EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of March 18, 2005 (this "Agreement"),
by and between AMITY ENTERTAINMENT, INC., a Delaware corporation ("Purchaser"),
and MAC FILMWORKS, INC., a Delaware corporation (the "Seller"). Certain
capitalized terms used herein are defined in Article XIII hereof.
WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, the Seller desires to sell to Purchaser, and Purchaser desires to
purchase from the Seller, certain assets of the Seller, as more particularly
described herein, in consideration for the payments from the Purchaser and the
assumption of certain liabilities of the Seller each as specified herein.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, intending to be legally
bound hereby, the parties hereto agree as follows:
ARTICLE I.
PURCHASE AND SALE OF ASSETS
Section 1.01. Purchase and Sale of Assets. Except as set forth in Section
1.02, upon the terms and subject to the conditions set forth herein, at the
Closing, the Seller shall sell, convey, transfer, assign and deliver to the
Purchaser, and the Purchaser shall purchase, acquire and accept from the Seller,
free and clear of Encumbrances (other than the Permitted Encumbrances), all of
the Seller's right, title and interest in and to the following properties,
assets, Contracts, rights and choses in action, whether tangible or intangible,
whether real, personal or mixed, whether accrued, contingent or otherwise, and
wherever located, as the same existed on the Closing Date as provided in this
Agreement (collectively, the "Assets"):
(a) subject to the terms of the Film Contracts, all right, title and
interest of the Seller, in and to the programs and films set forth on Schedule
3.06(a), including but not limited to, all literary, dramatic and musical
material therein contained (collectively and individually as to each film or
program, the "Film Library");
(b) all of the Seller's Film Assets associated with the Film
Library, including all inventories of films, videos, DVDs and other similar
products, availability schedules, historical information, and film elements;
(c) all of the Seller's accounts receivable (on and off balance
sheet), notes, prepaid items and expenses, deferred charges, rights of offset,
claims for refund, and other receivables or right to payment of any nature
whatsoever relating to the Film Library (collectively, "Receivables") existing
on the Closing Date, and all such items arising thereafter, a true, correct and
complete list of which, as they existed on the Closing Date, is set forth hereto
as Schedule 3.04;
(d) cash and cash equivalents of Seller received from the Film
Library on and after the Closing Date;
(e) all Film Asset Acquisition Agreements, Film Asset Exploitation
Agreements, all Contracts for the distribution by Seller of products or services
relating to the Film Library, and all other Contracts entered into by the Seller
relating to the Film Library, including those specified on Schedule 3.07 (the
"Assumed Contracts");
(f) all of the Seller's (i) trademarks and service marks relating to
the Film Library, and any registrations, registration certificates and
applications for registration therefor, and the goodwill associated therewith
(the "Trademarks"), (ii) trade names, assumed and fictitious names and
registered user names relating to the Film Library, and registrations and any
applications for registration therefor, and the goodwill associated therewith
and related internet domain names (the "Trade Names"), and (iii) copyrights and
registrations relating to the Film Library and any applications for registration
therefor (the "Copyrights"), including, without limitation, those items which
are specified on Schedule 3.06(c)(i);
(g) all of the Seller's available books, records, files, manuals and
other similar materials, including, advertising materials, marketing materials,
brochures, business and marketing plans and proposals, production data, sales
and promotional materials and records, purchasing materials and records, files
for past, existing and contemplated projects, media materials, financial and
fiscal records (copies), sales order files, customer lists and customer records
in any form (and all software related to any such customer records, to the
extent transferable), whether of past or present customers or potential future
customers, related to or arising from the Film Library, advertiser lists,
receipts and computer records relating to the Film Library, standard operating
procedures, correspondence, customer relations information, and any other trade
secrets, confidential or proprietary information pertaining to the Film Library
(the "Business Records");
(h) all of Seller's claims, choses in action, causes of action and
judgments relating to the Film Library, including those listed on Schedule
1.01(h);
(i) all certifications, franchises, approvals, permits licenses,
orders, registrations, certificates, variances and other similar permits or
rights obtained from any Governmental Entity or professional or trade
organization relating to the Film Library and all pending applications therefor;
(j) all third party warranties and guarantees with respect to any of
the Assets; and
(k) all rights to receive insurance proceeds relating to the damage,
destruction or impairment of any of the Assets on or subsequent to the Closing
Date.
Section 1.02. Excluded Assets. Notwithstanding anything else contained
herein, the Seller shall not sell, transfer, convey or assign to the Purchaser
the following (the "Excluded Assets"):
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(a) all cash and cash equivalents of the Seller arising from the
Assets received prior to the Closing Date;
(b) all original versions of accounting, financial and fiscal
records; and
(c) all rights to receive insurance proceeds relating to the damage,
destruction or impairment of any of the Assets prior to the Closing Date.
Section 1.03. Assumed Liabilities. Subject to the terms and conditions
contained in this Agreement, at the Closing, the Purchaser agrees to assume, pay
and perform when due the following liabilities and obligations of the Seller as
of the Closing Date and for all periods thereafter all as further described on
Schedule 1.03 (the "Assumed Liabilities"):
(a) all Residuals, Participations, Guild Payments and other third
party obligations owed on or after the Closing Date that arise from receipts
relating to the Film Assets received on or after the Closing Date (but excluding
any penalties for, or interest on, payments due prior to the Closing Date and
not paid on a timely basis);
(b) all obligations arising or coming due under the Assumed
Contracts in accordance with their terms with respect to acts or services to be
performed under such Assumed Contracts after the Closing Date, except for any
obligation (a) that relates to any breach or default (or an event which might,
with the passing of time or the giving of notice, or both, constitute a default)
under any such Assumed Contract arising out of or relating to periods on or
prior to the Closing Date, (b) for which the Seller owes any amounts to its
Affiliates (except as disclosed on Schedule 3.08), or (c) that relates to any
indemnity, defense or hold harmless provision or agreement for occurrences prior
to the Closing Date, provided that if any such obligation relates to actions or
the failure to act on the part of the Seller, such obligation shall remain the
Seller's responsibility and shall not become an Assumed Liability; and
(c) the costs and expenses of maintaining or preserving the
intellectual property included in the Film Assets.
Section 1.04. Excluded Liabilities. Except for the Assumed Liabilities,
Purchaser shall not assume or be bound by any Liabilities of the Seller of any
kind or nature, known, unknown, accrued, absolute, contingent, recorded or
unrecorded or otherwise, whether now existing or hereafter arising (the
"Excluded Liabilities"). The Excluded Liabilities shall include, without
limitation, the following: (i) all Residuals, Participations and Guild Payments
arising from receipts relating to the Film Library received prior to the Closing
Date (including any penalties for, or interest on, payments due and not paid on
a timely basis prior to the Closing Date); (ii) any Liability of the Seller with
respect to unpaid laboratory costs, tape duplication costs or unpaid advances,
guaranties or deferments (except as disclosed on Schedule 1.03) in connection
with any Film Contract; (iii) any Liability of the Seller with respect to unpaid
synchronization or music license fees used in the Film Library prior to the
Closing Date; (iv) any Liability of the Seller with respect to unpaid production
costs arising prior to the Closing Date and (v) any Liability related to the
Seller Obligations. All responsibility for the Excluded Liabilities shall remain
with the Seller.
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Section 1.05. Purchase Price. The purchase price for the Assets shall be
an amount equal to either (i) one million eight hundred fifty thousand dollars
($1,850,000) if Schedule 3.06(a) is updated by Seller between the date hereof
and the Closing Date to include additional titles having a fair market value of
at least $100,000 as determined by Purchaser in its sole and absolute discretion
and that are otherwise acceptable to Purchaser in its sole and absolute
discretion, or (ii) one million seven hundred fifty thousand dollars
($1,750,000) if Schedule 3.06(a) is not updated by Seller between the date
hereof and the Closing Date in accordance with Section 1.05(i) above.
Section 1.06. Payment of Purchase Price. Subject to the conditions,
representations and warranties and covenants hereof, at the Closing the
Purchaser shall pay the Purchase Price as follows, each by federal funds wire
transfers of immediately available funds to accounts designated in writing by
each of the payees set forth below.
(a) to Seller, the Purchase Price as calculated in Section 1.05 less
(i) the principal amount of the Seller Note (the "Closing Cash Consideration"),
and (ii) the amounts paid to the obligors under the Seller Obligations pursuant
to Section 1.06(b) below, to the Seller;
(b) to each obligor under a Seller Obligation, an amount sufficient
to satisfy in full Seller's obligations to such obligor pursuant to the
Settlement Agreement; and
(c) to Seller, a promissory note in a form to be mutually agreed
upon by Seller and Purchaser (the "Seller Note") in the amount of two hundred
fifty thousand dollars ($250,000) that will be secured by the Assets and due and
payable on the date that is twenty four (24) months from the Closing Date
(subject to the Right of Setoff in Section 9.05).
Section 1.07. Transfer Taxes. Seller shall be responsible for, and shall
pay on or prior to their due date, all municipal, county, state and federal
sales, use and transfer taxes incurred and the related costs of preparing or
documenting the same, if any, in connection with the Transactions contemplated
by the Agreement.
Section 1.08. Allocation of Purchase Price. The consideration provided for
herein has been allocated among the Assets in the manner required by Treasury
Regulation ss.1.1060-1 as set forth in more detail on Schedule 1.08 (the
"Allocation"). The parties hereto agree that, except as otherwise required by
law (i) the Allocation shall be binding on the parties for all federal, state,
local and foreign tax purposes and (ii) the parties shall file with their
respective federal income tax returns consistent Internal Revenue Service Forms
8594 - Asset Acquisition Statements under Section 1060, including any required
Internal Revenue Service forms, schedules or amendments thereto which shall
reflect the allocation set forth in the Allocation.
ARTICLE II.
THE CLOSING
Section 2.01. Closing Date. Unless this Agreement shall have been
terminated and the Transactions shall have been abandoned pursuant to Article X,
and subject to the satisfaction or waiver of the conditions set forth in
Articles VII and VIII, the closing of the Transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Dechert, LLP, 00
Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m. on April 30, 2005,
provided that the satisfaction or waiver of each condition set forth in Articles
VII and VIII has occurred by such date, or such other place, date and time as
the parties shall mutually agree (such date and time of the Closing is referred
to herein as the "Closing Date").
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Section 2.02. Deliveries at Closing.
(a) At the Closing, the Purchaser shall deliver the following to the
Seller:
(i) the Closing Cash Consideration and the Seller Note;
(ii) a certificate of Purchaser, duly executed by an
appropriate officer thereof, certifying to compliance with the
covenants set forth in Article VI, and satisfaction (or, as
specified, waiver) of the conditions set forth in Article VIII;
(iii) true, correct and complete copies of resolutions duly
and validly adopted by the Board of Directors of the Purchaser
evidencing the authorization of the execution and delivery of this
Agreement, the other Transaction Documents to which Purchaser is a
party and the consummation of the Transactions contemplated hereby
and thereby, and with respect to the resolutions of the Board of
Directors, accompanied by a certificate of the Secretary of the
Purchaser, dated as of the Closing Date, stating that no amendments
have been made thereto from the date thereof through the Closing
Date;
(iv) a duly executed Assignment, Xxxx of Sale and Assumption
Agreement in a form to be mutually agreed upon by Seller and
Purchaser;
(v) confirmation that the Seller Obligations have been paid in
full in accordance with the Settlement Agreement; and
(vi) a certificate from the Secretary of State of the State of
Delaware as to the good standing of Purchaser dated within ten (10)
days of the Closing.
(b) At the Closing, the Seller shall deliver to the Purchaser:
(i) a certificate from the Secretary of State of the State of
Delaware as to the good standing of the Seller dated within ten (10)
days of the Closing;
(ii) an Assignment, Xxxx of Sale and Assumption Agreement in a
form to be mutually agreed upon by Seller and Purchaser, duly
executed by Seller, and all such other instruments of assignment,
transfer or conveyance as shall, in the reasonable opinion of
Purchaser and its counsel, be necessary to vest in Purchaser, good,
valid and marketable title to the Assets, subject to no Encumbrances
(other than Permitted Encumbrances) and to put Purchaser in actual
possession or control of the Assets;
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(iii) one or more Copyright Assignments in a form to be
mutually agreed upon by Seller and Purchaser, duly executed by
Seller, assigning all of the Copyrights to Purchaser;
(iv) one or more Trademark Assignments in a form to be
mutually agreed upon by Seller and Purchaser, duly executed by
Seller, assigning all of the Trademarks to Purchaser;
(v) one or more Domain Name Transfers in a form to be mutually
agreed upon by Seller and Purchaser, duly executed by Seller,
assigning all of the internet domain names relating to the Film
Library to Purchaser;
(vi) a certificate of the Seller, duly executed by an
appropriate officer thereof, certifying to compliance with the
covenants set forth in Article V and Article VI, and satisfaction
(or, as specified, waiver) of the conditions set forth in Article
VII;
(vii) true, correct and complete copies of (1) the certificate
of incorporation, as amended to date, of the Seller, certified as of
a recent date by the Secretary of State of the State of Delaware,
(2) the by-laws of the Seller, (3) resolutions duly and validly
adopted by the Board of Directors of the Seller evidencing the
authorization of the execution and delivery of this Agreement, the
other Transaction Documents to which Seller is a party and the
consummation of the Transactions contemplated hereby and thereby,
and with respect to the resolutions of the Board of Directors,
accompanied by a certificate of the Secretary of the Seller, dated
as of the Closing Date, stating that no amendments have been made
thereto from the date thereof through the Closing Date;
(viii) pursuant to Section 3.04, updates of Schedule 1.03 and
Schedule 3.04;
(ix) all Consents, waivers and estoppels from third parties as
required to consummate the Transactions contemplated by this
Agreement, all as set forth on Schedule 3.02(c);
(x) Lien searches, a clearance certificate or similar
document(s) that may be required by any state, local or foreign
Governmental Entity in order to relieve Purchaser of any obligation
to withhold any portion of the Purchase Price and such other
instruments showing that there were no financing statements,
judgments, Taxes or other Liens outstanding against the Seller with
respect any of the Assets;
(xi) to the extent applicable, payoff letters, UCC-3
termination statements and other documentation relating to the
release of all security interests as necessary, all as set forth on
Schedule 3.02(c);
(xii) a Laboratory Transfer Letter, in a form to be mutually
agreed upon by Seller and Purchaser, executed by the Seller;
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(xiii) the Business Records;
(xiv) an opinion, dated the Closing Date, of counsel to the
Seller, in a form and substance reasonably satisfactory to
Purchaser; and
(xv) a duly executed Settlement Agreement (the "Settlement
Agreement") among the Seller and each obligor under the Seller
Obligations whereby each such obligor agrees that upon the payment
of certain amounts to such obligor the Seller Obligations will be
satisfied in full.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to and for the benefit of the
Purchaser, as of the date hereof and as of the Closing Date, as follows:
Section 3.01. Organization and Qualification. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Seller has all corporate or other power and authority,
and is duly authorized by all necessary regulatory approvals and orders, to own,
lease and operate the Assets and properties and to carry on the Business as it
is now being conducted, and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of the Business or the
ownership or leasing of the Assets and properties makes such qualification
necessary.
Section 3.02. Authority.
(a) Authority.
(i) The Board of Directors of the Seller has taken all action
to authorize and approve the Transaction Documents and the
Transactions. The Seller has all requisite power and authority to
enter into the Transaction Documents to which it is a party and to
consummate the Transactions contemplated hereby and thereby.
(ii) The execution, delivery and performance by the Seller of
each Transaction Document to which it is a party and the
consummation by the Seller of the Transactions contemplated hereby
and thereby have been duly authorized by all corporate action on the
part of the Seller, and no other corporate proceeding on the part of
the Seller is necessary to authorize each Transaction Document.
(iii) Each Transaction Document to which the Seller is a party
has been duly and validly executed and delivered by the Seller and,
assuming the due authorization, execution and delivery hereof by the
other parties hereto, constitutes the valid and binding obligation
of the Seller, enforceable against it in accordance with its
respective terms.
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(b) Non-Contravention. Neither the execution and delivery by the
Seller of any Transaction Document to which it is a party nor the consummation
or performance by the Seller of any of the Transactions contemplated hereby and
thereby will contravene, conflict with or result in any violation by the Seller
under any provisions of or result in acceleration, termination, cancellation or
modification of, or constitute a default under:
(i) the articles of incorporation, bylaws or similar governing
documents of the Seller;
(ii) any Requirements of Law;
(iii) any order of any Governmental Entity; or
(iv) any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, Contract, lease or other
instrument, obligation or agreement of any kind relating to the
Assets to which the Seller is now a party or by which the Assets may
be bound or affected, except for Permitted Encumbrances.
Neither the execution nor the delivery by the Seller of any Transaction Document
will result in the creation or imposition of any Encumbrance (other than
Permitted Encumbrances) of any nature whatsoever upon the Assets.
(c) Approvals. Except as set forth on Schedule 3.02(c), no
declaration, filing or registration with, or notice to or Consent of, any
Governmental Entity or any other Person is necessary for the execution and
delivery by the Seller of any Transaction Document to which it is a party or the
consummation by the Seller of the Transactions contemplated hereby and thereby.
(d) Compliance.
(i) With regards to the Assets, neither the Seller nor its
employees or agents is, or has been in the last 3 years, in
violation in any material respect of, or has been given notice or
been charged with any material violation of, any law, order,
regulation, ordinance or judgment of any Governmental Entity.
(ii) The Seller has all permits, licenses and franchises from
Governmental Entities necessary for the ownership, marketing,
distribution, licensing and exploitation of the Assets and is in
compliance in all material respects with the terms thereof. No
violations have been reported in writing to Seller in respect of
such permits, licenses and franchises. Schedule 3.02(d)(ii) lists
each permit, license and franchise of the Seller relating to the
Assets. A true and complete copy of each such material permit,
license and franchise of the Seller relating to the Assets has been
provided to Purchaser and as of the date of the Closing each such
permit, license and franchise shall be assigned to Purchaser and be
in full force and effect upon such assignment.
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Section 3.03. Title to Properties; Liens; Condition of Assets. The Seller
has good, valid and marketable title to all of the Assets, free and clear of any
Encumbrances, other than (i) Liens on properties and assets securing Taxes,
assessments, governmental charges or levies, in each case, which are not yet due
and payable, (ii) Liens held by licensees under Assumed Contracts, SAG, WGA or
the DGA which arose in the ordinary course of business consistent with industry
standards and which did not arise from any action or inaction of Seller, and
(iii) Liens disclosed on Schedule 3.03 ((i) through (iii), collectively, the
Permitted Encumbrances). At the Closing, the Seller will convey to the Purchaser
good title to the Assets, free and clear of any Encumbrances, other than the
Permitted Encumbrances (except for Permitted Encumbrances relating to the Seller
Obligations). All of the Physical Properties are in good operating condition and
repair, subject to normal wear and tear, none of such Physical Properties are in
need of maintenance or repairs except for ordinary, routine maintenance and such
Physical Properties are suitable for and operating according to their intended
use.
Section 3.04. Receivables and Assumed Liabilities.
(a) Schedule 3.04 sets forth a true, correct and complete aged list
of the Receivables of the Seller as of the date hereof. At Closing, the Seller
shall deliver a true, correct and complete updated list of such Receivables as
of the Closing Date. Except as set forth on Schedule 3.04, all Receivables
outstanding as of the date hereof, and as of the Closing Date (i) are bona fide,
or will have been bona fide, and arose, or will have arisen, from the sale of
inventory or services to Persons not affiliated with the Seller and in the
ordinary course of business consistent with past practice and (ii) are supported
by a valid and enforceable Assumed Contract.
(b) Schedule 1.03 sets forth a true, correct and complete list of
the Assumed Liabilities as such items exist as of the date hereof. At Closing,
the Seller shall deliver a true, correct and complete updated list of such
Assumed Liabilities as of the Closing Date. Each Assumed Liability (i) has
arisen, or will have arisen, from the operation of the Business in the ordinary
course of business consistent with past practice and (ii) is properly, or will
be, properly and accurately reflected in the Business Records of the Seller.
Section 3.05. Litigation; Investigations. Except as specifically set forth
on Schedule 3.05, there are: (i) no claims, actions, suits, investigations or
proceedings pending or, to the knowledge of the Seller, threatened against,
relating to, or affecting the Seller, the Assets, or to the knowledge of the
Seller, any employee, officer or director of the Seller relating to the Assets,
and (ii) no orders of any Governmental Entity or arbitrator outstanding against
either of the Seller (in connection with the Assets), the Assets, or to the
knowledge of the Seller, any employee, officer or director of the Seller
relating to the Assets, or that could prevent or enjoin or delay in any respect,
consummation of the Transactions contemplated hereby.
Section 3.06. Matters Regarding the Film Library.
(a) Schedule 3.06(a) sets forth, on a title-by-title basis, a true,
correct and complete list of the principal films and programs that constitute
the Film Library.
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(b) Except with respect to the Permitted Encumbrances and the terms
of the Film Contracts, the Seller owns good and marketable title to, holds fully
valid, enforceable and exclusive licenses of or is otherwise duly authorized to
use substantially all rights under all copyrights, trademarks, service marks,
trade secrets and other Intellectual Property used or otherwise exploited by
Seller in connection with the Assets, including, without limitation, the Film
Assets and the Film Library, and the rights to use, duplicate, distribute,
merchandise, create derivative works based upon, publicly perform, and publicly
display the Film Assets.
(c) Schedule 3.06(c)(i) sets forth a true, correct and complete list
of all of Seller's copyright registrations, registration numbers and serial
numbers by the issuing authority related to the Film Library. Schedule
3.06(c)(ii) sets forth a true, correct and complete list of all of Seller's
trademarks, service marks, trade names, domain names and logos, and all
registrations, registration numbers and serial numbers by the issuing authority
thereof, included in the Film Library. Schedule 3.06(c)(iii) sets forth a true,
correct and complete list (the "Physical Properties Schedule") of each location
at which the Physical Properties are held or stored and a general description of
the nature or type of Physical Properties held or stored thereat and, at the
Closing, Purchaser shall have exclusive ownership of such Physical Properties,
subject to any Permitted Encumbrances.
(d) The ownership, use or exploitation of the Film Library by any
means in connection with the operations of the Seller or its Affiliates with
respect to the Assets prior to the Closing does not and will not infringe or
misappropriate the rights of any other Person, including, without limitation,
any rights relating to defamation, contract, trademark, unfair competition,
copyright, trade secret, privacy or publicity. Except as set forth on Schedule
3.06(d), neither the Seller nor any Affiliate of the Seller has received any
notice of infringement or misappropriation or other notice of claim relating to
the Film Library including, without limitation, oppositions filed in respect to
the Seller's trademark applications, if any. Further, no presently existing
assignment, license or other transfer to the Seller of any portion of the Film
Library or of any rights thereunder is now or, to the knowledge of the Seller,
will in the future become subject to rescission, cancellation or termination
(except as may occur by operation of statute pursuant to Section 304 of the
Copyright Act of 1976, as amended, or any equivalent foreign statutes to which
the Film Assets may be subject, or, with respect to any Assumed Contract, as
expressly set forth by its terms).
(e) All advances, guarantees, Guild Payments, Residuals and
Participations, laboratory payments, open purchase orders, costs and fees
charged by agents and sub-agents, and other amounts or obligations owed, due,
invoiced or payable prior to or on the Closing Date by the Seller, any of its
Affiliates or any of its predecessors-in-interest pursuant to or under the
Assumed Contracts or otherwise in respect of the Film Library have been paid, or
at the Closing will be retained by Seller.
(f) Except pursuant to the Assumed Contracts, there are no Persons
that have (or will have) any rights to participate in the development,
production, distribution or financing of any portion of the Film Library.
(g) None of the licensors under any Film Asset Acquisition Agreement
to which the Seller is a party has exercised any right to buy back any rights
granted to Seller in the Film Library nor have any such rights reverted to any
licensor nor has any such licensor purported to terminate or rescind any such
rights.
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(h) All of the artwork, packaging, publicity, promotional materials
and advertising prepared by Seller relating to the Film Library has been
prepared in accordance with and is in compliance in all material respects with
all of the requirements of the applicable Film Contracts and requirements of
applicable laws which are customarily applicable to transactions of the type
contemplated herein.
(i) The transfer of the Assets pursuant to this Agreement will vest
in Purchaser all rights with respect to musical compositions and sound
recordings licensed from third parties by Seller and contained in the Assets
necessary for the lawful distribution, exhibition and exploitation of the Film
Library without infringing or violating any laws or rights of third parties; and
the performance rights of all non-dramatic music contained in the Film Library
(whether in connection with musical compositions or sound recordings) are: (i)
controlled by a performing rights organization such as the American Society for
Composers Authors and Publishers, Broadcast Music Inc., SESAC, Inc., PRS, and/or
SOCAN, (ii) available for license from the party(ies) controlling such rights,
(iii) in the public domain, or (iv) controlled by Seller directly or through
license(s), and if so, then such rights are granted herewith.
(j) The Seller has not sold, leased, pledged, disposed of or
otherwise transferred or encumbered in any way any of the Film Assets since the
date the Seller acquired such Film Assets.
Section 3.07. Contracts. Schedule 3.07 sets forth a complete and accurate
list of all Assumed Contracts. Each of the Assumed Contracts is in full force
and effect and enforceable in accordance with its terms. The Seller has not
received notice of cancellation of or intent to cancel, or notice to make a
modification or intent to make a modification in, any of the Assumed Contracts.
The consummation of the Transactions hereunder will not result in the early
termination of any of the Assumed Contracts or have a material adverse effect on
the relationships between the Purchaser (as the new owner of the Film Library)
and the customers who have licensed or otherwise acquired rights in portions of
the Film Library. There exists no event of default or occurrence, condition or
act on the part of the Seller or, to the best knowledge of the Seller, on the
part of the other parties to such Assumed Contracts which constitutes or would
constitute (with notice or lapse of time or both) a breach under, or cause or
permit acceleration of, any obligation of the Seller. Except as specifically set
forth on Schedule 3.02(c) no Consent of any other party to any of the Assumed
Contracts is required in connection with the execution, delivery and performance
of this Agreement by the Seller, which Consents shall be obtained prior to
Closing. The Seller has delivered or made available to Purchaser true and
complete copies of each Assumed Contract listed on Schedule 3.07.
Section 3.08. Transactions with Affiliates. Except as set forth on
Schedule 3.08, none of the officers, directors, employees or stockholders of the
Seller (a) is a party to any Assumed Contract with the Seller, (b) has asserted
or threatened to assert any claim against the Seller, (c) is engaged in any
transaction with the Seller relating to the Assets, or (d) to the actual
knowledge of the Seller, has any direct or indirect financial interest in any
competitor, supplier, customer, or distributor of the Seller as it relates to
the Assets.
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Section 3.09. Taxes.
(a) All material Tax Returns required by applicable law to be filed
by or on behalf of the Seller prior to or as of the Closing Date have been
timely filed or will be timely filed as of the Closing Date, and all such Tax
Returns are true, complete and correct in all material respects.
(b) All material Taxes that are due or claimed to be due from Seller
on or prior to the Closing Date have been paid or will have been paid as of the
Closing Date, other than those (A) currently payable without penalty or interest
or (B) being contested in good faith and by appropriate proceedings, which
proceedings are described in Schedule 3.09.
Section 3.10. Bulk Sales. The bulk sales laws of the jurisdictions in
which the Assets are located are not applicable to the Transactions contemplated
hereby.
Section 3.11. Disclosure. No representation, warranty or statement made by
the Seller in (i) this Agreement or (ii) the Schedules attached hereto, contains
or will contain any untrue statement of a material fact, or omits or will omit
to state a material fact required to be stated herein or therein or necessary to
make the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading.
Section 3.12. Insurance. Seller does not currently have and has never had
any insurance policies related to the Assets.
Section 3.13. Permits. No permits, license or franchise from a
Governmental Entity is necessary for Seller's ownership, marketing,
distribution, or exploitation of the Assets.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Purchaser represents and warrants to and for the benefit of the Seller, as
of the date hereof and as of the Closing Date, as follows:
Section 4.01. Organization and Qualification. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
Section 4.02. Authority.
(a) Authority.
(i) The Board of Directors of the Purchaser has taken all
action to authorize and approve the Transaction Documents and the
Transactions. The Purchaser has all requisite power and authority to
enter into the Transaction Documents to which it is a party and to
consummate the Transactions contemplated hereby and thereby. At the
Closing, Purchaser will have adequate financial resources to fund
the transactions contemplated by this Agreement.
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(ii) The execution, delivery and performance by the Purchaser
of each Transaction Document to which it is a party and the
consummation by the Purchaser of the Transactions contemplated
hereby and thereby have been duly authorized by all corporate action
on the part of the Purchaser and no other corporate proceeding on
the part of the Purchaser is necessary to authorize each Transaction
Document.
(iii) Each Transaction Document to which Purchaser is a party
has been duly and validly executed and delivered by Purchaser and,
assuming the due authorization, execution and delivery hereof by the
other parties hereto, constitutes the valid and binding obligation
of Purchaser, enforceable against it in accordance with its
respective terms.
(b) Non-Contravention. Neither the execution and delivery by Purchaser of
any Transaction Document to which it is a party nor the consummation or
performance by Purchaser of any of the Transactions contemplated hereby and
thereby will contravene, conflict with or result in any violation by Purchaser
under any provisions of or result in acceleration, termination, cancellation or
modification of, or constitute a default under:
(i) the articles of incorporation, bylaws or similar governing
documents of Purchaser;
(ii) any Requirements of Law;
(iii) any order of any Governmental Entity; or
(iv) any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, Contract, lease or other
instrument, obligation or agreement of any kind to which Purchaser
is now a party.
(c) Approvals. No declaration, filing or registration with, or notice to
or Consent of, any Governmental Entity or any other Person is necessary for the
execution and delivery by Purchaser of any Transaction Document to which it is a
party or the consummation by Purchaser of the Transactions.
Section 4.03. Disclosure. No representation, warranty or statement made by
Purchaser in (i) this Agreement or (ii) the Schedules attached hereto, contains
or will contain any untrue statement of a material fact, or omits or will omit
to state a material fact required to be stated herein or therein or necessary to
make the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading.
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ARTICLE V.
PRE-CLOSING COVENANTS OF SELLER
Except with the prior written consent of the Purchaser, the Seller shall
comply with the provisions of this Article V after the date hereof and prior to
the Closing Date or earlier termination of this Agreement.
Section 5.01. Ordinary Course of Business. The Seller shall conduct its
business as it relates to the Assets in the usual, regular and ordinary course
in substantially the same manner as heretofore conducted and use best efforts to
preserve the Assets, preserve relationships with customers, suppliers,
franchisors, distributors and others having business dealings with it and keep
available the services of its present officers and employees, in each case in
the ordinary course of business consistent with past practice. The Seller shall
not take any action with the purpose of causing any of the conditions to the
Purchaser's obligations set forth in Article VII hereof to not be satisfied.
Except as expressly contemplated by this Agreement, the Seller shall not without
the prior written consent of the Purchaser:
(a) enter into any commitment or transaction relating to the Assets
not in the ordinary course of business;
(b) enter into, modify, amend or waive any terms of any Assumed
Contract;
(c) take any action or engage in any transaction which would cause
any representation or warranty of the Seller hereunder to be untrue as of the
Closing Date;
(d) accelerate the receipt of payment with respect to receivables or
slow down the payment of payables relating to the Assets;
(e) enter into any agreement with any of its Affiliates relating to
the Assets; or
(f) agree in writing to take any of the actions described above in
this Section 5.01.
Section 5.02. Certain Actions. The Seller shall not sell, lease, transfer,
license, pledge, encumber or otherwise dispose of any Assets or incur any
Liabilities or obligations of any nature whatsoever relating to the Assets
(whether absolute, accrued, contingent or otherwise and whether due or to become
due) without the prior written consent of the Purchaser.
Section 5.03. Intentionally Omitted.
Section 5.04. Intentionally Omitted.
Section 5.05. Actions. The Seller shall not institute, settle or dismiss
any action, claim, demand, lawsuit, proceeding, arbitration or grievance by or
before any Governmental Entity threatened against, relating to or involving the
Assets, without the prior written consent of the Purchaser.
Section 5.06. Maintenance of Assets. The Seller shall maintain all the
Assets in good repair and condition, except to the extent of wear or use in the
ordinary course of business and consistent with past practice or damage by fire
or other unavoidable casualty.
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Section 5.07. Access and Investigation. The Seller and its representatives
shall afford to representatives of Purchaser, including its counsel,
accountants, consultants and lenders, with full and complete access during
normal business hours to all of the properties, books, Contracts, records and
assets of the Seller to enable the Purchaser to perform a due diligence review
of the Film Library. Such due diligence review shall include, but not be limited
to the following (i) obtaining a complete and accurate list of all films,
television episodes and other titles and media included in the Film Library,
(ii) obtaining a complete and accurate list of all distribution agreements
relating to any and all items in the Film Library, (iii) confirming that Seller
possesses Physical Properties for each item in the Film Library, (iv) obtaining
advice from qualified third-party advisors as to the potential commercial value
of the Film Library and the time and resources likely to be required to realize
such value, (v) obtaining advice from qualified third party advisors as to the
physical condition of the Film Library, and as to the steps and cost necessary
to convert the Film Assets into digital or other form necessary to commercialize
such items, (vi) obtaining advice from counsel and other advisers as to the
validity and enforceability of Seller's title to each item in the Film Library,
and as to the current validity and enforceability of copyright protection for
each such item, and (vii) conducting such other legal and accounting due
diligence as Purchaser deems appropriate in its sole discretion. Any information
obtained pursuant to this Section 5.07 shall be held in strict confidence and
shall be used solely in connection with the Transactions contemplated hereunder
and shall not be disclosed to any Person except as required by a Governmental
Entity.
Section 5.08. No Negotiation.
(a) The Seller shall terminate any discussions regarding an
Acquisition Proposal (other than discussions with Purchaser) and shall ensure
that neither it nor any of its subsidiaries, officers, directors, employees,
shareholders, Affiliates, investment bankers, attorneys, accountants, agents or
other advisors or representatives of the Seller, directly or indirectly:
(i) solicit, initiate or knowingly facilitate or encourage the
submission of any Acquisition Proposal; or
(ii) participate in any discussions or negotiations regarding,
or furnish to any Person any information with respect to, or take
any other action to facilitate any inquiries or the making of any
Acquisition Proposal, or enter into any agreement with respect to
any Acquisition Proposal, other than with Purchaser.
(b) Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in this Section 5.08 by any officer,
director, employee, affiliate, shareholder, investment banker, attorney,
accountant, agent or other advisor or representative of the Seller, whether or
not such individual is purporting to act on behalf of the Seller, or otherwise,
shall be deemed to be a breach of this Section 5.08 by the Seller. Seller shall
notify the Purchaser promptly of the receipt of any notice, discussions or
requests for information relating to an Acquisition Proposal.
Section 5.09. Performance Under Assumed Contracts. The Seller shall
continue to perform in a manner consistent with regular and ordinary course
under, and abide by, each of the Assumed Contracts in all respects and shall
otherwise fully discharge its obligations under each of the Assumed Contracts.
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ARTICLE VI.
PRE-CLOSING COVENANTS OF EACH PARTY
Section 6.01. Notification of Certain Matters. During the period from and
after the date hereof through the earlier of the termination of this Agreement
or the Closing Date, each party hereto shall promptly notify the other in
writing of:
(a) the discovery by it of any event, condition, fact or
circumstance that occurred, arose or existed on or prior to the date of this
Agreement or occurs, arises or exists after the date of this Agreement and that
caused or constitutes or could cause or constitute a breach of any
representation or warranty made by such party in this Agreement;
(b) any breach of any covenant or obligation made by it; and
(c) any event, condition, fact or circumstance that may make the
timely satisfaction of any of the conditions set forth in Article VII or Article
VIII impossible or unlikely.
Section 6.02. Consents. Each party hereto shall use its commercially
reasonable efforts to ensure that:
(a) each filing, notice or certificate required to be made or given
(pursuant to any applicable Legal Requirement, order or Contract, or otherwise)
by it in connection with the execution and delivery of this Agreement or in
connection with the consummation or performance of any of the Transactions is
made or given as soon as practicable after the date of this Agreement;
(b) each Consent set forth on Schedule 3.02(c) required to be
obtained (pursuant to any applicable legal requirement, order or Contract, or
otherwise) by it in connection with the execution and delivery of this Agreement
or in connection with the consummation or performance of any of the Transactions
is obtained as soon as practicable after the date of this Agreement and remains
in full force and effect through the Closing Date;
(c) it shall promptly deliver to the other parties, a copy of each
filing made, each notice given and each Consent obtained by it during the
pre-Closing period; and
(d) during the pre-Closing period, it and its respective
representatives cooperate with the other parties and with the other parties'
representatives, and prepare and make available such documents and take such
other actions as the other parties may reasonably request in good faith, in
connection with any filing, notice or Consent that it is required or elects to
make, give or obtain.
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ARTICLE VII.
CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATION TO CLOSE
The obligation of the Purchaser to purchase the Assets is subject to the
satisfaction, at or before the Closing, of the conditions set out below. The
benefit of these conditions are for the benefit of the Purchaser only and may
only be waived in a writing signed by the Purchaser at any time in its sole
discretion.
Section 7.01. Accuracy of Representations and Warranties. The
representations and warranties of the Seller shall be true and correct in all
material respects (except for representations and warranties that contain
qualifications as to materiality, which shall be true and correct in all
respects) at and as of the date when made and as of the Closing Date as though
made at that time, and the Purchaser shall have received a certificate attesting
thereto from the Seller signed by a duly authorized officer of the Seller.
Section 7.02. Performance by the Seller. The Seller shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement and the Purchaser shall have received
a certificate signed by a duly authorized officer of the Seller attesting to
that effect.
Section 7.03. Material Adverse Change. There shall not have been any
changes or events that have resulted or could result in a Material Adverse
Effect.
Section 7.04. No Litigation. There shall not have been issued and be in
effect any order of any court or tribunal of competent jurisdiction which (i)
prohibits or makes illegal the purchase by the Purchaser of the Assets, (ii)
would require the divestiture by the Purchaser of all or any portion of the
Assets as a result of the Transactions contemplated hereby, or (iii) would
impose limitations on the ability of the Purchaser to effectively exercise full
rights of ownership of the Assets as a result of the Transactions contemplated
hereby.
Section 7.05. No Injunction. On the Closing Date there shall be no
effective injunction, writ, preliminary restraining order or any order of any
nature issued by a court of competent jurisdiction 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 Transactions
contemplated hereby.
Section 7.06. Due Diligence Review. The Purchaser, in its sole and
absolute discretion, shall be satisfied with the results of its due diligence
review as set forth in Section 5.07 hereof.
Section 7.07. No Encumbrances. At the Closing, Seller shall deliver the
Assets free and clear of any Encumbrances whatsoever other than the Permitted
Encumbrances (except for Permitted Encumbrances relating to the Seller
Obligations).
Section 7.08. Purchase Agreement. The Purchase Agreement by and among the
Purchaser, Tadpole Entertainment, LLC, Xxxxx Xxxxx, Inc., Xxxxx X. Carell, Xxxx
X. Xxxxxx, Xxxxxx X. Xxxxxx, and Xxxxxx X. Xxxxxxx dated as of the date hereof
shall not have been terminated and all of the conditions to Closing set forth in
Article XIII and Article IX therein shall be satisfied or waived.
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Section 7.09. Delivery of Schedules. If Seller updates Schedule 3.06(a) in
accordance with Section 1.05, Seller shall have delivered to Purchaser revisions
of all other Schedules that are required to be revised in connection with such
update that are, in each case, satisfactory to Purchaser in Purchaser's sole and
absolute discretion.
Section 7.10. Opinion of Counsel. The Seller shall have delivered an
opinion, dated the Closing Date, of counsel to the Seller, in a form and
substance reasonably satisfactory to Purchaser.
ARTICLE VIII.
CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATIONS TO CLOSE
The obligation of the Seller to sell the Assets is subject to the
satisfaction, at or before the Closing, of the conditions set out below. The
benefit of these conditions is for the Seller only and may be waived by the
Seller in writing at any time in its sole discretion.
Section 8.01. Accuracy of Representations and Warranties. The
representations and warranties of Purchaser shall be true and correct in all
material respects (except for representations and warranties that contain
qualifications as to materiality, which shall be true and correct in all
respects at and as of the date when made and as of the Closing Date, as though
made at that time), and the Seller shall have received a certificate attesting
thereto signed by a duly authorized officer of the Purchaser.
Section 8.02. Performance by Purchaser. The Purchaser shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement and the Seller shall have
received a certificate of a duly authorized officer of the Purchaser to such
effect.
Section 8.03. No Litigation. There shall not have been issued and be in
effect any order of any court or tribunal of competent jurisdiction which (i)
prohibits or makes illegal the sale by the Seller of the Assets or the purchase
by the Purchaser of the Assets or (ii) would impose limitations on the ability
of the Seller to effectively transfer full rights of ownership of the Assets as
a result of the Transactions contemplated hereby.
Section 8.04. No Injunction. On the Closing Date there shall be no
effective injunction, writ, preliminary restraining order or any order of any
nature issued by a court of competent jurisdiction 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 Transactions
contemplated hereby.
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ARTICLE IX.
INDEMNIFICATION
Section 9.01. Representations and Warranties. The representations and
warranties set forth in Articles III and IV hereof shall survive through the
three-year anniversary of the Closing Date; provided, however, that the
representations and warranties set forth in Section 3.03 and Section 3.06 shall
survive indefinitely.
Section 9.02. Indemnification by the Seller. The Seller shall indemnify,
defend and hold Purchaser and its officers, directors, employees, Affiliates,
representatives, agents and the successors and assigns of all of them harmless
up to a maximum amount equal to the Purchase Price for any and all Liabilities,
costs or expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages and amounts paid in settlement (collectively,
"Damages"):
(a) arising from or in connection with (i) the failure or breach of
any representation or warranty of the Seller under this Agreement (including the
schedules hereto), in any certificate delivered pursuant hereto to be true and
correct as of the date hereof and as of the Closing Date or any other
Transaction Document, (ii) the failure of the Seller to duly perform or observe
any term, provision, covenant or agreement to be performed or observed by the
Seller pursuant to this Agreement or any other Transaction Document or in the
schedules, exhibits, certificates or documents delivered by Seller pursuant
hereto or thereto, or (iii) all Liabilities, other than the Assumed Liabilities;
and
(b) for a period from the Closing Date to the three-year anniversary
thereof, in the event that the Seller shall have engaged in fraud, willful
misconduct or bad faith in connection with the consummation of the transactions
contemplated by this Agreement.
Section 9.03. Sole Remedy. Notwithstanding anything to the contrary
herein, Purchaser's sole remedy against Seller for Damages pursuant to this
Agreement shall be limited to the provisions set forth in this Article IX and
shall not exceed an aggregate amount equal to the Purchase Price.
Section 9.04. Claims for Indemnification. Within the indemnification
limitations set forth in Section 9.02 above, upon receipt by Purchaser of a
written notice of any action, suit, proceedings, claim, demand or assessment
against it which might give rise to a claim for Damages, Purchaser shall give
written notice thereof to the Seller indicating the nature of such claim and the
basis therefor; provided, however, that failure to give such notice shall not
affect the Purchaser's rights provided hereunder except to the extent that the
Seller's rights shall have been actually and materially prejudiced as a result
of such failure. Seller shall have the right, at its option, exercisable within
10 days after receipt of such notice to assume the defense of, at its own
expense and by its own counsel, any such matter involving the asserted liability
of the Purchaser as to which the Seller shall have acknowledged the right of the
Purchaser to payment by the Seller, subject to the next sentence. If the Seller
shall undertake to compromise, settle or defend any such asserted liability, it
shall promptly notify the Purchaser of its intention to do so, and the Purchaser
agrees to cooperate fully with the Seller and its counsel in the compromise or
settlement of, or defense against, any such asserted liability; provided,
however, that the Seller shall not settle any such asserted liability without
the written consent of the Purchaser, which such consent shall not be
unreasonably withheld. Notwithstanding an election to assume the defense of such
action or proceeding, the Purchaser shall have the right to employ separate
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counsel and to participate in the defense of such action or proceeding, and the
reasonable fees, costs and expenses of such separate counsel shall be payable by
the Seller, if (A) the Seller shall not have employed counsel reasonably
satisfactory to the Purchaser to represent the Seller within 20 days after
notice to the Seller of the institution of such action or proceeding or (B) the
Seller shall have authorized the Purchaser to employ separate counsel at the
Seller's expense and the Seller shall promptly assume and hold the Purchaser
harmless from and against the full amount of any Damage resulting therefrom.
Notwithstanding anything herein to the contrary, the Seller shall not be
entitled to assume control of such defense but shall pay for the reasonable
fees, costs and expenses of Purchaser's legal counsel if (i) the claim for
indemnification relates to or arises in connection with any criminal proceeding,
action, indictment, allegation or investigation; (ii) Purchaser has been advised
by counsel that a reasonable likelihood exists of a conflict of interest between
the Seller, on the one hand, and Purchaser on the other; (iii) the Seller failed
or is failing to vigorously prosecute or defend such claim; (iv) the claim seeks
an injunction or equitable relief against Purchaser; or (v) Purchaser reasonably
believes an adverse determination with respect to the action, lawsuit,
investigation, proceeding or other claim giving rise to such claim for
indemnification would be detrimental to or injure the reputation or future
business prospects of Purchaser. If the Purchaser shall undertake to compromise,
settle or defend any asserted liability in accordance with the immediately
preceding sentence, it shall promptly notify the Seller of its intention to do
so, and the Seller agrees to cooperate fully with the Purchaser and its counsel
in the compromise or settlement of, or defense against, any such asserted
liability; provided, however, that the Purchaser shall not settle any such
asserted liability without the written consent of the Seller, which such consent
shall not be unreasonably withheld. In any event, the Purchaser and its counsel
shall cooperate with the Seller and its counsel. The Purchaser shall have the
right at its own expense to participate in the defense of such asserted
liability.
Section 9.05. Method of Payment. If a payment is due from Seller to
Purchaser for Damages, in addition to any other rights Purchaser may have
against Seller under this Agreement regarding the collection of such Damages,
Purchaser shall at its option have the right, in accordance with the procedure
outlined below, to collect such Damages by offsetting the amount of such Damages
against the Seller Note (the "Right of Setoff"). If Purchaser desires to
exercise its Right of Setoff, it must first provide Seller with 10 days prior
written notice (the "Setoff Notice") setting forth the amount of Damages it
desires to offset (the "Setoff Amount") and a brief description of the facts
which gave rise to the Damages. If, within such 10 day period, Purchaser does
not receive a written notice from Seller (an "Objection Notice") setting forth
Seller's objection to either the facts giving rise to the Damages or the amount
of Damages, Purchaser shall be allowed to exercise its Right of Setoff pursuant
to the Setoff Notice. If, within such 10 day period, Purchaser receives an
Objection Notice, the parties agree to meet within 20 days of the receipt of
such Objection Notice to make a good faith effort to resolve the dispute set
forth in the Objection Notice. If after such meeting the parties are unable to
resolve such dispute, the Purchaser agrees to pay the Setoff Amount (on the
dates and in the amounts set forth in the Seller Note) to an escrow agent
pursuant to an Escrow Agreement in a form to be mutually agreed upon by Seller
and Purchaser. Such amount shall be released by the escrow agent upon the
earlier of either (i) the joint direction of Purchaser and Seller, or (ii) the
ruling of an arbitrator pursuant to an arbitration in accordance with Section
12.08 hereof.
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ARTICLE X.
TERMINATION
Section 10.01. Termination Events. This Agreement may be terminated and
the Transactions may be abandoned at any time prior to the Closing:
(a) by mutual written consent of the Seller and Purchaser;
(b) by the Seller or Purchaser if the Closing shall not have
occurred on or before April 30, 2005; provided, however, that
(i) the right to terminate this Agreement under this Section
10.01(b) shall not be available to the Seller or Purchaser, as the
case may be, if such party's failure to fulfill any obligation under
this Agreement is the cause of or resulted in the failure of the
Transactions to occur on or before such date;
(ii) if the failure to close by such date is a result of
Seller's failure to provide Purchaser with full and complete access
on a timely basis to Seller's diligence materials in accordance with
Section 5.07 hereof, such date shall automatically be extended to
May 31, 2005; and
(iii) if the failure to close by such date is not due to
either parties failure to fulfill any of its obligations under this
Agreement, the parties agree to meet in good faith on or before
April 30, 2005, to use their best efforts to mutually agree upon a
reasonable extension of such date;
(c) by the Seller so long as the Seller is not then in material
breach of its obligations hereunder, if any of the Conditions to Closing set
forth in Article VIII shall not have been satisfied and are incapable of being
satisfied by April 30, 2005; and
(d) by Purchaser so long as Purchaser is not then in material breach
of its obligations hereunder, if any of the Conditions to Closing set forth in
Article VII shall not have been satisfied and are incapable of being satisfied
by April 30, 2005.
Section 10.02. Effect of Termination.
(a) In the event of termination of this Agreement by either the
Seller or Purchaser as provided in Section 10.01, this Agreement shall forthwith
become null and void and there shall be no liability or obligations on the part
of Purchaser, on the one hand, or the Seller, on the other, or any of its
Affiliates, officers, or shareholders except (i) with respect to the provisions
of Section 10.02(b) hereof, and (ii) that no such termination shall relieve any
party from liability for any breach of the respective representations, covenants
and other obligations hereunder prior to the date of termination.
(b) If this Agreement is terminated as provided herein:
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(i) each party will redeliver, and will cause its agents
(including, without limitation, attorneys and accountants) to
redeliver, all documents, work papers and other material of the
other party relating to the Transactions contemplated hereby,
whether obtained before or after the execution hereof; and
(ii) each party shall hold any information received by any
other party with respect to the business, operations, assets or
financial condition of such other party in strict confidence and not
disclose such information to any Person except as required by a
Governmental Entity.
ARTICLE XI.
OBLIGATIONS AFTER THE CLOSING
Section 11.01. Further Assurances.
(a) Seller will, at any reasonable time, when called upon to do so
by the Purchaser, its successors, legal representatives, or assigns, sign all
lawful papers, make all rightful oaths, execute and deliver all documents, and
do all lawful acts required for the filing of such papers as are reasonable and
necessary to aid the Purchaser, its successors, legal representatives and
assigns, to (i) effectively vest in the Purchaser good title to the Assets, (ii)
consummate the Transactions contemplated hereby, and (ii) record, obtain,
enforce and renew proper copyright, trademark, patent and other intellectual
property rights in the Film Library in all countries, all without further
compensation but at the expense of the Purchaser, its successors, legal
representatives and assigns.
(b) Upon the reasonable request of Purchaser, Seller will make
available to Purchaser original versions of all accounting, financial and fiscal
records that are related to the Assets.
(c) On and after the Closing Date, the Purchaser shall have the sole
right and authority to collect, for its own account and sole benefit, all monies
payable in respect of the Assets (with respect to Transactions or events
occurring after the Closing Date), but not to collect monies payable in respect
of Excluded Assets, and the Seller shall have the sole right and authority to
collect, for its own account and sole benefit, all monies payable in respect of
such Excluded Assets. If either party shall receive any such monies of the
other, it shall hold all such monies in trust for the sole benefit of the other
party. Within five business days after receipt thereof, the Seller shall cause
the transfer and delivery to the Purchaser of any monies or other property which
the Seller may receive after the Closing Date in payment of monies payable in
respect of the Assets and the Purchaser shall (within five business days after
receipt thereof) cause the transfer and delivery to the Seller of any monies
which the Purchaser may receive after the Closing Date in payment of Excluded
Assets.
(d) Purchaser shall timely execute an assumption agreement with the
Screen Actors Guild; provided, that, such agreement shall be consistent with the
terms of this Agreement, including without limitation Section 1.03(d) hereof.
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ARTICLE XII.
MISCELLANEOUS
Section 12.01. Publicity. Purchaser or Seller may make press releases,
statements or other public announcements from time to time as is required to
comply with applicable laws provided, however, that such items shall not
disclose any of the material details of the Transactions other than as necessary
to comply with such applicable laws. Purchaser may make press releases,
statements or other public announcements from time to time to publicize its
ownership of the Assets.
Section 12.02. Costs. The Purchaser, on the one hand, and the Seller on
the other, shall each pay its own costs and expenses incurred by it in
negotiating and preparing this Agreement and in closing and carrying out the
Transactions contemplated by this Agreement.
Section 12.03. Headings. Subject headings are included for convenience
only and shall not affect the interpretation of any provision of this Agreement.
Section 12.04. Notices. Any notice, demand, request, waiver, or other
communication under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if personally served or sent by
facsimile transmission, on the business day after notice is delivered to a
courier or mailed by express mail if sent by courier delivery service or express
mail for next day delivery and on the third day after mailing if mailed to the
party to whom notice is to be given, by first class mail, registered, return
receipt requested, postage prepaid and addressed as follows (or to such other
address of which any such party shall give notice pursuant to this Section
12.04):
If to the Seller to:
MAC Filmworks, Inc.
0000 Xxxxxxxxx Xxxx, Xxxxx X-0
Xxxxxxxxxx, XX 00000
Attn: Xxx XxXxxxxxxx
Fax: (000) 000-0000
With a Copy to:
Xxxxxx & Xxxxxxxxx, PC
0 Xxxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
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If to the Purchaser, to:
Amity Entertainment, Inc.
c/o AG Special Situation Corp.
000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Josh Brain
Xxxxx Xxxxxxx
Fax: (000) 000-0000
with a copy to:
Dechert LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
Section 12.05. Assignment and Successors. Prior to Closing, neither the
Purchaser, on the one hand, or the Seller, on the other, shall assign any rights
or delegate any duties hereunder without the prior written consent of the other
except that Purchaser may assign this Agreement to an affiliate of Purchaser
without obtaining Seller's consent.
Section 12.06. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the parties.
Section 12.07. Governing Law. This Agreement shall be construed in
accordance with, and governed by, the laws of the State of New York as applied
to contracts made and to be performed entirely in the State of New York without
regard to principles of conflicts of law.
Section 12.08. Arbitration.
(a) Any controversy, claim for the recovery of any Damages or other
claim (including, without limitation, whether any controversy, claim for the
recovery of any Damages or other claim is subject to arbitration) arising out of
this Agreement, or the breach thereof (whether, in any case, involving (x) a
party hereto, (y) their transferees or (z) such party's or transferee's
directors, officers, shareholders, employees, representatives or agents), shall
be settled by binding arbitration administered by the American Arbitration
Association (the "AAA") under its Commercial Arbitration Rules ("Rules"), and
shall be held in New York, New York.
(b) The Federal rules of evidence shall control the admission of
evidence into the arbitration proceeding. Any applicable discovery limitations
under the Federal Rules of Civil Procedure (and the local rules of the Federal
District Court located in New York) shall control the form and volume of written
discovery and oral depositions that each side may conduct in preparation for the
arbitration proceeding; provided, however, that the arbitration panel shall
specify all other matters regarding the conduct of such written discovery and
oral depositions.
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(c) Any dispute submitted for arbitration shall be referred to a
panel of three arbitrators. The party or parties submitting ("Submitting Party")
the intention to arbitrate (the "Submission") shall nominate one arbitrator.
Within 10 days of receipt of the Submission, the party or parties receiving the
Submission ("Answering Party") shall nominate one arbitrator. If the Answering
Party fails to timely nominate an arbitrator, then the second arbitrator shall
be appointed by the AAA in accordance with the Rules. If the arbitrator chosen
by the Submitting Party and the arbitrator chosen by or selected for the
Answering Party can agree upon a neutral arbitrator within 15 days of the choice
or selection of the Answering Party's arbitrator, then such individual shall
serve as the third arbitrator. If no such agreement is reached, a third neutral
arbitrator shall be appointed by the AAA in accordance with the Rules. The
parties agree that they shall consent in writing to an expedited proceeding
under the Rules, to the full extent the AAA can accommodate such a request.
(d) The ruling of the arbitrators shall be binding and conclusive
upon all parties hereto any other Person with an interest in the matter.
(e) The arbitration provision set forth in this Agreement shall be
the sole dispute resolution process regarding any controversy or claim
(including, without limitation, whether any controversy or claim is subject to
arbitration) arising out of or relating to this Agreement, or the breach thereof
(whether, in any case, involving (x) a party hereto, (y) their transferees or
(z) such party's or transferee's officers, directors, shareholders, employees,
representatives or agents); provided, however, that (i) any of the parties to
the arbitration may request the Federal District Court located in New York, New
York (or any applicable New York state court) to provide interim injunctive
relief in aid of arbitration hereunder or to prevent a violation of this
Agreement pending arbitration hereunder (and any such request shall not be
deemed a waiver of the obligations to arbitrate set forth in this Section
12.08), (ii) any ruling on the award rendered by the arbitrators may be entered
as a final judgment in a Federal District Court or any New York state court (and
each of the parties hereto irrevocably submits to the jurisdiction of such court
solely for such purposes) and (iii) application may be made by a party to any
court of competent jurisdiction wherever situated for enforcement of any such
final judgment and the entry of whatever orders are necessary for such
enforcement. In any proceeding with respect hereto, all direct, reasonable costs
and expenses (including, without limitation, AAA administration fees and
arbitrator fees) incurred by the parties to the proceeding shall, at the
conclusion of the proceeding, be paid by the party incurring same.
Section 12.09. Entire Agreement. This Agreement, including the Schedules
and Exhibits hereto, sets forth the entire understanding and agreement and
supersedes any and all other understandings, negotiations or agreements between
the Purchaser and the Seller relating to the sale and purchase of the Assets.
Section 12.10. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute a single agreement. This Agreement may be evidenced by
facsimile signatures.
Section 12.11. Severability. In the event that any one or more of the
immaterial provisions contained in this Agreement shall for any reason be held
to be invalid, illegal or unenforceable, the same shall not affect any other
provision of this Agreement, but this Agreement shall be construed in a manner
which, as nearly as possible, reflects the original intent of the parties.
25
Section 12.12. No Prejudice. This Agreement has been jointly prepared by
the parties hereto and the terms hereof shall not be construed in favor of or
against any party on account of its participation in such preparation.
Section 12.13. Words in Singular and Plural Form. Words used in the
singular form in this Agreement shall be deemed to import the plural, and vice
versa, as the sense may require.
Section 12.14. Parties in Interest. Nothing expressed or implied in this
Agreement is intended or shall be construed to confer upon or give to any
person, firm or corporation, other than the parties hereto, any rights or
remedies under or by reason of this Agreement or any transaction contemplated
hereby.
Section 12.15. Amendment and Modification. This Agreement may be amended
or modified only by written agreement executed by all parties hereto.
Section 12.16. Waiver. At any time prior to the Closing, the Purchaser or
the Seller may (i) extend the time for the performance of any of the obligations
or other acts of the other, (ii) waive any inaccuracies in the representations
and warranties of the other contained herein or in any document delivered
pursuant hereto, and (iii) waive compliance with any of the agreements or
conditions of the other contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed by the party granting such waiver but such waiver
or failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or future failure.
ARTICLE XIII.
DEFINITIONS
"AAA" shall have the meaning set forth in Section 12.08(a).
"Acquisition Proposal" shall mean any offer or proposal for or indication
of interest in the purchase of or the acquisition of (whether by operation of
law or otherwise) any of the Assets or of an equity interest in any entity that
controls the Assets, other than the Seller's offering set forth in registration
statement 333-70526 filed with the SEC.
"Affiliate" shall mean, when used with respect to any Person, (i) if such
Person is a corporation, any officer or director thereof and any Person which
is, directly or indirectly, the beneficial owner of more than ten percent (10%)
of any class of any equity security thereof, and any officer, director, partner
or Affiliate of such beneficial owner, (ii) if such Person is a partnership, any
partner thereof, (iii) if such Person is a limited liability company or other
unincorporated association, any member or managing agent thereof, and (iv) any
other Person (other than the Purchaser) which, directly or indirectly, controls
or is controlled by or is under common control with such Person. For purposes of
this definition, "control" (including the correlative terms "controlling,"
"controlled by" and "under common control with"), with respect to any Person,
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, the ability to exercise voting power, or by
Contract or otherwise.
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"Ancillary Rights" shall have the meaning set forth in subsection (iv) of
the definition of Film Assets.
"Answering Party" shall have the meaning set forth in Section 12.08(c).
"Assets" shall have the meaning set forth in Section 1.01.
"Assumed Contracts" shall have the meaning set forth in Section 1.01(e).
"Assumed Liabilities" shall have the meaning set forth in Section 1.03.
"Business" shall mean the Seller's business of creating, owning, using,
marketing, producing, distributing, licensing and otherwise exploiting on a
worldwide basis a library of television and motion picture products.
"Business Records" shall have the meaning set forth in Section 1.01(g).
"Closing" shall have the meaning set forth in Section 2.01.
"Closing Cash Consideration" shall have the meaning set forth in Section
1.06(a).
"Closing Date" shall have the meaning set forth in Section 2.01.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder, as in effect from time to time.
"Consents" shall mean all governmental and third party consents, permits,
approvals, orders, authorizations, qualifications, and waivers necessary to be
received by a Person for the consummation of the Transactions contemplated by
this Agreement.
"Contracts" shall mean all contracts, commitments, agreements,
arrangements and other instruments, whether written or oral.
"Encumbrance" shall mean any option, pledge, security interest, Lien,
charge, encumbrance, restriction (whether on voting, sale, transfer or
disposition or otherwise) whether imposed by agreement, understanding, law or
otherwise, except those arising under applicable federal or state securities
laws.
"Excluded Assets" shall have the meaning set forth in Section 1.02.
"Excluded Liabilities" shall have the meaning set forth in Section 1.04.
"Film Asset Acquisition Agreement" shall mean, with respect to any Person,
a Contract pursuant to which that Person has acquired from another Person, or
must acquire from another Person, all or any of such other Person's rights in
the Film Library or any Film Asset.
27
"Film Asset Exploitation Agreements" shall mean, with respect to any
Person, a Contract pursuant to which that Person has granted to another Person,
or must grant to another Person, all or any of that Person's rights to exploit
the Film Library or any Film Asset.
"Film Assets" shall mean, with respect to the Film Library, all rights and
interests therein or pertaining thereto, including, all rights and interests of
every kind and nature of whatever description, present and future, direct and
indirect, whether now owned or hereafter acquired (including, without
limitation, any rights or interests that revert), throughout the universe in
perpetuity in all media, whether now or hereafter created or devised, and by all
means, whether now known or hereafter created or devised, in and to the
following:
(i) the underlying Literary Property;
(ii) all copyrights, rights and interests in copyrights,
renewals and extensions of copyrights, domestic and foreign,
obtained upon the Film Library or the underlying Literary Property
or any part thereof, the right (but not the obligation) to make
publication thereof for copyright purposes and to register claims
under copyright, the right (but not the obligation) to renew and
extend such copyright and the right (but not the obligation) to xxx
in the name of any Person for past, present and future infringements
of copyright and to receive all damages, judgments, recoveries or
proceeds therefrom;
(iii) all music, musical compositions and master recordings
created for, used in or to be used in connection with the Film
Library, including, without limitation, all copyrights therein and
all rights to perform, copy, record, re-record, produce, publish,
reproduce or synchronize any or all of said music, musical
compositions and master recordings throughout the universe as well
as all other rights to exploit such music including recording,
soundtrack recording and music publishing rights;
(iv) all collateral, allied, ancillary and subsidiary rights
of every kind and nature whatsoever derived from, appurtenant to or
related to the Film Library or the underlying Literary Property,
including, without limitation, all production, exploitation,
reissue, remake, sequel, prequel, adaptations, serial or series
production rights, by any means and in any medium now known or
hereafter devised, whether based upon, derived from or inspired by
the Film Library, the underlying Literary Property or any part
thereof; all rights to use, exploit and license others to use or
exploit any and all music, novelization, publishing, commercial
tie-ups and merchandising rights of every kind and nature
whatsoever, including, without limitation, those arising out of or
connected with or inspired by the Film Library or the underlying
Literary Property, the title or titles of the Film Library or the
underlying Literary Property, the characters appearing in the Film
Library or the underlying Literary Property and/or the names or
characteristics of said characters, and including further, without
limitation, any and all commercial exploitation in connection with
or related to the Film Library, all remakes, sequels, prequels or
other adaptations and/or derivative works thereof and/or said
Literary Property (collectively the "Ancillary Rights");
28
(v) all rights to develop, produce, acquire, reacquire,
finance, release, sell, distribute, subdistribute, lease, sublease,
market, license, sublicense, exhibit, broadcast, transmit,
reproduce, manufacture, publicize or otherwise exploit the Film
Library, the underlying Literary Property and the Ancillary Rights
in perpetuity, without limitation, in any manner and in any media
whatsoever throughout the universe, whether now known or hereafter
developed, including, without limitation, by projection, radio, all
forms of television (including, without limitation, free, pay, toll,
cable, sustaining subscription, sponsored and direct satellite
broadcast), in theatres, non-theatrically, all airline and ship
board exploitation, closed circuit, on cassettes, cartridges, DVD,
other discs and other similar and dissimilar video devices, all
forms of computer assisted or interactive media (including, without
limitation, CD-ROM, CD-I and similar disc systems), all so-called
video-on-demand and/or near video-on-demand systems however devised,
interactive cable and by any and all other means, methods, processes
or devices now known or hereafter conceived, devised or created;
(vi) all underlying Literary Properties and all Ancillary
Rights relating to the Film Library, including, without limitation,
(i) all rights to receive proceeds of any insurance, indemnity,
warranty or guaranty with respect to the Film Library or any Film
Asset relating thereto and all applicable Film Contracts, (ii) all
claims for damages arising out of or for breach of or default under
all applicable Film Contracts or otherwise, and (iii) the right to
terminate all applicable Film Contracts, to perform thereunder and
to compel performance and otherwise to exercise all remedies
thereunder;
(vii) all agreements with respect to the Film Library or any
Film Asset relating thereto, including, without limitation, all Film
Contracts relating to the Film Library and all agreements for (i)
acquisition of rights in the Film Library or any Literary Property
and all rights under distribution and license agreements and (ii)
personal and/or professional services, including the services of
writers, directors, performers, producers, special effects
personnel, production personnel, animators, cameramen and other
creative, artistic or technical staff and other persons providing
services with respect to the Film Library, to the extent applicable;
(viii) all Physical Properties relating to the Film Library,
including ownership and all access rights and rights to use the
same, all pledgeholder, laboratory, access or film warehousing
documents or agreements relating to the Film Library or any Physical
Properties thereof;
(ix) all insurance of whatever description placed upon or
relating to the Film Library or the insurable properties thereof
and/or any Person or Persons engaged in the development,
acquisition, production, completion, delivery or exploitation of the
Film Library, and all rights of any kind or nature whatsoever in and
to all completion guarantees and all other agreements and documents
relating to production, completion, delivery and exploitation of the
Film Library and the proceeds thereof;
29
(x) the title or titles of the Film Library including rights
protected pursuant to trademark, service xxxx, unfair competition
and/or other laws, rules or principles of law or equity and all
inventions, processes, formulae, licenses, copyrights, patents,
patent rights, trademarks, trademarks rights, service marks, service
xxxx rights, trade names, trade name rights, logos, indicia,
corporate and company names, business source or business identifiers
and renewals and extensions thereof, domestic and foreign, and the
accompanying goodwill relating to the Film Library, the right (but
not the obligation) to register claims under trademark, patent or
copyright and to renew and extend such trademarks, patents or
copyrights and the right (but not the obligation) to xxx in the name
of any Person for past, present or future infringement of trademark,
copyright or patents;
(xi) all key art, transparencies, photographs, slides and
promotional materials of whatever nature; and
(xii) all Internet Websites owned and operated by Seller
related to the Film Library, including but not limited to the
website names, URL addresses, domain registrations, and any and all
linked websites or pages controlled by Seller and all elements
thereof including but not limited to all literary, dramatic, visual
and musical material therein.
"Film Contracts" shall mean, with respect to any Person, all Contracts to
which that Person is a party relating to the Film Library or any Film Asset,
including, without limitation, all Film Asset Acquisition Agreements, Film Asset
Exploitation Agreements, sales agency agreements, financing arrangements,
copyright mortgages, cast and crew agreements, collective bargaining agreements,
performance bonds, or other agreements of any nature whatsoever relating to the
acquisition, production, financing, distribution, exhibition, or exploitation of
the Film Library or Film Asset.
"Film Library" shall have the meaning set forth in Section 1.01(a).
"GAAP" shall mean U.S. generally accepted accounting principles, applied
on a consistent basis.
"Governmental Entity" shall mean the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guild Payments" shall mean the obligations payable by the Seller or any
of its Affiliates pursuant to any guilds or similar organizations, including
without limitation the Screen Actors Guild, the Writers Guild of America and the
Directors Guild of America, or collective bargaining agreements in connection
with the distribution and exploitation of the Film Assets.
30
"Liabilities" shall mean any debt, obligation, duty or liability of any
nature including indebtedness and any undisclosed, unmatured, unaccrued,
unasserted, contingent, indirect, conditional, implied, vicarious, derivative,
joint, several or secondary liability, regardless of whether such debt,
obligation, duty or liability would be required to be disclosed on a balance
sheet prepared in accordance with GAAP and regardless of whether such debt,
obligation, duty or liability is immediately due and payable.
"Lien" shall mean any security agreement, financing statement (whether or
not filed), security or other like interest, conditional sale or other title
retention agreement, lease or consignment or bailment given for security
purposes, lien, mortgage, deed of trust, indenture, pledge, constructive or
other trust or attachment.
"Literary Properties" shall mean any and all underlying literary, dramatic
or other works (whether published or unpublished), screenplays, teleplays,
stories, adaptations, scripts, treatments, scenarios and any and all other
literary or dramatic materials of any kind on which the Film Assets are based or
which were written for or included in the Film Assets.
"Material Adverse Effect" shall mean a material adverse effect on (i) the
Assets, or (ii) the validity or enforceability of (A) this Agreement or (B) the
rights or remedies of the Purchaser hereunder.
"Objection Notice" shall have the meaning set forth in Section 9.04.
"Participations" shall mean the amounts (other than Residuals) payable by
any Person pursuant to Contracts with any other Person or pursuant to Contracts
under which any Person assumed the obligations or is otherwise obligated to pay
such amounts, in connection with the acquisition, production, financing,
distribution, exhibition or exploitation of a Film Asset, the payment of which
is: (a) contingent upon and payable only to the extent of the receipt by such
Person of revenues from the exploitation of such Film Asset; or (b) due based
upon the passage of time or the occurrence of an identified event; or (c) an
advance or guarantee of payments of the kind described in (a) or (b) above, and
which are held by (i) actors, writers, directors, producers, other film industry
professionals, or any of their respective loan out companies, (ii) production
companies or licensors or transferors of rights, or (iii) any of their
respective successors or assigns.
"Permitted Encumbrances" shall have the meaning set forth in Section 3.03.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, limited liability company,
association, corporation, institution, entity, party, or Governmental Entity or
any other juridical entity of any kind or nature whatsoever.
"Physical Properties" shall mean all physical properties of every kind or
nature of or relating to any film or program in the Film Library and all
versions thereof and all teasers, trailers, music videos, featurettes,
television spots, outtakes, stock footage, "making of" films or programs,
including, without limitation, exposed film, developed film, positives,
negatives, final cut negatives, prints, answer prints, special effects,
preparing materials (including interpositives, negatives, duplicate negatives,
internegatives, color reversals, intermediates, lavenders, fine grain master
31
prints and matrices, title overlays, textless backgrounds and all other forms of
pre-print elements which may be necessary or useful to produce prints or other
copies or additional pre-print elements, whether now known or hereafter
devised), soundtracks, recordings, audio and video tapes and discs of all types
and gauges, tape masters, stills, press kits and other publicity or promotional
material, cutouts, trims and any and all other physical properties of every kind
and nature relating to the Film Library in whatever state of completion, and all
duplicates, drafts, versions and copies of each thereof, all of which are in
possession or control of Seller.
"Purchase Price" shall have the meaning set forth in Section 1.05.
"Purchaser" shall have the meaning set forth in the Preamble.
"Receivables" shall have the meaning set forth in Section 1.01(c).
"Requirements of Law" shall mean as to any Person, provisions of the
Articles or Certificate of Incorporation and By-laws or regulations or other
organizational or governing documents of such Person, or any law, treaty, code,
rule, regulation, right, privilege, qualification, license or franchise or
determination of any Governmental Entity, in each case applicable or binding
upon such Person or any of such Person's property or to which such Person or any
of such Person's property is subject or pertaining to any or all of the
Transactions contemplated or referred to herein.
"Residuals" shall mean all amounts (other than Participations) payable by
any Person pursuant to guild agreements or collective bargaining agreements, or
pursuant to Contracts under which any such Person assumed the obligations or is
otherwise obligated to pay such amounts, in connection with the development,
acquisition, production, distribution or exploitation of a Film Asset.
"Right of Setoff" shall have the meaning set forth in Section 9.04.
"Rules" shall have the meaning set forth in Section 12.08(a).
"Seller" shall have the meaning set forth in the Preamble.
"Seller Note" shall have the meaning set forth in Section 1.06(b).
"Seller Obligations" means the certain amounts owed by Seller to (i) Xxx
Xxxxxxxx, d/b/a Western International and (ii) Xxx Xxxx d/b/a Saturn Producers.
"Setoff Amount" shall have the meaning set forth in Section 9.04.
"Setoff Notice" shall have the meaning set forth in Section 9.04.
"Settlement Agreement" shall have the meaning set forth in Section
2.02(b)(xv).
"Submission" shall have the meaning set forth in Section 12.08(c)
"Submitting Party" shall have the meaning set forth in Section 12.08(c).
32
"Tax Return" means any report, return, form, claim for refund, declaration
or other document or information return or statement required to be supplied to
any authority in connection with Taxes, including any schedule or attachment
thereto and any amendment thereof.
"Taxes" shall mean all taxes, charges, fees, levies or other assessments,
including, without limitation, income, gross receipts, excise, property, sales,
use, license, withholding, payroll, estimated, stamp, unemployment insurance, ad
valorem, disability, severance, social security and franchise taxes, occupation
or other taxes, fees, assessments or charges of any kind whatsoever, together
with any interest and any penalties (including penalties for failure to file in
accordance with applicable information reporting requirements), and additions to
tax by any authority, whether federal, state or local or domestic or foreign.
"Transaction Documents" shall mean this Agreement and each document
delivered pursuant to this Agreement.
"Transactions" shall mean the asset purchase and other transactions
contemplated by the Transaction Documents.
33
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
PURCHASER
AMITY ENTERTAINMENT, INC.
By:
Name:
Title:
SELLER
MAC FILMWORKS, INC.
By:
Name:
Title:
