SALE OF ASSETS
This Agreement (the "Agreement"), entered
into as of this day of November, 1995, sets
forth the terms whereby Twentieth Century Fox Film
Corporation, or one or more of its permitted
designees, as set forth in Paragraph 1.3,
(collectively, "Fox"), subject to the approval of
the Bankruptcy Court (defined below), as provided
below, will purchase the assets of Carolco Pictures
Inc. ("Carolco Pictures") and those of its
subsidiaries listed on Exhibit "A" attached hereto
(such subsidiaries being the "Carolco
Subsidiaries"). Together, Carolco Pictures and the
Carolco Subsidiaries are referred to as "Carolco."
The parties hereby agree that, other than
as provided below, Fox will purchase all of the
assets of Carolco, whether tangible, intangible,
real, personal, owned, leased, possessed, and
whether arising under a cause of action, chose of
action, judgment or otherwise (collectively, the
"Assets") but excluding the Excluded Assets (as
defined below).
A. The Assets being purchased include,
but are not limited to the following property, in
each case whether such property now exists or arises
after the date of this Agreement, and includes all
proceeds thereof:
(1) Carolco's certain limited rights
to a library consisting primarily of (a) 22 Carolco-produced motion pictures
(the "Carolco Library"),
(b) 64 theatrical motion pictures, (c) 8 motion
pictures made for television, and (d) 6 television
series. Collectively, all of Carolco's limited
rights to the motion pictures and series referred to
in clauses (a)-(d) are referred to as the "Library,"
and all of Carolco's limited rights to the motion
pictures and series referred to in clauses (b)-(d)
are referred to separately as the "Additional
Pictures."
(2) Carolco's limited rights to
future productions based on motion pictures in the
Library, including, among others, limited sequel
rights in Terminator (collectively, the "Library
Rights"), and rights to projects in development,
including, among others, Spiderman (collectively the
"Projects in Development"). Collectively, all of
Carolco's limited rights in the Library Rights and
the Projects in Development are referred to as the
"Project Rights".
(3) Miscellaneous assets of Carolco
including, among others, the following assets, and
all proceeds thereof: (a) real property on which the
studio in North Carolina is located and personal
property, fixtures, furniture, and equipment owned
by Carolco Studios, Inc., a North Carolina
corporation, and customarily located therein (the
"Studio"); (b) proceeds, whenever received, which
may result from all claims that arise out of or are
related to that certain letter dated February 10,
1995 from Greenberg, Glusker, Claman, Fields, &
Machtinger to TriStar Pictures which was the initial
correspondence in a currently ongoing arbitration
referred to as the "TriStar Audit" (unless Fox
elects not to purchase the TriStar Audit as provided
in Paragraph 9.4 below); (c) accounts receivable
(whether on or off Carolco's balance sheet), cash or
cash equivalents received as a result of such
accounts receivable, royalties, fees, and other
consideration from any source, whether in bank
accounts, in escrow accounts or held pursuant to
escrow arrangements for the benefit of Carolco, and
royalties and other amounts payable pursuant to any
distribution or output contract relating to the
Library or Spiderman (collectively, the "Payment
Rights") that either (i) are earned in accordance
with generally accepted accounting principles after
the first to occur of March 31, 1996 or the Closing
or (ii) are received after the first to occur of
March 31, 1996 or the Closing, regardless of when
earned, but in all cases excluding proceeds of the
Pioneer Audit (as defined in Paragraph B.(17))
(collectively, the "Included Payment Rights");
(d) Carolco's rights to prequels, sequels, remakes,
and spinoffs to Cutthroat Island; (e) all of
Carolco's rights of every kind or nature in and to
any and all music and musical compositions created
for, used in, or to be used in connection with the
Library and Project Rights, including, without
limitation, all copyrights therein owned by Carolco
and all rights of Carolco to perform, copy, record,
produce, publish, reproduce or synchronize and
otherwise exploit such music; (f) one-half of all
proceeds (net of costs incurred by either party
related to such audit) from any audit that was
initiated by Carolco prior to the Closing (other
than the Pioneer Audit and the TriStar Audit),
whenever received; provided, however, that if, after
the Closing, issues are raised in such audit that
relate to Included Payment Rights, any recovery in
respect of such issues shall constitute Assets;
(g) all of Carolco's access rights and right to use
the Physical Properties (as hereinafter defined)
related to the Library and Project Rights, all
pledgeholder, laboratory, access or film warehousing
agreements related thereto which are assigned to Fox
and any and all documents issued by any
pledgeholder, warehouseman or bailee with respect
thereto; and (h) all of Carolco's rights in tangible
personal property relating to the Library and
Project Rights and all versions thereof, including,
without limitation, all property relating to the
development, production, completion, delivery,
exhibition, distribution or other exploitation,
including, without limitation, literary property,
exposed film, videotapes, developed film, positives,
negatives, prints, answer prints, special effects,
pre-print materials, soundtracks, recordings, audio
and video tapes and discs of all types and gauges,
advertising and promotional materials relating to
the Assets, transparencies, posters, pressbooks,
publicity kits, correspondence, licenses, and all
duplicates, drafts, versions, variations and copies
of each (the "Physical Properties") (collectively,
the "Miscellaneous Assets").
(4) Together, the Library, the
Project Rights, and the Miscellaneous Assets, and
all other assets of Carolco, but excluding the
Excluded Assets (as defined below), are the Assets.
As used in this Agreement, Included Audit Rights
means rights to payments in respect of audits to
which Fox is entitled under this Agreement.
B. The Assets do not include the
following property, in each case whether such
property now exists or arises after the date of this
Agreement:
(1) Any of the cash or cash
equivalents, stocks, bonds or other securities
(including, without limitation, the stock in the
Carolco Subsidiaries), whether such property is in
bank accounts, in escrow accounts or held pursuant
to escrow arrangements for the benefit of Carolco,
on hand, in financial institutions of Carolco or
elsewhere as of the Closing (unless such property is
an Included Payment Right).
(2) All Payment Rights that are
earned in accordance with generally accepted
accounting principles and collected before the first
to occur of March 31, 1996 or the Closing (the
"Excluded Payment Rights").
(3) Any rights to, interest in or
agreements or any consideration, whenever received,
related to Cutthroat Island and all rights and
physical materials of every kind and nature relating
thereto and all intellectual properties relating
thereto, including, without limitation, Payment
Rights, merchandising rights, literary properties
and music rights relating exclusively thereto and
the proceeds thereof (except that (a) the right to
use any of Carolco's rights to film clips and music
rights to Cutthroat Island in connection with the
rights under (b), and (b) all rights to prequels,
sequels, remakes or spinoffs to Cutthroat Island,
and the proceeds of clauses (a) and (b) are Assets).
(4) Any lease for or ownership of
any Carolco real property (including the office
space, editing facilities, and screening room
located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇) or other space
and the tangible personal property, fixtures,
furniture and equipment customarily located thereon
or which Carolco has purchased for other property,
whether or not owned or leased by Carolco, and
rents, issues, profits, revenues and proceeds
relating thereto, other than in connection with the
Studio.
(5) Any executory contracts that are
not assumed by Carolco and assigned to Fox that
relate to Excluded Assets and all proceeds resulting
therefrom and rights relating thereto and any
Payment Rights derived therefrom.
(6) Any rights to, interest in or
agreement relating to (including the purchase price
paid to Carolco by the writer) the screen play
entitled Duke and Fluffy written by ▇▇. ▇▇▇▇▇▇▇ and
▇▇. ▇▇▇▇▇▇▇▇▇ if the screen play is reacquired by
such writers prior to the Closing pursuant to the
provisions of the Basic Agreement of the Writers
Guild of America West (and only to the extent
provided therein).
(7) All intercompany claims by
Carolco Pictures against one or more Carolco
Subsidiaries or entities controlled by Carolco,
which entities are set forth on Exhibit "B" attached
hereto (the "Controlled Entities"), by one or more
Carolco Subsidiaries or Controlled Entities against
Carolco Pictures, or by one or more Carolco
Subsidiaries or Controlled Entities against one
another, or any combination of the foregoing, and
proceeds thereof.
(8) All employee benefit or pension
plans for the benefit of any current or former
Carolco employee and all rights relating thereto.
(9) Except for insurance policies
related to the Studio, to the extent assignable to
Fox, all business insurance policies and premiums
(including liability, business interruption,
directors and officers and similar insurance) and
all claims thereunder and proceeds thereof.
However, nothing contained herein shall affect any
rights or obligations set forth in Paragraph 8.11.
(10) All claims, rights and interests
in and to any refunds for federal, state or local
taxes or fees (but not any right resulting from any
changes in the character or ownership of the Assets
after the Closing) and any and all net operating
loss carry forwards of Carolco.
(11) All vehicles and rolling stock
owned by Carolco (other than such vehicles and
rolling stock as are owned or leased by Carolco for
the Studio) and all proceeds relating thereto.
(12) The Carolco name and other
business names used by Carolco (including Carolco
business name-related logos and symbols) and
proceeds thereof except to the extent use of such
name by Fox is necessary to preserve any right
relating to any Asset.
(13) Notes, accounts and other claims
receivable from current or former employees of
Carolco Pictures and/or any Carolco Subsidiary or
Controlled Entities (a) included on Carolco's
September 30, 1995 balance sheet, or (b) as
subsequently incurred in connection with (i) Carolco
loans to cover COBRA payments for former employees
or (ii) other matters in an amount not to exceed
$100,000 in the aggregate.
(14) All corporate records, including
articles of incorporation, minute books, stock
books, bylaws, and other books and records that
pertain to the organization, existence, and
shareholdings of Carolco and/or any Carolco
Subsidiary, and financial records of Carolco and/or
any Carolco Subsidiary, including account books of
original entry and general ledgers, financial
records, tax returns and records necessary to enable
such person to file its tax returns and reports.
(15) All business licenses, permits,
authorizations, consents, orders, registrations, and
franchises necessary to realize value from the
Excluded Assets and otherwise to enable Carolco to
fulfill its obligations in the bankruptcy
proceeding.
(16) Any actions to avoid and recover
transfers and/or the value thereof under Bankruptcy
Code sections 544, 545, 547, 548, 549, 550 and/or
553(b)(1) ("Avoidance Actions"), provided that
neither Carolco nor its estate may assert any
Avoidance Action (a) to recover any Asset and/or the
value thereof, or (b) if the assertion of an
Avoidance Action would materially adversely affect
the value of any Asset or impose any liability on
Fox. (The prohibition on asserting an Avoidance
Action as set forth herein shall survive the
Closing.)
(17) All claims and causes of action
whether prior to or after the filing of the petition
in the Bankruptcy Court relating to or arising out
of (i) management, operation, or ownership of
Carolco, or Controlled Entities, (ii) acts or
omissions by the holders of debt or equity
securities or secured claims of Carolco or
Controlled Entities, (iii) this Agreement; or
(iv) proceeds arising from claims under the audit
report from Film Financial Consultants dated June
1995 (the "Pioneer Audit"), whenever the proceeds of
the Pioneer Audit are received, and one-half of all
proceeds (net of costs incurred by either party
related to such audit) from any audit that was
initiated by Carolco prior to the Closing (other
than the Pioneer Audit and the TriStar Audit),
whenever received (except that if, after the
Closing, issues are raised in such audit that relate
to Included Payment Rights, any recovery in respect
of such issues shall constitute Assets).
(18) Prepaid retainers paid to
professionals, prepaid utility deposits, and prepaid
insurance premiums, except for prepaid premiums paid
for the insurance identified in Paragraph 8.11.
(19) Any claims relating to items
specified in paragraphs (1) through (18) above.
(20) Any goodwill.
(21) Collectively, all of the assets
described in this paragraph B are the "Excluded
Assets". As used in this Agreement, Excluded Audit
Rights means rights to payments in respect of audits
to which Carolco is entitled under this Agreement.
C. A complete list of the material
Assets, identified as to each Carolco company,
Anabasis, or, if applicable, Atalanta Films
International B.V., Atalanta Films International
(Australia) Pty., Ltd., Atalanta Films Japan, BV,
and other Atalanta entities ("Atalanta") that owns
or has the rights to the Asset, is set forth on
Schedule 1. Schedule 1 is to be delivered in
accordance with Paragraph 9.3, and is incorporated
herein by this reference. Carolco shall not expend
or otherwise dissipate the Included Payment Rights.
To the extent permissible under Carolco's agreements
with its creditors, all Included Payment Rights will
be segregated by Carolco as received pending the
Closing, and deposited in a separate account
requiring the joint signature of Carolco and Fox.
If the Included Payment Rights cannot be deposited
in a joint account because of Carolco's agreements
with its creditors, or if, notwithstanding the
foregoing, any Included Payment Rights are expended
or otherwise dissipated, the full amount of the
Included Payment Rights received shall be credited
against the purchase price at the Closing. At
reasonable times and upon reasonable notice, Fox,
its employees and agents, shall have the right to
review, copy, and audit, at Fox's expense, the books
and records of Carolco related to all amounts
received by Carolco from whatever source to
determine compliance with the provisions of this
Agreement. Any dispute as to the amount of credit
against the purchase price shall be fully and
finally resolved by a binding decision made by a
mutually satisfactory independent accountant
familiar with the business and assets of an
entertainment business, who shall establish the
offset amount, if any, within 30 days of referral of
the matter to him. The name of the accounting firm
and accountant shall be agreed to by the parties
within 5 business days of the date either party
notifies the other in writing that, in such party's
good faith opinion, the matter cannot be resolved by
the parties. If the parties cannot agree on the
accounting firm and accountant within the 5 business
day period, the Bankruptcy Court shall select a
recognized accounting firm that is not the current
accounting firm of either Fox or Carolco.
The parties further agree as follows:
1. Purchase Terms.
1.1 (a) At the Closing, Carolco
Pictures will sell, and will cause the Carolco
Subsidiaries to sell, and Fox will purchase the
Assets for $50,000,000, less any credit that has
been retained by Carolco as described in the
immediately preceding Paragraph C., and less the
reductions, if applicable, described in Paragraphs
3.3(e), 9.2, 9.4, and 8.13. The purchase price
shall be payable by wire transfer (or other cash
equivalent) at the Closing as Carolco Pictures
directs.
(b) Except for the right to
offset against the purchase price and reduce the
purchase price as described in Paragraph 1.1(a)
above, Fox shall not offset against the purchase
price or in any way reduce the purchase price by the
amount of any claims Fox may have against Carolco or
any claims against Carolco that Fox may acquire from
others in the future.
(c) Fox shall notify Carolco
within 30 days after the date Carolco has filed its
Chapter 11 proceeding with the U.S. Bankruptcy Court
for the Central District of California or in
Delaware (the "Bankruptcy Court") as to whether it
elects that the sale be consummated pursuant to
(i) Sections 363 and 365 of the U.S. Bankruptcy Code
(the "Code"); (ii) Sections 1129 and 365 of the
Code; or (iii) Sections 363, 365, and 1129 of the
Code. Carolco shall use its best efforts to
consummate the sale in accordance with such Sections
of the Code elected by Fox; provided, however, that
if Carolco cannot consummate the sale under Sections
363 and 365 (after using its best efforts to do so)
but can consummate the sale through use of a Chapter
11 Plan of Reorganization pursuant to Sections 1129
and 365 (the "Plan") that is consistent with this
Agreement by the date set forth in Paragraph 8.5,
Carolco may elect to, and Fox shall consent to,
consummation through such a Plan under the terms set
forth herein. Nothing stated herein shall prevent
Carolco from filing a Plan at any time, so long as
it is consistent with this Agreement and can be
consummated by the date set forth in Paragraph 8.5.
(d) The purchase price shall be
allocated among the Assets as the parties shall, in
good faith, mutually agree, based upon fair market
values. If the parties do not reach agreement
within 30 days prior to the Closing (but in no event
shall any such failure to agree, delay the Closing),
the issue of the allocation shall be resolved by
referral to a mutually satisfactory independent
accountant familiar with the business and assets of
an entertainment business, who shall establish the
allocation within 30 days of appointment. The
decision of the accountant shall be final and
binding on the parties, and the parties shall share
equally in the cost of the accountant. The name of
the accounting firm and accountant shall be agreed
to by the parties within 5 business days of the date
the parties have determined they cannot reach
agreement on the allocation. The parties
acknowledge and agree that Fox is not acquiring any
goodwill or going concern of Carolco and no value
shall be allocated to such items.
(e) Carolco shall not enter
into any agreement with any third party that results
in any discount, compromise, or acceleration of
payment with respect to any Payment Rights;
provided, however, that (i) Carolco may accelerate
accounts receivable set forth on Carolco's
September 30, 1995 balance sheet, and (ii) Carolco
may, before and after the Closing, collect amounts
with respect to Excluded Payment Rights that are
earned under generally accepted accounting
principles as of a date prior to the earlier of
March 31, 1996 or the Closing, but which, in
accordance with the terms of Carolco's agreements,
may be paid up to three months after the date on
which they are earned.
1.2 At any time prior to the
Closing, Fox may give notice to Carolco that it
elects not to purchase an Asset, and such Asset
shall become an Excluded Asset and the purchase
price shall not be changed, except as otherwise
permitted pursuant to Paragraph 1.1(a).
1.3 Fox may, in its sole discretion
and without obtaining the consent of Carolco, assign
any or all of its rights and obligations hereunder
to any one or more existing or to be formed domestic
or foreign subsidiaries or affiliates of Fox, or its
parent company. Notwithstanding anything in the
preceding sentence to the contrary, Twentieth
Century Fox Film Corporation shall be liable for the
payment of the purchase price and the Assumed
Obligations (as defined below); provided, however,
that the liability of Twentieth Century Fox Film
Corporation for the payment of the purchase price
and the Assumed Obligations shall be deemed
satisfied to the extent such obligations are paid by
another party.
2. Closing. Subject to the satisfaction
or waiver of the conditions set forth in Paragraph
10, the Closing shall be held on the first business
day after the tenth calendar day after the entry of
the order by the Bankruptcy Court referred to in
Paragraph 10.2; provided, however, if there is a
stay of such order (or other injunction with respect
to such order), the Closing shall occur on the first
business day after the expiration of the stay (and
any other injunction) so long as the stay (and any
other injunction) is dissolved within ten (10)
calendar days of its effectiveness. If the stay
(and any other injunction) is not dissolved within
the 10-day period, Fox may, in its sole discretion,
elect not to proceed with the transaction. At the
Closing, Carolco shall deliver to Fox such executed
and, if required, notarized documents of transfer
for the Assets which Fox may reasonably request,
including without limitation, if Fox elects to
purchase the Studio, a ▇▇▇▇ of sale and a grant deed
for the real property owned by the Studio, and an
assignment of personal property, and assignment of
leases, contracts, and other rights associated with
the Studio as requested by Fox. At the Closing, Fox
shall deliver to Carolco such executed documents
evidencing Fox's assumption of the Assumed
Obligations which Carolco may reasonably request.
3. Executory Obligations; Litigation.
3.1 Throughout this Paragraph 3,
reference is made to the responsibility of the
parties hereto for pre and post Closing obligations
to third parties. The parties hereto intend that
such obligations be the responsibility of the party
which receives revenues related to such obligation,
and the provisions of this Paragraph 3 should be
read in conjunction with this statement of intent.
For example, if Carolco is the party to a contract
which requires payments (whether such payments be
Residuals (as defined below), Participations (as
defined below), or other types of payments), and
Carolco, either before or after the Closing,
receives revenues related to such contract, which
revenues Carolco is entitled to retain under this
Agreement, Carolco is obligated to make any payments
of amounts as determined under the third party
contract which relate to (and only to) the revenues
Carolco receives. Conversely, if Fox is the party
to a contract which requires payments (whether such
payments be Residuals, Participations, or other
types of payments), and Fox receives revenues after
the Closing related to such contract, which revenues
Fox is entitled to retain under this Agreement, Fox
would be obligated to make any payments of amounts
as determined under the third party contract which
relate to (and only to) the revenues Fox receives.
Fox shall not assume and shall not be
liable for any obligations or liabilities of Carolco
not expressly assumed herein. Without affecting the
generality of the foregoing, Fox shall not be liable
for:
(a) any costs, expenses,
obligations, or liabilities which result from
benefits received by Carolco;
(b) any costs, expenses,
obligations, or liabilities related to or arising
out of any employment relationships of Carolco;
(c) any residual payments
pursuant to collective bargaining agreements
(collectively, "Residuals") resulting from Excluded
Payment Rights or Excluded Audit Rights;
(d) Intentionally deleted.
(e) obligations in respect of
the Litigation described in Paragraph 3.3, except as
Fox assumes such obligations pursuant to Paragraph
3.3(f);
(f) any judgments, claims,
damages, fees, fines, or costs awarded against or
incurred by Carolco, or agreed to by Carolco in
connection with the TriStar Audit and any TriStar
counterclaims against Carolco arising out of the
TriStar Audit (the "TriStar Counterclaims");
(g) any talent participations
or producer royalties, including any fees payable
for merchandising and music rights (collectively,
"Participations") that are not listed on Schedule
5.4(d); and any Participations, whether or not
listed on Schedule 5.4(d), resulting from Excluded
Payment Rights or Excluded Audit Rights;
(h) obligations under output
agreements unless such obligations are contained in
executory contracts assigned to Fox pursuant to
Paragraph 8.8, and then only with respect to
obligations which result from Included Payment
Rights or Included Audit Rights; and
(i) obligations arising out of
audits, arbitrations, settlements, or judgments of
the Participations or residuals that are not the
obligation of Fox pursuant to Paragraph 3.1(g)
above, even if the audit, arbitration, settlement,
or judgment requires a payment after the Closing.
3.2 From and after the date of the
Closing, Fox agrees to assume and be liable only for
the following specifically identified obligations
(collectively, the "Assumed Obligations"):
(a) Residuals resulting from
Included Payment Rights and Included Audit Rights;
(b) Obligations under executory
contracts assigned to Fox pursuant to Paragraph 8.8
which result from benefits under such executory
contracts to which Fox is entitled under this
Agreement;
(c) Payment or other
contractual obligations to talent with respect to
the Project Rights and Participations entered into
prior to the date of this Agreement that are listed
on Schedule 5.4(d) and that result from Included
Payment Rights or Included Audit Rights;
(d) Obligations under
distribution agreements (relating exclusively to the
Library) assigned to Fox pursuant to Paragraph 8.8
that result from Included Payment Rights or Included
Audit Rights; and
(e) Obligations assumed in
accordance with Paragraph 3.3(f) below.
3.3 Carolco is currently a party in
several actions in Superior Court, all of which have
been consolidated into a single action, relating to
the right to make a live action motion picture based
upon the comic book character Spiderman (the
"Superior Court Litigation"). The captions for the
Superior Court Litigation, and a separate action
that has not been consolidated and in which Carolco
is not a party (alone, the "MGM Litigation"), are
listed on Schedule 3.3A attached hereto. Carolco is
also a party in interest and creditor in the Chapter
11 proceeding of 21st Century Film Corporation and
related entities in the United States Bankruptcy
Court, in which the right to make a live action
motion picture based upon the comic book character
Spiderman is at issue (the "Bankruptcy Litigation").
The caption for the Bankruptcy Litigation is set
forth on Schedule 3.3B attached hereto.
(a) In recognition of Fox's interest
in Spiderman, the TriStar Audit, and the other items
in the Library and the Project Rights that Fox is
purchasing hereunder, between the date hereof and
the Closing, Carolco shall use its best efforts, at
Carolco's expense, to protect the rights of Carolco
to Spiderman, to any other material Project Rights,
material rights in the Carolco Library, or other
material items in the Library, and to defend against
the TriStar Counterclaims. During such period,
Carolco shall use its best efforts to assert
zealously the positions of Carolco in the Superior
Court Litigation, the Bankruptcy Litigation, the
TriStar Audit, and any other litigation, claims, or
other proceedings that place at issue Carolco's
rights, title and interest in and to Spiderman, any
other material Project Rights, material rights in
the Carolco Library, or other material items in the
Library (collectively, and including the TriStar
Audit, the Superior Court Litigation and the
Bankruptcy Litigation, the "Litigation").
Immediately upon execution of this Agreement,
Carolco and its counsel shall enter into ongoing
consultations and discussions with Fox and its
counsel in connection with all aspects of the
Litigation (to the extent that is, in the reasonable
opinion of Carolco, consistent with preserving
Carolco's attorney-client and work product
privileges).
(b) To facilitate Carolco's ability
to convey to Fox Carolco's rights to Spiderman, Fox
shall file with the Bankruptcy Court an emergency
motion to obtain authorization, if necessary, from
the Bankruptcy Court allowing Fox to immediately
move in the Superior Court to intervene in the
Superior Court Litigation, and, at Fox's option, the
Bankruptcy Litigation, and Carolco shall cooperate
with and support Fox in obtaining such authorization
from the Bankruptcy Court and in pursuing Fox's
motion in the Superior Court to intervene in the
Superior Court Litigation, and, if requested by Fox,
the Bankruptcy Litigation. If the motion to
intervene is granted, in recognition of the common
interests of the parties in the Superior Court
Litigation, without waiving any applicable
privilege, Carolco and Fox agree to enter into a
joint defense agreement as permitted under
applicable law. In addition, Carolco agrees to
support any motion Fox may make to seek relief from
any automatic stay resulting from Carolco's
bankruptcy filing so as to permit the Superior Court
Litigation to proceed.
(c) Carolco shall not enter into a
settlement or other voluntary disposition of the
Litigation (except for the Bankruptcy Litigation)
without Fox's written consent (unless approved by
the Bankruptcy Court pursuant to a motion upon
notice to Fox).
(d) Notwithstanding the rights of
Fox as described above prior to the Closing,
immediately following the Closing, so long as Fox
desires to continue to assert its rights to
Spiderman, any other material Project Rights,
material rights in the Carolco Library, or other
material items in the Library in the Litigation, or
defend against the counterclaims in the TriStar
Audit, Fox shall have and maintain full and complete
control of the Litigation, and any future litigation
and proceedings insofar as they relate to the rights
to Spiderman or any other Project Rights or items in
the Library, or the TriStar Audit, at its expense.
(e) Notwithstanding the Closing,
Carolco shall be liable for (i) its costs of defense
in any Litigation; (ii) any indemnification
obligations it may have to Marvel Entertainment
Group, Inc. ("Marvel"), or any other entity (other
than RCS) that became due or payable or are incurred
prior to the Closing; and (iii) for any damages or
settlement amounts incurred by or awarded against
Carolco arising out of any Litigation. Nothing in
this paragraph constitutes a waiver of Carolco's
right to seek discharge or otherwise treat, pursuant
to the Code, the indebtedness referred to in this
paragraph; provided, however, that if Marvel
requires, as a condition of entering into an
agreement with Fox as contemplated by Paragraph
10.1, that its attorneys' and other professional
fees and costs covered by Carolco's indemnification
of Marvel be paid in full at that time, Fox may pay
such fees and costs and reduce the purchase price
accordingly. Any amounts owing for attorneys' and
other professional fees and costs to Marvel's
counsel that are covered by Carolco's
indemnification as of the Closing shall be paid by
Carolco prior to or at the Closing or Fox may pay
such amounts and reduce the purchase price
accordingly.
(f) In no event shall Fox be liable
for any judgments, claims, damages, fees, fines, or
costs awarded against or incurred by Carolco, or
Marvel, or agreed to by Carolco or Marvel in
settlement of the Litigation; provided, however,
that any damages recovered by Carolco in the
Litigation shall be payable to Fox as the owner of
the Asset that is the subject of the reward or
recovery, and attorneys' fees and costs awarded to
Carolco shall be paid as awarded by the Court, or in
the absence of an allocation, pro rata based on
total fees and expenses incurred by Carolco and Fox
during the Litigation. Notwithstanding anything in
this Agreement to the contrary, (i) upon the
Closing, Fox shall assume and be liable for
Carolco's indemnity obligations which become due and
payable after the Closing (a) to RCS in accordance
with the terms of that certain Release and Quitclaim
Agreement dated as of March 28, 1995 between Carolco
and RCS, (b) to Canal+ as such indemnity obligations
are set forth in Exhibit "C" attached hereto, and
(c) to Pioneer, for which the indemnity obligations
shall be substantially the same as (and no broader
or more extensive than) those set forth in Exhibit
"C"; and (ii) if Fox, in its sole discretion, elects
to waive the condition set forth in Paragraph 10.1,
Fox shall assume all of Carolco's obligations
pursuant to Carolco's agreement with Marvel relating
to Spiderman, as further described in Paragraph 10.
4. Other Offers.
4.1 (a) At all times between the
date of the execution of this Agreement and the
earlier of its termination or the Closing, Carolco
Pictures will not, and will not permit the Carolco
Subsidiaries or any of its or their officers,
directors or representatives, directly or indirectly
and in any capacity, to take any action to solicit
or initiate any Acquisition Proposal (as defined
below) for the Assets; provided, however, that
Carolco may engage in negotiations concerning an
Acquisition Proposal with, or disclose any nonpublic
information relating to the Assets, or afford access
to the properties, books, or records of Carolco
related to the Assets, to any person or entity only
if, in the reasonable written opinion of Carolco's
investment banker, Carolco has received a firm,
written Acquisition Proposal from a reputable buyer
that is on terms financially superior to those
offered in this Agreement (a "Competing Offer").
(b) Carolco shall promptly
notify Fox in writing, in accordance with Paragraph
17, after receipt of any Acquisition Proposal or
Competing Offer, which notice shall specify the
terms of the Acquisition Proposal or Competing Offer
and, if a Competing Offer, shall include a copy of
the opinion of Carolco's investment banker.
(c) "Acquisition Proposal"
means any offer or proposal to Carolco for, or any
indication of interest in, a merger, sale, or other
business transaction involving some or all of the
Assets, Carolco Pictures, the Carolco Subsidiaries
or the acquisition of more than 10% of the
outstanding voting securities or securities
convertible into voting securities of Carolco
Pictures or a Carolco Subsidiary.
4.2 (a) Fox shall have five (5)
business days after its receipt of Carolco's notice
of receipt of a Competing Offer that includes the
acquisition of all of the Assets which Carolco
intends to accept to amend the terms of this
Agreement to be at least as favorable as the terms
in the Competing Offer, in which case this
Agreement, as amended, will remain in effect. If,
in accordance with Paragraph 4.3, Carolco intends to
accept one or more Competing Offers for less than
all of the Assets, Fox shall have the right, by
giving notice to Carolco within five (5) business
days after its receipt of Carolco's notice of each
Competing Offer, whether the Competing Offers are
received concurrently or over time, and including
higher Competing Offers made after Fox has made
Replacement Offers (as defined below) (but subject
to a matching period of three (3) business days
after Fox's receipt of Carolco's notice of a higher
Competing Offer), to make one or more replacement
offers for the Assets that are the subject of one or
more of the Competing Offers at a price that matches
or exceeds that set forth in any one or more
Competing Offers (in either event, and whether for
all of the Assets described herein or for those set
forth in a Competing Offer, the "Replacement
Offer"). In each such case Carolco shall accept
Fox's Replacement Offer as an amendment to this
Agreement and in lieu of the Competing Offer that
was the subject of the Replacement Offer. Carolco
shall use its best efforts to promptly obtain the
Bankruptcy Court's approval of and consummate the
transaction described in this Agreement, as amended
to include the Replacement Offer, which amendment
shall state that only the Assets that are the
subject of the Competing Offer are being acquired,
only the Assumed Obligations relating thereto are
being assumed, and shall set forth the purchase
price for those Assets. Fox's delivery to Carolco
of a Replacement Offer shall automatically amend
this Agreement as set forth in the Replacement
Offer.
(b) If Fox fails to notify
Carolco of its desire to so amend this Agreement
within the time periods described above, Carolco may
enter into a contract with the third party who made
the Competing Offer (the "Third Party") on the same
terms and conditions described in Carolco's notice
within 30 calendar days after the date of Carolco's
notice. If (i) the final agreement between Carolco
and the Third Party is not fully executed within 30
calendar days after the date of Carolco's notice, or
(ii) the transaction with the Third Party is not
closed within nine (9) months after the date of
Carolco's notice, or (iii) the terms of the final
agreement are different in any material respect from
the terms described in Carolco's notice to Fox, then
the Competing Offer shall again be subject to Fox's
rights to amend or terminate this Agreement and
match a Competing Offer as described above. If a
Competing Offer is conditioned upon the results of a
due diligence investigation, Fox's Replacement Offer
may include a conforming due diligence right.
(c) Carolco's signing of such
an agreement with a Third Party shall immediately
terminate this Agreement; provided, however, that
the terms of Paragraph 4.2 and the terms of
Paragraph 12.2 through and including 12.6 shall
survive such termination. If, following the 9-month
period described above, the final agreement between
Carolco and the transaction with the Third Party
does not close, Fox, at its option, may deliver to
Carolco notice of reinstatement and the parties
shall reinstate this Agreement giving effect to any
Replacement Offers made and consummate the
transaction on the terms described herein, except
that the dates shall be amended to take account of
the delay.
(d) If Fox makes a Replacement
Offer, as described in Paragraph 4.2(a), or meets
the terms of a Competing Offer as described in
Paragraph 4.2(b), and the party making the Competing
Offer makes another Competing Offer, Fox shall again
have the right to make a Replacement Offer or meet
the terms of the Competing Offer within three (3)
business days of notice of such Replacement Offer or
Competing Offer, and such rights shall continue
under the terms described in Paragraph 4.2, so long
as Carolco continues to receive Competing Offers.
(e) Any order of the Bankruptcy
Court establishing an overbidding procedure with
respect to the sale of some or all of the Assets
shall be consistent with the terms of this
Agreement, including the procedures set forth in
this Paragraph 4, and specifically acknowledging
that any overbid that attempts to negate the
provisions of Paragraph 10.1(e) shall not be
acceptable. The terms of this Paragraph 4.2(e)
shall survive the termination of this Agreement.
4.3 Nothing contemplated in this
Paragraph 4 shall prohibit Carolco or the members of
its board of directors from complying with its and
their (a) fiduciary duties; (b) obligations under
applicable state and federal law or rules and
regulations promulgated thereunder; and
(c) obligations to comply with any orders of the
Bankruptcy Court, including the obligation to
disclose information. Fox agrees that it shall not
file a claim or complaint or bring a cause of action
against a Carolco director who, in good faith and
after sufficient evaluation and analysis, and in
compliance with his fiduciary duty, votes to approve
or accept a Competing Offer.
5. Representations and Warranties of
Carolco. Carolco represents and warrants to Fox
that:
5.1 Authorization of Agreement.
Subject to approval of its shareholders or approval
of the Bankruptcy Court, Carolco Pictures' and the
Carolco Subsidiaries' execution, delivery and
performance of this Agreement and the consummation
of the transactions contemplated hereby have been
duly authorized by all necessary corporate action of
Carolco Pictures and the Carolco Subsidiaries. This
Agreement has been duly executed and delivered by
Carolco Pictures and the Carolco Subsidiaries and
constitutes a legal, valid and binding obligation of
Carolco Pictures and the Carolco Subsidiaries,
enforceable in accordance with its terms, subject to
approval of the Bankruptcy Court.
5.2 Insurance. All causes of
action, claims, and other actions asserted by third
parties against Carolco with which Carolco has been
served in regard to the Assets have been reported to
Transamerica Insurance Group ("TIG"), Carolco's
insurance carrier, during the policy period in which
the causes of action, claims, or other actions were
made.
5.3 Governmental Approvals. Except
for (a) confirmation of a Plan or approval of a sale
by the Bankruptcy Court as described in Paragraph 8
below, and (b) compliance with any applicable
requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), no
approval of any court or administrative agency is
required for the execution, delivery, and
performance by Carolco of this Agreement.
5.4 Title to Assets, Absence of
Liens and Encumbrances. Except as set forth on
Schedule 5.4, a copy of which is attached hereto or
delivered herewith or hereafter, as permitted
pursuant to Paragraph 9.3, and incorporated herein
by this reference, Carolco has not sold, conveyed,
transferred, hypothecated or otherwise disposed of
any of Carolco's right, title, or interest in and to
any material Asset, or agreed to sell, convey,
transfer, hypothecate (except for any replacement
liens required as a result of any adequate
protection order) or otherwise dispose of any of
Carolco's right, title, or interest in and to any
material Asset to any other person or entity. At
the Closing, Carolco shall have the legal right and
capacity to convey, and shall convey to Fox all of
the right, title, and interest owned or held by
Carolco in and to the Assets. Except as set forth
in Schedule 5.4(a) and subject to the Fox
Acknowledgement contained in Paragraph 10.2, such
conveyance shall be free and clear of all liens,
claims, charges, pledges, security interests or
other encumbrances of any nature whatsoever other
than the Assumed Obligations. For purposes of this
Agreement, free and clear shall mean, without
limiting the generality of the foregoing, free and
clear of any claims or liens asserted by the Guilds
as defined in Paragraph 8.13, any replacement liens
that were required as a result of an adequate
protection order, any liens purporting to secure
obligations of Carolco in respect of the Library or
the Project Rights, and any liens or mortgages held
or owned by third parties on any copyrights owned by
Carolco ("Free and Clear"). Schedule 5.4(a) lists
all exceptions to Carolco's obligation to convey
Free and Clear; 5.4(b) lists all binding
distribution agreements related to the Library that
exist as of the date of this Agreement; 5.4(c) lists
all material obligations to talent entered into
prior to the date of this Agreement with respect to
Project Rights; 5.4(d) lists all Participations
relating to the Assets (which shall be the list
included with the letter dated November 9, 1995 from
counsel for Fox addressed to Carolco and counsel for
Carolco, except that ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, his
affiliates, and insiders of his affiliates shall be
deleted, and any applicable merchandising and music
Participations shall be included); and 5.4(e) lists
all Residuals relating to the Assets.
5.5 Ownership. The Assets listed on
Schedule 1, and Cutthroat Island, comprise all
material film and production and development
properties and all material rights and assets owned,
leased, or licensed by Carolco and all of its
subsidiaries. Such ownership does not violate or
infringe on the
right of any other person or entity in any material
respect; provided, however, that Carolco makes no
representation and warranty as to its ownership
interest in miscellaneous Projects in Development
not specifically named on Schedule 1, and Cutthroat
Island, except that the representation and warranty
set forth herein does apply to rights to sequels to
Cutthroat Island. The signatories to this Agreement
are the sole entities that are required to sign this
Agreement in order to convey the items in the
Library and the Project Rights and the other Assets
listed on Schedule 1 to Fox on the terms described
in this Agreement.
5.6 Litigation. As of the date
hereof, all of the litigation to which Carolco is a
party and on which Carolco has been served is listed
on Schedule 5.6, attached hereto and incorporated
herein. Carolco shall, once per quarter and five
(5) business days prior to the Closing, provide Fox
with an updated Schedule 5.6.
5.7 Accuracy. All of the documents
provided to Fox by Carolco in connection with this
transaction are accurate copies of the original
documents. The information in the documents
provided to Fox by Carolco is true and accurate in
all material respects and does not omit material
facts necessary to make the statements therein not
misleading, in light of the circumstances under
which they were made.
6. Representations and Warranties of
Fox. Fox represents and warrants to Carolco that:
6.1 Authorization of Agreement.
Fox's execution, delivery and performance of this
Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all
necessary corporate action. This Agreement has been
duly executed and delivered by Fox and constitutes a
legal, valid and binding obligation of Fox,
enforceable in accordance with its terms.
6.2 Non-Contravention. Fox's
execution, delivery, and performance of this
Agreement will not contravene any agreement to which
it is a party or any order or judgment of any court.
6.3 Governmental Approvals. Except
for compliance with any applicable requirements of
the HSR Act, no approval of any court or
administrative agency is required for the execution,
delivery, and performance by Fox of this Agreement.
7. Miscellaneous. This Agreement shall
be governed by the laws of California (except to the
extent that the U.S. bankruptcy laws control, and
except to the extent that matters related to
corporate procedure and consents are subject to
Delaware law). The forum for resolution of any
dispute shall be in Los Angeles, California. This
Agreement contains the entire understanding and
agreement of the parties in regard to the subject
matter set forth herein. If any material term or
material provision hereof is determined by a court
to be invalid or unenforceable, (a) Fox may, at its
option, terminate this Agreement, or (b) if Fox has
not exercised its option to terminate, the term or
provision shall be limited to the extent necessary
to make it enforceable or severed from the
Agreement, in which case, all of the remaining terms
and provisions of this Agreement shall remain in
full force and effect. This Agreement has been
negotiated, and the parties agree that no party is
the "drafter" for purposes of any rule of
construction to the effect that contracts are to be
construed adversely to the drafter. Carolco's
obligations under this Agreement shall constitute
administrative expense liability of Carolco and its
estate under Bankruptcy Code Sections 507(a)(1) and
503(b)(1)(A). In order to permit the parties more
readily to comply with requirements of the Federal
Communications Commission, Securities and Exchange
Commission, and/or other governmental regulatory
bodies, Carolco and Fox shall each deliver to the
other, on a regular basis, word processing disks in
a WordPerfect 5.1/6.0 format containing copies of
all documents prepared by such parties which are
reasonably requested by the other party in
connection with this Agreement.
8. Pre-Closing Actions and Other
Covenants. Between the execution of this Agreement
and the Closing, the following actions shall be
completed within the time frames set forth below:
8.1 By November 17, 1995, Carolco
Pictures and the Carolco Subsidiaries (except for
Carolco Studios, Inc., (North Carolina) which shall
be obligated to file only as and when set forth in
Paragraph 9.2) shall have filed Chapter 11 petitions
with the Bankruptcy Court, and by November 22, 1995
Carolco shall have filed and served its motion with
the Bankruptcy Court requesting entry of an order
assuming this Agreement as described in Paragraph
8.2. Carolco Pictures shall notify Fox in writing,
within a reasonable period of time, whether any
Carolco Subsidiary will not file a Chapter 11
petition by the date set forth above, and will
provide Fox with a list of any Asset owned by any
Carolco Subsidiary that cannot or will not file a
Chapter 11 petition by the date set forth in this
Paragraph 8.1.
8.2 By December 29, 1995, an order,
reasonably satisfactory in form and substance to
Fox, of the Bankruptcy Court shall have been
entered, assuming this Agreement under Section 365
of the Code and approving it in its entirety.
8.3 (a) By February 15, 1996,
Carolco shall have filed a proposed Plan and
accompanying proposed disclosure statement (the
"Disclosure Statement") with the Bankruptcy Court,
if Fox has elected the Plan as one of its options or
if Carolco elects to do so, as described in
Paragraph 1.1. Any Plan filed by Carolco shall be
consistent in all respects with the terms of this
Agreement, and shall allow for confirmation of the
Plan by the Bankruptcy Court by June 3, 1996.
(b) Carolco shall serve by U.S.
mail all notices with respect to the hearing upon
which the Bankruptcy Court will enter its order as
described in Paragraphs 8.5 and 10.2 to all
creditors including, without limitation, parties to
executory contracts (even if not so required by the
Code) (the "Notice re Order") in form reasonably
approved by Fox, and shall serve all other notices
pertaining to the disposition of the Assets in
accordance with the provisions of the Code and the
rules promulgated thereunder, and shall otherwise
comply with the requirements of the Code and such
rules. The Notice re Order shall be published in a
newspaper of national circulation, such as the Wall
Street Journal, National Edition, and a trade
journal. Fox shall reimburse Carolco for the cost
of publication. The Notice re Order shall state
that Carolco is seeking an order of the Bankruptcy
Court approving and authorizing the sale of the
Assets, which shall be the property generally listed
by type (unless circumstances warrant listing
specific properties), and that Carolco has the legal
right and capacity to convey, and all of the right,
title, or interest owned or held by Carolco is being
conveyed to Fox free and clear of all liens, claims,
and encumbrances except for the Assumed Obligations
and other claims or encumbrances listed on Schedule
5.4(a), and subject to the Fox Acknowledgment
contained in Paragraph 10.2. With respect to
executory contracts being assigned to Fox, the
Notice re Order and a separate notice (the "Notice
re Contracts") shall be served by U.S. mail on any
non-Carolco party asserting a claim in, or based on,
the contract and shall state the amount necessary to
cure any default under Section 365 of the Code and
shall specify the date by which the creditor or
party to the contract must object to the cure
amount. If there is a dispute between Carolco and
the creditor or other party as to the amount
required to cure, the Bankruptcy Court shall make a
final and binding determination of the amount. The
Notice re Contracts shall state that upon Carolco's
tendering of the amount required to cure material
defaults, which will occur on or before the Closing,
the creditor shall be barred from asserting against
Fox, as assignee, or any affiliate of Fox, any
default or unpaid obligation under such contract
allegedly arising or incurred prior to the Closing.
8.4 By May 1, 1996, Carolco shall
have (a) completed the solicitation of acceptances
(including distribution of the Disclosure Statement)
and obtained the consents of those whose consents
are necessary to approve the Plan, such that the
Plan is confirmable, if a Plan has been elected; or
(b) filed with the Bankruptcy Court, at the election
of Fox, documents and pleadings, in form and
substance reasonably acceptable to Fox, required
pursuant to Sections 363 and 365 of the Code, if a
motion under those sections has been elected; or
(c) both (a) and (b) if Fox has elected to proceed
with all options or Carolco desires to proceed with
the Plan as well as motions under Sections 363 and
365.
8.5 By June 3, 1996, the Bankruptcy
Court shall have entered an order confirming the
Plan or approving the sale by Carolco pursuant to
Sections 363 and 365 of the Code, in each case in
form and substance reasonably approved by Fox.
8.6 Between the date hereof and the
Closing, Carolco shall not sell, assign, amend,
convey, hypothecate (except for any replacement
liens required as a result of any adequate
protection order), or grant any rights or interests
to any of the Assets to any third party without the
prior written consent of Fox or take any other
action which could adversely affect the Assets.
8.7 Carolco shall use its best
efforts to consummate this transaction by, among
other things (a) encouraging Carolco's bondholders
and others with an interest in the transaction
described herein to meet directly with Fox at Fox's
request; (b) coordinating with Fox during the
preparation of the bankruptcy documents and
accepting reasonable comments from Fox in connection
with the preparation and filing of the bankruptcy
documents; and (c) causing the Carolco Subsidiaries
(i) to sell and deliver to Fox any of the Assets in
which such Carolco Subsidiary has an interest and
(ii) to take any required action (including, without
limitation, delivery of documents and making of
filings) to consummate the transactions contemplated
in this Agreement.
8.8 On or before February 9, 1996,
and based on the Schedules to be provided by
Carolco, Fox shall deliver to Carolco a preliminary
list identifying the executory contracts that Fox
elects to have assigned to it. Fox may, by written
notice delivered to Carolco on or before April 1,
1996, modify such list. Such contracts shall
include binding distribution agreements related
exclusively to the Library that exist as of the date
of this Agreement which are listed on Schedule 5.4;
provided, however, that nothing stated herein
obligates Fox to elect to have assigned to it any
executory contracts, other than distribution
agreements that relate exclusively to the Library,
and, if Fox acquires the Studio, all executory
contracts necessary for the ongoing operation of the
Studio.
8.9 Fox shall use its best efforts
to consummate this transaction, and shall take any
required action (including, without limitation,
delivery of documents and making of filings) to
consummate the transactions contemplated in this
Agreement.
8.10 Carolco shall not, before or
after the Closing, assume any material executory
contract that Fox has not elected to have assigned
to it pursuant to Paragraph 8.8 if such executory
contract relates to an Asset and could create or
impose any material obligation or liability for Fox
after the Closing. On or before February 9, 1996,
and based on the Schedules to be provided by
Carolco, Fox shall deliver to Carolco a preliminary
list identifying any executory contracts referred to
in the preceding sentence. Fox may, by written
notice delivered to Carolco on or before April 1,
1996, modify such list. As to any such executory
contract, on or before June 3, 1996, Carolco shall
obtain entry of order or orders of the Bankruptcy
Court on notice to the non-Carolco parties to any
such contract (a) authorizing and providing for
rejection of any such executory contract in the
bankruptcy proceeding effective as of the Closing,
or (b) determining that any such executory contract
will not create or impose any material obligation or
liability for Fox after the Closing.
Notwithstanding the foregoing, Carolco may, at Fox's
written request, delivered to Carolco by April 1,
1996, assume such contracts that have been modified
in a manner that is reasonably acceptable to Fox and
insures that Fox has no obligations or liability in
connection with such executory contracts. If such
modifications to assumed contracts requested by Fox
result in the expenditure of funds, Fox shall bear
the out of pocket costs incurred by Carolco. This
Paragraph 8.10 shall survive the Closing.
8.11 (a) Prior to the Closing,
Carolco shall deliver to Fox a copy of written
notice from TIG confirming that Carolco has paid the
necessary premiums on its Errors & Omissions Policy
(the "TIG Policy") to keep the TIG Policy in effect
through its scheduled expiration date of
September 15, 1996, and a copy of the policy. Prior
to the Closing, Carolco shall deliver to Fox a
letter from TIG or other evidence reasonably
satisfactory to Fox stating that the existing TIG
Policy does not vary in any material respect from
the prior policy. Carolco shall not terminate, nor
cause to be terminated, the TIG Policy prior to its
scheduled expiration date of September 15, 1996.
(b) Carolco shall indemnify,
defend, and hold harmless Fox, its past, present or
future shareholders, officers, directors,
affiliates, agents, servants, representatives,
successors, assigns and all other persons or
organizations acting on their behalf, and each of
them, from and against any and all claims, actions,
judgments, costs (including without limitation,
reasonable attorneys' fees and costs), expenses,
causes of action, obligations, debts, damages,
losses and liabilities of whatever kind of nature
brought by any third party (collectively, "Claims");
however, Carolco's obligations pursuant to this
paragraph shall be limited to only those obligations
for which coverage is provided to Carolco under the
TIG Policy or any other insurance available to
Carolco.
(c) Prior to the Closing,
Carolco shall use its reasonable efforts, at Fox's
expense, to cause Fox to be named as an Additional
Insured on Carolco's TIG Policy.
8.12 Prior to the Closing, Carolco
shall deliver written termination and release forms
to all third parties holding liens of records
(including, without limitation, copyright mortgages)
which have been satisfied and shall use its
reasonable efforts to obtain from such third parties
executed and, if required, notarized releases of all
liens of record that have been satisfied. The
releases shall be filed or recorded by Carolco
immediately upon receipt.
8.13 At or prior to the Closing,
Carolco shall obtain from SAG, DGA, WGA, the
International Alliance of Theatrical and Studio
Employees, the American Federation of Musicians, and
the Motion Picture Industry Pension and Health Plans
(collectively, the "Guilds") a certificate of
acknowledgement ("Certificate"). Each Certificate
shall be duly authorized and signed by an authorized
officer of the Guild, and shall state the full
amount, if any, of the Residuals (including, for
purposes of this Paragraph 8.13, any payments due to
the pension, health and welfare plans of the Guilds)
that remain unpaid through the date of the
Certificate, which date shall not be more than 30
days prior to the Closing, that is based upon
Excluded Payment Rights and Excluded Audit Rights.
The Certificate shall also state the estimated
amount of the Residuals that is based upon Excluded
Payment Rights and Excluded Audit Rights that is
estimated to be unpaid from the date of the
Certificate through the Closing. The Certificate
will further state that, upon the Guild's receipt of
the amounts set forth in the Certificate, no further
amounts are owed to that Guild through the date of
the Certificate, and that, conditioned upon the
tender of the amount, if any, set forth in the
Certificate, the Guild has no right or claim against
Carolco or Fox, and the Guild fully and finally
releases Carolco and Fox from any obligation to pay
or be liable for Residuals that were based upon
Excluded Payment Rights and Excluded Audit Rights.
On the Closing, proceeds from the purchase price
shall be delivered to the Guilds in the full amount
of the Certificate. Notwithstanding the above, if
Carolco, in good faith, notifies Fox in writing ten
(10) business days prior to the Closing that, in
Carolco's reasonable judgment, the amount set forth
in any particular Certificate is not correct, the
amount set forth in the Certificate shall be
withheld from the purchase price by Fox and retained
by Fox in a segregated account pending receipt by
Fox of a settlement agreement and release signed by
the Guild or a final judgment, not subject to any
further appeal to any court, by a court of competent
jurisdiction, setting forth the amount, if any, owed
to the Guild in accordance with the terms of this
paragraph, and that, upon tender of such amount, the
Guild will have no right or claim against Fox. Upon
receipt of such document, Fox shall deliver to the
Guild from the funds in such segregated account any
funds owing to it, and to Carolco any amounts owing
to it from the funds in such segregated account. If
(a) any Guild fails to timely return its
Certificate; or (b) Fox reasonably believes that any
other guild, union, or collective bargaining
organization, or any pension, health, or welfare
plan associated with a Guild, any other guild, union
or collective bargaining organization anywhere in
the world (collectively, "Other Union"), may claim
that Residuals are unpaid by Carolco as of the
Closing, and Fox reasonably believes it could be
liable to any Other Union due to Fox's independent
relationship or agreements with such Other Union for
amounts owing by Carolco as a result of Fox's
purchase of the Assets, Fox shall withhold from the
purchase price and maintain in the segregated
account the amount that Fox reasonably determines as
being the amount owed to that Guild or Other Union
pending final judgment, not subject to any further
appeal to any court, by a court of competent
jurisdiction setting forth the amount, if any, owed
to the Guild or Other Union in accordance with the
terms of this paragraph.
8.14 Prior to the Closing, any right,
title or interest of Atalanta in or to the Library,
Project Rights or other Assets listed on Schedule 1
shall have been terminated by Carolco, or
transferred, conveyed and delivered to Carolco, and
such transfer or termination shall (a) not create
any liability or obligation to Fox and (b) be
properly documented, duly authorized, and fully
enforceable. Prior to the Closing, Carolco shall
cause Anabasis to transfer, convey and deliver, in a
properly documented, duly authorized and fully
enforceable manner, any right, title or interest of
Anabasis in or to the Library, project Rights or
other Assets listed on Schedule 1 to either Fox or
Carolco without such transfer creating any liability
or obligation to Fox.
8.15 By May 1, 1996, Carolco shall
deliver to Fox, for Fox's information purposes only,
and not for purposes of determining Assumed
Obligations, a statement for each Participation
listed on Schedule 5.4(d), prepared in Carolco's
normal and customary manner, listing, among other
things, gross receipts and allowable deductions, if
any, and any amounts which are owing as a result of
revenues that have been received and retained by
Carolco, with such amounts being calculated through
and as of April 1, 1996. Carolco shall deliver an
updated statement for each Participation listed on
Schedule 5.4(d) calculated through the Closing
within 60 days after the Closing.
8.16 On or before December 29, 1995,
Carolco shall deliver to Fox the list of all
material executory contracts of Carolco relating to
the Assets (which list may be a copy of the list of
executory contracts required to be filed with the
Bankruptcy Court if such list identifies those
material executory contracts relating to the
Assets), and a list of all material rights Carolco
has granted to third parties with respect to the
Library and the Project Rights.
9. Due Diligence.
9.1 Prior to the Closing, Carolco
shall afford Fox and its representatives full and
complete access, as deemed necessary by Fox, to
Carolco's offices, representatives, facilities,
books and records with respect to the Assets and
shall allow representatives of Fox to discuss the
Assets with employees of Carolco and, subject to
Carolco's approval, which shall not be unreasonably
withheld, others designated by Fox. By December 1,
1995, Carolco shall provide to Fox a list of all
executives employed at the Studio, with their
titles, duties, and other terms of their employment
arrangements, and copies of all documents in the
possession or control of Carolco related to
ownership, operation, or condition of the real
property on which the Studio is located.
9.2 Fox will have until December 15,
1995 to complete its due diligence with respect to
the Studio and obligations, contracts, and claims
related thereto. To the extent Fox is not satisfied
with the findings of such due diligence, then on or
before December 15, 1995 Fox may, upon notice to
Carolco, elect to eliminate the Studio and any
related Assets from the Assets that Fox is
purchasing, and the Studio and the related Assets
shall be Excluded Assets, and the purchase price set
forth in Paragraph 1.1 shall be reduced by
$2,500,000. If Fox elects to purchase the Studio
and the related Assets, Carolco shall, upon notice
from Fox, cause Carolco Studios, Inc. (North
Carolina) to file a Chapter 11 petition by January
1, 1996 with the Bankruptcy Court, and the Studio
and the related Assets shall be sold pursuant to the
terms governing the sale of the other Assets as set
forth herein.
9.3 Unless already provided to Fox,
Carolco shall, within 10 business days after the
execution of this Agreement, deliver to Fox all
Schedules and Exhibits referred to in this
Agreement. Schedules C, 1, 5.4(a), and Exhibit D
are subject to Fox's reasonable approval (i) within
10 business days after receipt (in the case of the
Schedules) of the last of Schedules C, 1, and
5.4(a), as set forth in Paragraph 10.3, and (ii) in
the case of Exhibit D, within 10 business days after
receipt of the original documents contained in such
Exhibit or evidence that such documents have been
filed with the appropriate agencies, as set forth in
Paragraph 10.4.
9.4 Fox will have ten (10) business
days from the execution of this Agreement to provide
notice to Carolco that it elects to eliminate the
TriStar Audit (including the TriStar Counterclaims)
from the Assets that Fox is purchasing, and in such
case, the TriStar Audit shall be Excluded Assets,
the purchase price set forth in Paragraph 1.1 shall
be reduced by $2,500,000, and all reference in this
Agreement to the TriStar Audit and the TriStar
Counterclaims shall be null and void.
10. Conditions to Closing.
Notwithstanding anything to the contrary in this
Agreement, the obligations of Fox to purchase the
Assets under this Agreement are subject, at its
option, to the satisfaction or waiver (except that
Fox may not waive the condition set forth in
Paragraph 10.1 without the consent of Carolco unless
Fox agrees to assume all of Carolco's obligations
pursuant to Carolco's agreement with Marvel relating
to Spiderman) at or prior to the Closing of each of
the conditions set forth in Paragraphs 10.1 through
and including 10.11, except for Paragraph 10.5(b).
The obligations of Carolco to sell the Assets under
this Agreement are subject, at its option, to the
satisfaction or waiver at or prior to the Closing of
each of the conditions set forth in Paragraphs 10.2,
10.5(b), 10.6, 10.7, 10.8, and 10.11.
10.1 By February 9, 1996, Fox and
Marvel shall have entered into an agreement in
connection with Spiderman that is satisfactory to
Fox, in its sole discretion. Such agreement shall
include, without limitation, the following:
(a) Marvel's consent, if such
consent is required in the opinion of Fox, to
Carolco's assignment to Fox of all of Carolco's
rights under its agreement(s) with Marvel related to
Spiderman (the "Carolco-Marvel Agreement").
(b) Marvel's consent to an
extension, for the benefit of Fox, as assignee of
Carolco, of the current deadline to commence
principal photography on Spiderman until
September 30, 1998.
(c) Marvel's agreement to amend
those paragraphs of the Carolco-Marvel Agreement
related to the financial and indemnification
provisions, to the satisfaction of Fox.
(d) Marvel's agreement that Fox
will not be liable for or obligated to cure any
breaches by Carolco of the Carolco-Marvel Agreement,
including, without limitation, any indemnity
obligation of Carolco.
(e) If Fox does not acquire the
Assets pursuant to this Agreement, or the rights to
Spiderman through a Replacement Offer, through a
proceeding in the Bankruptcy Court, or otherwise,
(i) Marvel shall not be obligated to agree with any
other party acquiring any rights to Spiderman to
amend the Carolco-Marvel Agreement in any way, and
specifically shall not be obligated to agree with
any other party to amend the Carolco-Marvel
Agreement to comply with the terms set forth in
Paragraph 10.1(a), (b), (c), or (d) or any other
agreement Marvel has reached with Fox in connection
with Spiderman; and the order of the Bankruptcy
Court assuming this Agreement shall specifically so
state. If Marvel and Fox enter into the agreement
described in this Paragraph 10.1, but Fox does not
ultimately acquire the rights to Spiderman, Carolco
shall not sell, assign, transfer, or convey the
rights to Spiderman to any other person or entity,
without Marvel's prior written consent, which
consent Marvel may, in it sole discretion, withhold;
provided, however, that Carolco does not waive its
right to seek to assume and assign the Carolco-Marvel Agreement, without
Marvel's consent, to a
third party so long as there is no modification or
amendment to the terms of the Carolco-Marvel
Agreement.
10.2 By June 3, 1996, the Bankruptcy
Court shall have entered an order confirming the
Plan or approving the sale of the Assets, enabling
Carolco to sell, transfer and deliver the Assets to
Fox Free and Clear of all liens, claims, interests,
and other encumbrances, except as set forth in
Schedule 5.4(a) and except for the Assumed
Obligations, and except that Fox acknowledges (which
acknowledgement, as set forth in this Paragraph 10.2
is referred to as the "Fox Acknowledgement") that
(a) certain third parties have asserted an interest
in and contested Carolco's ownership of Spiderman,
and contend that they have an interest in or
ownership right to Spiderman, and some or all of
these third parties may also assert rights in and to
Spiderman under Section 365(n) of the Code; and,
(b) with respect to the TriStar Audit, TriStar has
asserted rights of offset and has asserted
counterclaims against Carolco. Neither Fox nor
Carolco acknowledge that any such third party's
purported rights to Spiderman, whether under Section
365(n) of the Code or otherwise, or any of TriStar's
assertions or counterclaims in connection with the
TriStar Audit are valid or enforceable. Fox and
Carolco agree, however, that if the Bankruptcy Court
or any other court of competent jurisdiction finds
in favor of any such third party, in regard to
Spiderman, or in favor of TriStar in connection with
the TriStar Audit, such finding shall not constitute
a breach of this Agreement by Carolco, and shall not
give Fox any right to terminate this Agreement, to
adjust the purchase price, or to otherwise make any
claim against Carolco or otherwise revise this
Agreement. The Bankruptcy Court shall issue
separate findings of fact and conclusions of law
that:
(a) Fox acted in good faith
under Bankruptcy Code Section 363(m) or otherwise;
(b) notice of the hearing
concerning approval of the sale and that the
transactions contemplated thereby (x) was given in
accordance with applicable Bankruptcy Rules and any
applicable order of the Bankruptcy Court and
(y) constitutes such notice is appropriate under the
particular circumstances and in accordance with
Bankruptcy Code Section 102(1)(A);
(c) Carolco has the legal right
and capacity to convey, and all of the right, title,
and interest owned or held by Carolco in and to the
Material Assets can and shall be conveyed and
transferred to Fox Free and Clear of all liens,
claims, charges, pledges, security interests or
other encumbrances (other than the Assumed
Obligations and other than as set forth in Schedule
5.4(a), and subject to the Fox Acknowledgement set
forth in Paragraph 10.2); and
(d) Fox shall only be liable,
with respect to the executory contracts that are
assumed by Carolco and assigned to Fox, for
liabilities and obligations in accordance with the
terms of this Agreement, and such executory
contracts can and shall be assumed and assigned to
Fox. Nothing in this Paragraph 10.2(d) shall
relieve Fox of its obligations in respect of
Participations as described in Paragraph 3.2(c).
10.3 Fox shall be satisfied by the
end of the period set forth in Paragraph 9.3, in its
reasonable judgment, with Schedules C, 1, 5.4(a),
and Exhibit D. There shall have been no material
adverse change to the Assets, and Carolco shall have
the right and ability to convey all of the Assets to
Fox in the condition described in and otherwise in
accordance with the terms of this Agreement.
10.4 Pioneer and Canal+ shall each
have executed, filed, and recorded unconditional
reconveyances of the copyright and assignments of
their respective rights (as applicable) to ▇▇▇▇▇▇▇
and Basic Instinct (as to Canal+) and Spiderman (as
to each of Pioneer and Canal+) in form and substance
reasonably satisfactory to Fox, and Pioneer and
Canal+ shall have unconditionally terminated their
security interests in Spiderman, and Canal+ shall
have unconditionally terminated its security
interests in ▇▇▇▇▇▇▇, and Basic Instinct. Fox
acknowledges that it has received the documents
included in Exhibit "D" attached hereto relating to
termination of Canal+'s rights and security interest
in Spiderman and that Carolco has advised Fox that
such documents satisfy the requirements of the
foregoing sentence. In addition, to the extent that
Pioneer acknowledges in writing (in form
satisfactory to Fox) that (a) Pioneer's only
interest in Spiderman is a lien in Carolco's
ownership interest in Spiderman to secure repayment
of certain sums (plus interest thereon) advanced by
Pioneer to Carolco, and that (b) Pioneer does not
have any ownership interest in Spiderman, then
Carolco may, in lieu of the unconditional
reconveyance and termination described in the first
sentence of this Paragraph 10.4, with respect to
Pioneer, obtain a final order of the Bankruptcy
Court authorizing the sale of Carolco's interest in
Spiderman free and clear of Pioneer's lien with
respect thereto.
10.5 (a) (i) Carolco shall have
performed in all material respects all of its
material obligations hereunder required to be
performed by it at or prior to the Closing; and
(ii) the representations and warranties of Carolco
contained in this Agreement shall be true in all
material respects at and (except to the extent that
such representations and warranties speak only as of
an earlier date) as of the Closing as if made at and
as of such time.
(b) Fox shall have performed in
all material respects all of its material
obligations hereunder required to be performed by it
at or prior to the Closing; the representations and
warranties of Fox contained in this Agreement shall
be true in all material respects at and (except to
the extent that such representations and warranties
speak only as of an earlier date) as of the Closing
as if made at and as of such time.
10.6 No court, arbitrator or
governmental body, agency or official shall have
issued any order, and there shall not be any
statute, rule or regulation, restraining or
prohibiting the consummation of the transaction
contemplated hereunder, and no proceeding shall have
been filed (a) challenging this Agreement or the
transactions contemplated hereby or seeking to
prohibit, alter, prevent or materially delay the
sale of the Assets (other than an opposition filed
in the Bankruptcy Court opposing the Plan or motions
filed pursuant to Section 363 and 365 of the Code
concerning the sale of the Assets); or (b) seeking
to restrain or prohibit Fox's ownership or operation
or use (or that of its subsidiaries or affiliates)
of the Assets.
10.7 There shall be no action taken,
or any statute, rule, regulation, injunction, order
or decree proposed, enacted, enforced, promulgated,
issued or deemed applicable to the transaction
contemplated hereunder, by any court, government or
governmental authority or agency, domestic or
foreign, other than the application of the waiting
period provisions of the HSR Act (including any
extensions thereof), in effect at the Closing that
is likely, directly or indirectly, to result in any
of the consequences referred to in clauses (a) or
(b) of Paragraph 10.6 above.
10.8 The parties shall not have
received any communication from the Department of
Justice or Federal Trade Commission (each, an "HSR
Authority") (which communication shall be confirmed
to the other party by the HSR Authority) that caused
such party reasonably to believe that any HSR
Authority has authorized the institution of
litigation challenging, impairing or diminishing the
benefits with respect to any of the transactions
contemplated by this Agreement, and the waiting
period provisions of the HSR Act shall have expired.
10.9 There shall not have been a
settlement or other disposition of any of the
Litigation relating to Spiderman or involving the
TriStar Audit that is not acceptable to Fox, in its
sole discretion, (reasonable discretion in the case
of an involuntary settlement or other involuntary
disposition), whether or not such settlement or
other disposition is approved by the Bankruptcy
Court. There shall not have been a settlement or
other disposition, whether voluntary or not voluntary, of any other
Litigation that would materially adversely affect the Assets that is not
acceptable to Fox, in its reasonable discretion, whether or not such
settlement or other disposition is approved by the Bankruptcy Court.
10.10 Carolco shall have made definitive provisions
satisfactory to Fox, in its sole discretion, to cure, at or before
Closing, any material defaults and material monetary obligations related
to any material executory contracts, including, without limitation,
Participations, to be assigned to Fox, as required by Bankruptcy Code
Section 365; and to pay, or make provision to pay, Participations to the
extent the Participations result from Excluded Payment Rights or
Excluded Audit Rights; and Carolco shall have delivered to Fox full and
complete releases signed by the Guilds as described in Paragraph 8.14
and if applicable, Fox shall have held back from the purchase price an
amount determined in accordance with Paragraph 8.13.
10.11 There shall have been no stay of the Bankruptcy
Court's order, as described in Paragraphs 8.5 and 10.2, or other
injunction pertaining thereto, or the stay and injunction pertaining
thereto shall have been dissolved within the time periods described in
Paragraph 2.
10.12 Carolco shall have satisfied any rights or claims
to Participations of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, or any of his affiliates or any
insider of any of his affiliates.
10.13 RCS Transfer. RCS shall have taken all
necessary steps to transfer all of its right, title and interest in and
to Spiderman and ▇▇▇▇▇▇▇ to Carolco pursuant to the settlement between
RCS and Carolco and such transfer has become unconditional.
11. Certain Fox Options. If this transaction does not close
or the Closing is delayed because of a dispute over the allocation of
the purchase price proceeds among Carolco Pictures and the Carolco
Subsidiaries, Fox may deposit the purchase price proceeds in trust.
Immediately following such deposit, the Closing will occur, and the
Bankruptcy Court shall thereafter allocate and distribute the proceeds
of the purchase price to Carolco Pictures and the Carolco Subsidiaries
in accordance with an allocation formula determined by the Bankruptcy
Court.
12. Termination.
12.1 This Agreement may be terminated at any time prior
to the Closing by mutual written consent of Carolco and Fox.
12.2 The terms of Paragraphs 12.2 through and including
12.6 shall survive the termination of this Agreement. Subject to the
survival of Paragraphs 4.2, 12.2 through 12.6, and 13 (the "Surviving
Paragraphs"), this Agreement shall terminate automatically, without
further action required by either party, immediately upon the occurrence
of any event or delivery of any notice as set forth in this Paragraph
12.2; provided, however, that Fox may, in its sole discretion, deliver
to Carolco, within 30 days after the occurrence or delivery of notice,
notice that it waives the automatic termination in accordance with the
terms of its notice of waiver.
(a) If one or more of the actions set forth in
Paragraphs 8.1 through 8.5 has not been accomplished within the time
frame for that action set forth therein, or if a Carolco Subsidiary that
owns or holds rights to a material Asset does not or cannot file a
Chapter 11 petition by the date set forth in Paragraph 8.1.
(b) If any of the conditions set forth in Paragraph
10 have not been achieved on or before June 30, 1996.
(c) If there has been a material adverse change in
or to the ownership of, rights to, or condition of the Assets, or
Carolco is unable to convey to Fox one or more of the material Assets
Free and Clear of all liens, claims, charges, pledges, security
interests or other encumbrances other than the Assumed Obligations and
other than as set forth in Schedule 5.4(a), and subject to the Fox
Acknowledgement set forth in Paragraph 10.2.
(d) If a trustee has been appointed by the
Bankruptcy Court to handle the estate of Carolco Pictures or any Carolco
Subsidiary or the Chapter 11 proceeding has been (i) converted to a
Chapter 7 proceeding, or (ii) dismissed.
(e) If any action or pleading has been filed by
Carolco challenging the enforceability of this Agreement.
12.3 If (a) this Agreement is terminated because
(i) Carolco has accepted an Acquisition Proposal for some or all of the
Assets from a Third Party in lieu of this Agreement by executing an
agreement with a Third Party, or (ii) some or all of the material Assets
are otherwise disposed of, either directly or indirectly, by plan of
reorganization, motions, or otherwise, other than to Fox or other than
in accordance with the terms of this Agreement; or (b) Carolco has
failed to use its best efforts to accomplish one or more of the actions
set forth in Paragraphs 8.1 through 8.5 and 10.11 and one or more of the
actions set forth in Paragraphs 8.1 through 8.5 and 10.11 has not been
achieved within the time frame for that action set forth therein; or
(c) a Carolco Subsidiary that owns or holds rights to a material Asset
(other than Carolco Studios, Inc. (North Carolina)) does not or cannot
file a Chapter 11 petition by the date set forth in Paragraph 8.1; or
(d) if Fox has not elected to eliminate the Studio from the Assets,
Carolco Studios, Inc. (North Carolina) does not or cannot file a Chapter
11 petition by January 1, 1996, if Fox has requested that such a
petition be filed; Carolco shall, in recognition and consideration of
the time, effort, and costs incurred by Fox in pursuing this
transaction, and preparing to develop and use the Assets upon the
completion of the transaction, pay to Fox (i) a fee in the amount of
$1,000,000; and (ii) an additional $250,000, as reimbursement for all
reasonable fees payable and expenses incurred by Fox (including, without
limitation, the fees and expenses of its accountants, attorneys, and
other consultants) in connection with this Agreement (collectively, the
amounts described in clauses (i) and (ii) constitute the "Fee");
provided, however, that Fox shall refund all or any portion of the Fee
paid to it pursuant to the operation of clauses 12.3(a)(ii), 12.3(b),
12.3(c), or 12.3(d) if Fox ultimately acquires the Assets or a material
portion thereof through Carolco bankruptcy proceedings for no more
consideration than would have been allocated pursuant to this Agreement
to the Assets ultimately acquired by Fox. The amount of the Fee
represents Fox's and Carolco's good faith attempt to place a reasonable
monetary value on (a) the tangible and intangible costs likely to be
incurred by Fox in connection with the negotiation of this Agreement and
the conduct of due diligence in connection with its purchase of the
Assets; and (b) the tangible and intangible benefits likely to be
conferred on Carolco or its estate as a result of Fox's participation in
the sale process, which costs and benefits the parties agree are not
readily quantifiable and may exceed Fox's actual out-of-pocket expenses.
In no event shall the Fee and the Reimbursement (as defined in Paragraph
12.4 below) be aggregated, and if one is payable, the other shall not be
payable; provided, however, that if events occur which would otherwise
result in both the Fee and the Reimbursement being payable, only the Fee
shall be payable. The Fee shall represent the maximum aggregate amount
Carolco shall collectively be required to pay to Fox in the event of a
termination pursuant to this Paragraph 12.3 and shall represent the sole
remedy of Fox if this Agreement is terminated due to the occurrence of
an event set forth in clause (a), (b), (c), or (d) of the first sentence
of this Paragraph 12.3.
12.4 If this Agreement is terminated at any time because
of failure of a condition described in Paragraph 10.5(a), 12.2(d), or
12.2(e), Carolco shall pay Fox $500,000, as reimbursement for Fox's
actual out-of-pocket costs (including, without limitation, attorneys'
fees and costs) in connection with the transaction (the
"Reimbursement"); provided, however, that Fox shall refund all or any
portion of the Reimbursement paid to it pursuant to the operation of
this Paragraph 12.4 if Fox ultimately acquires the Assets or a material
portion thereof through Carolco bankruptcy proceedings for no more
consideration than would have been allocated pursuant to this Agreement
to the Assets ultimately acquired by Fox. The Reimbursement shall
represent the maximum aggregate amount Carolco shall collectively be
required to pay to Fox in the event of a termination pursuant to this
Paragraph 12.4 and shall represent the sole remedy of Fox if this
Agreement is terminated due to the occurrence of an event set forth in
Paragraph 10.5(a), 12.2(d) or 12.2(e).
12.5 The Fee and the Reimbursement shall be secured by
cash in the amount of $1,250,000 that is free and clear of any other
valid and perfected liens, claims, or encumbrances, and that is duly and
properly perfected in accordance with applicable law. The cash referred
to in the preceding sentence shall be deposited in an interest-bearing
account at a financial institution selected by Fox and which is not a
creditor of Carolco. The cash shall remain in the above-referenced
deposit account notwithstanding Carolco's filing of a Chapter 11
petition. Carolco shall advise Fox regarding whether, based upon
Carolco's books and records, the financial institution selected by Fox
is a creditor of Carolco. Concurrently with the execution of this
Agreement, Carolco shall execute a written notice prepared by Fox to
such financial institution advising such financial institution of the
security interest of Fox in and to such deposit account, which notice
shall be concurrently signed by the financial institution, acknowledging
its consent thereto (to the extent the financial institution is willing
to sign such notice). Carolco hereby grants to Fox a security interest
in and to such deposit account to secure the Fee and the Reimbursement,
which grant shall be fully and immediately effective upon the execution
of this Agreement by the parties. Carolco shall execute and deliver to
Fox such other documents as may be reasonably requested by Fox to
establish or perfect a security interest in the deposit account,
including, without limitation, a security agreement. The Fee and the
Reimbursement shall be payable within two business days of the
occurrence of the event that creates the obligation to pay the Fee or
the Reimbursement under this Agreement. Fox shall be granted relief
from the automatic stay to obtain the Fee or the Reimbursement,
whichever is applicable, which relief from stay shall be granted
pursuant to the order approving assumption of this Agreement, as
specified in Paragraph 8.2 above. In connection with the enforcement of
Fox's rights in and to the above-referenced deposit account, Fox may
exercise all rights conferred under California's Commercial Code and
applicable law. If notwithstanding the granting of relief from the
stay, Fox is prohibited from obtaining the Fee or the Reimbursement from
the deposit account, then within 2 business days of Fox's notice to
Carolco, Carolco shall pay to Fox in cash the full amount of the Fee or
the Reimbursement, as applicable, and thereafter Carolco shall succeed
to whatever rights Fox has to the deposit account. Upon the Closing or
the termination of this Agreement, Fox shall release its security
interest in the deposit account or refund to Carolco the cash payment
made to Fox hereunder unless Fox is entitled to retain the funds in the
deposit account or the cash pursuant to the terms of Paragraph 12.3 or
12.4. If Fox does not acquire the Assets, Fox's sole remedy for any
breach or default by Carolco hereunder shall be limited to payment of
the Fee or the Reimbursement, as applicable. If Fox acquires the Assets
pursuant to the terms of this Agreement, Fox shall have the right to
assert a claim for damages for any breach or default by Carolco
hereunder, but Fox waives its right of rescission.
12.6 Except for the terms set forth in the Surviving
Paragraphs, all of which shall survive the termination of this
Agreement, upon the termination of this Agreement, this Agreement shall
become void and have no effect, and no party hereto shall have any
liability to any other party or its stockholders or directors or
officers or creditors. Notwithstanding anything to the contrary in this
Agreement, but subject to Paragraphs 12.3, 12.4, and 12.5 nothing herein
shall relieve any party from liability for any breach or default hereof.
13. Confidentiality; Publicity. Carolco and Fox agree that,
except as disclosures may be required by law, and except for press
releases and announcements that may be made as described below, all of
the terms and conditions of this Agreement shall be confidential, and
neither party shall disclose any of the terms and conditions hereof to
any other party (except to its board members and officers, attorneys,
accountants, and other professional advisors). The parties agree to
cooperate in making any disclosures required by law or issuing press
releases or other public announcements concerning this Agreement or the
transactions contemplated hereby at a time and in a manner reasonably
satisfactory to both parties. Each party shall furnish to the other
drafts of all disclosures required by law and all contemplated press
releases or announcements prior to their filing or release. Carolco
shall obtain the consent of Fox (which consent shall not be unreasonably
withheld) with respect
to the contents and timing thereof prior to any such
release. The terms
of this Paragraph 13 shall survive the termination of this Agreement and
the Closing.
14. Responsibility of Parties for Taxes and Other Expenses.
Carolco shall (a) pay or reimburse Fox for all sales, use, transfer,
excise, customs, or other taxes or duties applicable to the sale to Fox
of the Assets (and any deficiency, interest or penalty asserted with
respect thereto); (b) pay when due all foreign, federal, state or local
taxes measured by or with respect to the income or gross receipts of
Carolco prior to the Closing or resulting from the sale to Fox of the
Assets; and (c) pay all attorney and other professional fees incurred by
Carolco prior to or after the Closing in connection with this
transaction and its bankruptcy, and all other liabilities attendant to
Carolco's operations and Carolco's liabilities as debtor-in-possession,
all in accordance with the Code and orders of the Bankruptcy Court.
15. Further Assurances. Prior to and after the Closing,
Carolco and Fox will take all appropriate action and execute any
documents, instruments or conveyances of any kind which may be
reasonably necessary or advisable to carry out the intent of any of the
provisions hereof, including, without limitation, putting Fox in
possession and operating control of the Assets. Without limiting the
generality of the foregoing, on or prior to the Closing, Carolco shall
deliver to Fox notice of the location of Physical Properties and
physical lab access letters granting rights to the Physical Properties;
an assignment of the claims, causes of action and choses in action that
constitute Assets hereunder; and an assignment of all of Carolco's
worldwide trademark, copyrights, rights and interests in copyrights,
renewals and extensions of copyrights, domestic and foreign, upon the
Library and Projects in Development or any part thereof. Carolco shall
also deliver to Fox, on or prior to the Closing, copies of all of the
books and records described in Paragraph B.(14), originals of all
contracts and agreements with third parties, and copies of all other
documents, books, records, computer programs, software, computerized
data, ledgers,
worksheets, files, summaries, correspondence, and notes of
Carolco
relating to the Assets and copies of Carolco's system, if any, that,
among other things, documents and/or calculates the Participations. Fox
shall, upon reasonable request by Carolco, make available to Carolco
reasonable information and documents to evidence Fox's compliance with
the terms of this Agreement.
16. No Partnership. No relationship of partner, joint
venturer or any other relationship which may give rise to liability on
the part of Fox as a result of the direct or indirect acts or omissions
of Carolco is intended to, or is, created by this Agreement. The
parties acknowledge and agree that this is an arms-length transaction
and that the sole relationship between the parties is that of buyer and
seller. Each of Carolco Pictures and the Carolco Subsidiaries filing a
Chapter 11 petition has made its own decision to so file and to enter
into this Agreement.
17. Notices. All notices, demands, and other communications
required or permitted to be given hereunder shall be deemed to have been
duly given and received if in writing and delivered either
(a) personally (effective as of the date of delivery), (b) by facsimile
transmission with telephonic confirmation of receipt (effective as of
the date of telephonic confirmation), (c) by deposit in the United
States mail, first class, postage prepaid, registered or certified mail,
return receipt requested (effective on date of receipt), or (d) by
overnight courier (effective on date of receipt), in each case addressed
as set forth on the signature page of this Agreement. Any party may
change the address to which communications are to be directed by giving
written notice to the other party in the manner provided for herein.
18. Time of Essence. Time is of the essence in the
performance of all obligations and with respect to all deadlines
specified in this Agreement.
Executed as of the date first above written.
Twentieth Century Fox Film Corporation,
Notice Address a Delaware corporation
▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇. By:\s\ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq. Title: Executive Vice President, Legal Affairs
Carolco Pictures Inc.,
a Delaware corporation
By: \s\ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:Chief Operating Officer
Carolco International Inc.
By: \s\ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:Executive Vice President
Carolco Production Services Inc.
By: \s\ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
Carolco Service Inc.
By: \s\ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
Carolco Studios Inc.,
a Delaware corporation
By: \s\ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
Carolco Television Inc.
By: \s\ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
Cliffhanger Investment Holdings Inc.
By: \s\ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
International Production Services Inc.
By: \s\ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President