, investigation, notice
of a violation, litigation, proceeding, arbitration, or other dispute,
whether civil, criminal, administrative or otherwise, whether pursuant
to contractual obligations or otherwise.
"Contract" means any agreement, contract, commitment,
instrument or other binding arrangement or understanding, whether
written or oral.
"Lien" means any security interest, lien, mortgage, pledge,
hypothecation, encumbrance, Claim, easement, restriction or interest of
another Person of any kind or nature.
"Material Adverse Change" means any developments or changes
which would have a Material Adverse Effect.
"Material Adverse Effect" means any circumstances, state of
facts or matters which might reasonably be expected to have an adverse
effect in respect of the Assets or the Business resulting in a 10% or
greater reduction in net sales or net worth of the Seller.
"Order" means any decree, judgment, award, order, injunction,
rule, consent of or by an Authority.
"Person" means any corporation, partnership, joint venture,
organization, entity, Authority or natural person.
"Regulation" means any law, statute, rule, regulation,
ordinance, requirement, announcement or other binding action of or by
an Authority.
13.4 Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand or mailed, first class certified mail
with postage paid or by overnight receipted courier service:
17
If to Seller:
Xxxxxxxxx Productions, Inc.
0000 X. Xxxxxxx Xxxx Xxxx.
Xxxxxxxxxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx
Fax No. (000) 000-0000
or to such other person or address as the Seller shall furnish by
notice to the Purchaser in writing.
If to the Purchaser:
Xxxxxxxxxxx.xxx, Inc.
0000 X. Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxx Xxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Fax No. (000) 000-0000
or to such other person or address as the Purchaser shall furnish by
notice to the Seller in writing.
13.5 Assignment and Binding Effect. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and its successors and permitted assigns, but neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto without the prior written consent of the other parties,
except that the Purchaser may assign its rights, interests and obligations
hereunder to any Affiliate.
13.6 Governing Law. The Agreement shall be governed by the internal
laws of the State of Florida as to all matters, including but not limited to
matters of validity, construction, effect and performance.
13.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.8 Headings. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
13.9 Beneficiary. This Agreement shall not be construed so as to confer
any right or benefit upon any Person other than the signatories to this
Agreement and each of its successors and permitted assigns.
13.10 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party hereto, upon any breach or default of any
other party under this Agreement, shall impair any such right, power or remedy
of such party nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach
18
or default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any party hereto of any breach
or default under this Agreement, or any waiver on the part of any party of any
provisions or conditions of this Agreement must be made in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
13.11 Severability. Unless otherwise provided herein, if any provision
of this Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
13.12 Expenses. Except as otherwise provided in this Agreement, the
Purchaser shall bear its own expenses, including without limitation, legal fees
and expenses, with respect to this Agreement and the transactions contemplated
hereby. The Seller shall bear its own expenses, including without limitation,
legal fees and expenses, with respect to this Agreement and the transactions
contemplated hereby.
13.13 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
IN WITNESS WHEREOF, the parties hereto have made and entered into this
Agreement the date first hereinabove set forth.
SHUTTERPORT, INC.,
a Florida corporation
By:/S/ XXXXXX XXXXX
Xxxxxx Xxxxx
President and CEO
XXXXXXXXX PRODUCTIONS. INC.,
a Florida corporation
By:/S/ XXXXX XXXXXXXXX
Xxxxx Xxxxxxxxx, President
19
SCHEDULE 1.1 - ASSETS
SCHEDULE 3.5 - CONTRACTS
EXHIBIT A - XXXX OF SALE
EXHIBIT B - NOTE
20
SCHEDULE 3.5 CONTRACTS
1. Xxxxxxxxx - Xxxx Productions, Inc., dated 9/14/76;
2. Asset Purchase Agreement, dated 8/14/97;
3. Independent Agreement, dated 10/21/97;
4. NBC Contract, dated 6/15/73;
5. NBC Letter dated 10/8/98;10/27/98 VidKid to NBC;
6. Memo from X. Xxxxx dated 10/23/98;
7. Original VidKid Settlement Agreement 9/10/98;
8. Original VidKid Letter dated 3/9/00 (Payment in full);
9. Agreement dated 2/11/98;
10. VidKid Letter to Xxxxx re: settlement;
11. Decision filed 4/21/99;
12. Copy of Mandate from District Court dated 5/7/99;
13. Copy of Xxxx of Sale of HD to API dated 6/30/01;
14. Copy of Consulting Agreement/China; and
15. Copy of Agreement (Xxx Xxxxxxx).
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