STOCK SALE AGREEMENT
BETWEEN
F2 BROADCAST NETWORK, INC.
AND
NMSF, LLC
Dated June 28, 2001
STOCK SALE AGREEMENT
THIS STOCK SALE AGREEMENT dated as of June 28, 2001 (the "Agreement"), is
entered into between F2 BROADCAST NETWORK, INC. , a Nevada corporation
("Seller"), and NMSF, LLC., a Colorado limited liability company ("Purchaser").
WHEREAS, the Seller owns 400,885,600 shares of common stock, $.0001 par
value per share, representing 80% of the outstanding shares of common stock
("First Film Common Stock") of FIRST FILMS, INC., a Colorado corporation,
(together with its directly- and indirectly-owned or controlled subsidiaries,
"First Film").
WHEREAS, the Seller desires to sell to the Purchaser and the Purchaser
desires to purchase from the Seller, all 400,885,600 shares of First Film Common
Stock owned by the Seller on the terms and conditions set forth in this
Agreement.
IT IS AGREED:
ARTICLE I
THE STOCK SALE AND RELATED MATTERS
SECTION 1.1 Definitions. Certain capitalized terms used but not otherwise
defined in this Agreement shall have the meanings specified in Article XII.
SECTION 1.2 The Sale and Purchase of Stock. Subject to the terms and
conditions of this Agreement, at the Closing, the Seller shall transfer and
deliver to the Purchaser, and the Purchaser shall purchase from the Seller, an
aggregate of 400,885,600 shares of First Film Common Stock (the "Stock Sale").
SECTION 1.3 The Purchase Price. The purchase price (the "Purchase Price")
to be paid to the Seller by the Purchaser for the First Film Common Stock shall
be $300,000 in cash, which is being delivered by the Purchaser simultaneously
with the execution of this Agreement by wire transfer to Escrow Document
Services For Lawyers, Inc., as escrow agent ("Escrow Agent") under an escrow
agreement to be entered into concurrently with the execution of this Agreement
by the Seller, the Purchaser and the Escrow Agent in the form annexed hereto as
Exhibit A ("Escrow Agreement"). The funds in escrow will be distributed as
provided in the Escrow Agreement and the escrow schedule annexed hereto.
SECTION 1.4. The Closing. Subject to the terms and conditions of this
Agreement, the consummation of the Stock Sale and the other transactions
contemplated by this Agreement shall take place simultaneously with the
execution of this Agreement (the "Closing"). The date on which the Closing
occurs is referred to herein as the "Closing Date."
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
AS TO SELLER
The Seller represents and warrants to the Purchaser as to matters
pertaining to the Seller as follows:
SECTION 2.1 Organization. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada and
has all requisite corporate power to own, lease and operate its properties and
to carry on its business.
SECTION 2.2 Authority; Corporate Action. The Seller has all necessary
corporate power and authority to enter into this Agreement and the other
instruments and agreements to be executed and delivered by the Seller in
connection with the transactions contemplated by this Agreement and to
consummate the Stock Sale and other transactions contemplated hereby. All
corporate action necessary to be taken by the Seller to authorize the execution,
delivery and performance of this Agreement and all other agreements delivered by
the Seller in connection with the transactions contemplated hereby has, or at
the Closing will have been duly and validly taken and this Agreement and such
other agreements and instruments have been, duly executed and delivered by the
Seller. No approval by the stockholders of the Seller is required for the Stock
Sale. Subject to the terms and conditions hereof, this Agreement constitutes
valid, binding and enforceable obligations of the Seller, enforceable in
accordance with its terms, except as enforceability may be limited or barred by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or similar laws of general application now or hereafter in effect
affecting the rights and remedies of creditors and by general principals of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity).
SECTION 2.3 No Conflict; Required Filings and Consents.
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(1) The execution and delivery of this Agreement (and the
other agreements contemplated hereby) by the Seller does not, and the
performance by the Seller of its obligations under this Agreement (and any other
agreements contemplated hereby) will not, (i) conflict with or violate the
Articles of Incorporation, Bylaws or other organizational documents of the
Seller, (ii) conflict with or violate any law, statute, ordinance, rule,
regulation, order, judgment or decree applicable to the Seller or by which any
of its respective properties or assets is bound or affected, or (iii) result in
any breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the properties or assets of the Seller pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Seller is a
party or by which any of its respective properties or assets is bound or
affected, except, in the case of clauses (ii) and (iii) above, for any such
conflicts, violations, breaches, defaults or other alterations or occurrences
that would not reasonably be expected to, and will not, either singly or in the
aggregate, materially impair the Seller's ability to consummate the transactions
contemplated by this Agreement (a "Seller Material Adverse Effect").
(2) The execution and delivery of this Agreement (and the
other agreements contemplated hereby) by the Seller does not, and the
performance of this Agreement (and any other agreements contemplated hereby) by
the Seller will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental entity, (ii) compliance with
the applicable requirements, if any, of the Exchange Act, Securities Act and
state securities laws as set forth in this Agreement and (iii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not reasonably be expected to have, and will not
have, either singly or in the aggregate, a Seller Material Adverse Effect.
SECTION 2.4 Ownership of Securities. The Seller is the record and
beneficial owner of 400,885,600 shares of First Film Common Stock, free and
clear of all Liens. There are no options, warrants or other contractual rights
outstanding which require, or give any person the right to require, the
issuance, delivery or sale of any of the shares of First Film Common Stock owned
by Seller, whether or not such rights are presently exercisable.
SECTION 2.5 Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
AS TO FIRST FILM AND THE FIRST FILM SUBSIDIARIES
The Seller represents and warrants to the Purchaser as to First Film as
follows:
SECTION 3.1 Organization and Good Standing; Ownership of Subsidiary
Stock Interests; Capitalization.
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(1) First Film and each of its directly- or indirectly-owned
or controlled subsidiaries (collectively, the "First Film Subsidiaries") is a
corporation or other entity duly organized, validly existing and in good
standing under the laws of the state of its respective jurisdiction of
incorporation, and each is entitled to own or lease its properties and to carry
on its business as and in the places where such properties are now owned, leased
or operated and such businesses are now conducted. First Film and each of the
First Film Subsidiaries is duly licensed or qualified and in good standing as a
foreign entity where the character of the properties owned by them or the nature
of the business transacted by them make such licenses or qualifications
necessary, except where the failure to do so would not have a ("Material Adverse
Effect"). As used hereinafter, unless the context otherwise requires, "First
Film" refers to First Film and the First Film Subsidiaries.
(2) (a) First Film's entire authorized capital stock consists
of 500,000,000 shares of $.0001 par value common stock. As of the date of this
Agreement there are, and as of the Closing Date there will be, 400,885,600
shares, or 80%, of First Film common stock issued and outstanding, all of which
are held by Seller.
(b) Comedy Works, Inc.'s entire authorized capital
stock consists of 50,000 shares of no par value common stock. As of the date of
this Agreement there are, and as of the Closing Date there will be, 3,000 shares
of Comedy Works, Inc. common stock issued and outstanding, all of which are held
by First Films.
(c) Comedy Core, Inc.'s entire authorized capital
stock consists of 50,000 shares of no par value common stock. As of the date of
this Agreement there are, and as of the Closing Date there will be, 1,000 shares
of Comedy Core, Inc. common stock issued and outstanding, all of which are held
by First Films.
SECTION 3.2 Financial Statements, Books and Records. There has been
previously delivered to Purchaser the unaudited balance sheet of First Film as
at March 31, 2001 (the "Balance Sheet"). The Balance Sheet is true and accurate
and fairly represents the financial position of First Film as at such date and
has been prepared in accordance with generally accepted accounting principles
consistently applied, except for the omission of footnotes or otherwise as
indicated therein.
SECTION 3.3 No Material Adverse Changes. Since the date of the
Balance Sheet there have not been:
(i) any change which could reasonably be expected to have, and which has
not had, a Material Adverse Effect;
(ii) any damage, destruction or loss which could reasonably be expected to
have, and which has not had, a Material Adverse Effect;
(iii)any declaration, setting aside or payment of any distribution or with
respect to any redemption or repurchase of First Film's capital
interests;
(iv) any sale of an asset (other than in the ordinary course of business)
or any mortgage or pledge by First Film of any properties or assets of
First Film; or
(v) adoption of any pension, profit sharing, retirement, stock bonus,
stock option or similar plan or arrangement.
SECTION 3.4 Taxes. First Film has prepared and filed all appropriate
federal, state and local tax returns for all periods prior to and through the
date hereof for which any such returns have been required to be filed by it and
has paid all taxes shown to be due by said returns or on any assessments
received by them or has made adequate provision for the payment thereof as
reflected on the Balance Sheet.
SECTION 3.5 Compliance with Laws. First Film has complied with all
federal, state, county and local laws, ordinances, regulations, inspections,
orders, judgments, injunctions, awards or decrees applicable to it or its
businesses which, if not complied with could reasonably be expected to have a
Material Adverse Effect.
SECTION 3.6 No Breach. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not:
(i) violate any provision of any operational or
organizational documents of First Film;
(ii) violate, conflict with or result in the breach of any of
the terms of, result in a material modification of, otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any contract or other agreement to
which First Film is a party or by or to which it or any of its assets or
properties may be bound or subject;
(iii) violate any order, judgment, injunction, award or decree
of any court, arbitrator or governmental or regulatory body against, or binding
upon First Film, or upon the properties or business of First Film; or
(iv) violate any statute, law or regulation of any
jurisdiction applicable to the transactions contemplated herein, which in the
case of (ii), (iii) and (iv) could reasonably be expected to have a material
adverse effect.
SECTION 3.7 Actions and Proceedings. There is no outstanding order,
judgment, injunction, award or decree of any court, governmental or regulatory
body or arbitration tribunal against or involving First Film. There is no
action, suit or claim or legal, administrative or arbitral proceeding or
(whether or not the defense thereof or liabilities in respect thereof are
covered by insurance) pending or threatened against First Film or any of its
properties or assets. There is no fact, event or circumstances known to Seller
that may give rise to any suit, action, claim, investigation or proceeding.
SECTION 3.8 Real Estate. Except as set forth on Schedule 3.8, First
Film neither owns real property nor is a party to any leasehold agreement.
SECTION 3.9 Tangible Assets. First Film has full title and interest in
all machinery, equipment, furniture, leasehold improvements, fixtures, vehicles,
structures, owned or leased by First Film, any related capitalized items or
other tangible property material to the businesses of First Film (the "Tangible
Assets") and those certain programming assets and equipment assets listed on
Schedule 3.9 hereof (the "Supplemental Assets"). First Film holds all rights,
title and interest in all the Tangible Assets owned by it on the Balance Sheet
or acquired by it after the date of the Balance Sheet, and the Supplemental
Assets, free and clear of all liens, pledges, mortgages, security interests,
conditional sales contracts or any other encumbrances except as set forth on
Schedule 3.9. All of the Tangible Assets and the Supplemental Assets are in good
operating condition and repair and are usable in the ordinary course of business
of First Film.
SECTION 3.10 Liabilities. Schedule 3.10 to this Agreement sets forth
(i) all single Liabilities (as defined below) of First Film which equal or
exceed $10,000, (ii) all Liabilities not incurred in the ordinary course of
business, regardless of amount, (iii) all Liabilities not fully and adequately
reflected on the Balance Sheet, and (iv) all Liabilities to any person or
entity, and all Affiliates (as defined below) of such person or entity, which in
the aggregate equal or exceed $10,000 regardless of whether such Liabilities are
incurred in the ordinary course of business.
Except as set forth on Schedule 3.10, First Film does not have, and as
of the Closing Date will not have, any direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility, known
or unknown, fixed or unfixed, liquidated or unliquidated, secured or unsecured,
accrued or absolute, contingent or otherwise, including, without limitation, any
liability on account of taxes, any other governmental charge or lawsuit (all of
the foregoing collectively defined to as "Liabilities").
For the purposes of this Agreement, the term Affiliate means, with
respect to any person or entity, another person or entity which controls, is
controlled by, or is under common control with the subject person or entity.
SECTION 3.11 Operations of First Film. Except as set forth on Schedule
3.11, from the date of the Balance Sheet and through the Closing Date hereof
First Film has not and will not have:
(i) incurred any indebtedness for borrowed money;
(ii) declared or paid any dividend or declared or made any
distribution of any kind to any member or made any direct or indirect
redemption, retirement, purchase or other acquisition of any subsidiary stock
interest or other capital interest;
(iii) made any loan or advance to any shareholder, manager,
officer, director, employee, consultant, agent or other representative or made
any other loan or advance otherwise than in the ordinary course of business;
(iv) except in the ordinary course of business,
incurred or assumed any indebtedness or liability (whether or not currently
due and payable);
(v) disposed of any assets of except in the ordinary
course of business;
(vi) materially increased the annual rate of
compensation of any executive employee of First Film;
(vii) increased, terminated, amended or otherwise
modified any plan for the benefit of employees of First Film;
(viii) issued any equity securities or interest or rights
to acquire such equity securities or interest; or
(ix) except in the ordinary course of business,
entered into or modified any contract, agreement or transaction.
SECTION 3.12 Capitalization. Neither First Film nor any of the First
Film Subsidiaries has granted, issued or agreed to grant, issue or make
available any capital interests, warrants, options, subscription rights or any
other commitments of any character relating to the issued or unissued capital
interests of First Film or such First Film Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser, jointly and severally, represents and warrants to the Seller
as follows:
SECTION 4.1 Authority; Required Action. Purchaser has full legal power
and authority to enter into this Agreement and the other instruments and
agreements to be executed and delivered by the Purchaser in connection with the
transactions contemplated by this Agreement and to consummate the Stock Sale and
other transactions contemplated hereby. All action required to be taken by the
Purchaser to authorize the execution, delivery and performance of this Agreement
and all other agreements delivered by Purchaser in connection with the
transactions contemplated hereby has, or at the Closing will have been, duly and
validly taken and this Agreement and such other agreements and instruments have
been duly executed and delivered by the Purchaser. Subject to the terms and
conditions hereof, this Agreement constitutes valid, binding and enforceable
obligations of the Purchaser, enforceable in accordance with its terms, except
as enforceability may be limited or barred by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws of general
application now or hereafter in effect affecting the rights and remedies of
creditors and by general principles of equity (regardless of whether enforcement
is sought in a proceeding at law or in equity).
SECTION 4.2 No Conflict; Required Filings and Consents.
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(1) The execution and delivery of this Agreement (and the
other agreements contemplated hereby) by the Purchaser does not, and the
performance by the Purchaser of its obligations under this Agreement (and any
other agreements contemplated hereby) will not, (i) conflict with or violate the
Articles of Organization, Operating Agreement or other organizational documents,
if any, of Purchaser, (ii) conflict with or violate any law, statute, ordinance,
rule, regulation, order, judgment or decree applicable to Purchaser, or by which
any of its respective properties or assets is bound or affected, or (iii) result
in any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the properties or assets of Purchaser pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Purchaser is a
party or by which any of its respective properties or assets is bound or
affected, except, in the case of clauses (ii) and (iii) above, for any such
conflicts, violations, breaches, defaults or other alterations or occurrences
that would not reasonably be expected to, either singly or in the aggregate,
materially impair Purchaser's ability to consummate the transactions
contemplated by this Agreement (a "Purchaser Material Adverse Effect").
(2) The execution and delivery of this Agreement (and the
other agreements contemplated hereby) by the Purchaser does not, and the
performance of this Agreement (and any other agreements contemplated hereby) by
the Purchaser will not, require it to obtain any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
entity, except (i) compliance with the applicable requirements, if any, of the
Exchange Act, Securities Act as set forth in this Agreement and (iii) where
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not reasonably be expected to have,
either singly or in the aggregate, a Purchaser Material Adverse Effect.
SECTION 4.3 Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Purchaser.
SECTION 4.4 Investment Representations. Purchaser represents that: (i)
all of the shares of First Film Common Stock to be acquired by Purchaser
pursuant to this Agreement will be acquired for its own account and not with a
view towards distribution thereof; (ii) it understands that it must bear the
economic risk of the investment in such stock, which cannot be sold or
transferred by Purchaser unless the transfer of such stock is registered under
the Securities Act, or an exemption therefrom is available thereunder; (iii)
Purchaser has had both the opportunity to ask questions and receive answers from
the officers and directors of First Film and Seller concerning the business and
operations of First Film and to obtain any additional information to the extent
First Film and Seller possesses or may possess such information or can acquire
it without unreasonable effort or expense necessary to verify the accuracy of
such information; and (iv) Purchaser has reviewed copies of all of First Film's
filings with the Commission. Purchaser (a) acknowledges that it is either (i) an
"accredited investor" as such term is defined in Regulation D promulgated under
the Securities Act or (ii) a person possessing sufficient knowledge and
experience in financial and business matters to enable it to evaluate the merits
and risks of an investment in First Film and (b) understands that the
certificates representing all securities of First Film to be acquired by
Purchaser pursuant to this Agreement shall bear a legend to the effect that such
securities may not be transferred except upon compliance with the registration
requirements of the Securities Act (or an exemption therefrom) and the
provisions of this Agreement.
ARTICLE V
NATURE AND SURVIVAL OF REPRESENTATIONS AND
WARRANTIES OF THE PARTIES
SECTION 5.1 Survival. Each representation and warranty made or deemed
made by any Party to another under this Agreement shall remain in effect
following the Closing, and shall terminate at such time as the obligation to
indemnify under such representation or warranty under Section 10.1 or 10.2, as
the case may be, so terminates (the "Warranty Termination Date").
Notwithstanding the above, there shall be no duty to update such representations
or warranties after the Closing except as required by Section 6.2 below.
SECTION 5.2 Nonwaiver of Rights. The representations and warranties
made or deemed made by any Party to another shall not be affected or deemed
waived by reason of the fact that another Party or its representatives knew or
should have known that any such representations or warranties is or might be
inaccurate in any respect. Any furnishing of information by any Party to another
pursuant to, or otherwise in connection with, this Agreement, including, without
limitation, any information contained in any document, contract, book or record
of the delivering Party to which another Party shall have access or any
information obtained by, or made available to, any Party as a result of any
investigation made by or on behalf of such Party prior to or after the date of
this Agreement, shall not affect such Party's right to rely on any
representation or warranty made or deemed made by another Party in this
Agreement and shall not be deemed a waiver thereof.
ARTICLE VI
JOINT COVENANTS OF THE PARTIES
SECTION 6.1 Further Action. Each of the Parties shall execute such
documents and other papers and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby. Upon the terms and subject to the conditions hereof, each
of the Parties shall use commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all other things necessary,
proper or advisable to consummate and make effective as promptly as practicable
the transactions contemplated by this Agreement.
SECTION 6.2 Schedules. The Parties shall have the obligation to
supplement or amend the Schedules being delivered concurrently with the
execution of this Agreement and annexed hereto with respect to any matter
hereafter arising or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or described in the
Schedules. The obligations of the Parties to amend or supplement the Schedules
being delivered herewith shall terminate on the Warranty Termination Date.
SECTION 6.3 Regulatory and Other Authorizations. The Parties will
promptly make all necessary filings, if any, and use their reasonable best
efforts to obtain all authorizations, consents, orders and approvals of all
Federal, state and other regulatory bodies and officials that are required for
the consummation of the transactions contemplated by this Agreement.
ARTICLE VII
COVENANTS OF THE SELLER
SECTION 7.1 Fulfillment of Conditions. The Seller shall use its
reasonable best efforts to fulfill, or cause to be fulfilled, the conditions
specified in Section 9.3. In addition, the Seller shall use its reasonable best
efforts to fulfill, or cause to be fulfilled, the conditions specified in
Section 9.1 to the extent that the fulfillment of such conditions is within its
control. The foregoing obligation includes taking or refraining from taking such
actions as may be necessary to fulfill such conditions.
SECTION 7.2 Confidentiality. The Seller shall hold and shall cause its
Representatives to hold in strict confidence, unless compelled to disclose by
judicial or administrative process or by other requirements of law, all terms of
this Agreement and related agreements, all documents and information concerning
Purchaser furnished to it by Purchaser in connection with the transactions
contemplated by this Agreement and all information and other knowledge it
possesses concerning the business, assets and subsidiaries of First Film, and
the business of the Comedy Works; (except to the extent that such information
can be shown to have been (i) previously known by the Seller, (ii) in the public
domain through no fault of the Seller or (iii) later lawfully acquired by the
Seller from another source, which source shall not be the agent of Purchaser or
person under confidentiality obligation to any Purchaser) and, except as
otherwise required by applicable law, rule or regulation, the Seller shall not
release or disclose such information to any other person, except its
Representatives who are involved in facilitating the closing of the transactions
contemplated by this Agreement.
SECTION 7.3 Disclosure of Certain Matters. During the period from the
date hereof through the Closing Date, the Seller shall give the Purchaser prompt
written notice of any event or development that occurs that (a) had it existed
or been known on the date hereof would have been required to be disclosed under
this Agreement, (b) would cause any of the representations and warranties of the
Seller contained herein to be inaccurate or otherwise misleading, (c) gives
Seller any reason to believe that any of the conditions set forth in Article IX
will not be satisfied, or (d) is of a nature that is or may be materially
adverse to the operations, prospects or condition (financial or otherwise) of
Seller or First Film.
SECTION 7.4 Certain Consents. The Seller, in consultation with the
Purchaser and its Representatives, shall use its reasonable best efforts to
obtain consents under all instruments to which Seller is a party or by which it
is bound which require the consent of any other party or person either by the
terms thereof or as a matter of law in connection with the Stock Sale.
SECTION 7.5 Directors of First Film. At the time of Closing, the
then-directors of First Film (the "Pre-Closing Directors") shall appoint each of
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (together, the "Post-Closing Directors") as
additional directors of First Film and the Pre-Closing Directors shall then
resign as directors of, and all other offices or positions with, First Film.
Subsequent to the Closing, the Post-Closing Directors shall be the only
directors of First Film until their successors are duly elected and qualified.
SECTION 7.6 Conduct of Business. Seller covenants and agrees that, from
the date hereof through the Closing Date, except as otherwise set forth in this
Agreement or agreed to by the Parties in writing, they shall cause First Film
to:
(a) conduct its business only in the ordinary course and in a manner consistent
with the current practice of such business, preserve substantially intact the
business organization of First Film, use its reasonable best efforts to keep
available the services of the current employees of First Film and preserve the
current relationships of First Film with customers and other persons with which
First Film has significant business relations, and comply with all requirements
of law, the violation of which would reasonably be expected to have, either
singly or in the aggregate, a material adverse effect on the results of
operations, financial condition, business, assets or prospects of First Film;
(b) not pledge, sell, transfer, dispose of, or otherwise encumber or grant any
rights or interests to others of any kind with respect to, all or any part of
First Film's capital stock or enter into any discussions or negotiations with
any other party to do so;
(c) not pledge, sell, lease, transfer, dispose of or otherwise encumber any of
First Film's property or assets other than consistent with past practices and in
the ordinary course of business or enter into any discussions or negotiations
with any other party to do so;
(d) not (i) issue any shares of First Film's capital stock nor any options,
obligations, rights, warrants or other securities convertible into or
exchangeable for its capital stock, or any other class of securities, whether
debt or equity, of First Film; or (ii) amend or otherwise modify the terms of
any such securities, options, obligations, rights or warrants in a manner
inconsistent with the provisions of this Agreement or the effect of which shall
be to make such terms more favorable to the holders thereof;
(e) not declare any dividend or make any distribution in cash, securities or
otherwise on the outstanding shares of First Film's capital stock, or directly
or indirectly redeem or purchase any such capital stock;
(f) not, in any manner whatsoever, advance, transfer (other than in payment for
goods received or services rendered in the ordinary course of business) or
distribute to any stockholders or any of their affiliates, or otherwise
withdraw, cash or cash equivalents in any manner inconsistent with established
cash management practices, except to pay existing obligations of First Film in
accordance with their terms;
(g) not make, agree to make or announce any general wage or salary increase or
enter into any employment contract or, unless provided for on or before the date
of this Agreement, increase the compensation payable or to become payable to any
officer or employee of First Film or adopt or increase the benefits of any
bonus, insurance, pension or other employee benefit plan, payment or
arrangement, except for those increases, consistent with past practices,
normally occurring as the result of regularly scheduled salary reviews and
increases, normal year-end bonuses in amounts and to persons consistent with
prior practice and increases directly or indirectly required as a result of
changes in applicable law or regulations;
(h) not make any capital expenditures, except in the ordinary course
of business of First Film and consistent with past practices;
(i) not propose or adopt any amendments to First Film's Articles of
Incorporation or By-laws, except as contemplated hereby;
(j) not permit First Film to merge or consolidate with, or acquire all or
substantially all of the assets of, or otherwise acquire any business operations
of, any person or entity or enter into any agreement for any of the foregoing;
(k) not allow First Film to deviate from past practices or schedules with
respect to the payment of accounts payable or collection of accounts receivable;
(l) not allow First Film to prepay, before the scheduled maturity thereof, any
of its long-term debt, or incur any obligation for borrowed money, whether or
not evidenced by a note, bond, debenture or similar instrument, other than
indebtedness incurred in the ordinary course of business consistent with past
practices;
(m) not allow First Film to enter into or modify in any material respect any
material contract, lease or permit other than in the ordinary course of
business;
(n) not take any action that will, or could reasonably be expected to, result in
any of its representations and warranties set forth in this Agreement being
inaccurate or in any of the conditions to the Stock Sale not being satisfied; or
(o) forebear from agreeing, in writing or otherwise, to do any of the
foregoing.
ARTICLE VIII
COVENANTS OF PURCHASER
SECTION 8.1 Fulfillment of Conditions. From the date hereof to the
Closing, the Purchaser shall use its reasonable best efforts to fulfill or cause
to be fulfilled the conditions specified in Section 9.3. In addition, Purchaser
shall use its reasonable best efforts to fulfill, or cause to be fulfilled, the
conditions specified in Section 9.1 to the extent that the fulfillment of such
conditions is within its control. The foregoing obligation includes taking or
refraining from taking such actions as may be necessary to fulfill such
conditions.
SECTION 8.2 Confidentiality. Until the Closing Date, Purchaser shall
hold and shall cause its Representatives to hold in strict confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law or as otherwise provided in this Agreement, the existence of
this transaction, all terms of this Agreement and related agreements and all
documents and information concerning the Seller furnished to them by the Seller
or its Representatives in connection with the transactions contemplated by this
Agreement (except to the extent that such information can be shown to have been
(i) previously known by Purchaser, (ii) in the public domain through no fault of
Purchaser or (iii) later lawfully acquired by Purchaser from another source,
which source shall not be the agent of the Seller or person under
confidentiality obligation to the Seller) and, except as otherwise required by
applicable law, rule or regulation, none of Purchaser shall release or disclose
such information to any other person, except their respective Representatives
who are involved in facilitating the closing of the transactions contemplated by
this Agreement.
SECTION 8.3 Disclosure of Certain Matters. During the period from the
date hereof through the Closing Date, Purchaser shall give the Seller prompt
written notice of any event or development that occurs that (a) had it existed
or been known on the date hereof would have been required to be disclosed under
this Agreement, (b) would cause any of the representations and warranties of
Purchaser contained herein to be inaccurate or otherwise misleading, (c) gives
the Purchaser any reason to believe that any of the conditions set forth in
Article IX will not be satisfied, or (d) is of a nature that is or may be
materially adverse to the operations, prospects or condition (financial or
otherwise) of any Purchaser.
SECTION 8.4 Certain Consents. The Purchaser, in consultation with the
Seller and its Representatives, shall use its reasonable best efforts to obtain
consents under all instruments to which Purchaser is a party or by which
Purchaser is bound that require the consent of any other party or person either
by the terms thereof or as a matter of law in connection with the Stock Sale.
ARTICLE IX
CONDITIONS TO CLOSING
SECTION 9.1 Conditions to Each Party's Obligations. The respective
obligations of each Party to consummate the Stock Sale and the other
transactions contemplated by this Agreement shall be subject to the fulfillment
at or prior to the Closing Date of the following conditions:
(1) No Governmental Order or Regulation. There shall not be in
effect any order, decree or injunction (whether preliminary, final or
appealable) of a United States Federal or state court of competent jurisdiction,
and no regulation shall have been enacted or promulgated by any governmental
authority or agency, that prohibits consummation of the Stock Sale, and no
litigation pending or threatened regarding same; and
(2) Regulatory and Other Authorizations. All authorizations,
consents, orders and approvals of all Federal, state and other regulatory bodies
and officials that are required for the consummation of the transactions
contemplated by this Agreement shall have been obtained.
SECTION 9.2 Conditions to the Obligations of Seller. The obligations of
Seller to consummate the Stock Sale and the other transactions contemplated by
this Agreement shall be subject, at the sole option of Seller, to the
fulfillment, at or prior to the Closing, of each of the following conditions:
(1) Representations and Warranties; Covenants. Without
supplementation after the date hereof except as required by this Agreement, the
representations and warranties of Purchaser contained in this Agreement shall be
true and correct in all respects, as of the Closing, with the same force and
effect as if made as of the Closing, and all the covenants and agreements
contained in this Agreement to be complied with by Purchaser on or before the
Closing Date shall have been complied with, and Seller shall have received a
certificate of Purchaser to such effect;
(2) Consents. Purchaser shall have obtained and
-------- delivered to the Seller all governmental
and private third party consents to the performance of Purchaser's obligations
with respect to the Stock Sale; and
(3) Necessary Proceedings. All proceedings, corporate or
otherwise, to be taken by Purchaser in connection with the consummation of the
transactions contemplated by this Agreement shall have been duly and validly
taken, and copies of all documents and certificates incident thereto shall have
been delivered to the Seller.
SECTION 9.3 Conditions to the Obligations of Purchaser. The obligations
of Purchaser to consummate the Stock Sale and the other transactions
contemplated by this Agreement shall be subject, at the sole option of
Purchaser, to the fulfillment, at or prior to the Closing, of each of the
following conditions:
(1) Representations and Warranties; Covenants. Without
supplementation after the date hereof the representations and warranties of the
Seller contained in this Agreement shall be, except as required by this
Agreement, true and correct in all respects, as of the Closing, with the same
force and effect as if made as of the Closing, and all the covenants and
agreements contained in this Agreement to be complied with by the Seller on or
before the Closing Date shall have been complied with, and Purchaser shall have
received a certificate of the Seller to such effect;
(2) Consents. The Seller shall have obtained and
--------
delivered to Purchaser all governmental and private third party consents to
the performance of Seller's obligations with respect to the Stock Sale;
(3) Resignation of Directors and Officers of First Film. Each
of the existing officers and directors shall have resigned in writing as
directors and officers of First Film and all the First Film Subsidiaries; and
copies of such written resignations, in form and substance acceptable to
Purchaser, shall have been delivered to Purchaser; and
(4) Necessary Proceedings. All proceedings, corporate or
otherwise, to be taken by the Seller in connection with the consummation of the
transactions contemplated by this Agreement shall have been duly and validly
taken, and copies of all documents, resolutions and certificates incident
thereto, duly certified, if required by Purchaser, by the officers of Seller as
of the Closing, shall have been delivered to the Purchaser.
ARTICLE X
INDEMNIFICATION
SECTION 10.1 Indemnification by Seller. The Seller shall indemnify and
hold harmless Purchaser, its directors, officers, managers, members, agents,
attorneys and other representatives (the "Purchaser Parties") from and against,
and shall reimburse the Purchaser Parties for any Damages which may be
sustained, suffered or incurred by any of the Purchaser Parties, whether as a
result of any Third Party Claim or otherwise, and which arise or result from or
in connection with or are attributable to the breach by Seller of any of the
Seller's covenants, representations, warranties, agreements, obligations or
undertakings contained in this Agreement. This indemnity will survive the
Closing. Claims made for indemnity hereunder must be made prior to the two-year
anniversary of the Closing Date. Any claim for indemnity asserted within the
relevant period shall survive until resolved.
SECTION 10.2 Indemnification by Purchaser. Purchaser shall indemnify
and hold harmless Seller, its directors, officers, managers, members, agents,
attorneys and other representatives (the "Seller Parties") from and against, and
shall reimburse Seller Parties for, any Damages which may be sustained, suffered
or incurred by any of the Seller Parties, whether as a result of any Third Party
Claim or otherwise, and which arise or result from or in connection with or are
attributable to the breach by Purchaser of any of Purchaser's covenants,
representations, warranties, agreements, obligations or undertakings contained
in this Agreement. This indemnity will survive the Closing. Claims made for
indemnity hereunder must be made prior to the two-year anniversary of the
Closing Date. Any claim for indemnity asserted within the relevant period shall
survive until resolved.
SECTION 10.3 Claims.
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(1) Third Party Claims. In the event that an Indemnified Party
becomes aware of a Third Party Claim for which an Indemnifying Party would be
liable to an Indemnified Party hereunder, the Indemnified Party shall give
reasonably prompt notice in writing to the Indemnifying Party of such Claim,
identifying the basis for such Claim or demand, and the amount or the estimated
amount thereof to the extent then determinable (which estimate shall not be
conclusive of the final amount of such Claim whether or not the Claim is a Third
Party Claim) ("Claim Notice"); provided, however, that any delay in giving such
Claim Notice will not be deemed a waiver of nor result in any discontinuation of
any rights of the Indemnified Party except to the extent the rights of the
Indemnifying Party are actually materially prejudiced by such failure. The
Indemnifying Party, upon request of the Indemnified Party, shall retain counsel
(who shall be reasonably acceptable to the Indemnified Party) to represent the
Indemnified Party and shall pay the reasonable fees and disbursements of such
counsel with regard thereto; provided, however, that the Indemnified Party is
hereby authorized, prior to the date on which it receives written notice from
the Indemnifying Party designating such counsel, to retain counsel, whose fees
and expenses shall be at the expense of the Indemnifying Party, to file any
motion, answer or other pleading and take such other action which it reasonably
shall deem necessary to protect its interests or those of the Indemnifying Party
until the date on which the Indemnified Party receives such notice from the
Indemnifying Party. After the Indemnifying Party shall retain such counsel, the
Indemnified Party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (ii) the named parties of any such
proceeding (including any impleaded parties) include both the Indemnifying Party
and the Indemnified Party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The Indemnifying Party shall not, in connection with any proceedings or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one such firm for the Indemnified Party (except to the
extent the Indemnified Party retained counsel to protect its (or the
Indemnifying Party's) rights prior to the selection of counsel by the
Indemnifying Party). If requested by the Indemnifying Party, the Indemnified
Party agrees to cooperate with the Indemnifying Party and its counsel in
contesting any Third Party Claim which the Indemnifying Party defends. A Third
Party Claim may not be settled by the Indemnifying Party without the prior
written consent of the Indemnified Party (which consent will not be unreasonably
withheld) unless, as part of such settlement, the Indemnified Party shall
receive a full and unconditional release; provided, however, that the
Indemnifying Party shall not settle any claim without the prior written consent
of the Indemnified Party (which consent shall not be unreasonably withheld) if
such Claim is not exclusively for monetary Damages.
(2) Direct Claims. In the event any Indemnified
--------------
Party has a direct claim against any Indemnifying Party, the Indemnified
Party shall send a Claim Notice with respect to the claim to the Indemnifying
Party.
(3) Books and Records. After delivery of a Claim Notice, so
long as any right to indemnification exists pursuant to this Article X, the
affected Parties each agree to retain all books and records related to such
Claim Notice. In each instance, the Indemnified Party shall have the right to be
kept fully informed by the Indemnifying Party and its legal counsel with respect
to any legal proceedings. Any information or documents made available to any
Party hereunder and designated as confidential by the Party providing such
information or documents and which is not otherwise generally available to the
public and not already within the knowledge of the Party to whom the information
is provided (unless otherwise covered by the confidentiality provisions of any
other agreement among the Parties hereto, or any of them), and except as may be
required by applicable law, shall not be disclosed to any third party (except
for the representatives of the Party being provided with the information, in
which event the Party being provided with the information shall request its
representatives not to disclose any such information which it otherwise required
hereunder to be kept confidential).
SECTION 10.4 Representations and Warranties. For purposes of indemnity
under this Article IX for breach of a representation or warranty of a Party
under this Agreement, the representations and warranties shall be the
representations and warranties of a Party made herein, as supplemented, modified
or amended by any Schedule thereto as of required by this Agreement without
regard to any materiality qualifications or standards otherwise contained
therein.
ARTICLE XI
TERMINATION
SECTION 11.1 Methods of Termination. The transactions contemplated
herein may be terminated and/or abandoned at any time but not later than the
Closing:
(1) By mutual written consent of Seller and Purchaser;
(2) By either Seller or Purchaser (if the terminating Party is
not then in material breach of its obligations hereunder) if (i) a material
default or breach shall be made by the other Party with respect to the due and
timely performance of any of its covenants and agreements contained herein and
such default cannot be cured within a reasonable period of time, or (ii) if any
of the other Party's representations and warranties, without supplementation
after the date hereof, are not true and correct in all respects as of the
Closing Date; or
(3) By either Seller or Purchaser (if the terminating Party is
not then in material breach of its obligations hereunder) if the Closing Date
has not occurred by June 30, 2001, unless the Parties agree to an extension in
writing.
SECTION 11.2 Effect of Termination. In the event of termination by a
Party, or both Parties, pursuant to Section 11.1 hereof, written notice thereof
shall forthwith be given to the other Party and all obligations (except as set
forth in this Section 11.2) of the Parties shall terminate and no Party shall
have any right against the other Party hereto. Notwithstanding the foregoing, if
this Agreement is so terminated by one Party under Section 11.1(b) above, it is
expressly agreed and understood that the terminating Party's right to pursue all
legal remedies for breach of contract or otherwise, including, without
limitation, Damages relating thereto, shall survive such termination unimpaired.
If the transactions contemplated by this Agreement are terminated and/or
abandoned as provided herein:
(1) Each Party hereto will return all documents, work papers
and other material (and all copies thereof) of the other Party, relating to the
transactions contemplated hereby, whether so obtained before or after the
execution hereof, to the Party furnishing the same; and
(2) All confidential information received by either Party
hereto with respect to the business of the other Party shall be treated in
accordance with Section 7.2 and 8.2 hereof, which shall survive such termination
or abandonment.
ARTICLE XII
DEFINITIONS
SECTION 12.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Business Day" means a day of the year on which banks are not required
or authorized to be closed in the City of New York.
"Commission" means the Securities and Exchange Commission.
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"Damages" means the dollar amount of any loss, damage, cost, expense or
liability, including, without limitation, reasonable attorneys' fees and
disbursements incurred by an Indemnified Party in any action or proceeding
between the Indemnified Party and the Indemnifying Party or between the
Indemnified Party and a third party, which is determined (as provided in Article
IX) to have been sustained, suffered or incurred by a Party and to have arisen
from or in connection with an event or state of facts which is subject to
indemnification under this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"First Film Subsidiaries" means all the directly- or indirectly-
-------------------------
owned or controlled subsidiaries of First Film, including Comedy Works, Inc.,
a Colorado corporation and Comedy Core, Inc., a corporation.
"Lien" means any lien, claim, charge, option, security interest,
restriction or encumbrance.
"Party" means the Purchaser, on the one hand, and the Seller, on the
other hand (collectively, the "Parties").
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof, self-regulatory body or any other entity.
"Representatives" of either Party means such Party's employees,
officers, directors, accountants, auditors, actuaries, counsel, financial
advisors, bankers, investment bankers and consultants.
"Securities Act" means the Securities Act of 1933, as amended.
"Third Party Claim" means a claim, demand, suit, proceeding or action
by a person, firm, corporation or government entity other than a party hereto or
any affiliate of such party.
ARTICLE XIII
GENERAL PROVISIONS
SECTION 13.1 Expenses. Except as otherwise provided herein, all costs
and expenses, including, without limitation, fees and disbursements of
Representatives, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Party incurring such costs and
expenses, whether or not the Closing shall have occurred.
SECTION 13.2 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered personally or by confirmed facsimile or
one day after delivery to a nationally recognized courier with instructions and
payment for next day delivery, in each case, to the Parties at the following
addresses or facsimile numbers (or at such other address or facsimile number for
a Party as shall be specified by like notice, except that notices of changes of
address shall be effective upon receipt):
(a) If to Purchaser:
NMSF, LLC
c/o ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. [or then-current Manager]
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(b) If to Seller:
F2 Broadcast Network Inc.
c/o Mr. ▇▇▇▇▇▇ ▇▇▇▇▇, Chairman [or then-current Chairman]
▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SECTION 13.3 Press Release; Public Announcements; Filings. Promptly
after execution of this Agreement, the Parties shall issue a press release in
the form approved by the Parties ("Signing Release"). The Seller also shall file
with the Commission a Current Report on Form 8-K with respect to the
transactions contemplated hereby (the "Signing 8-K" and together with the
Signing Release, the "Agreed Disclosure"). The Signing 8-K shall be provided by
Seller to Purchaser prior to filing and Purchaser shall be given at least two
business days to comment thereon. Notwithstanding the foregoing, a Party may
make any disclosure which it believes is required by applicable law or
regulation, in which case the other Party shall be given such reasonable advance
notice as is practicable in the circumstances and the Parties shall use their
reasonable best efforts to cause a mutually agreeable release or announcement to
be issued. The Parties also may make appropriate disclosure of the transactions
contemplated by this Agreement to their officers, directors and Representatives.
SECTION 13.4 Amendment. This Agreement may not be amended or modified
except by an instrument in writing signed by the Parties.
SECTION 13.5 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 13.6 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any Party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the Parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the Parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 13.7 Entire Agreement. This Agreement and the Schedules and
Exhibits hereto constitute the entire agreement and supersede all prior
agreements and undertakings, both written and oral, between Seller and Purchaser
with respect to the subject matter hereof.
SECTION 13.8 Benefit; Assignment. This Agreement shall inure to the
benefit of and be binding upon the Parties and the successors and permitted
assigns of the Parties and, except as otherwise expressly provided herein, are
not intended to confer upon any other person any rights or remedies hereunder.
This Agreement is not assignable by any Party without the express written
consent of the other Parties.
SECTION 13.9 Governing Law; Resolution of Disputes. Except as to
matters governed by the Nevada General Corporation Law, this Agreement shall be
governed by, and construed in accordance with, the law of the State of Colorado,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of law. Any controversy or claim arising out of or relating to this
Agreement, the making, interpretation or the breach thereof, shall be settled by
submitting such dispute to the American Arbitration Association ("AAA") for
arbitration in Chicago, Illinois, before three arbitrators of the AAA, pursuant
to the Commercial Arbitration Rules of the AAA. Judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof and
any party to the arbitration may, if he or it so elects, institute proceedings
in any court having jurisdiction for the specific performance of any such award.
The powers of the arbitrators shall include, but not be limited to, the awarding
of injunctive relief, but shall not include the power to award punitive damages.
The arbitrators may include in any award, reasonable attorneys' fees and
expenses and other reasonable costs and expenses of the arbitration.
SECTION 13.10 Specific Performance. Purchaser and Seller each
acknowledges and agrees that a remedy at law for any breach or attempted breach
of their respective obligations to consummate the sale of the First Film Common
Stock contemplated hereby will be inadequate and will result in irreparable harm
to the other and each of them covenants and agrees not to oppose any demand for
specific performance and injunctive and other equitable relief in case of any
such breach or attempted breach.
SECTION 13.11 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different Parties in separate counterparts, each
of which when executed shall be deemed to be an original but all of which when
taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed as of the date first written above.
SELLER:
F2 BROADCAST NETWORK, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:CEO/Chairman
PURCHASER:
NMSF, LLC.
By: /s/ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇.
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Manager