AGREEMENT AND PLAN OF REORGANIZATION
MAGIC FINGERS, INC.
ACQUISITION OF
FLASH ENTERTAINMENT, INC.
ENTERTAINMENT FILM PARTNERS, INC.
NO BULL DISTRIBUTION, INC.,
AND CERTAIN FILM RIGHTS
MA ol 04.6,97 Ug2.031094.1
31
TABLE OF CONTENTS
Recitals.......................................................................4
Agreement
1. Plan of Reorganization...........................................6
2. Purchase and Payment.............................................8
3. Representations and Warranties of the
Shareholders and the Acquirees...............................9
4. Representations of Acquiror.....................................22
5. Covenants of the Shareholders and the Arquirees.................25
6. Covenants of the Acquiror.......................................28
7. Conditions Precedent to the Obligations of
Acquirees and the Shareholders..............................30
8. Conditions Precedent to the Obligations of Acquiror.............30
9. Conditions Subsequent to Obligations of the
Shareholders and the Acquirees...............................31
10. Conditions Subsequent to Obligations of
the Acquiror.................................................31
11. Closing.........................................................32
12. General.........................................................34
Signature Pages...............................................................36
Schedules.....................................................................37
MAG1O4.697.MO2.031094.1
32
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization is entered into as of this 15th day of
March, 1994, by and between
MAGIC FINGERS, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
("Acquiror")
FLASH ENTERTAINMENT, INC.
▇▇▇▇▇▇▇ Bank plaza
▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
("FEI")
ENTERTAINMENT FILM PARTNERS, INC.
c/o Flash Entertainment, Inc.
▇▇▇▇▇▇▇ Bank Plaza
▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
("EFP")
NO BULL DISTRIBUTION, INC.
c/o Flash Entertainment, Inc.
▇▇▇▇▇▇▇ Bank Plaza
▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
("NBD")
ENTERTAINMENT FILM PARTNERS 1, LTD.
c/o Entertainment Film Partners, Inc.
▇▇▇▇▇▇▇ Bank Plaza
▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
("EFP I")
ENTERTAINMENT FILM PARTNERS II, LTD.
c/o Entertainment Film Partners, Inc.
▇▇▇▇▇▇▇ Bank Plaza
▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
("EFP II")
(EFP I and EFP II may hereinafter
be referred to collectively as the
"Limited Partnerships")
33
MAG104.697MO2.031094.1
and
G. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
c/o Flash Entertainment, Inc.
▇▇▇▇▇▇▇ Bank Plaza
▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(collectively the "Shareholders")
FEI, EFP, NBD, EFP 1, and EFP 11 are hereinafter sometimes referred to herein
collectively as the Acquirees.
RECITALS
Whereas,
A. Pursuant to the terms of a certain letter of intent, amended as of July
26, 1993, between and among Acquiror and the Shareholders (the "Letter of
Intent"), on or about November 9, 1993, Acquiror issued and transferred an
aggregate of twenty million (20,000,000) shares of its common stock, $.0001 par
value (the "Acquisition Shares") to FEI, for its own account and as nominee for
the accounts of various other persons, in consideration of the transactions
authorized under this Agreement and Plan of Reorganization.
B. Pursuant to the terms of the Letter of Intent, on or about November 9,
1993, the Shareholders transferred to Acquiror two hundred thirty-four (234)
shares, comprising 85% of the issued and outstanding capital stock, of FEI;
C. The Acquirees, directly and through one or more of the constituent
entities thereof, are engaged in the motion picture production and distribution
business;
D. Acquiror, directly and through one or more subsidiaries, intends to
engage in the motion picture production and distribution business;
E. The Shareholders are the executive officers and the key employees of one
or more of the Acquirees and are professionally expert in the motion picture
production and distribution business;
F. FEI is the sole and exclusive holder of all of the issued and
outstanding capital stock of EFP;
G. EFP is the general partner of EFP I and EFP II (collectively the
"Limited Partnerships");
H. Except for such rights as have been assigned to NBD or such interests as
are reserved to certain "Profit Holders", as set forth on the applicable
Schedules hereto, FEI owns all right, title, and interest to the feature film
entitled No More Dirty Deals and all of the distribution rights to the feature
films, Shakma and Shoot (formerly Kings ▇▇▇▇▇▇);
MAGIO4.697.MO2.031094.1 4
34
I. Except for such rights as have been assigned to FEI or such interests as
are reserved to third parties, as set forth on the applicable Schedules hereto,
EFP I owns all right, title, and interest to the feature film entitled, Shakma;
J. Except for such rights as have been assigned to FEI or such interests as
are reserved to third parties, as set forth on the applicable Schedules hereto,
EFP 11 owns all right, title, and interest to the feature film entitled Shakma
(formerly Kings ▇▇▇▇▇▇);
K. The holders of not less than two thirds of the Limited Partnership
interests in EFP I (the "EFP I Limited Partners"), have voted, in person or by
proxy, in favor of transferring to the Acquiror, all of the right, title, and
interest in the feature film Shakma owned by EFP I in exchange for an aggregate
of one million, two hundred thirteen thousand (1,213,000) of the Acquisition
Shares (the "EFP I Partners Shares") to be distributed to the EFP I Limited
Partners, pro rata, in proportion to their respective ownership interests in EFP
1, as soon as such distribution can be effected in accordance with the
requirements of all applicable state and federal securities laws and
regulations;
L. The holders of the majority of the Limited Partnership interests in EFP
II (the "EFP II Limited Partners"), have voted, in person or by proxy, in favor
of transferring to the Acquiror, all of the right, title, and interest in the
feature film Shoot owned by EFP II in exchange for an aggregate of eight hundred
forty-three thousand (843,000) of the Acquisition Shares (the "EFP II Partners
Shares") to be distributed to the EFP I Limited Partners, pro rata, in
proportion to their respective ownership interests in EFP II, to be distributed
by FEI to the Limited Partners as soon as such distribution can be effected in
accordance with the requirements of all applicable state and federal securities
laws and regulations;
M. The Shareholders own all of the issued and outstanding capital stock of
NBD;
N. NBD owns all of the distribution rights to the feature film No More
Dirty Deals, FEI owns all of the distribution rights to the feature films Shakma
and Shoot;
0. The Shareholders have developed a business plan respecting the motion
picture production and distribution business to be conducted by Acquiror (the
"Business Plan") and G. ▇▇▇▇▇ ▇▇▇▇▇▇▇, in his capacity as a duly appointed
officer of Acquiror, has completed a private placement of the common stock of
the Acquiror with the sale of three million, nine hundred fifty thousand
(3,950,000) shares of Acquiror's common stock, yielding aggregate proceeds of
approximately $237,000 (the "Private Placement"), which proceeds have been, and
will be, used to implement the said Business Plan; and
P. The parties hereto deem it to be in the best interests of each of them
that Acquiror receive in consideration for the Acquisition Shares (i) all of the
issued and outstanding capital stock of FEI, (ii) all of the issued and
outstanding capital stock of NBD, and (iii) all of the right, title and interest
in the Films and that Acquiror employ the key employees of the Acquirees
implement the Business Plan and generally succeed to the businesses of the
Acquirees, all pursuant to such terms, provisions, and conditions as the parties
hereto have agreed.
Now, Therefore, in consideration of the premises and of the mutual promises
and covenants hereinafter set forth, the parties agree as follows:
MAGIO4.697.MO2.031094.1 5
35
AGREEMENT
Plan of Reorganization
The Plan of Reorganization agreed to and authorized hereunder encompasses
the following:
Prior to or at the "Closing", as that term is hereinafter defined, the
Shareholders and the various Acquirees have sold, assigned and transferred, or
shall sell, assign, and transfer to the Acquiror, directly or indirectly, the
following stock and assets:
Stock or Asset Transferred Identity of Transferor and Mode of Transfer
-------------------------- ------------------------------------------
All Of the issued and outstanding 85% transferred directly to Acquiror from
capital stock of FEI Shareholders; the remaining 15 % to be
acquired by the said Shareholders, for
the account of Acquiror, from two additional
persons (the "Third Party Shareholders) who
are not parties to this Agreement and Plan
of Reorganization.
All of the issued and outstanding To be transferred directly to Acquiror by FEI
stock of EFP
All of the issued and outstanding To be transferred directly to Acquiror by the
capital stock of NBD Shareholders.
Such right, title, and interest To be transferred indirectly to Acquiror
in the feature film No More Dirty through Acquiror's acquisition of all of the
Deals, as are held by FEI issued and outstanding capital stock of FEI
from the Shareholders and the Third Party
Shareholders.
All of the right, title, and To be assigned directly to Acquiror by EFP I.
interest in the feature film
Shakma, as are held by EFP I
All of the right, title, and To be assigned directly to Acquiror by EFP II
interest in the feature film
Shoot, as are held by EFP II
All of the distribution rights To be transferred indirectly to Acquiror
to the feature films, No More through its acquisition of all of the issued
Dirty Deals, Shakma, and Shoot and outstanding capital stock of NBD from the
as are held by NBD Shareholders.
6
36
MAG1O4.697MO2.,931094.1
1.2 Transfers to and Among the Shareholders, the Various Acquirees and
Certain Third Parties
1.2.1 On or about November 9, 1993, Acquiror issued and transferred an
aggregate of 20,000,000 shares of its common stock, constituting the Acquisition
Shares, to FEI for its own account and as nominee and custodian for certain
other persons including but not limited to certain of the parties hereto, such
Acquisition Shares to be held or distributed by FEI as the Shareholders and the
Acquirees have agreed and as set forth herein.
1.2.2 At the Closing, or as soon as practicable thereafter, in
consideration of the transfer to Acquiror of all of the issued and outstanding
common stock of FEI (and concomitantly therewith the transfer of all of FEI's
right, title and interest in the feature film No More Dirty Deals, the music
video No Rules, and, the music video No More Dirty Deals (of which, FEI owns
fifty percent (50%)), and FEI's distribution rights to the feature films Shakma
and Shoot and the transfer from FEI to the Acquiror of all of the issued and
outstanding capital stock of EFP. FEI will sell, transfer, and assign an
aggregate of two million, seventy-two thousand (2,072,000) of the Acquisition
Shares to the Shareholders, the Third Party Shareholders, and the "Profit
Holders", as that term is hereinafter defined, in such amounts as are set forth
on Schedule 1.2.2 hereto.
1.2.3 At the Closing, or as soon as practicable thereafter, in
consideration of EFP I's assigning to Acquiror of all of its right, title and
interest in the feature film Shakma, FEI will sell, transfer, and assign to EFP,
in its capacity as the general partner of EFP 1, for its own account, and as
custodian for the EFP I Limited Partners, an aggregate of one million, two
hundred thirteen thousand (1,213,000) of the Acquisition Shares (the "EFP I
Partners Shares").
1.2.4 At the Closing, or as soon as practicable thereafter, in
consideration of EFP II's assigning to Acquiror of all of its right, title and
interest in the feature film Shoot, FEI will transfer to EFP, in its capacity as
the general partner of EFP II, for its own account, and as custodian for the EFP
II Limited Partners, an aggregate of eight hundred forty-three thousand
(843,000) of the Acquisition Shares (the "EFP II Partners Shares").
1.2.5 At the Closing, or as soon as practicable thereafter, in
consideration of their transfer of all of the issued and outstanding capital
stock of NBD (and concomitantly therewith the transfer of the distribution
rights to the feature film No More Dirty Deals held by NBD), FEI will transfer
to the Shareholders an aggregate of one million, twenty-two thousand, sixty-four
(1,022,064) of the Acquisition Shares, in such amounts as are set forth on
Schedule 1.2.5 hereto.
1.3 Change of Management and Implementation of the Business Plan
----------------------------------------------------------------------
1.3.1 Prior to, or at the Closing, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ Rossband,
constituting the board of directors of Acquiror prior to November 9, 1993: (i)
shall have authorized, or shall authorize, an increase in the number of
directors of Acquiror, (ii) shall have tendered, or shall tender, their
resignations as directors of Acquiror and (iii) shall have appointed, or shall
appoint, ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ VenEers, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to Acquiror's
board of directors to fill the vacancies created by such increase and
resignations.
1.3.2 Prior to or at the Closing, all persons who were officers of Acquiror
prior to November 9, 1993 shall have tendered, or shall tender, their
resignations as officers of Acquiror.
MAGIO4.697.MD2.031094.1
7
37
1.3.3 Prior to or at the Closing, the board of directors of Acquiror shall
have appointed. or shall appoint, the following persons to fill the following
positions:
G. ▇▇▇▇▇ ▇▇▇▇▇▇▇ President
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Vice President
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Vice President
▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ Secretary & Treasurer
1.3.4 Prior to the Closing, in his capacity as a duly appointed officer of
Acquiror, G. ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have completed the Private Placement of the
common stock of the Acquiror yielding proceeds of not less than $200,000.
1.3.5 Prior to the Closing, the Shareholders shall have developed the
Business Plan for the feature film production and distribution business to be
conducted by Acquiror.
1.3.6 Prior to or after the Closing, Acquiror, under the management of the
Shareholders, shall implement the Business Plan and shall use the proceeds of
the Private Placement to finance the initial costs thereof.
1.4 Registration and Distribution of Partners Shares
------------------------------------------------
As soon as practicable following the Closing, Acquiror shall take all steps
necessary to file with the Securities and Exchange Commission a registration
statement on Form SB-1 or such other Form as shall be available and shall
include therein the EFP I Partners Shares and EFP II Partners Shares, which
shares shall be distributed to the respective Limited Partners upon such
registration statement being declared effective, to such persons and in such
amounts as are set forth on Schedule 1.4 hereto.
2. Purchase and Payment
2.1 Purchase and Sale of FEI Stock
------------------------------
2.1.1 Acquiror hereby acknowledges and confirms that it has purchased from
the Shareholders and the Shareholders hereby acknowledge and confirm that they
have sold, assigned, transferred, and delivered to Acquiror two hundred
thirty-four (234) shares, constituting 85% of the issued and outstanding stock
of FEI, as described in Schedule 2.1 hereto.
2.1.2 Acquiror hereby agrees to purchase from the Third Party Shareholders
and the Shareholders hereby agree to use their best efforts to obtain the
agreement of the Third Party Shareholders to sell, assign, transfer, and deliver
to Acquiror thirty-nine (39) shares, constituting 15 % of the issued and
outstanding stock of FEI, as described in Schedule 2.1 hereto.
2.2 Purchase and Sale of NBD Stock
------------------------------
Acquiror hereby agrees to purchase from the Shareholders and the
Shareholders hereby agree to sell, assign, transfer. and deliver to Acquiror two
hundred thirty-four (234) shares, constituting all of the issued and outstanding
stock of NBD, as described in Schedule 2.2 hereto.
MAGID4.697MO2.03IL?94.1 8
38
2.3 Sale, Assignment and Transfer of Copyright and Rights
2.3.1 EFP I hereby sells, transfers, and assigns to Acquiror all of its
right, title and interest in the feature film Shakma and in the copyright
thereon, together with the right to secure renewals, reissues, and extensions of
such copyright, until the full end of the term for which such copyright or any
renewal or extension thereof is or may be granted.
2.3.2 EFP II hereby sells, transfers, and assigns to Acquiror all of its
right, title and interest in the feature film, Shoot and in the copyright
thereon, together with the right to secure renewals, reissues, and extensions of
such copyright, until the full end of the term for which such copyright or any
renewal or extension thereof is or may be granted.
2.4 Purchase Price and Payment
--------------------------
2.4.1 The parties hereto agree that the purchase price of the FEI stock,
the EFP stock, the NBD stock, the covenants of the Shareholders set forth in
Section 5 hereof, and the copyrights and rights sold, assigned, and transferred
to Acquiror hereunder is the 20,000,000 shares of the common stock of Acquiror
constituting the Acquisition Shares (the "Purchase Price").
2.4.2 The Shareholders and the Acquirees hereby acknowledge and confirm
that Acquiror fulfilled its obligation to pay the Purchase Price by issuing and
transferring the Acquisition Shares to FEI on or about November 9, 1993 pursuant
to the terms of the Letter of Intent.
3. Representations and Warranties of the Shareholders and the Acquirees
The Shareholders and the Acquirees hereby represent and warrant, jointly
and severally, that as of the date hereof and as of the Closing Date, as that
term is hereinafter defined, the representations and warranties set forth below
are and will be true and correct.
3.1 Corporate Status
----------------
3.1.1 FEI is (i) duly organized corporation, validly existing and in good
standing under the laws of the State of Florida; (ii) has full power to own all
of its properties and carry on its business, if any; and (iii) is qualified to
do business as a foreign entity in each of the jurisdictions in which it
operates, if any, and the character of the properties owned by FEI or the nature
of the business transacted by FEI, if any, does not make qualification necessary
in any other jurisdiction or jurisdictions.
3.1.2 EFP is (i) duly organized corporation, validly existing and in good
standing under the laws of the State of Florida; (ii) has full power to own all
of its properties and carry on its business, if any; and (iii) is qualified to
do business as a foreign entity in each of the jurisdictions in which it
operates, if any, and the character of the properties owned by EFP or the nature
of the business transacted by EFP, if any, does not make qualification necessary
in any other jurisdiction or jurisdictions.
3.1.3 NBD is (i) duly organized corporation, validly existing and in good
standing under the laws of the State of Florida; (ii) has full power to own all
of its properties and carry on its business, if any; and (iii) is qualified to
do business as a foreign entity in each of the jurisdictions in which it
operates, if any, and the character of the properties owned by NBD or the nature
of the business
MA G 1 04.69Z M02.031094. 1
9
39
transacted by NBD, if any, does not make qualification necessary in any other
jurisdiction or jurisdictions.
3.2 Limited Partnership Status
--------------------------
3.2.1 EFP I is (i) duly organized limited partnership, validly existing and
in good standing under the laws of the State of Florida; (ii) has full power to
own all of its properties and carry on its business, if any; and (iii) is
qualified to do business as a foreign entity in each of the jurisdictions in
which it operates, if any, and the character of the properties owned by EFP I or
the nature of the business transacted by EFP I, if any, does not make
qualification necessary in any other jurisdiction or jurisdictions.
3.2.2 EFP II is (i) duly organized limited partnership, validly existing
and in good standing under the laws of the State of Florida; (ii) has full power
to own all of its properties and carry on its business, if any; and (iii) is
qualified to do business as a foreign entity in each of the jurisdictions in
which it operates, if any, and the character of the properties owned by EFP II
or the nature of the business transacted by EFP II, if any, does not make
qualification necessary in any other jurisdiction or jurisdictions.
3.3 Capital Structure of the Corporations and the Limited Partnerships
-------------------------------------------------------------------
3.3.1 FEI (a) is authorized by its charter and applicable law to issue
capital stock of the types, classes, series and having par values as set forth
in Schedule 3.3.1 hereto; (b) has no issued or outstanding shares of its capital
stock whatever, except as specifically indicated in Schedule 3.3.1 hereto, all
of which such shares are fully paid and nonassessable; (c) does not have
authorized, issued or outstanding any other shares of stock or any subscription,
option, warrant, conversion or other rights to the issuance or receipt of shares
of its capital stock except as set forth in Schedule 3.3.1 hereto; (d) has all
voting rights vested exclusively in the presently issued and outstanding capital
stock and; (e) has outstanding no evidences of indebtedness except as
specifically disclosed in Schedule 3.3.1.
3.3.2 EFP (a) is authorized by its charter and applicable law to issue
capital stock of the types, classes, series and haven par values as set forth in
Schedule 3.3.2 hereto; (b) has no issued or outstanding shares of its capital
stock whatever, except as specifically indicated in Schedule 3.3.2 hereto, all
of which such shares are fully paid and nonassessable; (c) does not have
authorized, issued or outstanding any other shares of stock or any subscription,
option, warrant, conversion or other rights to the issuance or receipt of shares
of its capital stock except as set forth in Schedule 3.3.2 hereto; (d) has all
voting rights vested exclusively in the presently issued and outstanding capital
stock and; (e) has outstanding no evidences of indebtedness except as
specifically disclosed in Schedule 3.3.2.
3.3.3 NBD (a) is authorized by its charter and applicable law to issue
capital stock of the types, classes, series and having par values as set forth
in Schedule 3.3.3 hereto; (b) has no issued or outstanding shares of its capital
stock whatever, except as specifically indicated in Schedule 3.3.3 hereto, all
of which such shares are fully paid and nonassessable; (c) does not have
authorized, issued or outstanding any other shares of stock or any subscription,
option, warrant, conversion or other rights to the issuance or receipt of shares
of its capital stock except as set forth in Schedule 3.3.3 hereto; (d) has all
voting rights vested exclusively in the presently issued and outstanding capital
stock and; (e) has outstanding no evidences of indebtedness except as
specifically disclosed in Schedule 3.3.3.
MAGID4.697MO2.031094.1 10
40
3.3.4 EFP I (a) is authorized by its Agreement of Limited Partnership and
applicable law to sell general and limited partnership interests as set forth in
Schedule 3.3.4 hereto; (b) has no issued or outstanding general or limited
partnership interests whatever, except as specifically indicated in Schedule
3.3.4 hereto, all of which partnership interests are duly paid and
nonassessable; (c) does not have authorized, issued or outstanding any, other
general or limited partnership interests or any subscription, option, warrant,
conversion or other rights to purchase or acquire any general or limited
partnership interests except as set forth in Schedule 3.3.4 hereto; (d) has all
voting rights vested exclusively in the presently issued and outstanding general
and limited partnership interests and; (e) has outstanding no evidences of
indebtedness except as specifically disclosed in Schedule 3.3.4.
3.3.5 EFP II (a) is authorized by its Agreement of Limited Partnership and
applicable law to sell general and limited partnership interests as set forth in
Schedule 3.3.5 hereto; (b) has no issued or outstanding general or limited
partnership interests whatever, except as specifically indicated in Schedule
3.3.5 hereto, all of which partnership interests are fully paid and
nonassessable; (c) does not have authorized, issued or outstanding any other
general or limited partnership interests or any subscription, option, warrant,
conversion or other rights to purchase or acquire any general or limited
partnership interests except as set forth in Schedule 3.3.5 hereto; (d) has all
voting rights vested exclusively in the presently issued and outstanding general
and limited partnership interests and; (e) has outstanding no evidences of
indebtedness except as specifically disclosed in Schedule 3.3.5.
3.4 Ownership of the Stock of the Corporations and Rights to Sell
-------------------------------------------------------------
3.4.1 Prior to the transfer on or about November 9, 1993 by the
Shareholders to Acquiror of two hundred thirty-four (234) shares, constituting
85% of the issued and outstanding capital stock of FEI, all of the issued and
outstanding shares of capital stock of FEI were owned 85% by the Shareholders
and 15 % by the Third Party Shareholders, such persons and the number of shares
owned by each, beneficially and of record being set forth in Schedule 2.1
hereto; the sole, absolute, record and beneficial owners and holders of all of
the issued and outstanding shares of capital stock of FEI were or are such
persons; and each such person held or holds such FEI stock free and clear of all
liens, claims, debts, encumbrances and assessments, and any and all restrictions
as to sale, assignment or transferability thereof, and as at the date, on or
about November 9, 1993, when they sold, assigned, and transferred their shares
of FEI stock to Acquiror, the Shareholders had, and to the best of the
Shareholders knowledge, as at the date hereof, the Third Party Shareholders
have, full right, power and authority to sell, transfer and deliver all of the
said shares of FEI stock and the certificates therefor, sold hereunder, to
Acquiror in accordance with the terms of this Agreement, and otherwise to
consummate and close the transaction provided for in this Agreement in the
manner and upon the terms herein specified.
3.4.2 All of the issued and outstanding shares of capital stock of EFP are
owned by FEI, the number of shares owned by FEI, beneficially and of record
being set forth in Schedule 3.4.2 hereto; the sole, absolute, record and
beneficial owner and holder of all of the issued and outstanding shares of
capital stock of EFP is FEI and FEI holds such EFP stock free and clear of all
liens, claims, debts, encumbrances and assessments, and any and all restrictions
as to sale, assignment or transferability thereof, and FEI has full right,
power and authority to sell, transfer and deliver all of the said shares of EFP
stock and the certificates therefor, sold hereunder, to Acquiror in accordance
with the terms of this Agreement, and otherwise to consummate and close the
transaction provided for in this Agreement in the manner and upon the terms
herein specified.
MA 6 1 04.697 M02.031094. 11
41
3.4.3 All of the issued and outstanding shares of capital stock of NBD are
owned by the Shareholders, such persons and the number of shares owned by each,
beneficially and of record being set forth in Schedule 3.4.3 hereto; the sole,
absolute, record and beneficial owners and holders of all the issued and
outstanding shares of Capital stock of NBD are such persons; and each such
person held or holds such NBD stock free and clear of all liens, claims, debts,
encumbrances and assessments, and any and all restrictions as to sale,
assignment or transferability thereof; and such persons have full right power
and authority to sell, transfer and deliver all of the said shares of NBD stock
and the certificates therefor, sold hereunder, to Acquiror in accordance with
the terms of this Agreement, and otherwise to consummate and close the
transaction provided for in this Agreement in the manner and upon the terms
herein specified.
3.5 Ownership of Partnership Interests and Rights to Transfer Assets
-----------------------------------------------------------------
3.5.1 EFP, as the general partner of EFP I, owns 1% of the total issued and
outstanding partnership interests in EFP I. The remaining 99% of EFP I is owned
by the EFP I Limited Partners, such persons and the percentage ownership
interest in EFP I owned by each, beneficially and of record being set forth in
Schedule 3.5.1 hereto; and such persons are the sole, absolute, record and
beneficial owners and holders of 100% of the partnership interests in EFP I; and
each such person holds such partnership interests free and clear of all liens,
claim, debts, encumbrances and assessments, and any and all restrictions as to
sale, assignment or transferability thereof except as set forth in the EFP I
Limited Partnership Agreement; and such persons have full right, power and
authority under the said Limited Partnership Agreement to vote in favor of
selling, transferring, and assigning all of the right, title, and interest in
the feature film Shakma, sold, transferred, and assigned hereunder, to Acquiror
in accordance with the terms of this Agreement, and otherwise to consummate and
close the transaction provided for in this Agreement in the manner and upon the
terms herein specified.
3.5.2 EFP, as the general partner of EFP II, owns 1% of the total issued
and outstanding partnership interests in EFP II. The remaining 99% of EFP II is
owned by the EFP II Limited Partners, such persons and the percentage ownership
interest in EFP H owned by each, beneficially and of record being set forth in
Schedule 3.5.2 hereto; and such persons are the sole, absolute, record and
beneficial owners and holders of 100% of the partnership interests in EFP II;
and each such person holds such partnership interests free and clear of all
liens, claim, debts, encumbrances and assessments, and any and all restrictions
as to sale, assignment or transferability thereof except as set forth in the EFP
II Limited Partnership Agreement; and such persons have full right, power and
authority under the said Limited Partnership Agreement to vote in favor of
selling, transferring, and assigning all of the right, title, and interest in
the feature film Shoot, sold, transferred, and assigned hereunder, to Acquiror
in accordance with the terms of this Agreement, and otherwise to consummate and
close the transaction provided for in this Agreement in the manner and upon the
terms herein specified.
3.6 Ownership of Copyright
----------------------
3.6.1(a) The name (s) of the author(s) of the screenplay upon which the
feature film No More Dirty Deals is based are ▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
(b) The feature film No More Dirty Deals was produced in 1993 in
Florida, by Flash Entertainment, Inc., and was registered for
copyright in the office of the United States Register of
Copyrights on June 11, 1993, copyright number PA-626-790.
MAGID4.697.MO2.031094.1 12
42
(c) No other copyright has been effected nor has any other
registration relating to copyright protection respecting the
feature film No More Dirty Deals been made except as above
specified.
(d) The copyright of No More Dirty Deals is owned by FEI, and it has
made no agreement with respect to No More Dirty Deals which is in
conflict with the transfer of the ownership of FEI made
hereunder.
3.6.2(a) The name(s) of the author(s) of the screenplay upon which the
feature film Shakma is based are ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇.
(b) The feature film Shakma was produced in 1989 in Florida, by Quest
Studios, and was registered for copyright in the office of the
United States Register of Copyrights on September 22, 1989,
copyright number PA-1309-332.
(c) No other copyright has been effected nor has any other
registration relating to copyright protection respecting the
feature film Shakma been made except as above specified.
(d) The copyright of Shakma is owned by EFP I, and it has made no
agreement with respect to Shakma which is in conflict with the
assignment of such copyright to Acquiror made hereunder.
3.6.3(a) The name(s) of the author(s) of the screenplay upon which the
feature film Shoot is based are ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇.
(b) The feature film Shoot was produced in 1991 in Florida, by Quest
Studios, and was registered for copyright in the office of the
United States Register of Copyrights on August 29, 1991, under
its original title, Kings ▇▇▇▇▇▇, copyright number PA-1544-578.
(c) No other copyright has been effected nor has any other
registration relating to copyright protection respecting the
feature film Shoot been made except as above specified.
(d) The copyright of Shoot is owned by EFP II, and it has made no
agreement with respect to Shoot which is in conflict with the
assignment of such copyright to Acquiror made hereunder.
3.6.4(a) The name(s) of the author(s) of the screenplay upon which the
music video No Rules is based are G. ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇.
(b) The music video No Rules was produced in 1991 in Florida, by
Flash Entertainment, Inc., and was registered for copyright in
the office of the United States Register of Copyrights on May 23,
1991, copyright numbers PA-529-027 and PA-529-028.
MA G 104.69Z U02.031094. 1 13
43
(c) No other copyright has been effected nor has any other
registration relating to copyright protection respecting the
music video No Rules been made except as above specified.
(d) The copyright of No Rules is owned by FEI, and it has made no
agreement with respect to No Rules which is in conflict with the
transfer of the ownership of FEI made hereunder.
3.6.5(a) The name (s) of the author(s) of the screenplay upon which the
music video No More Dirty Deals is based are ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and G. ▇▇▇▇▇ ▇▇▇▇▇▇▇.
(b) The music video No More Dirty Deals was produced in 1993 in
Florida, by Flash Entertainment, Inc., and was registered for
copyright in the office of the United States Register of
Copyrights on June 11, 1993 copyright number PA-626-790.
(c) No other copyright has been effected nor has any other
registration relating to copyright protection respecting the
music video No More Dirty Deals been made except as above
specified.
(d) FEI owns a 50% interest in the copyright of the music video No
More Dirty Deals and it has made no agreement with respect to its
ownership interest in the music video No More Dirty Deals which
is in conflict with the transfer of the ownership of FEI made
hereunder.
3.7 Ownership of Film Rights
-----------------------
3.7.1 FEI is the sole and exclusive owner of a rights, except such
distribution rights as have been assigned to and are held by NBD, as set forth
in Paragraph 3.9.1 hereof, for the economic exploitation, public exhibition,
broadcast, and video rental of the feature film No More Dirty Deals (the "No
More Dirty Deals Film Rights"), and such rights to a percentage of the "profits"
for such film as are held by certain persons, as set forth on Schedule 3.7.1
hereto (the "Profit Holders"). FEI has good and marketable title to the No More
Dirty Deals Film Rights, which good and marketable title is free and clear of
all pledges, liens, credit agreements, title retention agreements, security
agreements, taxes, claims, debts and other obligations and encumbrances and
FEI's ownership and possession of the No More Dirty Deal Film Rights have been
peaceable and undisturbed and the title thereto has never been disputed or
questioned to the knowledge of the Shareholders and the Acquirees, nor do the
Shareholders and the Acquirees know of any facts by reason of which the
possession or title thereof by FEI might be disturbed or questioned or by reason
of which any claim to the No More Dirty Deals Film Rights might arise or be set
up adverse to FEI. The No More Dirty Deals Film Rights include but are not
limited to the following:
(a) The exclusive right to adapt, sell, lease, rent, exhibit,
perform, and generally deal with the feature film No More Dirty
Deals or any part or portion thereof, and of the characters and
characterizations contained therein, with or without sound
accompaniment and with or without the interpolation of musical
numbers therein and for such purposes to adapt one or more
MAGIO4.697.MD2.031094.1 14
44
versions of the feature film No More Dirt Deals, to add to and
subtract from the feature film No More Dirty Deals, change the
sequence thereof, use a portion or portions of the feature film
No More Dirty Deals, change the title of the feature film No More
Dirty Deals, in any and all languages.
(b) The exclusive right mechanically to produce, reproduce, and
license the reproduction of spoken words taken from or based upon
the text or theme of the feature film ) No More Dirty Deals on
records, flim, or other devices designed or used for the purpose
of producing and reproducing sound in synchronism with,
accompaniment of, or supplementary to, the feature film No More
Dirty Deals, using for that purpose all or a part of the text,
theme, and dialogue contained in the feature film No More Dirty
Deals.
(c) The exclusive right to broadcast the feature film No More Dirty
Deals by means of the method generally known and described as
television or any process analogous thereto including but not
limited to broadcast over public airwaves, private cable and
Pay-Per-View systems.
(d) The exclusive right to make, produce, adapt, sell, lease and
rent, and license the feature film No More Dirty Deals for
exploitation in the home video rental field.
3.7.2 EFP I is the sole and exclusive owner of all rights, except such
distribution rights as have been assigned to and are held by FEI, as set forth
in Paragraph 3.9.2 hereof, for the economic exploitation, public exhibition,
broadcast, and video rental of the feature film Shakma (the "Shakma Film
Rights"). EFP I has good and marketable title to the Shakma Film Rights, which
good and marketable title is free and clear of all pledges, liens, credit
agreements, title retention agreements, security agreements, taxes, claims,
debts and other obligations and encumbrances and EFP I's ownership and
possession of the Shakma Film Rights have been peaceable and undisturbed and the
title thereto has never been disputed or questioned to the knowledge of the
Shareholders and the Acquirees, nor do the Shareholders and the Acquirees know
of any facts by reason of which the possession or title thereof by EFP I might
be disturbed or questioned or by reason of which any claim to the Shakma Film
Rights might arise or be set up adverse to EFP I. The Shakma Film Rights include
but are not limited to the following:
(a) The exclusive right to adapt, sell, lease, rent, exhibit,
perform, and generally deal with the feature film Shakma or any
part or portion thereof, and of the characters and
characterizations contained therein, with or without sound
accompaniment and with or without the interpolation of musical
numbers therein, and for such purposes to adapt one or more
versions of the feature film Shakma, to add to and subtract from
the feature film Shak7m, change the sequence thereof, use a
portion or portions of the feature film Shakma, change the title
of the feature film Shakma=, in any and all languages.
MA6104.697.MO2.031094.1 15
45
(b) The exclusive right mechanically to produce, reproduce, and
license the reproduction of spoken words taken from or based upon
the text or theme of the feature film Shakma on records, films,
or other devices designed or used for the purpose of producing
and reproducing sound in synchronism with, accompaniment of, or
supplementary to, the feature film Shakma, using for that purpose
all or a part of the text, theme, and dialogue contained in the
feature film Shakma.
(c) The exclusive right to broadcast the feature film Shakma by means
of the method generally known and described as television or any
process analogous thereto including but not limited to broadcast
over public airwaves, private cable and Pay-Per-View systems.
(d) The exclusive right to make, produce, adapt, sell, lease and
rent, and license the feature film Shakma for exploitation in the
home video rental field.
3.7.3 EFP II is the sole and exclusive owner of all rights, except such
distribution rights as have been assigned to and are held by FEI, as set forth
in Paragraph 3.9.3 hereof, for the economic exploitation, public exhibition,
broadcast, and video rental of the feature film Shoot (formerly Kings ▇▇▇▇▇▇)
(the "Shoot Film Rights"). EFP 11 has good and marketable title to the Shoot
Film Rights, which good and marketable title is free and clear of all pledges,
liens, credit agreements, title retention agreements, security agreements,
taxes, claims, debts and other obligations and encumbrances and EFP II's
ownership and possession of the Shoot Film Rights have been peaceable and
undisturbed and the title thereto has never been disputed or questioned to the
knowledge of the Shareholders and the Acquirees, nor do the Shareholders and the
Acquirees know of any facts by reason of which the possession or title thereof
by EFP II might be disturbed or questioned or by reason of which any claim to
the Shoot Film Rights might arise or be set up adverse to EFP 11. The Shoot Film
Rights include but are not limited to the following:
(a) The exclusive right to adapt, sell, lease, rent, exhibit,
perform, and generally deal with the feature film Shoot or any
part or portion thereof, and of the characters and
characterizations contained therein, with or without sound
accompaniment and with or without the interpolation of musical
numbers therein, and for such purposes to adapt one or more
versions of the feature film Shoot, to add to and subtract from
the feature film Shoot, change the sequence thereof, use a
portion or portions of the feature film Shoot, change the title
of the feature film Shoot, in any and all languages.
(b) The exclusive right mechanically to produce, reproduce, and
license the reproduction of spoken words taken from or based upon
the text or theme of the feature film Shoot on records, films, or
other devices designed or used for the purpose of producing and
reproducing sound in synchronism with, accompaniment of, or
supplementary to, the feature film Shoot, using for that purpose
all or a part of the text, theme, and dialogue contained in the
feature film Shoot.
MA6104.69ZM92.031094.1 16
46
(c) The exclusive right to broadcast the feature film Shoot by means
of the method generally known and described as television or any
process analogous thereto including but not limited to broadcast
over public airwaves, private cable and Pay-Per-View systems.
(d) The exclusive right to make, produce, adapt, sell, lease and
rent, and license the feature film Shoot for exploitation in the
home video rental field.
3.7.4 FEI is the sole and exclusive owner of all rights for the economic
exploitation, public exhibition, broadcast, and video rental of the music video
No Rules (the "No Rules Film Rights"). FEI has good and marketable tide to the
No Rules Film Rights, which good and marketable title is free and clear of all
pledges, liens, credit agreements, title retention agreements, security
agreements, taxes, claims, debts and other obligations and encumbrances and
FEI's ownership and possession of the No Rules Film Rights have been peaceable
and undisturbed and the title thereto has never been disputed or questioned to
the knowledge of the Shareholders and the Acquirees, nor do the Shareholders or
the Acquirees know of any facts by reason of which the possession or title
thereof by FEI might be disturbed or questioned or by reason of which any claim
to the No Rules Film Rights might arise or be set up adverse to FEI. The No
Rules Film Rights include but are not limited to the following:
(a) The exclusive right to adapt, sell, lease, rent, exhibit,
perform, and generally deal with the music video No Rules or any
part or portion thereof, and of the characters and
characterizations contained therein, with or without sound
accompaniment and with or without the interpolation of musical
numbers therein, and for such purposes to adapt one or more
versions of the music video No Rules, to add and to subtract from
the music video No Rules, change the sequence thereof, use a
portion or portions of the music video No Rules, change the title
of the music video No Rules, in any and all languages.
(b) The exclusive right mechanically to produce, reproduce, and
license the reproduction of spoken words taken from or based upon
the text or theme of the music video No Rules on records, films,
or other devices designed or used for the purpose of producing
and reproducing sound in synchronism with, accompaniment of, or
supplementary to, the music video No Rules, using for that
purpose all or a part of the text, theme, and dialogue contained
in the music video No Rules.
(c) The exclusive right to broadcast the music video No Rules by
means of the method generally known and described as television
or any process analogous thereto including but not limited to
broadcast over public airwaves, private cable and Pay-Per-View
systems.
(d) The exclusive right to make produce, adapt, sell, lease and rent,
and license the music video No Rules for exploitation in the home
video rental field.
MAGIO4.597.MO2.031094.1 17
47
3.7.5 FEI owns a fifty percent interest in all rights for the economic
exploitation, public exhibition, broadcast, and video rental of the music video
No More Dirty Deals (the "NADD Music Video Film Rights"), and such rights to a
percentage of the "profits" for such film as are held by certain persons, as set
forth on Schedule 3.7.5 hereto (the "Profit Holders"). FEI has good and
marketable title to the NADD Music Video Film Rights, which good and marketable
title is free and clear of all pledges, liens, credit agreements, tide retention
agreements, security agreements, taxes, claims, debts and other obligations and
encumbrances and FEI's ownership and possession of its 50% interest in the NMDD
Music Video Film Rights have been peaceable and undisturbed and the title
thereto has never been disputed or questioned to the knowledge of the
Shareholders and the Acquirees, nor do the Shareholders or the Acquirees know of
any facts by reason of which the possession or title thereof by FEI might be
disturbed or questioned or by reason of which any claim to FEI's interest in the
NMDD Music Video Film Rights might arise or be set up adverse to FEI. The NMDD
Music Video Film Rights include but are not limited to the following:
(a) The exclusive right to adapt, sell, lease, rent, exhibit,
perform, and generally deal with the music video No More Dirty
Deals or any part or portion thereof, and of the characters and
characterizations contained therein, with or without sound
accompaniment and with or without the interpolation of musical
numbers therein, and for such purposes to adapt one or more
versions of the music video, No More Dirty Deals, to add to and
subtract from the music video No More Dirty Deals, change the
sequence thereof, use a portion or portions of the music video No
More Dirty Deals, change the title of the music video No More
Dirty Deals, in any and all languages.
(b) The exclusive right mechanically to produce, reproduce, and
license the reproduction of spoken words taken from or based upon
the text or theme of the music video No More Dirty Deals on
records, films, or other devices designed or used for the purpose
of producing and reproducing sound in synchronism with,
accompaniment of, or supplementary to, the music video No More
Dirty Deals, using for that purpose all or a part of the text,
theme, and dialogue contained in the music video No More Dirty
Deals.
(c) The exclusive right to broadcast the music video No More Dirty
Deals by means of the method generally known and described as
television or any process analogous thereto including but not
limited to broadcast over public airwaves, private cable and
Pay-Per-View systems.
(d) The exclusive right to make, produce, adapt, sell, lease and
rent, and license the music video No More Dirty Deals for
exploitation in the home video rental field.
3.8 Consents of Limited Partners
----------------------------
3.8.1 In accordance with Section 7.03 of the EFP I Limited Partnership
Agreement, the holders of the majority of the limited partnership interests in
EFP I, have voted in person or by proxy at special meeting of the limited
MAGIO4.69ZM02.031094.1 18
48
partners of EFP I, held on or about March 15, 1993, in favor of the sale,
assignment and transfer to Acquiror of the, 5hakma copyrights and film rights
pursuant to Paragraph 2.3.1 hereof and all other transactions hereunder related
thereto.
3.8.2 In accordance with Section 7.03 of the EFP II Limited Partnership
Agreement the holders of the majority of the limited partnership interests in
EFP II, have voted in person or by proxy at a special meeting of the limited
partners of EFP II, held on or about March 15, 1993, in favor of the sale,
assignment and transfer to Acquiror of the Shoot copyrights and film rights
pursuant to Paragraph 2.3.2 hereof and all other transactions hereunder related
thereto.
3.9 Ownership of Distribution Rights
--------------------------------
3.9.1 Pursuant to the terms of a Distribution Agreement, dated as of August
3, 1993, between FEI, as licensor and NBD, as distributor, a copy of which is
appended hereto as Schedule 3.9.1 (the "No More Dirty Deals Distribution
Agreement"), NBD is the sole and exclusive holder of all rights to exploit the
feature film No Adore Dirty Deals in the territories and during the term set
forth in the said No More Dirty Deals Distribution Agreement, all in accordance
with the terms and provisions thereof.
3.9.2 Pursuant to the terms of a Distribution Agreement, dated as of August
3, 1993, between EFP I, as licensor and FEI, as distributor, a copy of which is
appended hereto as Schedule 3.9.2 (the "Shakma Distribution Agreement"), FEI is
the sole and exclusive holder of all rights to exploit the feature film Shakma
in the territories and during the term set forth in the said Shakma Distribution
Agreement, all in accordance with the term and provisions thereof.
3.9.3 Pursuant to the term of a Distribution Agreement, dated as of August
3, 1993, between EFP II, as licensor and FEI, as distributor, a copy of which is
appended hereto as Schedule 3.9.3 (the "Shoot Distribution Agreement"), FEI is
the sole and exclusive holder of all rights to exploit the feature film Shoot in
the territories and during the term set forth in the said Shoot Distribution
Agreement, all in accordance with the terms and provisions thereof.
3.10 Financial Condition of FFI Subsidiary
3.10.1 The books and records of FEl and its subsidiary EF are complete and
accurate and fairly present the financial condition and the results of
operations of FEI and EFP as of the date hereof. There are no material
liabilities, either fixed or contingent, not reflected in such books and records
other than contracts or obligations in the ordinary and usual course of
business; and no such contracts or obligations in the usual course of business
constitute liens or other liabilities which, if disclosed, would alter
substantially the financial condition of FEI or EFP as reflected in such books
and records.
3.10.2 All accounts receivable and notes receivable of FEI and EFP, if any,
are current and collectible except to the extent that a reserve for bad debts
has been established on its books for such accounts and notes.
3.11 Financial Condition of NBD
--------------------------
3.11.1 The books and records of NBD are complete and accurate and fairly
MA6104.697ML?2.031094.1 19
49
present the financial condition the results of operations of NBD as of the date
hereof. There are no material ____es, either fixed or contingent, not reflected
in such books and records other than contracts or obligations in the ordinary
and usual course of business; and no such contracts or obligations in the usual
course of business constitute liens or other liabilities which, if disclosed,
would alter substantially the financial condition of NBD as reflected in such
books and records.
3.11.2 All accounts receivable and notes receivable of NBD, if any, are
current and collectible except to the extent that a reserve for bad debts has
been established on its books for such counts and notes.
3.12 Financial Condition of Limited Partnerships
-------------------------------------------
3.12.1 The respective books and records of EFP I and EFP II (the "Limited
Partnerships") are complete and accurate and fairly present the financial
condition and the results of operations of the Limited Partnerships as of the
date hereof. There are no material liabilities, either fixed or contingent, not
reflected in such books and records other than contracts or obligations in the
ordinary and usual course of business; and no such contracts or obligations in
the usual course of business constitute liens or other liabilities which, if
disclosed, would alter substantially the financial condition of either of the
Limited Partnerships as reflected in such books and records.
3.12.2 All accounts receivable and notes receivable of the Limited
Partnerships, if any, are current and collectible except to the extent that a
reserve for bad debts has been established on its books for such accounts and
notes.
3.13 Legal Proceedings
---------------
Except as set forth on Schedule 3.13 hereof, none of the Shareholders or
the Acquirees are parties to any pending or threatened suit, action, proceeding,
prosecution or litigation which might relate to, involve or affect the financial
condition, business, assets, properties, certificates, rights, authorities,
franchises or authorizations of the Shareholders or the Acquirees, or interfere
therewith, nor the knowledge of the Shareholders or the Acquirees is there any
threatened or pending governmental investigation involving any of the
Shareholders or the Acquirees or any of their respective operations, including
inquiries, citations or complaints by any federal, state or local administration
or agency; and here are no outstanding, existing or pending judgments, orders,
decrees, rulings, directives, stipulations or other mandates of any court or any
public or quasipublic agency, body or official which in any way elate to or
affect any of the Shareholders or Acquirees or any of their respective
properties, businesses, Operations, affairs or activities.
3.14 Regulatory Good Standing
------------------------
3.14.1 Each of the Acquirees has complied with all state, federal and local
laws in connection with its formation, issuance of securities and organization,
and no contingent liabilities have been threatened or claims made, and no basis
for the same exists with respect to said operations, formations or
capitalization, including claims for violation of any state or federal
securities laws.
3.14.2 Each of the Acquirees has all rights, certificates, authorities,
permits, licenses, and other authorizations necessary to and has complied with
all laws applicable to, the conduct of its business, if any, in the manner and
in the areas in which such business is presently being conducted and all such
20
50
certificates, authorities, rights, permits, licenses, franchises and
authorizations are valid, in good standing, in full force and effect, under no
orders of suspension or restraints, and subject to no disciplinary, probationary
or other orders. None of the Shareholders or Acquirees have engaged in any
activity whatever which would cause or lead to proceedings involving revocation,
suspension, restraint, disciplinary action or any other action whereby any of
such certificates, authorities, rights, permits, licenses, franchises or
authorizations, or any part thereof, might be cancelled terminated, suspended,
impaired, lost or otherwise adversely affected, and no action or proceeding
looking to or contemplating any of the foregoing is pending or threatened.
3.15 Defaults and Conflicts
There are no defaults on the part of any of the Shareholders or Acquirees
under any contract, lease, mortgage, pledge, credit agreement, title retention
agreement, security agreement, lien, encumbrance or any other commitment,
contract, agreement or undertaken to which the Shareholders or Acquirees are a
party. The execution of this Agreement will not violate or breach any material
agreement, contract, or commitment to which any of the Shareholders or Acquirees
is a party.
3.16 Tax Returns
-----------
Except for the fiscal year ended December 31, 1993, all returns for
federal, state and other governmental income taxes, surtaxes, excess profits
taxes, franchise taxes, sales and use taxes, real and personal property taxes,
and any and all other taxes to which any of the Shareholders, or Acquirees,
their respective assets, operations or income may be subject, for all tax
periods ending up to and including the date hereof, have been duly prepared and
filed in good faith and all taxes shown thereon have been paid or are accrued on
the books of the respective Shareholders and Acquirees.
3.17 Tax Accruals
------------
All other taxes and other assessments and levies, if any, which any of the
Shareholders or Acquirees are required by law to withhold or to collect have
been duly withheld and collected and have been paid over to the proper
governmental authorities or are held by such Shareholders or Acquirees for such
payment and all such withholding and collections and all other payments due in
connection therewith as of the tax period therefor most recently ended are duly
reflected in any the books and records of the respective Shareholders and
Acquirees.
3.18 Infringements
-------------
None of the Shareholders or Acquirees have ever been charged with
infringement or violation of any adversely held trademark, trade name, or
copyright, with claims which would materially and adversely affect any operation
or the value of any asset of such Shareholders or Acquirees, nor are such
Shareholders or Acquirees using or in any way making use of any confidential
information or trade secrets, of any other person except as a result of the
acquisition by such Shareholders or Acquirees of the business or assets of such
person.
3.19 Termination of Profit Holders' Rights
-------------------------------------
The transfer to the persons named on Schedule 1.2.2 hereto as "Profit
Holders" of an segregate of 1,480,640 of the Acquisition Shares pursuant to
AIAGIO4.697.MG2.,931094.1 21
51
Paragraph 1.2.2 hereof shall satisfy in full, area, terminate, any claims which
such Profit Holders may have to a percentage of the "gross profits" of feature
film No More Dirty Deals.
3.20 Corporate Action
----------------
Prior to the date hereof, the boards of directors of FEI, EFP, and NBD have
duly adopted resolutions approving the execution and delivery to Acquiror of
this Agreement and authorizing and consenting to each and every one of the
terms, warranties, representations, covenants and conditions herein contained.
3.21 Truth of Representation
No representation by any of the Shareholders or Acquirees made in this
agreement and no statement made in any certificate or schedule furnished in
connection with the transactions herein contemplated contains or will contain
any knowingly untrue statement of a material fact or knowingly omits or will
omit to state any material fact reasonably necessary to make any such
representation or warranty or any such statement not misleading to a prospective
purchaser of any of the stock or assets being transferred hereunder to the
Acquiror, who is seeking full information as to such Shareholders or Acquirees
and their affairs. The Shareholders and the Acquirees have, and at the Closing
Date Will have, to the best of their knowledge, disclosed all events, conditions
and facts materially affecting the business and prospects of the Acquirees. Each
of the Shareholders and the Acquirees have not now, and will not have, at the
Closing Date, withheld knowledge of any such events, conditions, and facts which
they know, or have reasonable grounds to know, may materially affect the
business and prospects of any of the Acquirees.
4. Representations of Acquiror
The Acquiror hereby represents and warrants that as of the date hereof and
as of the Closing Date, as that term is hereinafter defined, the representations
and warranties set forth below are and will be true and correct.
4.1 Corporate Status
----------------
The Acquiror is duly organized corporation, validly existing and in good
standing under the laws of the State of Delaware and a part of its stock is held
by public shareholders and at present said public stock is eligible to be sold
and traded publicly in conformity with all federal securities laws; Acquiror has
full power to own all of its properties and carry on its business, if any; and
is qualified to do business as a foreign entity in each of the jurisdictions in
which it operates, if any, and the character of the properties owned by the
Acquiror or the nature of the business transacted by the Acquiror, if any, does
not make qualification necessary in any other jurisdiction or jurisdictions.
4.2 Capital Structure
-----------------
The Acquiror (i) is authorized by its charter and applicable law to issue
capital stock of the types, classes, series and having par values as set forth
in Schedule 4.2 hereto; (ii) has no issued or outstanding shares of its capital
stock whatever, except as specifically indicated in Schedule 4.2 hereto, all of
which such shares are fully paid and nonassessable. (iii) does not have
AGIO4.69ZM02.031094.1 22
52
authorized, issued or outstanding any other areas of stock or any subscription,
option, warrant, conversion or other rights to issuance or receipt of shares of
its capital stock except as set forth in Schedule 4.2 hereto; (iv) has all
voting rights vested exclusively in the presently issued and outstanding capital
stock and; (v) has outstanding no evidences of indebtedness except as
specifically disclosed in Schedule 4.2.
4.3 Financial Condition of Acquiror
-------------------------------
4.3.1 The books and records of Acquiror are complete and accurate and
fairly present the financial condition the results of operations of Acquiror as
of the date hereof. There are no material liabilities, either fixed or
contingent, not reflected in such books and records other than contracts or
obligations in the ordinary and usual course of business; and no such contracts
or obligations in the usual course of business constitute liens or other
liabilities which, if disclosed, would alter substantially the financial
condition of Acquiror as reflected in such books and records.
4.3.2 All accounts receivable and notes receivable of Acquiror, if any, are
current and collectible except to the extent that a reserve for bad debts has
been established on its books for such accounts and notes.
4.4 Legal Proceedings
-----------------
Acquiror is not a party to any pending or threatened suit, action,
proceeding, prosecution or litigation which might relate to, involve or affect
the financial condition, business, assets, properties, certificates, rights,
authorities, franchises or authorizations of Acquiror or interfere therewith,
nor to the knowledge of Acquiror are there any threatened or pending
governmental investigation involving Acquiror or any of its operations,
including inquiries, citations or complaints by any federal, state or local,
administration or agency; and there are no outstanding, existing or pending
judgments, orders, decrees, I findings, directives, stipulations or other
mandates of any court or any public or quasipublic agency, body or official
which in any way relate to or affect Acquiror or any of its properties,
businesses, operations, affairs or activities.
4.5 Regulatory Good Standing
------------------------
4.5.1 The Acquiror has complied with all state, federal and local laws in
connection with its formation, issuance of securities and organization, and no
contingent liabilities have been threatened or claims made, and no basis for the
same exists with respect to said operations, formations or capitalization,
including claim for violation of any state or federal securities laws.
4.5.2 The Acquiror has all rights, certificates, authorities, permits,
licenses, and other authorizations necessary to and has complied with all laws
applicable to, the conduct of its business, if any, in the manner and in the
areas in which such business is presently being conducted and all such
certificates. authorities, rights, permits, licenses, franchises and
authorizations are valid, in good standing, in full force and effect, under no
orders of suspension or restraints, and subject to no disciplinary,
probationary, or other orders. The Acquiror has engaged in no activity whatever
which would cause or lead to proceedings involving revocation, suspension,
restraint, disciplinary action or any other action whereby any of such
certificates, authorities, rights, permits. licenses, franchises or
authorizations, or any part thereof, might be cancelled, terminated, suspended,
impaired, lost or otherwise adversely affected, and no action or proceeding
looking to or contemplating any of the foregoing is pending or threatened.
104.69ZM02.031094.1 23
53
4.6 Defaults and Conflicts
----------------------
There are no defaults on the part of Acquiror under any contract, lease,
mortgage, pledge, credit agreement, title retention agreement, security
agreement, lien, encumbrance or any other commitment, contract, agreement or
undertaking to which Acquiror is a party and the execution of this Agreement
will not violate or breach any material agreement contract, or commitment to
which Acquiror is a party.
4.7 Tax Returns
-----------
All returns for federal, state and other governmental income taxes,
surtaxes, excess profits taxes, franchise taxes, sales and use taxes, real and
personal property taxes, and any and all other taxes to which Acquiror, its
assets, operations or income may be subject, for all tax periods ending up to
and including the date hereof, have been duly prepared and filed in good faith
and all taxes shown thereon have been paid or are accrued on the books of
Acquiror.
4.8 Tax Accruals
------------
All other taxes and other assessments and levies, if any, which Acquiror is
required by law to withhold or to collect have been duly withheld and collected
and have been paid over to the proper governmental authorities or are held by
Acquiror for such payment and all such withholding and collections and all other
payments due in connection therewith as of the tax period therefor most recently
ended are duly reflected in Acquiror's books and records.
4.9 Corporate Action
----------------
Prior to the date hereof, the board of directors of Acquiror has duly
adopted resolutions approving the execution and delivery to Acquiror of this
Agreement and authorizing and consenting to each and every one of the terms,
warranties, representations, covenants and conditions herein contained.
4.10 Truth of Representation
------------------------
No representation by Acquiror made in this agreement and no statement made
in any certificate or schedule furnished in connection with the transactions
herein contemplated contains or will contain any knowingly untrue statement of a
material fact or knowingly omits or will omit to state any material fact
reasonably necessary to make any such representation or warranty or any such
statement not misleading to a prospective purchaser of the Acquisition Shares,
who is seeking full information as to the Acquiror's and their affairs. The
Acquiror has, and at the Closing Date will have, to the best of its knowledge,
disclosed all events, conditions and facts materially affecting the business and
prospects of Acquiror. The Acquiror has not now, and will not have, at the
Closing Date, withheld knowledge of any such events. conditions, and facts which
they know, or have reasonable grounds to know, may materially affect the
business and prospects of Acquiror.
MAG104.697.MO2.031094.1 24
54
5. Covenants of the Shareholders and the Acquirees
The Shareholders and the Acquirees hereby covenant and agree as follows:
5.1 Inspection of Records
---------------------
During the period from the date hereof through the Closing Date as that
term is hereinafter defined (the "Contract Period") Acquiror shall have the
right and opportunity at its own expense to make such examination and
investigation of the respective businesses, properties, and affairs of the
Acquirees, as Acquiror may deem reasonably necessary or desirable for all
purposes relating to this agreement and to that end, throughout the Contract
Period, each of the Acquirees will allow and grant Acquiror, its officers,
counsel, accountants, auditors and executive employees full, free and continuous
access without interference with the conduct of such Acquiree's business, to all
of the premises, properties, contract, commitment, leases, books, papers,
docunents, instruments, books of account, minutes and other records of such
Acquirees and will furnish and provide Acquiror with all such financial and
other statements and all such additional information and particulars in respect
of the business, properties and affairs of such Acquirees as Acquiror may, from
time to time during the Contract Period, request or require.
5.2 Transfer of Records
-------------------
The corporate financial records, minute books, and other documents and
records of the Acquirees will be turned over in their entirety to the new
management of Acquiror appointed by and/or agreed to by Acquirees and the
Shareholders, at closing
5.3 Conduct of Business
--------------------
During the period from the date hereof to the Closing Date hereunder,
unless with notice to and agreement by the Acquiror, the Shareholders and the
Acquirees agree that each of the Acquirees shall:
(i) Conduct its business and operations solely in the usual,
normal and ordinary course;
(ii) Issue no additional shares of stock, options, calls or other
rights to purchase such stock, or any other securities of
any kind whatever except pursuant to current contracts or
agreements in place at the date hereof;
(iii)Make no distributions to its shareholders or partners, as
the case may be, of any of its assets or properties by way
of dividends, purchase of shares, redemptions or otherwise;
(iv) Pay no salary, wages, bonus or compensation to any officer,
employee, representative or agent of Acquirees other then in
the ordinary course of business under employment
arrangements in effect on the date of this Agreement or
otherwise in accordance with Acquiree's presently existing
administrative programs and, in the case of employees who
are not officers and directors, in accordance with periodic
review and adjustment of salaries consistent with past
practices;
MA6104.69ZM02.031094.1 25
55
(V) Not sell, transfer or dispose of any of its material
properties or assets whatever, tangible or intangible except
where under current contract;
(vi) Make no purchases or acquisitions of any real or personal
property;
(vii)Not subject any of its property or assets whatever,
tangible or intangible, to any mortgage, lien, pledge,
hypothecation or encumbrance in any manner except for a full
and fair consideration in the usual, normal and ordinary
course of business;
(viii) Not borrow any money, make any unusual or extraordinary
expenditures or incur or become liable for any obligations
or liabilities;
(ix) Not make any loans or advances or extend any credit; and
(x) Not amend its bylaws, certificate of incorporation or other
charter documents or make any changes in its business policies
and operations.
5.4 Financial Statements
--------------------
As soon as possible following the date hereof, each of the Acquirees shall
deliver to Acquiror its respective audited financial statements (the "Financial
Statements"). All of the respective Financial Statements shall be complete and
accurate and will fairly present the financial condition and results of
operations of the respective Acquirees for which such Financial Statements have
been prepared, of the date thereof and for the periods covered. There will be no
material liabilities, e4ther fixed or contingent, not reflected in such
Financial Statements other than contracts or obligations in the ordinary and
usual course of business; and no such contracts or obligations in the usual
course of business will constitute liens or other liabilities which, if
disclosed, would alter substantially the financial condition of any of the
Acquirees as reflected in such Financial Statements. All of the said Financial
Statements will be prepared in accordance with generally accepted accounting
principles consistently applied, except as otherwise stated therein.
5.5 Current Information
--------------------
Each of the Shareholders and Acquirees will promptly furnish to and advise
Acquiror of any and all information, details, statements, reports, returns,
minutes, consents, resolutions, resignations, pleadings, notices, documents,
instruments, facts and circumstances arising subsequent to the date of this
Agreement and prior to Closing, of which they have knowledge or notice, by
reason of which any changes, modifications, amendments, additions or deletions
from any schedule annexed hereto or any warranty, representation, covenant or
condition recited herein would be necessary to render the same true and correct
and not false and misleading, as of the date such information, details, facts
and circumstances are furnished to Acquiror.
5.6 Change of Management and Implementation of Business Plan
-------------------------------------------------------
Concurrent with the tender by the present directors and officers of
Acquiror, in accordance with Paragraph 6.5 hereof, the Shareholders shall
6104.69ZM02.031094.1 26
56
appoint new and additional officers and directors in accordance with, Paragraph
3.1 hereof. Thereupon, the Shareholders, in their capacities as officers of
Acquiror shall take all steps necessary and proper to immediately implement the
Business Plan for the motion picture production and distribution business to be
conducted by Acquiror and shall use the proceeds from the Private Placement to
cover the initial costs thereof.
5.7 Covenants Respecting the Acquisition Shares
-------------------------------------------
Each of the Shareholders and Acquirees hereby acknowledges and covenants
that, with respect to the Acquisition Shares which were transferred to FEI on or
about November 9, 1993 and which will be transferred to the Shareholders and
certain other of the parties hereto, for their own accounts or as custodians for
certain other persons:
(a) he or it has been advised that the Acquisition Shares have
not been, and as at the time such person receives any of
such shares from FEI, will not be, registered under the
Securities Act of 1933, as amended (the "Act"), on the basis
of the statutory exemptions, in Sections 4.1 and 4.2 thereof
and on the covenants made by him or it herein.
(b) he or it will acquire the Acquisition Shares to be
transferred to him or it for investment purposes only, for
his or its own account or as nominee for certain persons who
are not parties to this agreement, and not, absent the
registration of such shares under the Act, with a view to
the resale or distribution thereof, and that he or it does
not intend to divide such Acquisition Shares with others or
to resell or otherwise dispose of all or any part of such
Acquisition Shares unless and until they are subsequently
registered under the Act or an exemption from such
registration is available.
(c) in making these covenants, each of the Shareholders and
Acquirees understands that in the view of the Securities and
Exchange Commission, the statutory exemptions referred to
above would not be available, if notwithstanding his or its
representations, he or it had in mind merely acquiring the
Securities for resale upon the occurrence or nonoccurrence
of some predetermined event.
(d) he or it hereby accepts the condition that before any transfer of
the Securities may be effected by him or it, written approval
must first be obtained from Acquiror's counsel. The basis of such
approval, which shall not be unreasonably withheld, shall be
compliance with the requirements of the federal and state
statutes regulating securities. Each of the Shareholders and
Acquirees understands that a legend to this effect will be placed
on the certificates representing the Acquisition Shares, and that
Acquiror has issued stop transfer instructions to its transfer
agent.
A6104.697.MO2.,931094.1 27
57
Covenants of the Acquiror
The Acquiror hereby covenants and agrees as follows:
6.1 Inspection of Records
---------------------
During the period from the date hereof through the Closing Date as that
term is hereinafter defined (the "Contract Period") the Shareholders shall have
the right and opportunity at their own expense to make such examination and
investigation of the respective businesses, properties, and affairs of the
Acquiror, as they may deem reasonably necessary or desirable for all purposes
relating to this agreement and to that end, throughout the Contract Period,
Acquiror will allow and grant the Shareholders full, free and continuous access
without interference with the conduct of Acquiror's business, to all of the
premises, properties, contracts, commitments, leases, books, papers, documents,
instruments, books of account, minutes and other records of Acquiror and will
furnish and provided the Shareholders with all such financial and other
statements and all such additional information and particulars in respect of the
business, properties and affairs of Acquiror as the Shareholders may, from time
to time during the Contract Period, request or require.
6.2 Transfer of Records
--------------------
The corporate financial records, minute books, and all other documents and
records of Acquiror will be turned over in their entirety to the new management
of Acquiror appointed by and/or agreed to by Acquirees and the Shareholders, at
closing.
6.3 Conduct of Business
---------------------
During the period from the date hereof to the Closing Date hereunder,
unless with notice to and agreement by the Shareholders, Acquiror agrees that it
shall:
(i) Conduct its business and operations solely in the usual,
normal and ordinary course;
(ii) Issue no additional shares of stock, options, calls or other
rights to purchase such stock, or any other securities of
any kind whatever except pursuant to current contracts or
agreements in place at the date hereof;
(iii)Make no distributions to its shareholders, as shareholders,
of any of its assets or properties by way of dividends,
purchase of shares, redemptions or otherwise;
(iv) Pay no salary, wages, bonus or compensation to any of its
officers, employees, representatives or agents other then in
the ordinary course of business under employment
arrangements in effect on the date of this Agreement or
otherwise in accordance with Acquiror's presently existing
administrative programs and, in the case of employees who
are not officers and directors, in accordance with periodic
review and adjustment of salaries consistent with past
practices;
(v) Not sell, transfer or dispose of any of its material
properties or assets whatever, tangible or intangible except
where under current contract;
MAGID4.69ZM02.0310.94.1 28
58
(vi) Make no purchases or acquisitions of any real or personal
property;
(vii)Not subject any of its property or assets whatever,
tangible or intangible, to any mortgage, lien, pledge,
hypothecation or encumbrance in any manner except for a full
and fair consideration in the usual, normal and ordinary
course of business;
(viii) Not borrow any money, make any unusual or extraordinary
expenditures or incur or become liable for any obligations
or liabilities;
(ix) Not make any loans or advances or extend any credit; and
(x) Not amend its bylaws. certificate of incorporation or other
charter documents or make any changes in its business
policies and operations.
6.4 Stock Transfer Records
----------------------
During the period from the date hereof to the Closing Date hereunder,
Acquiror shall maintain or cause to be maintained current and accurate records
of all issuances of the common stock of Acquiror and maintain or continue to
employ a transfer agent to maintain current and accurate records of all
transfers of record of the common stock of Acquiror.
6.5 Resignations of Present Management
-----------------------------------
At or prior to the Closing Date, Acquiror shall obtain the resignations of
those of the present officers and directors of Acquiror as the Shareholders
shall direct and shall appoint such new or additional officers and directors as
the Shareholders shall direct, in accordance with Paragraph 1.3 hereof, subject,
however, to the requirement that the resignations of such present officers and
directors shall take effect and such new or additional officers and directors
shall take office at such time or times as the Shareholders shall direct. Upon
the effectiveness of such resignations, all resigning Acquiror officers and
directors shall be relieved from further liability as officers and directors of
Acquiror with respect to actions of Acquiror subsequent to such resignations.
6.6 Financial Statements
--------------------
As soon as possible following the date hereof, Acquiror shall deliver to
the Shareholders its audited financial statements (the "Financial Statements"),
which Financial Statements shall be complete and accurate and will fairly
present the financial condition and results of operations of the Acquiror, as of
the date thereof and for the periods covered. There will be no material
liabilities, either fixed or contingent, not reflected in such Financial
Statements other than contracts or obligations in the ordinary and usual course
of business; and no such contracts or obligations in the usual course of
business will constitute liens or other liabilities which, if disclosed, would
alter substantially the financial condition of the Acquiror as reflected in such
Financial Statements. The said Financial Statements will be prepared in
accordance with generally accepted accounting principles consistently applied,
except as otherwise stated therein.
MAGIO4.69ZM02.031094.1 29
59
A
6.7 Current Information
Acquiror will promptly furnish to and advise the Shareholders of any and
all information, details, statements, reports, returns, minutes, consents,
resolutions, resignations, pleadings, notices, documents, instruments, facts and
circumstances arising subsequent to the date of this Agreement and prior to
Closing, of which they have knowledge or notice, by reason of which any changes,
modifications, amendments , additions or deletions from any schedule annexed
hereto or any warranty, representation, covenant or condition recited herein
would be necessary to render the same true and correct and not false and
misleading, as of the date such information, details, facts and circumstances
are furnished to the Shareholders.
7. Conditions Precedent to the Obligations of Acquirees and the Shareholders
All obligations of Acquirees and the Shareholders under this Agreement are
subject to the fullfillment, prior to or as of the Closing Date, of each of the
following conditions:
7.1 Truth of Representation
-----------------------
The representations and warranties by or on behalf of Acquiror contained in
this Agreement or in any certificate or document delivered to Acquirees pursuant
to the provisions hereof shall be true in all material respects at and as of the
time of closing as though such representations and warranties were made at and
as of such time.
7.2 Compliance with Covenants
------------------------
Acquiror shall have performed and complied with all covenants, agreements,
and conditions required by this Agreement to be performed or complied with by or
prior to or at the closing.
7.3 Termination
-----------
In the event any of the foregoing conditions shall not be fulfilled, unless
caused by any action or failure to act on the part of any of the Shareholders or
the Acquirees, Acquirees and the Agreement by notice thereof in writing to
Acquiror, Shareholders shall have the right to terminate this in which event all
items of value paid, transferred or delivered by any party hereunder to the
other shall be repaid, retransferred or redelivered to that party, to the end
that the parties hereto shall be restored as far as possible to status quo,
whereupon the parties hereto shall have no further obligations or liabilities
hereunder one against the other, except with respect to such obligations or
liabilities which may exist by reason of breach by a party of any warranty or
covenant hereunder.
8. Conditions Precedent to the Obligations of Acquiror
All obligations of Acquiror under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:
4fA 104.697 M02.0310.94. 1 30
60
8.1 Truth of Representations
------------------------
The representations and warranties by the Shareholders and the Acquirees
contained in this Agreement or in any certificate or document delivered to
Acquiror pursuant to the provisions hereof shall were made at shall be true at
and as of the time of closing as though such representations and warranties and
as of such time:
8.2 Compliance with Covenants
---------------------------
The Shareholders and the Acquirees shall have performed and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by them prior to or at the closing.
8.3 Termination
------------
In the event any of the foregoing conditions shall not be fulfilled prior
to December 3 1, 1994, unless caused by any action or failure to act on the part
of Acquiror, Acquiror shall have the right to terminate this Agreement by notice
thereof in writing to Acquirees and the Shareholders, in which event all items
of value paid, transferred or delivered by any parry hereunder to the other
shall be repaid, transferred or redelivered to that party, to the end that the
parties hereto shall be restored as far as possible to status quo, whereupon the
parties hereto shall have no further obligations or liabilities hereunder, one
against the other, except with respect to such obligations or liabilities which
may exist by reason of breach by a party of any warranty or covenant hereunder.
9. Conditions Subsequent to Obligations of the Shareholders and the Acquirees
Conditions Subsequent to Obligations of the Shareholders and the Acquirees
All representations, warranties and covenants made by any party in this
Agreement shall survive the Closing hereunder and the consummation of the
transactions contemplated hereby for two years from the date hereof. The
existence of a material misstatement made herein or the breach of a material
covenant hereunder by Acquiror which is evidenced and/or discovered subsequent
to the Closing, shall entitle the Shareholders and the Acquirees to termination
pursuant to the terms of Paragraph 7.3.
10. Conditions Subsequent to Obligations of the Acquiror
All representations, warranties and covenants made by any party in this
Agreement shall survive the Closing hereunder and the consumation of the
transactions contemplated hereby for two years from the date hereof. The
existence of a material misstatement made herein or the breach of a material
covenant hereunder by any of the Shareholders or the Acquirees which is
evidenced and/or discovered subsequent to the Closing, shall entitle the
Acquiror to termination pursuant to the terms of Paragraph 8.3.
MAS104.69ZM02.031094.1 31
61
11. Closing
11.1 Time and Place
--------------
The Closing under this Agreement (the Closing") and all deliveries shall
take place at the offices of the Acquirees, ▇▇▇▇▇▇▇ Bank Plaza, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ on ___________,1994 at 10:00 A.M. Eastern
Standard Time, or such other time and place as Acquiror and the Shareholders
shall agree. At the Closing, the following transactions shall occur, all of such
transactions being deemed to occur simultaneously.
11.2 Delivery of Stock
-----------------
The Shareholders will deliver the following stock certificates to Acquiror:
(i) the certificates representing two hundred thirty-four (234)
shares of the common stock of FEI in definitive and fully
registered form, representing 85% of the shares of capital
stock of FEI, as fully described in Schedule 2.1 annexed
hereto, all of which certificates shall be properly,
adequately, and duly endorsed for transfer from the
Shareholders to the Acquiror;
(ii) the certificates representing seven thousand five hundred
(7,500) shares of the common stock of EFP, in definitive and
fully registered form, representing all of the shares of
capital stock of EFP, as fully described in Schedule 3.4.2
annexed hereto, all of which certificates shall be properly,
adequately, and duly endorsed for transfer from FEI to the
Acquiror;
(iii)the certificates representing two hundred thirty-four (234)
shares of the common stock of FEI, in definitive and fully
registered form, representing 15% of the shares of capital
stock of FEI, as fully described in Schedule 2.1 annexed
hereto, all of which certificates shall be properly,
adequately, and duly endorsed for transfer from the Third
Party Shareholders to the Acquiror;
(iv) the certificates representing two hundred thirtyfour (234)
shares of the common stock of NBD in definitive and fully
registered form, representing all of the shares of capital
stock of NBD, as fully described in Schedule 2.2 annexed
hereto, all of which certificates shall be properly,
adequately, and duly endorsed for transfer from the
Shareholders to the Acquiror.
11.3 Delivery of Documents
---------------------
11.3.1 At the Closing, the Shareholders and/or one or more of the Acquirees
will deliver to the Acquiror the following documents.
(i) all of the corporate records of FEI, EFP and NBD, including
without limitation, for each one of such corporations,
corporate minute books (which shall contain copies of the
Articles of Incorporation and Bylaws, as amended to the
closing), stock books, stock transfer books, corporate
seals, financial statements and such other corporate books
wAS104.69ZM02.031094.1 32
62
and records as may reasonably be requested for review by
Acquiror and its counsel;
(ii) a certificate of EFP, in its capacity as general partner of
EFP I. executed by the president and secretary of EFP, to
the effect that at a meeting of the Limited Partners of EFP
I, held on or about March 15, 1993, the holders of the
majority of the limited partnership interests in EFP I
voted, in person or by proxy, in favor of the sale,
assignent, and transfer to Acquiror of the Shakma copyrights
and film rights pursuant to Paragraph 2.3.1 hereof and all
other transactions hereunder related thereto.
(iii)a certificate of EFP, in its capacity as general partner of
EFP 11, executed by the president and secretary of EFP, to
the effect that at a meeting of the Limited Partners of EFP
R, held on or about March 15, 1993, the holders of the
majority of the limited partnership interests in EFP II
voted, in person or by proxy, in favor of the sale,
assignment, and transfer to Acquiror of the Shoot (formerly
Kings ▇▇▇▇▇▇) copyrights and film rights pursuant to
Paragraph 2.3.2 hereof and all other transactions hereunder
related thereto.
(iv) certificates executed by all of the Shareholders, in their
various capacities as individuals and as officer and/or
directors of the various Acquirees, to the effect that all
representations and warranties made by Acquirees and the
Shareholders under this Agreement are true and correct as of
closing, the same as though originally given to Acquiror on
said date;
(v) certified copies of resolutions of the boards of directors
of FEI and EFP, on its own behalf and in its capacities as
the general partner of EFP I and EFP II, authorizing the
execution of this Agreement and the transaction provided for
hereunder;
(vi) such other instruments, documents and certificates, if any,
as are required to be delivered pursuant to the provisions
of this Agreement or which may be reasonably requested in
furtherance of the provisions of this Agreement.
11.3.2 At the Closing, Acquiror will deliver to the Shareholders and the
Acquirees the following documents:
(i) all of the corporate records of Acquiror, including without
limitation, corporate minute books (which shall contain
copies of the Articles of Incorporation and Bylaws, as
amended to the closing), stock books, stock transfer books,
corporate seals, financial statements and such other
corporate books and records as may reasonably be requested
for review by the Shareholders and the Acquirees and their
counsel;
(ii) a certificate executed by the president and secretary of
Acquiror to the effect that all representations and
warranties made by Acquiror under this Agreement are true
MAGIO4.697.MO2.031194.1 33
63
and correct as of closing, the same as though originally given to Acquiror on
said date;
(iii)certified copies of resolutions by Acquiror's board of
directors authorizing the execution of this Agreement and
the transaction provided for hereunder;
(iv) resignations of those of Acquiror's officers and directors
as requested by the Shareholders and the Acquirees; and such
other instruments, documents and certificates, if any, as
are required
(v) to be delivered pursuant to the provisions of this Agreement
or which may be reasonably requested in furtherance of the
provisions of this Agreement.
12. General
12.1 Further Assurances
-----------------
At any time, and from time to time, after the effective date, each party
will execute such additional instruments and take such action as may be
reasonably requested by the other party to confirm or perfect title to any
property transferred hereunder or otherwise to carry out the intent and purposes
of this Agreement including without limitation the execution by the present
officers and directors of Acquiror of any documents required for the appointment
of designees of the Shareholders as officers and/or directors, the issuance of
shares of authorized stock and otherwise.
12.2 Waiver
-------
Any failure on the part of any party hereto to comply with any of its
obligations, agreements or conditions hereunder may be waived in writing by the
party to whom such compliance is owed.
12.3 Brokers
-------
Neither party has employed any brokers or finders with regard to this Agreement,
unless otherwise described in writing to all parties hereto.
12.4 Notices
-------
All notices and other commununications hereunder shall be in writing and
shall be deemed to have been given if delivered to the address stated at the
outset of this Agreement, in person or sent by prepaid first class registered or
certified mail, recognized overnight courier, in all cases with written proof of
receipt required.
MAG104.69ZM02.031094.1 34
64
12.5 Headings
---------
The section and subsection headings in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
12.6 Counterparts
------------
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
12.7 Governing Law
-------------
This Agreement shall be governed by the laws of the State of Florida.
12.8 Entire Agreement
-------------------
This Agreement is the entire agreement of the parties covering everything
agreed upon or understood in the transaction. There are no oral promises,
conditions, representations, understandings, interpretations or terms of any
kind as conditions or inducements to the execution hereof.
12.9 Severability
------------
If any part of this Agreement is deemed to be unenforceable the balance of
this Agreement shall remain in full force and effect.
12.10 Publicity
---------
All notices to third parties and all other publicity concerning the
transactions contemplated by this Agreement shall be subject to the prior
approval of counsel to Acquiror.
12.11 Benefit and Assignability
-------------------------
This agreement shall bind and inure to the benefit of the parties hereto
and their respective legal representatives, successors and assigns, provided,
however, that this Agreement cannot be assigned by any party except by or with
the written consent of the others. Nothing herein expressed or implied is
intended or shall be construed to confer upon or to give any person, firm or
corporation other than the parties hereto and their respective legal
representatives, successors and assigns any rights or benefits under or by
reason of this Agreement.
12.12 Default Costs
-------------
In the event any party hereto has to resort to legal action to enforce any
default of the terms, conditions or covenants hereof, or with respect to
liabilities arising out of any misrepresentation contained herein. such party
shall be entitled to collect attorneys fees and other costs from the party in
default in the event the nondefaulting party prevails in such legal action.
.,,46104.69ZM02.031094.1 35
65
In Witness Whereof, the parties have executed this Agreement as of the day
and year first were written.
MAGIC FINGERS, INC.
By /s/ ▇▇▇▇▇▇▇ Paolinin
--------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
FLASH ENTERTAINMENT, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, President
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
ENTERTAINMENT FILM PARTNERS, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, President
NO BULL DISTRIBUTION. INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, President
ENTERTAINMENT FILM PARTNERS I, LTD.
By: ENTERTAINMENT FILM PARTNERS, INC.
GENERAL PARTNER
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇,President
ENTERTAINMENT FILM PARTNERS II, Ltd
By: ENTERTAINMENT FILM PARTNERS, INC.
GENERAL, PARTNER
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇,President
36A
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