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EXHIBIT 10.83
LETTER OF INTENT
PREFERRED STOCK INVESTMENT
The following is a summary of the principal terms with respect to a
proposed investment transaction in which Classic Media LLC ("Investor") will
purchase shares of a newly designated series of preferred stock of The ▇▇▇▇▇▇
Entertainment Company (the "Company"). The parties intend for this Letter of
Intent (the "LOI") to be binding agreement, and each of the parties shall
negotiate reasonably and in good faith toward the completion and execution and
delivery of definitive transaction documents as hereinafter provided.
1. CONSIDERATION. Investor will invest $26 million in cash and
contribute Investor's ownership interests in the UPA/Mr. ▇▇▇▇▇
library (to be valued at approximately $4 million, equal to
Investor's aggregate expenditures as described in the next
sentence), for total consideration of approximately $30 million.
Investor will represent and warrant to its aggregate book value
for the UPA/Mr. ▇▇▇▇▇ library asset ($3 million acquisition price
plus booked direct and indirect expenses and subsequent costs).
2. SECURITIES. For Investor's investment, Investor will be issued
the securities described in clauses (a) and (b) below:
(a) approximately $30 million in face amount of a new series of
participating preferred stock ("New Preferred"). The New
Preferred will have a conversion price equal to $3.00 per share.
It will provide for a seven percent (7%) per annum pay-in-kind
("PIK") dividend and will rank (i) pari passu to the currently
outstanding Series A and Series B Preferred Stock (collectively,
"Existing Preferred") of the Company (which, to simplify the
capital structure, will probably be recapitalized into new
securities with terms paralleling the New Preferred except as
described below), and (ii) senior in all respects to all other
classes and series of capital stock of the Company. PIK dividends
will be payable quarterly whether or not declared by the Board of
Directors. New Preferred and Existing Preferred will be subject
to automatic conversion at the then applicable conversion price
if the weighted average closing sale price of the Common Stock on
its principal trading market (provided such market is NASDAQ-NMS
or a national securities exchange) during any period of six
calendar months is at least $7.50. In addition, commencing seven
(7) years following the issuance of the New Preferred, the cash
or PIK dividend will cease to be payable and cease to cumulate if
the weighted average closing sale price of the Common Stock on
its principal trading market (provided such market is NASDAQ-NMS
or a national securities exchange) during any period of six
calendar months (commencing after the expiration of such
seven-year period) is at least $6.00; provided, that any
cessation of PIK dividends in accordance with this provision will
likewise apply to the Existing Preferred. In addition, the New
Preferred will be callable by the Company at face plus
accumulated dividends
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commencing five years following its issuance (i.e., similar
mandatory redemption provision as provided for in Existing
Preferred), subject to the right of holders to convert prior to
redemption. The New Preferred will have a liquidation preference
over junior capital stock (to be defined) equal to the original
purchase price of the New Preferred plus all declared and unpaid
dividends plus all PIK dividends (whether or not declared). Terms
of the New Preferred will be designed to ensure that it qualifies
as "permanent equity" for NASDAQ listing purposes (provided, that
Investor shall not be required to agree to any term inconsistent
with those described in this LOI). The conversion price of the
New Preferred will be subject to weighted average anti-dilution
adjustment if the Company issues additional equity securities
(other than customary "permitted issuances" to be specified,
including issuance and exercise of the financing and performance
warrants to be issued to Investor in connection with this
transaction) at a purchase price less than the then applicable
conversion price, as well as customary anti-dilution adjustment
in the event of stock splits, stock dividends and the like.
Existing registration rights in favor of Existing Preferred to
remain in place and apply to recapitalized Existing Preferred,
and Investor will obtain same registration rights on a pari passu
basis.
(b) Financing warrants and performance warrants as follows (all
warrants to contain anti-dilution protection substantially
identical to the New Preferred):
(i) Financing warrants to purchase 3,270,000 shares at $4.50
per share (150% premium to conversion price of the New Preferred)
with a term of seven years following closing and financing
warrants to purchase 4,200,000 shares at the 30-day average
trading price preceding the closing (but not less than $2.50 or
greater than $3.00 per share) with a term of six years following
closing. At Investor's election, up to one-half of the financing
warrants may be issued as management warrants to members of
management that Investor designates post-closing; and
(ii) Performance warrants to purchase 3,270,000 shares at
$6.00 per share (200% premium to conversion price of the New
Preferred). Performance warrants will have a term of eight years
following closing.
3. USES. The cash invested will be used as follows: (a) up to $2.5
million will be used to redeem shares of Existing Preferred
(together with a corresponding amount of financing warrants
previously issued to the holders whose shares are redeemed) with
a face amount of $6 million, and (b) the remaining $23.5 million
will be used by the Company for general working capital purposes.
Investor will satisfy itself during the Due Diligence Period (as
defined in Section 8) as to the sufficiency of agreements or
arrangements to ensure the redemption referred to in clause (a)
above; if Investor is not satisfied by the end of such period and
elects not to proceed to a definitive agreement on that basis, it
shall so notify the Company in writing and the failure of the
transaction to proceed shall be considered a "No Fault
Termination" for purposes of this LOI. If Investor does not so
notify the Company in writing and elects to proceeds toward
definitive documentation, it will not be a condition to
Investor's obligation to sign definitive
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documentation or close the transaction contemplated thereby that
holders of Existing Preferred agree to the foregoing redemption.
To the extent funds are not used for such redemption, they shall
remain in the Company and be used for general working capital
purposes.
4. RECAPITALIZATION OF EXISTING PREFERRED. The shares of Existing
Preferred not redeemed will be recapitalized into new series of
securities (which will also be classified as permanent equity) in
the same principal amount (including accrued PIK dividends) as
the Existing Preferred, or amended, as follows:
a. approximately $4 million in face amount of securities with
terms paralleling the New Preferred, including conversion price
of $3.00 per share (subject to customary anti-dilution
provisions, including weighted average anti-dilution protection
for issuances below $3.00 per share); and
b. approximately $10 million (or approximately $16 million, if
the $6 million of Existing Preferred is not redeemed) in face
amount of securities with terms paralleling the New Preferred,
except conversion price of $6.00 per share (subject to customary
anti-dilution provisions, including weighted average
anti-dilution protection for issuances below $3.00 per share).
In addition, existing outstanding warrants (financing warrants
and current management warrants) will remain outstanding in
accordance with their present terms. If $6 million of Existing
Preferred is redeemed, the financing warrants corresponding to
the $6 million of Existing Preferred (i.e., the same proportion
of such financing warrants as the ratio of $6 million bears to
the total face amount of the Existing Preferred, including PIK
dividends) retired pursuant to paragraph 3(a) above will be
cancelled for no additional consideration. Assuming, however,
that Investor does not give a No Fault Termination notice
pursuant to Section 3 above, such cancellation will not be a
condition to Investor's obligation to sign definitive
documentation or close the transaction contemplated thereby.
Existing Preferred will be subject to automatic conversion,
cessation of dividend rights and call features paralleling the
New Preferred, as described in Section 2 above.
5. CONTROL. It is a fundamental investment criteria for Investor to
obtain control of the Company. Consequently, the securities
issued to Investor will have terms that ensure that, on a
fully-diluted and fully converted basis, Investor will own more
than 50% of the equity of the Company. Further, the New Preferred
issued to Investor will vote on an as-if-converted basis (except
with respect to the directors elected by a series or class of
capital stock voting as a separate class) and will provide for
designated seats on the Board of Directors of the Company, which
seats will be elected by Investor's preferred stock voting as a
separate class. In addition, if necessary to ensure control,
mechanisms (voting trust, etc.) will be implemented as necessary
with the consent of counterparty shareholders selected by
Investor to provide Investor
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with 51% or greater voting control at all times. Investor will
satisfy itself during the Due Diligence Period as to its
ownership or control (assuming completion of the transaction) of
more than 50% of the equity of the Company as hereinabove
provided, or, in lieu thereof, as to the sufficiency of
agreements or commitments relating to the foregoing mechanisms
(voting trusts, etc.); if Investor is not satisfied by the end of
such period and elects not to proceed to a definitive agreement
on that basis, it shall so notify the Company in writing and the
failure of the transaction to proceed shall be considered a "No
Fault Termination" for purposes of this LOI. If Investor does not
so notify the Company in writing and elects to proceeds toward
definitive documentation, it will not be a condition to
Investor's obligation to sign definitive documentation or close
the transaction contemplated thereby that Investor achieve such
greater than 50% control.
The holders of Existing Preferred will be entitled, voting as
separate class(es), to elect one member of the Board of
Directors. The holders of Common Stock will be entitled, voting
as a separate class, to elect one member of the Board of
Directors; provided, however, that the Company and Investor shall
each seek to ensure that the composition of the Board after the
closing will be such as to comply with the NASD's qualitative
listing standards for inclusion in NASDAQ (i.e., composition of
the audit committee and similar Board committee qualitative
criteria); provided, that the foregoing provision shall not be
construed as a covenant to maintain the Company's status as a
listed or publicly reporting company.
At the closing of the transaction, the Board of Directors of the
Company will arrange for a sufficient number of directors to
resign and/or expand the size of the Board such that Investor
will be able to designate a number of directors consistent with
its voting interest in the Company at that time and the
immediately preceding paragraph.
In connection with any proposed related party transactions, the
Board of Directors will employ customary public company
procedures to review and approve the same (establishment of
committee of disinterested directors, etc.).
6. ▇▇▇▇▇▇▇ MONEY. Upon execution of this LOI, Investor will post a
$500,000 ▇▇▇▇▇▇▇ money deposit to be held in a trust account of
the Company's counsel, ▇▇▇▇▇▇ & Austin, with interest for the
benefit of the party entitled to the deposit. Terms governing the
deposit will be set forth in an escrow agreement executed by the
parties and ▇▇▇▇▇▇ & ▇▇▇▇▇▇ simultaneously with the execution and
delivery of this LOI. If Investor gives written notice that it
elects to proceed following the Due Diligence Period, it will
post an additional $500,000 into the ▇▇▇▇▇▇▇ money deposit as a
condition to moving forward, to be held subject to such escrow on
the same terms and conditions as the initial deposit.
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7. DEFINITIVE DOCUMENTATION; STOCKHOLDER LOCK-UPS. If Investor
elects in writing to proceed toward definitive documentation
after the Due Diligence Period, the parties will promptly proceed
in good faith to negotiate and execute within 15 business days
following the end of the Due Diligence Period (the "Negotiation
Period") a definitive agreement containing the terms set forth in
this LOI and such other customary terms and conditions as are
appropriate and reasonable for a transaction of this type,
including maintenance of the Company's current D&O insurance for
at least three (3) years after the closing, subject to a cap on
premium expense of 250% of the current premium expense (the
"Definitive Agreement"). A condition to the Company's obligation
to negotiate and sign the Definitive Agreement will be the
demonstration to the reasonable satisfaction of the Board of
Directors of the Company that Investor has committed capital
sufficient to complete the transactions set forth herein, which
Investor agrees to provide to the Company on a confidential basis
during the Due Diligence Period. The Definitive Agreement will
contain standard and customary mutual representations and
warranties and indemnification provisions for a control
investment transaction. As a condition to Investor's obligation
to proceed to definitive documentation and to close, among other
things, there shall be no material adverse change in the
business, properties, operations, condition (financial or
otherwise), prospects, assets or liabilities of the Company or
its business (for this purpose, excluding any ordinary business
risk associated with media and other business projects in
progress that have been identified by the Company to Investor,
whether or not the result of such risk materializing in a
particular instance is materially adverse) (a "MAC") after the
date of this LOI. Conditions to the Company's obligations to
close shall be receipt of all necessary SEC approvals,
shareholder votes required under California law and NASD rules
and regulations, and compliance by Investor and the Company with
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ requirements, if applicable. The Company agrees
that it will obtain a fairness opinion to the extent that its
Board of Directors deems that to be advisable before the end of
the Due Diligence Period, such that obtaining such an opinion
shall not constitute a condition to the Company's obligation to
move forward towards a Definitive Agreement or close the
transaction contemplated by the Definitive Agreement; if the
Company advises Investor prior to the end of the Due Diligence
Period that it has been unable to obtain an affirmative fairness
opinion for this transaction, then the Company will be obligated
to reimburse Investor for its actual out-of-pocket expenses in
connection with this transaction (including, without limitation,
attorney's fees and costs), but such event shall otherwise be
considered a No Fault Termination for purposes of this LOI.
Assuming the closing of the transactions contemplated by the
Definitive Agreement, Investor's deposit will be applied to the
purchase price for its investment at the closing.
Simultaneously with the execution of this LOI, but subject to
constraints imposed by SEC and NASD rules and regulations,
Investor shall use commercially reasonable efforts to cause
certain of the Company's current stockholders holding at least a
majority of the voting power necessary to
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approve all aspects of the proposed transaction to provide
customary voting lock-up agreements to Investor, whereby, among
other things, such stockholders will agree to vote all of their
shares in favor of the approval of the proposed transaction; and
the Company will cooperate with Investor in this regard. Investor
will satisfy itself during the Due Diligence Period as to the
adequacy of the voting lock-up agreements or other arrangements
that can be obtained, if any; if Investor is not satisfied by the
end of such period and elects not to proceed towards a Definitive
Agreement on that basis, it shall so notify the Company in
writing and the failure of the transaction to proceed shall be
considered a "No Fault Termination" for purposes of this LOI.
Risk of breach of these voting agreements or other arrangements
by the counterparty stockholders shall be borne by Investor.
The Definitive Agreement will reflect that it is not a condition
to Investor's obligation to close that the Company's current bank
facility with Chase Bank be rolled over at the closing or
otherwise refinanced with Chase Bank at the closing. Among other
things, Investor will covenant in the Definitive Agreement to
provide information concerning itself and its owners and
controlling persons as required by SEC disclosure rules and
NASDAQ requirements.
8. DUE DILIGENCE. The terms outlined in this LOI are subject to the
completion of due diligence by Investor to its satisfaction in
its sole discretion. Subject to scheduling and the timely
provision of the Company's information, due diligence will be
completed on or before September 26, 2000 (the period from the
date of this LOI through September 26, 2000 being the "Due
Diligence Period"), and at such time Investor will either notify
the Company in writing that it has satisfied itself with respect
to due diligence (its "Due Diligence Condition") and each other
matter that may be the subject of a No Fault Termination notice
under the terms of this LOI (collectively, but excluding the Due
Diligence Condition, "No Fault Conditions"), or will give written
notice to the Company that it is not satisfied with the results
of its due diligence or a Due Diligence Condition and thereby
terminate its and the Company's obligations hereunder (except as
otherwise expressly provided herein).
Between the date of this LOI and the closing, Investor's
attorneys, accountants, representatives and other agents shall be
given full access to the accounting books and other business and
financial records, reports and documents of the Company and its
business, including corporate records, SEC filings and tax
returns. Such due diligence will also include the inspection and
examination of the Company's facilities. The officers and
management of the Company agree to cooperate fully with
Investor's representatives and agents and to make themselves
available to the extent necessary to complete the due diligence
process and the closing of the transaction.
9. BREAK-UP FEES/DEPOSIT. The following provisions indicate the
parties' respective obligations to one another in the event that
the transaction
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contemplated by this LOI does not close, in each case as a result
of the indicated events or circumstances occurring or prevailing
during the time period specified. Except as so indicated,
termination of this LOI or the Definitive Agreement as a result
of such events or circumstances shall terminate all rights and
obligations of the parties hereunder.
9.1 DURING THE DUE DILIGENCE PERIOD:
(1) Investor provides written notice during the Due
Diligence Period that it is not satisfied with and is not waiving
its Due Diligence Condition or a No Fault Condition, for any
reason other than a MAC: Deposit promptly refunded to Investor;
or
(2) Investor provides written notice during the Due
Diligence Period that it is not satisfied with and is not waiving
its Due Diligence Condition, due to a MAC specified in such
written notice: Deposit promptly refunded to Investor; or
(3) The Company's Board of Directors invokes the "fiduciary
duty" exception provided in paragraph 10 and the transaction
contemplated by this LOI is abandoned during the Due Diligence
Period for any reason: (a) Deposit promptly refunded to Investor,
(b) Company obligated to pay a $1,150,000 fee to Investor upon
the closing of a Sale Transaction (as defined in paragraph 10
below) involving a sale of more than twenty-five percent (25%) of
the equity or voting power of the Company or a sale of all or any
substantial part of the assets of the Company other than in the
ordinary course of business, in a single transaction or series of
related transaction (an "Alternative Transaction") during the
twelve month period following the end of the Due Diligence
Period. In the event that clause (1) and/or (2) and/or (4) of
this Section 9.1, on the one hand, and this clause (3), on the
other hand, are each applicable, then this clause (3) shall
control; or
(4) The Company breaches this LOI and the transaction
contemplated by this LOI is abandoned during the Due Diligence
Period for any reason: (a) Deposit promptly refunded to Investor
and (b) Company obligated to pay a $150,000 fee to Investor upon
the closing of an Alternative Transaction during the twelve month
period following the end of the Due Diligence Period. In the
event that clause (1) and/or (2) of this Section 9.1, on the one
hand, and this clause (4), on the other hand, are each
applicable, then this clause (4) shall control.
9.2 DURING THE NEGOTIATION PERIOD:
(1) Investor in breach and as a result a Definitive
Agreement is not signed: Deposit retained by the Company; or
(2) Investor provides written notice during the Negotiation
Period that it will not proceed due to a MAC specified in such
written notice: (a) Deposit
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promptly refunded to Investor and (b) Company obligated to pay a
$150,000 fee to Investor, upon the closing of an Alternative
Transaction during the twelve month period following the date of
Investor's written notice; or
(3) The Company's Board of Directors invokes the "fiduciary
duty" exception provided in paragraph 10 and the transaction
contemplated by this LOI is abandoned during the Negotiation
Period for any reason: (a) Deposit promptly refunded to Investor
and (b) same provision as (2)(b) immediately above (except that
reference to $150,000 shall be $1,300,000 and references to the
date of Investor's written notice shall be to the end of the
Negotiation Period). In the event that clause (2) and/or (4) of
this Section 9.2, on the one hand, and this clause (3), on the
other hand, are each applicable, then this clause (3) shall
control; or
(4) The Company breaches this LOI and the transaction
contemplated by this LOI is abandoned during the Negotiation
Period for any reason: (a) Deposit promptly refunded to Investor,
(b) the Company will promptly pay Investor a $500,000 fee, (c)
the Company will pay an additional $800,000 fee to Investor upon
the closing of an Alternative Transaction during the twelve month
period following the termination of the Negotiation Period.
9.3 AFTER EXECUTION OF A DEFINITIVE AGREEMENT AND BEFORE
CLOSING:
(1) Investor in breach: Deposit retained by the Company; or
(2) Investor provides written notice that it is terminating
the Definitive Agreement due to a MAC specified in such written
notice: (a) Deposit promptly refunded to Investor and (b) same
provision as clause (2)(b) of Section 9.2 above (except that
reference to $150,000 shall be $300,000); or
(3) The Company's Board of Directors invokes the "fiduciary
duty" exception provided in paragraph 10 prior to the initial
mailing of the Company's proxy statement for the transaction:
Same provisions as clause (3) of Section 9.2 above (except that
references to the end of the negotiation period shall be to the
date on which written notice of termination of the Definitive
Agreement is given). After such mailing, no "fiduciary duty"
exception will be applicable. In the event that clause (2) and/or
(4) of this Section 9.3, on the one hand, and this clause (3), on
the other hand, are each applicable, then this clause (3) shall
control; or
(4) The Company breaches this LOI and the Definitive
Agreement is terminated: Same provisions as clause (4) of Section
9.2 (except that references to the end of the Negotiation Period
shall be to the date on which written notice of termination of
the Definitive Agreement is given).
If the transaction contemplated hereby fails to close for any
reason not specifically identified above, Investor's deposit
shall be promptly refunded to Investor and the parties' rights
and obligations to one another shall otherwise
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(except as expressly provided herein to the contrary) terminate.
For the avoidance of doubt, it is the parties' intention that no
cash fee (for this purpose, excluding return of Investor's
deposit) shall be payable if the reason that a Definitive
Agreement for a transaction is not signed is a failure of any No
Fault Condition.
Once the Definitive Agreement is signed, Investor and the Company
shall be obligated to complete the transaction set forth herein
and therein, subject to the closing conditions set forth therein
and to the provisions of Section 10 hereof. The Definitive
Agreement will contain break-up fee and exclusivity provisions
substantially similar to those contained in this LOI, as
appropriate and as indicated above.
Notwithstanding anything in this LOI to the contrary, the fees
(including, without limitation, retention or refund of Investor's
deposit) provided for in this paragraph 9 are intended by the
parties as reasonable compensation for the resources to be
devoted by them and the financial commitments being made by them
to complete the investment transaction, and not as a penalty, and
will constitute the sole and exclusive legal and/or equitable
remedy of the parties for a breach of this LOI and/or the
Definitive Agreement by either of them and for the resulting
failure to execute, deliver and close a Definitive Agreement; and
each party hereby waives and relinquishes any right to obtain or
prosecute any other legal and/or equitable right against or from
the other.
Notwithstanding anything to the contrary in this LOI, a
termination of this LOI for any reason prior the execution of a
Definitive Agreement shall not affect the provisions of
paragraphs 6 and 9 hereof, which shall continue to apply and be
binding on the parties hereto in accordance with their terms.
For purposes of paragraphs 9.1 - 9.3 (inclusive), the following
shall not be deemed MACs: (a) shareholder litigation against the
transaction contemplated by this LOI; (b) continued financial and
cash flow performance consistent with (or better than) that
reported by the Company in recent financial statements; (c)
resignations of key executives; and (d) acceleration by the
Company's principal bank lender of its credit facility with the
Company to the closing date of the transaction contemplated by
this LOI (provided, that such acceleration does not result in
foreclosure on assets or the exercise of other remedies by such
lender). In addition, for the avoidance of doubt, failure to
obtain the requisite shareholder approval of the transaction
contemplated by this LOI at the shareholders meeting called for
that purpose, and a court-imposed injunction against the
consummation of such transaction (in each case, provided that the
parties are not in breach of this LOI or the Definitive
Agreement, as the case may be), will result in a prompt refund of
Investor's deposit but will otherwise be treated as the failure
of a No Fault Condition hereunder.
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10. EXCLUSIVITY. In consideration of the resources to be committed by
Investor and its representatives and agents and the ▇▇▇▇▇▇▇ money
deposit referred to above, from the date of execution of this LOI
until the expiration of the Due Diligence Period, or, if Investor
indicates in writing that it is satisfied with or waives the Due
Diligence Conditions, until the execution of the Definitive
Agreement, neither the Company nor any of its officers, directors
or other agents shall, directly or indirectly, through any
representative or otherwise, solicit or entertain offers from,
negotiate with or in any manner encourage, discuss, accept,
consider or assist any proposal of any other person relating to
the acquisition of the Company in whole or in part, or any
material investment transaction involving the Company, whether
through direct purchase, merger, consolidation or business
combination or otherwise, other than the sale of products or
services in the ordinary course (each of the foregoing is
referred to as a "Sale Transaction"), except and in each instance
to the extent that the Board of Directors of the Company
following consultation with its counsel believes that it must
take such action(s) in order to avoid a breach of its fiduciary
obligations to the Company's shareholders. Neither the provisions
of this LOI nor the fact that a transaction is being discussed
may be disclosed to any person without the express consent of the
parties hereto, except as may be required by applicable law (in
which case the disclosing party shall reasonably consult with the
other party prior to disclosure to the extent reasonably
practicable).
11. INTERIM OPERATIONS. From and after the date of this LOI, the
Company's business will be operated in the normal course
consistent with reasonable commercial practices prior to closing.
Among other things, the Company will not make any distribution of
stock, pay any dividends, sell or acquire any assets other than
in the ordinary course of business and in a manner consistent
with reasonable business practices, or change any aspect of
officer or director compensation or enter into or amend and
related party transaction without the prior consent of Investor.
12. GENERAL. If any term or other provision of this LOI is invalid,
illegal or incapable of being enforced by any rule of law or
public policy, all other conditions and provisions of this LOI
shall nevertheless remain in full force and effect. Each party
represents to the other that this LOI has been approved by its
Board of Directors or other governing body and, as to Investor,
by all required member action. The LOI constitutes the entire
agreement of the parties and supersedes all prior agreements and
undertakings, both written and oral, between the parties, or any
of them, with respect to the subject matter hereof (except with
respect to the confidentiality agreement previously signed by
Investor in favor of the Company, which shall continue to apply
in accordance with its terms). This LOI shall bind and inure to
the benefit of the parties hereto and their respective successors
and assigns, but shall not be assignable by any party hereto
without the prior written consent of the other parties (except
that Investor may permit co-investors to participate on the same
terms as Investor, provided that at least a majority of the
investment contemplated hereby is controlled by Investor). This
LOI shall be governed
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by and construed in accordance with the laws of the State of
California without regard to rules respecting conflicts of law.
In any proceeding to enforce this LOI, the prevailing party shall
be entitled to recover, in addition to other remedies, its
attorney's fees and costs of proceeding, as awarded by the
arbitrator(s). Any dispute pursuant to this LOI (including,
without limitation, any dispute concerning whether a party is
proceeding in good faith to negotiate and execute the Definitive
Agreement as provided in paragraph 7 hereof) shall be resolved by
binding, mandatory arbitration in Los Angeles, California under
the auspices of the American Arbitration Association using
commercial arbitration rules and procedures.
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IN WITNESS WHEREOF, Investor and the Company have each caused this LOI
to be executed as of the date indicated below by their respective officers and
representatives thereunto duly authorized.
Date: August 24, 2000 CLASSIC MEDIA LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Its: Chief Executive Officer and
President
Date: August 24, 2000 THE ▇▇▇▇▇▇ ENTERTAINMENT
COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Chairman and Chief Executive
Officer
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