EXHIBIT 10.2
ASSET PURCHASE AND SALE AGREEMENT
BETWEEN
▇▇▇▇▇ ▇▇▇▇▇ AS ASSIGNEE FOR
THE BENEFIT OF CREDITORS OF
▇▇▇▇▇▇▇▇ FILM INDUSTRIES CORP.
DBA ▇▇▇▇▇▇▇▇ VIDEO
AS
THE SELLER
AND
AV ACQUISITION CORP.
AS
THE BUYER
DATED MARCH 7, 1997
TABLE OF CONTENTS
PAGE(S)
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ARTICLE 1 - PURCHASE AND SALE OF THE ASSETS............................ 1
Section 1.1 Purchase By Buyer and Sale By Assignee
of the Assets................................... 1
ARTICLE 2 - CERTAIN DEFINITIONS........................................ 2
Section 2.1 Accounts Receivable............................. 2
Section 2.2 Affiliate....................................... 2
Section 2.3 ▇▇▇▇▇▇▇▇ Business............................... 2
Section 2.4 Approved Liens.................................. 2
Section 2.5 Assets.......................................... 2
Section 2.6 Assignment...................................... 3
Section 2.7 Assignor........................................ 3
Section 2.8 Assignee........................................ 3
Section 2.9 Books And Records............................... 3
Section 2.10 Business Day.................................... 3
Section 2.11 Closing......................................... 3
Section 2.12 Closing Date.................................... 3
Section 2.13 Contract........................................ 3
Section 2.14 ▇.▇. ▇▇▇▇▇▇▇▇................................... 4
Section 2.15 ▇▇▇▇▇▇▇......................................... 4
Section 2.16 Environmental Law............................... 4
Section 2.17 Environmental Permit............................ 4
Section 2.18 ERISA........................................... 4
Section 2.19 Excluded Assets................................. 4
Section 2.20 Financial Statements............................ 5
Section 2.21 Governmental Authority.......................... 5
Section 2.22 Governmental Licenses And Permits............... 5
Section 2.23 Hazardous Substance............................. 6
Section 2.24 Intellectual Property........................... 6
Section 2.25 Inventory....................................... 6
Section 2.26 Law............................................. 6
Section 2.27 Leased Premises................................. 6
Section 2.28 Liabilities (Liability)......................... 6
Section 2.29 Liens........................................... 7
Section 2.30 Loss or Losses.................................. 7
Section 2.31 Material Adverse Effect......................... 7
Section 2.32 Person.......................................... 7
Section 2.33 Personal Property............................... 7
Section 2.34 Personal Property Leases........................ 7
Section 2.35 Purchase Price.................................. 7
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TABLE OF CONTENTS
(CONTINUED)
Section 2.36 Real Property................................... 7
Section 2.37 Real Property Lease............................. 8
Section 2.38 Required Consent................................ 8
Section 2.39 Related Agreement............................... 8
Section 2.40 Schedule or Schedules........................... 8
Section 2.41 Subsidiary...................................... 8
Section 2.42 Taxes........................................... 8
ARTICLE 3 - TRANSACTIONS TO BE EFFECTED AT CLOSING..................... 8
Section 3.1 Closing......................................... 8
Section 3.2 Transactions To Be Effected..................... 9
Section 3.3 Possession and Risk of Loss..................... 10
Section 3.4 Employees....................................... 10
ARTICLE 4 - PURCHASE PRICE AND PAYMENT OF THE PURCHASE PRICE........... 10
Section 4.1 Purchase Price.................................. 10
Section 4.2 Payment of the Purchase Price................... 10
ARTICLE 5 - REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS OF
▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇........................ 11
Section 5.1 Corporate Status and Subsidiaries............... 11
Section 5.2 Authorization of Agreement...................... 11
Section 5.3 Binding Agreement............................... 11
Section 5.4 No Default...................................... 11
Section 5.5 Title To and Interest In the Assets............. 12
Section 5.6 Financial Statements; Undisclosed Liabilities;
Other Documents................................. 12
Section 5.7 Condition and Sufficiency of Assets............. 12
Section 5.8 Real Property................................... 13
Section 5.9 Personal Property............................... 13
Section 5.10 Inventories..................................... 13
Section 5.11 Litigation; Compliance With Laws................ 13
Section 5.12 Permits......................................... 14
Section 5.13 Insurance....................................... 14
Section 5.14 Tax Matters..................................... 14
Section 5.15 Intellectual Property........................... 14
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TABLE OF CONTENTS
(CONTINUED)
Section 5.16 Books and Records............................... 15
Section 5.17 Customers....................................... 15
Section 5.18 Schedules and Exhibits.......................... 15
Section 5.19 Environmental Issues............................ 15
Section 5.20 No Continuing Liabilities to Employees.......... 16
Section 5.21 Employee Benefit Plans.......................... 16
Section 5.22 No Collective Bargaining Agreements............. 16
Section 5.23 Transfer of Masters and Work-in-Progress........ 17
Section 5.24 Accuracy Of Statements.......................... 17
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF THE BUYER TO THE
ASSIGNEE 17
Section 6.1 Corporate Status................................ 17
Section 6.2 Authorization of Agreement...................... 17
Section 6.3 Binding Agreement............................... 18
ARTICLE 7 - OTHER COVENANTS OF ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇ AND
▇▇▇▇▇▇▇ 18
Section 7.1 Consents and Approvals.......................... 18
Section 7.2 Customer Lists.................................. 18
Section 7.3 Non-Competition................................. 19
Section 7.4 Implementing Agreement.......................... 20
Section 7.5 Required Consents Obtained...................... 20
ARTICLE 8 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER....... 20
Section 8.1 Conditions Precedent............................ 20
Section 8.2 Continued Truth of Representations and
Warranties and Compliance With Covenants........ 20
Section 8.3 Governmental Approvals.......................... 21
Section 8.4 Consent Of Third Parties........................ 21
Section 8.5 Adverse Proceedings............................. 21
Section 8.6 Delivery of Schedules and Other Materials....... 21
Section 8.7 Documents....................................... 21
Section 8.8 Discharge of Federal Tax Liens.................. 21
Section 8.9 Approved Liens.................................. 22
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TABLE OF CONTENTS
(CONTINUED)
PAGE(S)
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ARTICLE 9 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ASSIGNEE........ 22
Section 9.1 Conditions Precedent............................ 22
Section 9.2 Continued Truth Of Representations And
Warranties And Compliance With Covenants........ 22
Section 9.3 Governmental Approvals.......................... 22
Section 9.4 Consent of Third Parties........................ 22
Section 9.5 Adverse Proceedings............................. 22
ARTICLE 10 - INDEMNIFICATION........................................... 23
Section 10.1 Survival........................................ 23
Section 10.2 Indemnification by ▇.▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇.... 23
Section 10.3 Failure of ▇.▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ to Act..... 23
Section 10.4 Subrogation and Contribution.................... 23
Section 10.6 Indemnification of Assignee..................... 24
ARTICLE 11 - GENERAL PROVISIONS........................................ 24
Section 11.1 Sales and Use Tax............................... 24
Section 11.2 Seller's Brokers................................ 24
Section 11.3 Buyer's Brokers................................. 24
Section 11.4 Time is of the Essence.......................... 24
Section 11.5 Notices......................................... 24
Section 11.6 Entire Agreement; Amendment..................... 25
Section 11.7 Counterparts.................................... 25
Section 11.8 Governing Law................................... 25
Section 11.9 Partial Invalidity.............................. 26
Section 11.10 Successors and Assigns.......................... 26
Section 11.11 Captions........................................ 26
Section 11.12 Effect Of Investigation......................... 26
Section 11.13 Waivers......................................... 26
Section 11.14 Interpretation.................................. 26
Section 11.15 No Third Party Beneficiaries.................... 27
Section 11.16 Further Assurances.............................. 27
Section 11.17 Remedies Cumulative............................. 27
Section 11.18 Fees, Costs and Expenses........................ 27
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ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT is made as of the 7th day of
March, 1997 by and between ▇▇▇▇▇ ▇▇▇▇▇, assignee ("Assignee" or "Seller") for
the benefit of the creditors of ▇▇▇▇▇▇▇▇ Film Industries Corp., dba ▇▇▇▇▇▇▇▇
Video, a California corporation ("▇▇▇▇▇▇▇▇") and AV Acquisition Corp., a
Delaware corporation (the "Buyer"). This Asset Purchase and Sale Agreement,
including all exhibits and schedules attached hereto, as it may be amended from
time to time, shall be referred to as the "Agreement."
R E C I T A L S:
▇. ▇▇▇▇▇▇▇▇, on or about March 7, 1997, executed an assignment to
Assignee for the ultimate benefit of its creditors generally of all of the
property and assets of ▇▇▇▇▇▇▇▇ of every kind and nature wherever located, both
real and personal, and of every type, kind and nature, and any and all right,
title or interest therein, including without limiting the generality of the
foregoing all of the assets pertaining to the ▇▇▇▇▇▇▇▇ Business (as defined in
Section 2.3 hereof); and
B. Assignee has legal title to and possession of, and is empowered to
sell and dispose of, the assets which are the subject matter of this Agreement
and to execute, deliver and perform this Agreement; and
C. Assignee wishes to sell, assign, transfer, convey and deliver to the
Buyer all of the Assignee's right, title and interest in and to certain assets
used in the conduct of the ▇▇▇▇▇▇▇▇ Business, and the Buyer wishes to purchase,
accept and take from Assignee those certain assets upon the terms and conditions
set forth below;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, agreements and representations and warranties herein contained, the
parties hereto agree as follows:
ARTICLE 1
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PURCHASE AND SALE OF THE ASSETS
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Section 1.1 Purchase By Buyer and Sale By Assignee of the Assets. Upon
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the terms and subject to the conditions of this Agreement, at the Closing,
Assignee shall sell to Buyer and Buyer shall purchase from Assignee the Assets
without the Excluded Assets and Buyer shall not assume any Liabilities.
ARTICLE 2
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CERTAIN DEFINITIONS
-------------------
Section 2.1 Accounts Receivable. The term "Accounts Receivable" shall
-------------------
mean all of the notes and accounts receivable arising out of the operation of
the ▇▇▇▇▇▇▇▇ Business from formation to the date of the Assignment which remain
unpaid as of the Closing Date.
Section 2.2 Affiliate. The term "Affiliate" shall mean, with respect to
---------
any specified Person, (a) any other Person which, directly or indirectly, owns
or controls, is under common ownership or control with, or is owned or
controlled by, such specified Person; (b) any other Person which is a director,
officer or partner or is, directly or indirectly, the beneficial owner of ten
percent (10%) or more of any class of equity securities of the specified Person
or a Person described in clause (a) of this Section, (c) another Person of which
the specified Person is a director, officer or partner or is, directly or
indirectly, the beneficial owner of ten percent (10%) or more of any class of
equity securities; (d) another Person in which the specified Person has a
substantial beneficial interest or as to which the specified Person serves as
trustee or in a similar capacity, (e) each Subsidiary of such Persons; and/or
(f) any relative or spouse of the specified Person or any of the foregoing
Persons, any relative of such spouse or any spouse of such relative.
Section 2.3 ▇▇▇▇▇▇▇▇ Business. The term "▇▇▇▇▇▇▇▇ Business" shall mean
-----------------
the business of ▇▇▇▇▇▇▇▇ as it has heretofore been conducted, including studio
services and television services. "Studio services" include provision of the
facilities and services necessary to manage, format and distribute content,
which in turn include archiving original elements and working masters, creating
working masters from original elements, duplicating masters for professional
applications and formatting masters to meet specific end-user standards and
requirements. "Television services" include provision of technical and certain
creative services necessary to conform original film or video principal
photography to a final product suitable for airing on television, which in turn
include converting developed negative to video tape and/or digital formats,
creating visual effects, integrating visual effects in the final program master,
correcting color, removing artifacts and scratches from the program master,
formatting for commercial integration, and delivering the program master for
broadcast.
Section 2.4 Approved Liens. The term "Approved Liens" means Liens
--------------
approved by and acceptable to Buyer at Closing, as provided in Section 8.9.
Section 2.5 Assets. The term "Assets" shall mean all of the assets,
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properties, leases, leasehold improvements, prepaid expenses and deferred
charges, rights, books, records, files and goodwill of, relating to or used in
the ▇▇▇▇▇▇▇▇ Business, of every kind, nature and description, real, personal and
mixed, tangible and intangible, whether or not reflected on the books and
records of ▇▇▇▇▇▇▇▇ including, but not limited to accounts, book accounts,
Accounts Receivable, the Books and Records, the Contracts, the Inventory, the
Personal Property, ▇▇▇▇▇▇▇▇'▇ interest in any Real Property, ▇▇▇▇▇▇▇▇'▇ interest
in the Real Property Lease, ▇▇▇▇▇▇▇▇'▇ interest in the
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Personal Property Leases, the Intellectual Property, all assets including
accounts and Accounts Receivable reflected on the Financial Statements (other
than inventory disposed of after the respective dates thereof in the ordinary
course of business), the names "▇▇▇▇▇▇▇▇ Film Industries Corp." and "▇▇▇▇▇▇▇▇
Video" and all Governmental Licenses and Permits relating to the ▇▇▇▇▇▇▇▇
Business and/or the Assets; provided, however, that for all purposes under this
Agreement, the term "Assets" and any term set forth within the definition of
assets which describes any asset included therein shall not include the
assumption of any Liability associated therewith or arising thereunder.
Section 2.6 Assignment. The term "Assignment" shall mean the General
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Assignment of all the property and assets of ▇▇▇▇▇▇▇▇ dated March 7, 1997, by
▇▇▇▇▇▇▇▇, as "Assignor" to ▇▇▇▇▇ ▇▇▇▇▇, as "Assignee" for the ultimate benefit
of the creditors generally of ▇▇▇▇▇▇▇▇.
Section 2.7 Assignor. The term "Assignor" shall mean ▇▇▇▇▇▇▇▇ as the
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Assignor under the Assignment.
Section 2.8 Assignee. The term "Assignee" shall mean ▇▇▇▇▇ ▇▇▇▇▇ as
--------
"Assignee" under the Assignment and as "Assignee" or "Seller" under this
Agreement.
Section 2.9 Books And Records. The term "Books and Records" shall mean
-----------------
all books and records of ▇▇▇▇▇▇▇▇ including, but not limited to (a) all books
and records relating to (i) employees, agents, dealers, jobbers and other
representatives, (ii) suppliers, (iii) the purchase of raw materials, supplies
and services, (iv) Inventory, (v) customers and (vi) the marketing and sale of
products and services; (b) all financial or other information relating to
▇▇▇▇▇▇▇▇'▇ Business or any of the Assets, which information exists in a form
that may be reproduced in documentary form, transmitted electronically or copied
to computer media, and is or pursuant to the Assignment should be in the
possession of Assignee, or is readily available to ▇▇▇▇▇▇▇▇ or Assignee; and (c)
all leases and other contracts, surveys and appraisals, and engineering reports
relating to ▇▇▇▇▇▇▇▇'▇ Business or any of the Assets.
Section 2.10 Business Day. The term "Business Day" shall mean any day
------------
of the year other than (i) any Saturday or Sunday or (ii) any other day on which
banks located in the State of California generally are closed for business other
than the retail depository business.
Section 2.11 Closing. The term "Closing" shall mean the closing of the
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transactions contemplated by this Agreement on the Closing Date, in accordance
with Article 3 hereof and subject to all of the other terms and conditions
hereof.
Section 2.12 Closing Date. The term "Closing Date" shall mean the date
------------
of the Closing.
Section 2.13 Contract. The term "Contract" shall mean any plan,
--------
program, arrangement, lease, commitment, understanding, sales order, purchase
order, agreement,
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indenture, mortgage, note, bond, right, warrant, instrument, plan, permit or
license, whether written or verbal, which is intended or purports to be binding
and enforceable or which is offered to any Person and acted upon or relied upon
by such Person.
Section 2.14 ▇.▇. ▇▇▇▇▇▇▇▇. The term "▇.▇. ▇▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇▇▇
-------------
▇. ▇▇▇▇▇▇▇▇, individually.
Section 2.15 ▇▇▇▇▇▇▇. The term "▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
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individually.
Section 2.16 Environmental Law. The term "Environmental Law" shall mean
-----------------
any Law which related to or otherwise imposes liability or standards of conduct
concerning mining or reclamation of mined land, discharges, emissions, releases
or threatened releases of noises, odors or any pollutants, contaminants or
hazardous or toxic wastes, substances or materials, whether as matter or energy,
into ambient air, water, or land, or otherwise relating to the manufacture,
processing, generation, distribution, of pollutants, contaminants, or hazardous
or toxic wastes, substances or materials; including (but not limited to) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of 1986, as amended, the
Resource Conservation and Recovery Act of 1976, as amended, the Toxic Substances
Control Act of 1976, as amended, the Federal Water Pollution Control Act
Amendments of 1972, the Clean Water Act of 1977, as amended any so-called
"Superlien" law, and any other similar Federal, state or local statutes.
Section 2.17 Environmental Permit. The term "Environmental Permit"
--------------------
shall mean any permit, license, approval, consent or other authorization
required by or pursuant to any applicable Environmental Law.
Section 2.18 ERISA. The term "ERISA" shall mean the Employee Retirement
-----
Income Security Act of 1974, as amended.
Section 2.19 Excluded Assets. The term "Excluded Assets" shall mean all
---------------
of the following assets of the Assignee obtained from ▇▇▇▇▇▇▇▇ pursuant to the
Assignment relating to or arising out of the conduct of the ▇▇▇▇▇▇▇▇ Business:
(a) all cash, bank balances or other cash equivalents on hand
or in banks or other financial institutions of ▇▇▇▇▇▇▇▇ as of the date
of the Assignment; provided, however, that all checks received by
▇▇▇▇▇▇▇▇, Assignee or Buyer on or after the date of the Assignment
shall not be Excluded Assets, but shall be deemed to be collections
upon the accounts receivable transferred to Buyer and shall be
delivered to Buyer;
(b) all (i) federal, state and local income tax refunds or
credits with respect to any period of time prior to the Closing Date,
and (ii) federal, state and local real property, personal property,
franchise, sales, use and withholding tax and other employee benefit
tax refunds or credits with respect to any period of time prior to the
Closing Date
4
in each case without regard to the date when any such tax refund is
received or realized by the Assignee;
(c) all amounts paid in cash or cash equivalents to the
Assignee before or after the Closing Date (i) under any policy of
insurance, as a result of or in connection with any claim filed by the
Assignee prior to the Closing Date, or (ii) in connection with any
litigation, arbitration or other legal proceeding instituted by the
Assignee or to which the Assignee is a party as to which it is a
successor (whether under a policy of insurance or otherwise);
(d) all electric, telephone, water, natural gas, sewer and
other related utility deposits; provided, however, that no other
deposits shall be Excluded Assets;
(e) all claims by ▇▇▇▇▇▇▇▇ for all refunds and discounts of
whatever nature relating to or arising out of the conduct of the
▇▇▇▇▇▇▇▇ Business prior to the Closing Date;
(f) all causes of action to avoid and recover fraudulent or
preferential transfers which inure to the benefit of an assignee for
the benefit of creditors; and
(g) all Contracts, whether or not assigned to Assignee;
provided, however, that the following Contracts shall not be Excluded
Assets: (i) those certain Contracts with customers set forth in
Schedule 2.19(g); (ii) the Real Property Lease; (iii) the Personal
Property Leases; and (iv) licenses or permits (including Governmental
Licenses and Permits) granting ▇▇▇▇▇▇▇▇ rights used or useful in the
conduct of ▇▇▇▇▇▇▇▇'▇ Business.
Section 2.20 Financial Statements. The term "Financial Statements"
--------------------
shall mean all of the following: (a) the Financial Statements of ▇▇▇▇▇▇▇▇
prepared with respect to its business as of December 31, 1996 which are included
in Schedule 5.6, consisting of the unaudited balance sheet at such date and the
unaudited related statements of earnings and retained earnings and cash flows
for the year ended December 31, 1996; and (b) financial statements prepared with
respect to ▇▇▇▇▇▇▇▇ as of January 31, 1997, which are listed in Schedule 5.6,
consisting of the unaudited balance sheet at such date and the unaudited related
statements of operations and retained earnings and cash flows for the one month
then ending.
Section 2.21 Governmental Authority. The term "Governmental Authority"
----------------------
shall mean the government of the United States or any foreign country or any
state or political subdivision thereof and any entity, body or authority
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including the Pension Benefit Guaranty
Corporation and other quasi-governmental entities established to perform such
functions.
Section 2.22 Governmental Licenses And Permits. The term "Governmental
---------------------------------
Licenses and Permits" shall mean the licenses, permits or other authorizations
required by any law or
5
Governmental Authority to be held by a Person in order to operate the Assets as
they have been operated historically by ▇▇▇▇▇▇▇▇ and with respect to the
▇▇▇▇▇▇▇▇ Business.
Section 2.23 Hazardous Substance. The term "Hazardous Substance" shall
-------------------
have the meaning set forth in 42 U.S.C. ss. 9601 et seq. and the regulations
promulgated thereunder.
Section 2.24 Intellectual Property. The term "Intellectual Property"
---------------------
shall mean any and all (a) trademarks, trade names, logos, service marks,
patents, copyrights (including any registrations, applications, licenses or
rights relating to any of the foregoing, the names "▇▇▇▇▇▇▇▇ Film Industries
Corp." and "▇▇▇▇▇▇▇▇ Video," and any goodwill associated with any of the
foregoing); (b) technology, trade secrets, inventions, know-how, designs,
computer programs, proprietary information and processes; and (c) all other
intangible assets, properties and rights (whether or not appropriate steps have
been taken to protect, under applicable law, such assets, properties or rights).
Section 2.25 Inventory. The term "Inventory" shall mean all products
---------
(finished or otherwise), if any, held for sale by ▇▇▇▇▇▇▇▇ on the date of the
Assignment, including stock videotape.
Section 2.26 Law. The term "Law" shall mean any law, statute,
---
regulation, ordinance, rule order, decree, judgment, consent decree, settlement
agreement or governmental requirement enacted, promulgated, entered into, agreed
or imposed by any Governmental Authority.
Section 2.27 Leased Premises. The term "Leased Premises" shall mean
---------------
▇▇▇▇▇▇▇▇'▇ business premises leased pursuant to the Real Property Lease.
Section 2.28 Liabilities (Liability). The term "Liabilities" shall mean
-----------------------
all (a) obligations at any date which, are or should be reflected and classified
as liabilities on ▇▇▇▇▇▇▇▇'▇ balance sheet; (b) all contingent liabilities
(including, without limitation, guarantees, endorsements or obligations to pay,
assume or purchase liabilities or any obligation to purchase, sell or otherwise
furnish assets, properties or services primarily for the purpose of enabling
such other Person to make payment of such liabilities or of assuring the owner
of such liabilities against loss with respect thereto); (c) amounts (calculated
on an actuarial basis) that could be payable pursuant to any contract, or other
plan or arrangement by which ▇▇▇▇▇▇▇▇ is bound with respect to or affecting its
employees, officers,directors, representatives or agents; (d) penalties, charges
and assessments payable by ▇▇▇▇▇▇▇▇ to any other Person, including penalties,
charges or assessments that are triggered by virtue of the occurrence of a
transaction or event; (e) liabilities secured by any Lien affecting any assets
or properties owned by ▇▇▇▇▇▇▇▇ (whether or not any such liability has been
assumed by ▇▇▇▇▇▇▇▇, and whether it arises under a conditional sale or other
title retention agreement given as a security device); and (f) any other claims,
responsibilities, liabilities or obligations, regardless of whether such claim,
liability, responsibility or obligation is known or unknown, fixed or accrued,
absolute or contingent, determined or determinable and whether such claim,
responsibility, liability or obligation has arisen or has yet to arise or would
be required to be recorded or reflected on the books of
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▇▇▇▇▇▇▇▇, including but not limited to obligations for defects in, or otherwise
resulting from, work performed by ▇▇▇▇▇▇▇▇.
Section 2.29 Liens. The term "Liens" shall mean all, with respect to
-----
any given property(ies), encumbrances, defects of title, deeds of trust,
security agreements, pledges, liens, conditional sales agreements, claims,
restrictions, charges, options, leases, subleases, encroachments, covenants,
easements and/or rights of third parties of every kind and character arising or
existing by operation of law, by judicial decree or judgment or arbitral
decision, by contract or otherwise, whether or not accrued or fixed, absolute or
contingent, known or unknown, determined or determinable and whenever arising,
including, but not limited to, those evidenced by contracts, agreements, leases,
indentures, deeds of trust and security, conditional sale and other title
retention agreements.
Section 2.30 Loss or Losses. The term "Loss" or "Losses" shall mean any
--------------
and all liabilities, losses, costs, claims, damages, penalties and expenses
(including reasonable attorneys' fees and expenses and costs of investigation
and litigation). In the event any of the foregoing are indemnifiable hereunder,
the terms "Loss" and "Losses" shall include any and all reasonable attorneys'
fees and expenses and costs of investigation and litigation incurred by the
Indemnified Person (as hereinafter defined) in enforcing such indemnity.
Section 2.31 Material Adverse Effect. The term "Material Adverse
-----------------------
Effect" shall mean an effect (or circumstance involving a prospective effect) on
the Assets or on the ▇▇▇▇▇▇▇▇ Business which is materially adverse.
Section 2.32 Person. The term "Person" shall mean an individual, a
------
corporation, a limited liability company, a partnership, an association, a trust
or any other entity or organization, including, but not limited to, a government
or a political subdivision thereof or an agency or instrumentality of any
government or political subdivision thereof.
Section 2.33 Personal Property. The term "Personal Property" shall mean
-----------------
all machinery, equipment, vehicles, tools, furniture and other tangible personal
property owned or leased by ▇▇▇▇▇▇▇▇ or assigned or transferred by ▇▇▇▇▇▇▇▇ to
Assignee.
Section 2.34 Personal Property Leases. The term "Personal Property
------------------------
Leases" shall mean Personal Property lease agreements, as amended, to which
▇▇▇▇▇▇▇▇ or Assignee is a party (as lessor or lessee).
Section 2.35 Purchase Price. The term "Purchase Price" shall have the
--------------
meaning ascribed to it in Article 4 hereof.
Section 2.36 Real Property. The term "Real Property" shall mean real
-------------
property, including tenant improvements and fixtures.
7
Section 2.37 Real Property Lease. The term "Real Property Lease" shall
-------------------
mean (i) that certain lease dated September 15, 1988 by and between Universal
City Studios, Inc., as Landlord, and ▇▇▇▇▇▇▇▇ Film Industries, Inc., as Tenant,
for premises located in building #153 as Universal City, California, as more
particularly described therein; and (ii) six (6) separate month-to-month leases
for trailers and storage facilities presently used by ▇▇▇▇▇▇▇▇ which facilities
are located behind and adjacent to Building No. 153.
Section 2.38 Required Consent. All consents required to be obtained by
----------------
▇▇▇▇▇▇▇▇ or Assignee to comply with Section 3.2, Section 5.23, Section 8.3,
Section 8.4, Section 9.3 and Section 9.4 of the Agreement.
Section 2.39 Related Agreement. The term "Related Agreement" shall mean
-----------------
any Contract which is or is to be entered into at the Closing or otherwise
pursuant to this Agreement. The Related Agreements executed by a specified
Person shall be referred to as "such Person's Related Agreements," "its Related
Agreements" or another similar expression. Related Agreements shall also include
any "Related Agreement" to the Assignment.
Section 2.40 Schedule or Schedules. The term "Schedule" shall mean any
---------------------
schedule, and the term "Schedules" shall mean all Schedules, attached hereto and
incorporated herein.
Section 2.41 Subsidiary. The term "Subsidiary," with respect to a
----------
Specified Person, shall mean a corporation or other legal entity which such
person beneficially owns, controls or has the ability to control, directly or
indirectly, (a) in excess of fifty percent (50%) of the stock, the holders of
which are ordinarily and generally, in the absence of contingencies, entitled to
vote for the election of a majority of the directors or (b) in excess of fifty
percent (50%) of the aggregate total ownership thereof.
Section 2.42 Taxes. The term "Taxes" shall mean, with respect to any
-----
Person, (a) any net income, gross income, gross receipts, sales, use, ad
valorem, franchise, fuel, profits, license, withholding, payroll, employment,
excise, severance, stamp, transfer, occupation, premium, property or windfall
profit tax, custom duty or other tax, fee, assessment or charge of any kind or
nature whatsoever, together with any interest and any penalty thereon, imposed
by any Governmental Authority on such Person or with respect to the assets or
operations of such Person, and (b) any liability of such Person for the payment
of any amount of the type described in the immediately preceding clause (a) as a
result of such Person's being a member of an affiliated or combined group.
ARTICLE 3
---------
TRANSACTIONS TO BE EFFECTED AT CLOSING
--------------------------------------
Section 3.1 Closing. The Closing shall take place (a) at the offices of
-------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Fields Claman & Machtinger LLP, 1900 Avenue of the Stars,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, effective as of the opening of business on
___________________, 1997 or (b) at such other time, date or place as shall be
mutually agreed upon in writing by the parties hereto.
Section 3.2 Transactions To Be Effected. At the Closing, upon the
---------------------------
terms and subject to the conditions of this Agreement:
(a) Assignee shall sell, transfer, assign, convey and deliver
to the Buyer, and the Buyer shall purchase, accept and take from Assignee, the
Assets except for the Excluded Assets, subject to any existing Liens, in an "AS
IS-WHERE IS CONDITION" with a DISCLAIMER BY ASSIGNEE OF ALL WARRANTIES,
INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE, and the Buyer shall not assume any
Liabilities, by delivery to the Buyer of appropriately executed and
authenticated instruments of sale, assignment, transfer and conveyance as the
Buyer or its counsel may reasonably request, including, but not limited to:
(i) a ▇▇▇▇ of sale in the form of Schedule 3.2A
hereto; and
(ii) such other appropriately executed and
authenticated documents and instruments of sale, transfer,
assignment and conveyance with respect to the Assets as the
Buyer or its counsel may reasonably request, in each case as
shall be necessary to sell, transfer, assign and convey to,
and to vest in, the Buyer, title to the Assets as set forth
above.
(iii) Evidence in form satisfactory to the Buyer,
that all Required Consents have been obtained;
(iv) The originals and/or duly executed assignments
by ▇▇▇▇▇▇▇▇ and the Assignee (to the extent such Permits are
assignable) (in form suitable for filing or recording with the
appropriate Governmental Authority, if applicable) of all of
the Governmental Licenses and Permits;
(v) A certificate of the secretary of ▇▇▇▇▇▇▇▇
certifying (A) resolutions of the board of directors of and of
the stockholders of ▇▇▇▇▇▇▇▇ approving the Assignment
(together with an incumbency and signature certificate
regarding the officer(s) signing on behalf of ▇▇▇▇▇▇▇▇) and
(B) the articles of incorporation and bylaws of ▇▇▇▇▇▇▇▇ as
amended and/or restated; and
(vi) Certificates of Good Standing for ▇▇▇▇▇▇▇▇ from
the State of California.
(b) the Buyer shall deliver to Assignee:
(i) Payment of the Purchase Price (as provided in
Section 4.2 hereof);
9
(ii) A certificate of the secretary of the Buyer
certifying (A) resolutions of the board of directors of the
Buyer approving this Agreement and the transactions
contemplated hereby, together with an incumbency and signature
certificate regarding the officer(s) signing on behalf of each
such person, and (B) the certificate of incorporation and
bylaws of the Buyer as amended and/or restated.
(c) Notwithstanding the foregoing, Assignee may retain copies
of, or may deliver copies in lieu of, any portion of the Books and Records
required by Assignee.
Section 3.3 Possession and Risk of Loss. Possession of the Assets shall
---------------------------
be delivered to the Buyer as of the Closing. As of and after the Closing, such
risk of loss or damage shall be the sole and complete responsibility of the
Buyer.
Section 3.4 Employees. Buyer shall consider the employment of, but
---------
shall not be obligated to employ, any and all Employees of ▇▇▇▇▇▇▇▇ terminated
by ▇▇▇▇▇▇▇▇ on or before the date of the Assignment. No obligations or
liabilities of ▇▇▇▇▇▇▇▇ for the benefit of or in respect of employees or former
employees, express or implicit, shall be assumed by Buyer.
Section 3.5 Mail. The right of Assignee to direct ▇▇▇▇▇▇▇▇'▇ mail to be
----
delivered to Assignee, and to open such mail, shall be transferred to Buyer.
Buyer may retain all mail relating to its use of the Assets or its operation of
the former ▇▇▇▇▇▇▇▇ Business, but Buyer shall forward to Assignee promptly upon
receipt any mail related to the Excluded Assets, or the duties and
responsibilities of Assignee. To the extent that any such mail relates both to
Buyer's rights and Assignee's rights, Buyer shall forward such mail to Assignee
but Buyer may retain a copy thereof for its own use. The obligation of Buyer to
forward mail to Assignee shall terminate ninety (90) days after Closing.
ARTICLE 4
---------
PURCHASE PRICE AND PAYMENT OF THE PURCHASE PRICE
------------------------------------------------
Section 4.1 Purchase Price. The purchase price that the Buyer shall
--------------
pay to the Assignee for the Assets under this Agreement shall be One Hundred
Thousand Dollars ($100,000). The Buyer shall not assume any Liabilities of
▇▇▇▇▇▇▇▇ or any liabilities of Assignee, ▇.▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇.
Section 4.2 Payment of the Purchase Price. At the Closing on the
-----------------------------
Closing Date, the Buyer shall pay One Hundred Thousand Dollars ($100,000) to
Assignee.
10
ARTICLE 5
---------
REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS
OF ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ represent, warrant, covenant and
agree, jointly and severally, to, with and for the benefit of Buyer, its
Affiliates, successors and assigns, as follows:
Section 5.1 Corporate Status and Subsidiaries. ▇▇▇▇▇▇▇▇ is a
---------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of California. ▇▇▇▇▇▇▇▇ has all requisite corporate power and
authority to own or lease the Assets and to carry on its business as it is
currently conducted. ▇▇▇▇▇▇▇▇ is duly qualified to do business and is in good
standing in such other jurisdictions where the nature of the Assets owned,
leased or operated by ▇▇▇▇▇▇▇▇ would require such qualification. ▇▇▇▇▇▇▇▇ does
not own, directly or indirectly, the capital stock of any other corporation or
any equity interest in any other business entity or subsidiary.
Section 5.2 Authorization of Agreement. ▇▇▇▇▇▇▇▇ has full corporate
--------------------------
power and authority to execute, deliver and perform the Assignment and all other
agreements, instruments and certificates entered into or delivered in connection
with the transactions contemplated thereby, including the agreements of ▇▇▇▇▇▇▇▇
contained in this Agreement. Copies of the Articles of Incorporation of
▇▇▇▇▇▇▇▇, as amended to date and certified by the Secretary of State of the
State of California, and Bylaws of ▇▇▇▇▇▇▇▇, as amended to date and certified by
the Secretary or an Assistant Secretary of such corporation, shall be delivered
to the Buyer at the Closing and such copies shall be complete and correct. The
execution, delivery and performance of the Assignment have been, and all other
agreements, instruments and certificates entered into or delivered in connection
with the transactions contemplated thereby have been duly and validly authorized
by all necessary corporate action of ▇▇▇▇▇▇▇▇. On the Closing Date, ▇▇▇▇▇▇▇▇
shall deliver to the Assignee and to Buyer certified copies of the resolutions
adopted by the Board of Directors and by the stockholders of ▇▇▇▇▇▇▇▇,
authorizing the execution, delivery and performance by such corporation of the
Assignment, and all other agreements, instruments and certificates entered into
or delivered in connection with the transactions contemplated thereby, including
the agreements of ▇▇▇▇▇▇▇▇ contained in this Agreement.
Section 5.3 Binding Agreement. The Assignment, the agreements of
-----------------
▇▇▇▇▇▇▇▇ contained in this Agreement and each of all other Related Agreements is
or will constitute, a valid and binding obligation of ▇▇▇▇▇▇▇▇ and each is
enforceable against ▇▇▇▇▇▇▇▇ (or upon execution and delivery will be enforceable
against ▇▇▇▇▇▇▇▇) in accordance with its respective terms.
Section 5.4 No Default. Except as set forth on Schedule 5.4, no
consent, authorization or approval of, filing or registration with, or
cooperation from, any Governmental Authority is necessary by the terms of any
Law or Contract applicable to ▇▇▇▇▇▇▇▇ or the Assets in
11
connection with the execution, delivery and performance by ▇▇▇▇▇▇▇▇ of the
Assignment, this Agreement and Related Agreements or the consummation of the
transactions contemplated thereby or in order to transfer to the Assignee all
Assets free of any Lien or Liability. The execution, delivery and performance of
the Assignment, this Agreement and all other Related Agreements by ▇▇▇▇▇▇▇▇ does
not and will not violate, conflict with, result in a breach or termination of or
constitute a default under (or an event which with due notice or lapse of time,
or both, would constitute a breach of or default under) or give any third party
any additional right (including a claim to additional or escalated payments or
termination rights) under, permit the cancellation of, permit the acceleration
of any liability under or result in the creation of any Lien under (a) the
Articles of Incorporation or the Bylaws, each as amended to date; (b) except as
set forth on Schedule 5.4, any note, Contract or other obligation to which
▇▇▇▇▇▇▇▇ is a party or by which either of ▇▇▇▇▇▇▇▇ or any of the Assets is
bound; (c) any judgment, order, decree, ruling or injunction applicable to
▇▇▇▇▇▇▇▇ or any of the Assets; or (d) any law applicable to ▇▇▇▇▇▇▇▇ or any of
the Assets. Except as set forth on Schedule 5.4, neither ▇▇▇▇▇▇▇▇ nor any other
party is in default under, nor is there an event which with due notice or lapse
of time, or both, would constitute a default under, any Contract or other right
in favor of ▇▇▇▇▇▇▇▇, or obligation by which either of ▇▇▇▇▇▇▇▇ or any of the
Assets is bound. It is expressly understood that the previous sentence is not
intended to affect or refer to any agreements between or among any creditors of
▇▇▇▇▇▇▇▇ and Buyer or any Affiliate of Buyer.
Section 5.5 Title To and Interest In the Assets. Except for Personal
-----------------------------------
Property that is leased by ▇▇▇▇▇▇▇▇, and except as set forth on Schedule 5.6,
▇▇▇▇▇▇▇▇ had, as of the date of the Assignment, good and marketable title to all
of the Assets. For purposes of this Section 5.5, otherwise marketable title
shall not be rendered unmarketable for the sole reason that on the Closing Date,
the fair market value of an asset is less than the amount representing Liens
upon such asset.
Section 5.6 Financial Statements; Undisclosed Liabilities; Other
----------------------------------------------------
Documents. The Financial Statements are, except as stated therein, and as stated
---------
in this Section 5.6, prepared in accordance with generally accepted accounting
principles, consistently applied and present fairly the financial position,
assets and liabilities of ▇▇▇▇▇▇▇▇ as of the dates thereof and the revenues,
expenses, results of operations and cash flows of ▇▇▇▇▇▇▇▇ for the periods
covered thereby. The Financial Statements are in accordance with the books and
records of ▇▇▇▇▇▇▇▇ and do not reflect any transactions which are not bona fide
transactions. There are no Liabilities of ▇▇▇▇▇▇▇▇ and there are no Liabilities
or Liens relating to or affecting the Assets, other than those Liabilities or
Liens set forth on Schedule 5.6 hereto. The Financial Statements do not reflect
any material items of nonrecurring income; provided, however, that it is
expressly understood that income in respect of the ordinary services provided by
▇▇▇▇▇▇▇▇ is not considered to be nonrecurring, even if it may not continue. The
Financial Statements are included in Schedule 5.6.
Section 5.7 Condition and Sufficiency of Assets. Except as disclosed on
-----------------------------------
Schedule 5.7, all of the tangible Assets, whether real or personal, owned or
leased, have been maintained and are in good operating condition and repair
(with the exception of normal wear and tear).
12
Immediately after the date of the Assignment, the Assignee shall own or have a
permanent right to use all assets, properties, rights and the Intellectual
Property, which are required for or currently used in connection with the
operation of the ▇▇▇▇▇▇▇▇ Business or Assets, as presently conducted. Except as
described on Schedule 5.7, all of such property which is Personal Property is
located at the Leased Premises.
Section 5.8 Real Property.
-------------
(a) ▇▇▇▇▇▇▇▇ is the tenant under the Real Property Lease.
Except for the fixtures and tenant improvements at the Leased Premises,
▇▇▇▇▇▇▇▇ does not own, hold or use any other Real Property.
(b) Except as set forth in Schedule 5.8, the Real Property
Lease is in full force and effect and neither party is in default
thereunder. A true and correct copy of the Real Property Lease (to the
extent any such Lease is written) has been delivered to Buyer.
Section 5.9 Personal Property. Schedule 5.9A sets forth a true and
-----------------
complete list of all the Personal Property, including Personal Property which is
located other than at or on the Leased Premises. Schedule 5.9B sets forth a true
and accurate description of all Personal Property Leases, together with a
description of the Personal Property subject to each such Personal Property
Lease.
Section 5.10 Inventories. Schedule 5.10 contains a true and accurate
-----------
statement of all Inventory.
Section 5.11 Litigation; Compliance With Laws. Schedule 5.11 hereto
--------------------------------
sets forth actions, lawsuits, and administrative, arbitral or other proceedings
or governmental investigations ("Litigation") which are pending or, to the best
knowledge of ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, threatened against ▇▇▇▇▇▇▇▇,
or its shareholders that would relate to or could affect the Assets except for
Litigation that is covered by insurance (which is in full force and effect).
▇▇▇▇▇▇▇▇ is not, and neither the Assignee nor the Assets could be affected by,
or are subject to, any order, writ, decree, injunction or stipulation in respect
of the Assets or the ▇▇▇▇▇▇▇▇ Business. ▇▇▇▇▇▇▇▇ is not in the process of
settling any such pending or threatened Litigation. There is no Litigation
pending or threatened against ▇▇▇▇▇▇▇▇ with respect to the Assignment or the
transactions contemplated thereby and has no reason to believe that there is a
valid basis for instituting such Litigation. ▇▇▇▇▇▇▇▇ has (i) complied and is
complying in all material respects with all Laws applicable to operation of the
Assets and (ii) has obtained all Governmental Licenses and Permits that are
necessary to the operation of the Assets as being conducted by ▇▇▇▇▇▇▇▇ on the
date hereof (which are listed on Schedule 5.11 hereto), and ▇▇▇▇▇▇▇▇ is in full
compliance with the requirements and limitations set forth therein. Without
limiting the foregoing, no notice from any Governmental Authority has been
received by ▇▇▇▇▇▇▇▇ claiming any violation of any law (including any building,
zoning or other ordinance) or requiring any work, construction or expenditure,
or asserting any Tax, assessment or penalty.
13
Section 5.12 Permits. Schedule 5.12 is a true and accurate list of all
-------
Governmental Licenses and Permits (collectively "Permits") held by ▇▇▇▇▇▇▇▇.
Except for the Permits listed on Schedule 5.12, there are no Governmental
Licenses and Permits which are necessary for the lawful operation of the Assets.
Section 5.13 Insurance. Schedule 5.13 hereto contains an accurate
---------
description of all material policies of fire, liability, workers' compensation,
health and other forms of insurance owned or held by ▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇ has
heretofore delivered to Assignee and Buyer a true and complete copy of all such
policies, including all occurrence-based policies for all periods prior to the
date of the Assignment. All such policies are in full force and effect, all
premiums with respect thereto covering all periods up to and including the date
of the Assignment have been paid, and no notice of cancellation or termination
has been received with respect to any such policy. Such policies are sufficient
for compliance with (a) all requirements of Law and (b) all Contracts to which
▇▇▇▇▇▇▇▇ is a party. Except as set forth in Schedule 5.13, ▇▇▇▇▇▇▇▇ has not been
refused any insurance with respect to its assets or operations, and its coverage
has not been limited by any insurance carrier to which it has applied for any
such insurance or with which it has carried insurance, during the last three (3)
years. Except as set forth on Schedule 5.13 hereto, there are no pending or
threatened claims under any insurance policy.
Section 5.14 Tax Matters. Except as listed on Schedule 5.14 hereto,
-----------
▇▇▇▇▇▇▇▇ has duly and timely filed all federal, state, local and foreign tax
returns and reports with respect to the operation of its business and the Assets
that ▇▇▇▇▇▇▇▇ is required to file and has paid all taxes, interest, penalties,
assessments and deficiencies due or claimed to be due thereunder. Except as
listed on Schedule 5.14 hereto, all applicable federal, state, local and foreign
taxes, assessments, fees and other governmental charges imposed on ▇▇▇▇▇▇▇▇ with
respect to the operation of the ▇▇▇▇▇▇▇▇ Business and the Assets that have
become due and payable, unless disputed, have been paid.
Section 5.15 Intellectual Property. Schedule 5.15 hereto lists all
---------------------
Intellectual Property as of the date hereof. Except as disclosed on Schedule
5.15, ▇▇▇▇▇▇▇▇ represents and warrants that:
(a) all of the ▇▇▇▇▇▇▇▇ Intellectual Property is owned by
▇▇▇▇▇▇▇▇ free and clear of all Liens, and is not subject to any
license, royalty or other agreement, and ▇▇▇▇▇▇▇▇ has not granted any
license or agreed to pay or receive any royalty in respect of any
Intellectual Property;
(b) none of the Intellectual Property or its present or
contemplated use by ▇▇▇▇▇▇▇▇ infringes upon the rights, assets or
property of any third party or has been or is the subject of any
pending or threatened litigation or claim of infringement; and
(c) no license or royalty agreement which relates to the
Intellectual Property to which ▇▇▇▇▇▇▇▇ is a party is in breach or
default by any party thereto or the subject of any notice of
termination given or threatened.
14
Section 5.16 Books and Records. The Books and Records of ▇▇▇▇▇▇▇▇ are
-----------------
accurate and complete in all material respects and have been maintained in
accordance with good business practice for businesses similar to the ▇▇▇▇▇▇▇▇
Business.
Section 5.17 Customers.
---------
(a) Schedule 5.17A sets forth a list of the ten (10) largest
customers of ▇▇▇▇▇▇▇▇ in terms of sales volume during the fiscal year
ended December 31, 1996 and the period thereafter to the date of the
Assignment (collectively, the "Major Customers");
(b) Except to the extent set forth in Schedule 5.17B, since
January 1, 1996, there has not been any adverse change in the business
relationship, and there has been no material dispute, between ▇▇▇▇▇▇▇▇
and any Major Customer, and there are no indications that any Major
Customer intends to reduce its purchases from ▇▇▇▇▇▇▇▇. However,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇.▇. ▇▇▇▇▇▇▇▇ make no representations or
covenants, express or implied, that any current customer or supplier
will conduct business with any buyer of the Assets.
(c) ▇▇▇▇▇▇▇▇ has delivered to the Assignee at the date of the
Assignment a true and correct list of all current customers.
Section 5.18 Schedules and Exhibits. All Schedules and Exhibits
----------------------
attached to or referred to in the Assignment and all Schedules and Exhibits
delivered on or required to be delivered pursuant to the Assignment, shall
constitute an integral part of the Assignment. ▇▇▇▇▇▇▇▇ has delivered to the
Assignee and Buyer, or has otherwise made available to the Assignee and Buyer,
true and correct copies of all written Contracts and has described to Assignee
and Buyer all oral Contracts described in, attached to or referred to in any
Schedule or Exhibit delivered or required to be delivered pursuant to the
Assignment. A true and correct list of all such Contracts, written or oral, not
set forth on or described in other Schedules is set forth on and described in
Schedule 5.18.
Section 5.19 Environmental Issues. Except as set forth on Schedule
--------------------
5.19, (i) ▇▇▇▇▇▇▇▇ has obtained all Environmental Permits required for the
proper management and operation of the Assets and all such Environmental Permits
are in good standing and ▇▇▇▇▇▇▇▇ is in compliance with all terms and conditions
of such Environmental Permits; (ii) ▇▇▇▇▇▇▇▇ is not subject to any pending, or
to ▇▇▇▇▇▇▇▇'▇ knowledge threatened, order from or agreement pertaining to the
Assets with any Governmental Authority or private party or any judicial or
administrative proceedings or investigations, respecting any Environmental Law;
(iii) to the best of its knowledge, does not know of any material liabilities,
obligations or costs arising from the Release (as hereinafter defined) of a
Contaminant (as hereinafter defined) into the environment on or from any Real
Property used or occupied by ▇▇▇▇▇▇▇▇, or from the Assets; (iv) ▇▇▇▇▇▇▇▇ has not
filed, and to ▇▇▇▇▇▇▇▇'▇ knowledge, is not required to file, any notice under
applicable Environmental law reporting a Release of a Contaminant into the
environment; and (v) ▇▇▇▇▇▇▇▇ has not received any notice or claim to the effect
that it is or may be liable to any person, entity
15
or governmental body as a result of the Release of a Contaminant into the
environment or as a result of exposure to asbestos.
(a) As used herein the following terms shall have the
following definitions:
"Contaminant" includes any pollutant or contaminant (as that
term is defined in 42 U.S.C. (S)9601(13)), toxic pollutant (as that
term is defined in 33 U.S.C. (S)1362(13)), Hazardous Substance,
hazardous chemical (as that term is defined by 29 CFR (P)
1910.1200(c)), hazardous waste (as that term is defined by 42 U.S.C.
(S)6903(5)), radioactive material, asbestos and asbestos containing
material, polychlorinated biphenyl, petroleum and petroleum waste,
including crude oil or any petroleum-derived substance, waste or
breakdown or decomposition product thereof, or any constituent of any
such petroleum substance or waste.
"Release" means any spill, emission, leaking, dumping,
pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment or into or out of
any Real Property used or occupied by ▇▇▇▇▇▇▇▇, including the movement
of Contaminants through or in the air, soil, surface water or
groundwater of the Real Property used or occupied by ▇▇▇▇▇▇▇▇.
Section 5.20 No Continuing Liabilities to Employees. Except as
--------------------------------------
described on Schedule 5.20, ▇▇▇▇▇▇▇▇ has no obligation to continue the
employment or services of, or has any monetary liability (other than
compensation for the current pay period as well as accrued vacation and sick
leave) with respect to, any persons and ▇▇▇▇▇▇▇▇ acknowledges and agrees that
(a) Assignee has no liability with respect to any such persons whatsoever; (b)
Buyer shall have no liability to any such persons, and Buyer shall not have any
obligation to employ such persons with respect to Buyer's operation of the
Assets or otherwise. In this connection, ▇▇▇▇▇▇▇▇ shall notify each of its
employees of their respective terminations on or before delivery of the
Assignment, and of the fact that employment, if any, subsequent to the
Assignment shall be pursuant to the employment policies and practices and terms
and conditions established by a buyer, if any, from Assignee, of the Assets or
▇▇▇▇▇▇▇▇ Business.
Section 5.21 Employee Benefit Plans. Except as set forth on Schedule
----------------------
5.21, ▇▇▇▇▇▇▇▇ has no benefit plan or arrangement for employees, agent or
independent contracts. Except as set forth on Schedule 5.21, none of such
benefit plans or arrangements is an "employee benefit plan" within the meaning
of Section 3(3) of the Employee Retirement Security Act of 1974, as amended, and
at no time during the past six (6) years has ▇▇▇▇▇▇▇▇ made any contribution to
any other funded employee benefit or welfare or arrangement. The consummation of
the transactions contemplated by the Assignment will not entitle any individual
to severance or termination pay or benefits, other than "COBRA" benefits.
Neither the Assignee nor Buyer shall have any liability arising from any such
benefit plan or arrangement.
Section 5.22 No Collective Bargaining Agreements. ▇▇▇▇▇▇▇▇ is not a
-----------------------------------
party to any collective bargaining agreement or other similar agreement or
undertaking. No labor
16
organization has (or claims to have), or is negotiating or seeking to negotiate
for, or otherwise secure, the right to represent any individual rendering
services to ▇▇▇▇▇▇▇▇ under a collective bargaining agreement or otherwise.
▇▇▇▇▇▇▇▇ has no knowledge that a labor organization intends to negotiate or to
seek to negotiate for, or is otherwise seeking to secure, any such right. There
is no pending or threatened labor strike, stoppage, slowdown, picketing or
similar labor dispute affecting ▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇▇ has not experienced any
such matter during the last three (3) years.
Section 5.23 Transfer of Masters and Work-in-Progress. ▇▇▇▇▇▇▇▇ has the
----------------------------------------
authority and right to transfer custody of all of the masters and elements of a
tape, video, movie or other form of creative production (whether or not the
work-in- progress undertaken by ▇▇▇▇▇▇▇▇ has been completed) without the consent
of any third party.
Section 5.24 Accuracy Of Statements. Neither the Assignment nor any
----------------------
schedule, exhibit, statement, list, document, certificate or other information
furnished or to be furnished by or on behalf of ▇▇▇▇▇▇▇▇ to Assignee or any
representative of the Assignee in connection with the Assignment or any of the
transactions contemplated thereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements contained herein or therein, in light of the circumstances
in which they are made, not misleading.
Section 5.25 Intervening Period. The representations, warranties and
------------------
covenants contained in this Article 5 are made as of the time of the Assignment.
No representations, warranties or covenants are made as to any matters arising
out of facts or events arising after the time of the Assignment.
ARTICLE 6
---------
REPRESENTATIONS AND WARRANTIES
------------------------------
OF THE BUYER TO THE ASSIGNEE
----------------------------
Section 6.1 Corporate Status. The Buyer is a corporation duly
----------------
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified to do business and is in good standing in the
state of its incorporation. The Buyer has all requisite corporate power and
authority to own or lease its properties and assets and to conduct its business
as they are currently being conducted.
Section 6.2 Authorization of Agreement. The Buyer has full corporate
--------------------------
power and authority to execute, deliver and perform this Agreement and all other
agreements and instruments entered into or delivered in connection with the
transactions contemplated as of the date hereof, certified by the Secretary of
State of the State of Delaware, and the Buyer's Bylaws, as amended to date,
certified by the Secretary or an Assistant Secretary of the Buyer, shall be
delivered to the Assignee at the Closing on the Closing Date and when delivered,
will be
17
complete and correct. The execution, delivery and performance of this Agreement
has been, and all other agreements and instruments entered into or delivered in
connection with the transactions contemplated hereby have been, or prior to the
Closing will have been, duly and validly authorized by all necessary corporate
action on the party of the Buyer. On the Closing Date, the Buyer shall deliver
to Assignee certified copies of the resolutions adopted by the board of
Directors of the Buyer authorizing the execution, delivery and performance of
this Agreement by the Buyer.
Section 6.3 Binding Agreement. This Agreement constitutes, and all
-----------------
other agreements and instruments entered into or delivered in connection with
the transactions contemplated hereby do or will constitute, the valid and
binding obligations of the Buyer and are enforceable against the Buyer (or upon
execution and delivery will be enforceable against the Buyer) in accordance with
their respective terms.
ARTICLE 7
---------
OTHER COVENANTS OF ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇
------------------------------------------------------
▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ jointly and severally covenant and
agree to, with and for the benefit of Buyer, its Affiliates and successors, as
follows:
Section 7.1 Consents and Approvals.
----------------------
(a) ▇▇▇▇▇▇▇▇ shall, and ▇.▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ shall cause
▇▇▇▇▇▇▇▇ to, (i) take all necessary action and use its best efforts to
obtain any and all consents and governmental or other approvals and
authorizations required to be obtained by ▇▇▇▇▇▇▇▇ to permit ▇▇▇▇▇▇▇▇
to consummate the transactions contemplated by the Assignment, to
perform ▇▇▇▇▇▇▇▇'▇ obligations under the Assignment and to allow
Assignee to fulfill any conditions to which it agrees in respect of the
sale of the Assets to Buyer by Assignee, and (ii) make all filings,
applications, statements and reports to all Governmental Authorities
and other Persons which are required to be made by or on behalf of
▇▇▇▇▇▇▇▇ pursuant to any applicable Law or Contract in connection with
the Assignment or the transactions contemplated thereby; and
(b) In any event, ▇▇▇▇▇▇▇▇ shall, and ▇.▇. ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ shall cause ▇▇▇▇▇▇▇▇ to, take all actions necessary to cause
the sale, assignment, transfer and delivery of the Assets and the
consummation of the transactions contemplated by the Assignment or by
any sale of Assets to Buyer by Assignee.
Section 7.2 Customer Lists. ▇▇▇▇▇▇▇▇ shall deliver to Assignee on the
--------------
date of the Assignment a customer list as described in Section 5.17 hereof.
18
Section 7.3 Non-Competition.
---------------
(a) ▇.▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ each agree that from and after
the date of this Agreement, so long as he is either employed by Buyer
or an Affiliate of Buyer, or is receiving compensation from Buyer or an
Affiliate of Buyer, he will not, directly or indirectly:
(i) compete with Buyer or its Affiliates; or
(ii) be interested in, employed by, engaged in or
participate in the ownership, management, operation or control of, or
act in any advisory or other capacity for, any Competitive Business
which conducts its business within the Territory (as such terms are
hereinafter defined); provided, however, that notwithstanding the
-------- -------
foregoing, Executive may make solely passive investments in any
Competitive Business the common stock of which is "publicly held," and
of which Executive shall not own or control, directly or indirectly, in
the aggregate securities which constitute more than one (1%) percent of
the voting rights or equity ownership of such Competitive Business; or
(iii) solicit or divert any business or any customer
from Buyer or its Affiliates or assist any person, firm or corporation
in doing so or attempting to do so; or
(iv) cause or seek to cause any person, firm or
corporation to refrain from dealing or doing business with Buyer or its
Affiliates or assist any person, firm or corporation in doing so or
attempting to do so.
For purposes of this Section, the term "directly or indirectly" shall include
acts or omissions as proprietor, partner, joint venturer, employer, salesman,
agent, employee, officer, director, lender or consultant of or owner of any
interest in any Person. "Competitive Business" shall mean the ▇▇▇▇▇▇▇▇ Business
or similar or competitive business or any business which engages in the
provision of products or services that are similar to or used for the purposes
that could be served by the products or the services provided by ▇▇▇▇▇▇▇▇ prior
to the Assignment. "Territory" shall mean any geographic area in which ▇▇▇▇▇▇▇▇
has transacted business prior to the Assignment.
(b) ▇.▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ each agree that, from and after
the date of this Agreement, so long as he is either employed by Buyer
or an Affiliate of Buyer or is receiving compensation from Buyer or an
Affiliate of Buyer, and for two (2) years thereafter, he shall not,
directly or indirectly: (a) solicit or hire, or attempt to solicit or
hire, any employee of Buyer or an Affiliate of Buyer, or assist any
person, firm or corporation in doing so or attempting to do so; or (b)
solicit or cause to be solicited the disclosure of, or use or disclose,
any Confidential Information for any purpose whatsoever or for any
other party.
19
(c) If at any time any of the provisions of this Section shall
be determined to be invalid or unenforceable by reason of being vague
or unreasonable as to duration, area, scope of activity or otherwise,
then this Section shall be considered divisible (with the other
provisions to remain in full force and effect) and the invalid or
unenforceable provisions shall become and be deemed to be immediately
amended to include only such time, area, scope of activity or other
restrictions, as shall be determined to be reasonably and enforceable
by the court or other body having jurisdiction over the matter, and
▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ expressly agree that this Section,
as so amended, shall be valid and binding as though any invalid or
unenforceable provision had not been included herein.
(d) The provisions of this Section shall be in addition to,
and not in limitation of, any other provisions contained in any other
agreement restricting competition by the employees of ▇▇▇▇▇▇▇▇.
Section 7.4 Implementing Agreement. Subject to the terms and conditions
----------------------
thereof and compliance with any applicable law, court order or validly enacted
governmental action, ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ shall use their
respective best efforts to take all action required of it or them to fulfill
their respective obligations under the terms of the Assignment and to facilitate
the consummation of the transactions contemplated thereby or by this Agreement.
▇▇▇▇▇▇▇▇ agrees that neither ▇▇▇▇▇▇▇▇ nor any of its officers or directors will
take any action which would have the effect of preventing or disabling
▇▇▇▇▇▇▇▇'▇ performance of its obligations under the Assignment or any in
connection with the sale of the Assets to Buyer by Assignee, and that its
Shareholders will not take any such action prior to the performance of such
obligations by ▇▇▇▇▇▇▇▇.
Section 7.5 Required Consents Obtained. All Required Consents shall be
--------------------------
obtained by ▇▇▇▇▇▇▇▇ or Assignee.
ARTICLE 8
---------
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER
----------------------------------------------------
Section 8.1 Conditions Precedent. The obligations of the Buyer under
--------------------
this Agreement are subject to the fulfillment at the Closing on the Closing
Date, of all of the conditions precedent set forth in this Article 8 and
throughout this Agreement; provided, however, that any of such conditions may be
waived by the Buyer in writing at or prior to the Closing.
Section 8.2 Continued Truth of Representations and Warranties and
-----------------------------------------------------
Compliance With Covenants. The representations and warranties of ▇▇▇▇▇▇▇▇, ▇.▇.
-------------------------
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ contained in this Agreement shall be true, accurate and
complete in all material respects on and as of the Closing Date and ▇▇▇▇▇▇▇▇
shall have performed and complied in all material respects
20
with all terms, conditions, covenants and agreements required by the Assignment
to be performed or complied with by ▇▇▇▇▇▇▇▇ on or prior to the Closing Date.
Section 8.3 Governmental Approvals. All necessary consents,
----------------------
authorizations and approvals of all governmental agencies, commissions and
similar bodies, the consent, authorization or approval of which is required
under any applicable Law, in order to permit ▇▇▇▇▇▇▇▇ to consummate the
transactions contemplated by the Assignment and Assignee to consummate the
transactions contemplated by this Agreement, shall have been obtained and
delivered to Assignee and to Buyer, respectively, and any and all consents
necessary to assign all Governmental Permits, to the extent such Governmental
Permits may be assigned, shall also have been obtained and delivered to the
Assignee and Buyer.
Section 8.4 Consent Of Third Parties. The duly executed written
------------------------
consents and approvals of any third parties necessary to permit ▇▇▇▇▇▇▇▇ and
Assignee to consummate the transactions contemplated by the Assignment and this
Agreement, respectively, in form and substance satisfactory to Assignee and
Buyer in all material respects shall have been obtained and delivered by
▇▇▇▇▇▇▇▇ to Assignee and Assignee to Buyer.
Section 8.5 Adverse Proceedings. There shall be no action, lawsuit or
-------------------
proceeding filed and pending, or any claim or controversy asserted, that in
Buyer's good faith estimate could have a Material Adverse Effect. There shall be
no unsatisfied or outstanding order, writ, judgment, injunction or decree or any
litigation or proceeding filed that seeks to restrain, prohibit or invalidate
the transactions contemplated by this Agreement, or that would, if successful,
affect the right of the Buyer to own, operate or control the Assets or the
▇▇▇▇▇▇▇▇ Business.
Section 8.6 Delivery of Schedules and Other Materials. ▇▇▇▇▇▇▇▇ shall
-----------------------------------------
have delivered to the Assignee all of the Schedules, agreements, transfer and
assumption documents and every other document required to be executed and
delivered pursuant to the Assignment and the Assignee shall have delivered such
Schedules and documents and other materials to Buyer pursuant to Article 3
hereof or otherwise referred to in this Agreement.
Section 8.7 Documents. The Buyer shall have received all of the
---------
agreements, documents and items specified in Section 3.2.
Section 8.8 Discharge of Federal Tax Liens. The Buyer shall have
------------------------------
received (a) a true and correct duly executed original of Internal Revenue
Service Form 669-B (Certificate of Discharge of Property from Federal Tax Lien)
or Form 669-C (Certificate of Discharge of Property from Federal Tax Lien) in
form and substance satisfactory to Buyer, pursuant to which the District
Director of Internal Revenue irrevocably discharges the Assets from all tax
liens filed against ▇▇▇▇▇▇▇▇ by the Internal Revenue Service on or before the
Closing Date, or (b) evidence satisfactory to Buyer that (i) no tax liens have
been filed against ▇▇▇▇▇▇▇▇ or the Assets by the Internal Revenue Service on or
before the Closing Date and (ii) all delinquent taxes have been paid or
compromised on or before the Closing Date.
21
Section 8.9 Approved Liens. The Assets shall not be subject to any
--------------
Liens other than those approved by and acceptable to Buyer at Closing.
ARTICLE 9
---------
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ASSIGNEE
---------------------------------------------------
Section 9.1 Conditions Precedent. The obligations of the Assignee under
--------------------
this Agreement are subject to the fulfillment, at the Closing, on the Closing
Date, of all of the conditions precedent set forth in this Article 9 and
throughout this Agreement; provided, however, that any of such conditions may be
waived by Assignee in writing at or prior to the Closing.
Section 9.2 Continued Truth Of Representations And Warranties And
-----------------------------------------------------
Compliance With Covenants. The representations and warranties of the Buyer
-------------------------
contained in this Agreement shall be true, accurate and complete in all material
respects on and as of the Closing Date as though such representations and
warranties were made on and as of the Closing Date, and the Buyer shall have
performed and complied in all material respects with all terms, conditions and
agreements required by this Agreement to be performed or complied with by the
Buyer prior to or at the time of Closing on the Closing Date.
Section 9.3 Governmental Approvals. All necessary consents,
----------------------
authorizations and approvals of all governmental agencies, commissions and
similar bodies, the consent, authorization or approval of which is required
under any applicable law, rule, order or regulation for the consummation of the
transactions contemplated by this Agreement, shall have been received.
Section 9.4 Consent of Third Parties. The duly executed written
------------------------
consents and approvals of any third parties necessary to permit the Buyer to
consummate the transactions contemplated by this Agreement shall have been
obtained and delivered by the Buyer to Assignee.
Section 9.5 Adverse Proceedings. There shall be no unsatisfied or
-------------------
outstanding order, writ, judgment, injunction or decree that seeks to restrain,
prohibit or invalidate the transactions contemplated by this Agreement. That
shall be no lawsuit or proceeding filed and pending against ▇▇▇▇▇▇▇▇ or Assignee
with respect to the Assets or the ▇▇▇▇▇▇▇▇ Business that has a reasonable
likelihood of success and that seeks to restrain, prohibit or invalidate the
transactions contemplated by this Agreement.
22
ARTICLE 10
----------
INDEMNIFICATION
---------------
Section 10.1 Survival. The representations, warranties, agreements and
--------
(except for those that by their express terms terminate upon Closing) covenants
of the parties hereto shall survive the Closing.
Section 10.2 Indemnification by ▇.▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇. ▇.▇.
--------------------------------------------
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ each agree, jointly and severally, to indemnify and,
effective upon the Closing, do indemnify the Buyer and each of the Buyer's
Affiliates, and the Buyer's officers, directors, employees, agents and
representatives (individually, an "Indemnified Person" and collectively, "Buyer
Indemnified Parties") against, and agree to indemnify and hold each of them
harmless from, the amount of any and all Losses incurred or suffered by them
relating to or arising out of or in connection with any or all of the following:
(a) any material breach of or any inaccuracy in any
representation or warranty made by ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇
pursuant to the Assignment, this Agreement or any Related Agreement or
any document delivered at the Closing;
(b) any material non-fulfillment or material breach of or
failure by ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ to perform any
obligations or covenant to be performed by any of them set out in or
contemplated by the Assignment, this Agreement or any Related Agreement
or any document delivered at Closing; and
(c) all material Liabilities and Liens (other than Approved
Liens) arising out of the ownership of or the operation of the Assets,
or the conduct of the ▇▇▇▇▇▇▇▇ Business prior to the Closing Date,
whether arisen or to arise, fixed or contingent, known or unknown, in
any way relating to conditions, events, transactions, circumstances,
contracts, actions or omissions affecting or relating to ▇▇▇▇▇▇▇▇
and/or its operations or the Assets.
Section 10.3 Failure of ▇.▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ to Act. In the event
-------------------------------------------
that ▇.▇. ▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇ do not elect to assume the defense of any
claim, suit, action or proceeding, then any failure of the Indemnified Person to
defend or to participate in the defense of any such claim, suit, action or
proceeding or the cause the same to be done, shall not relieve ▇.▇. ▇▇▇▇▇▇▇▇ or
▇▇▇▇▇▇▇ of their respective obligations hereunder.
Section 10.4 Subrogation and Contribution. In the event that D.L.
----------------------------
▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇ make any payment in respect of indemnification under
this Agreement and the Indemnified Person also has a right to recover from a
third party the Losses paid by ▇.▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇, then ▇.▇. ▇▇▇▇▇▇▇▇
and/or ▇▇▇▇▇▇▇ shall, once the Indemnified Person shall have been compensated in
full for all Losses associated with the event, conditions or circumstance giving
rise to such indemnification, to the extent of his payment, be subrogated to,
23
and be entitled at his own expense to recover under, the claim of the
Indemnified Person against the third party. The Indemnified Person shall
cooperate to the extent reasonably requested by ▇.▇. ▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇,
and at the expense of ▇.▇. ▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇, in recovering against the
third party, including (without limitation) transferring or assigning said claim
to ▇.▇. ▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇. ▇.▇. ▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇ shall indemnify
the Indemnified Person against, and hold it harmless from, the full amount of
any and all Losses incurred or suffered by the Indemnified Person as a result of
▇.▇. ▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇ collecting, or attempting to collect, such claim.
Section 10.5 Limitations on Indemnity. The maximum amount for which
------------------------
▇.▇. ▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇ shall be obligated to pay pursuant to paragraph
10.2 hereof shall be One Hundred Thousand Dollars ($100,000) in the aggregate.
Section 10.6 Indemnification of Assignee. Buyer shall indemnify
---------------------------
Assignee against any and all Losses in an amount not to exceed an aggregate of
One Hundred Thousand Dollars ($100,000) arising from any asserted claims against
Assignee of the Internal Revenue Service, California Franchise Tax Board,
California Board of Equalization or the California Employment Development
Department with respect to taxes owed to such agencies respectively arising from
events occurring prior to the date of the Assignment.
ARTICLE 11
----------
GENERAL PROVISIONS
------------------
Section 11.1 Sales and Use Tax. The Buyer shall pay sales and use Taxes
-----------------
determined to be payable with respect to or as the result of the consummation of
the transactions contemplated hereby on personal property transferred hereunder.
Section 11.2 Seller's Brokers. Assignee represents and warrants to the
----------------
Buyer that Assignee has not dealt with, retained or otherwise employed any
broker, finder or agent in connection with the transactions contemplated by this
Agreement.
Section 11.3 Buyer's Brokers. The Buyer represents and warrants to
---------------
Assignee that the Buyer has not dealt with, retained or otherwise employed any
broker, finder or agent in connection with the transactions contemplated by this
Agreement.
Section 11.4 Time is of the Essence. Time is of the essence with regard
----------------------
to the consummation of the transactions contemplated by this Agreement, and both
parties shall use their best efforts to satisfy all obligations imposed upon
such parties under this Agreement in a timely fashion.
Section 11.5 Notices. Any notice, request, instruction or other
-------
document to be given hereunder by a party hereto shall be in writing and shall
be deemed to have been given,
24
(a) when received if given in person or by courier or a courier service, (b) on
the date of transmission if sent by telex, facsimile or other wire transmission,
or (c) three Business Days after being deposited in the U.S. mail, certified or
registered mail, postage prepaid:
To the Buyer: AV Acquisition Corp.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇ Glusker Fields
Claman & Machtinger LLP
1900 Avenue of the Stars, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
To the Assignee: ▇▇▇▇▇ ▇▇▇▇▇, Sr., Esq.
▇/▇ ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇ Film Industries Corp.
-----------------------------
-----------------------------
-----------------------------
Attention: _________________
or such other address as may be communicated in writing by any party to the
other. Notices shall be deemed given on the day following mailed first class,
proper postage, etc. or when actually delivered.
Section 11.6 Entire Agreement; Amendment. This Agreement and the
---------------------------
Schedules attached hereto contain the entire agreement between the parties
hereto with respect to the sale of the Assets and supersede all previous written
or oral negotiations, commitments and writings between the parties hereto. This
Agreement may be amended, but only in writing, signed on behalf of Assignee by
▇▇▇▇▇ ▇▇▇▇▇, Sr. or any partners of Assignee and signed on behalf of the Buyer
by the Chairman of the Board or the President or any Vice President of the
Buyer.
Section 11.7 Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
Section 11.8 Governing Law. This Agreement shall be governed by and
-------------
construed and enforced in accordance with the laws of the State of California.
The Assignee and the Buyer
25
covenant and agree that any action or proceeding arising in connection with this
Agreement, specifically including any action or proceeding instituted by the
Buyer against ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ or any other Person, to
enforce the indemnification obligations and liabilities of ▇▇▇▇▇▇▇▇ to the Buyer
under Article 10 of this Agreement may be instituted only in the Superior Court
of the State of California in Los Angeles, California or in the federal court in
the Central District of the State of California (Los Angeles).
Section 11.9 Partial Invalidity. In the event that any provision or
------------------
part of any provision of this Agreement shall be held invalid or unenforceable
by any court of competent jurisdiction, unless such provision or part of a
provision is material to the performance of this Agreement or the consummation
of the transactions contemplated hereby, as determined by both the Assignee and
the Buyer, this Agreement shall continue in effect and such provision or part of
a provision shall be excised herefrom, and there shall be deemed substituted for
the provision at issue a valid, legal and enforceable provision as similar as
possible to the provision at issue.
Section 11.10 Successors and Assigns. This Agreement shall be binding
----------------------
upon and inure to the benefit of Assignee and the Buyer and their respective
successors and permitted assigns.
Section 11.11 Captions. The Index and the titles of the Articles and
--------
Sections of this Agreement are for convenience only and shall not be construed
as limiting, defining or affecting the substantive terms of this Agreement.
Section 11.12 Effect Of Investigation. Any due diligence review, audit
-----------------------
or other investigation or inquiry undertaken or performed by or on behalf of the
Buyer shall not limit, qualify, modify or amend the representations, warranties
or covenants of, or indemnities by, ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇,
irrespective of the knowledge and information received (or which should have
been received) therefrom by the Buyer.
Section 11.13 Waivers. The failure of a party hereto at any time or
-------
times to required performance of any provision hereof shall in no manner affect
its right at a later time to enforce the same. No waiver by a party of any
condition or of any breach of any term, covenant, representation or warranty
contained in this Agreement shall be effective unless in writing, and no waiver
in any one or more instances shall be deemed to be a further or continuing
waiver of any such condition or breach of any other term, covenant,
representation or warranty.
Section 11.14 Interpretation. The use of the masculine, feminine or
--------------
neuter gender herein shall not limit any provision of this Agreement. The use of
the terms "including" or "include" shall in all cases herein mean "including,
without limitation, or "include, without limitation," respectively. Underscored
references to Articles, Sections, Subsections or Schedules shall refer to those
portions of this Agreement. Consummation of the transactions contemplated herein
shall not be deemed a waiver of a breach of or inaccuracy in any representation,
warranty or covenant or of any party's rights and remedies with regard thereto.
No specific representation, warranty or covenant contained herein shall limit
the generality or applicability of a more general representation, warranty or
covenant contained herein. A breach of or inaccuracy in any
26
representation, warranty or covenant shall be not be affected by the fact that
any more general or less general representation warranty or covenant was not
also breached or inaccurate.
Section 11.15 No Third Party Beneficiaries. This Agreement is solely
----------------------------
for the benefit of the parties hereto and, to the extent provided herein, their
respective Affiliates, directors, officers, employees, agents and
representatives, and no provision of this Agreement shall be deemed to confer
upon any third parties any remedy, claim, liability, reimbursement, cause of
action or other right.
Section 11.16 Further Assurances. Upon the reasonable request of the
------------------
Buyer, Assignee and ▇▇▇▇▇▇▇▇ will on and after the Closing Date execute and
deliver to the Buyer such other documents, releases, assignments and other
instruments as may be required to effectuate completely the transfer and
assignment to the Buyer of, and to vest fully in Buyer title to, the Assets, and
to otherwise carry out the purposes of this Agreement.
Section 11.17 Remedies Cumulative. The remedies provided in this
-------------------
Agreement shall be cumulative and shall not preclude the assertion or exercise
of any other rights or remedies available by law, in equity or otherwise.
Section 11.18 Fees, Costs and Expenses. Except as otherwise
------------------------
specifically provided herein, the Assignee (Seller), on the one hand, and the
Buyer, on the other hand, shall each bear their own direct and indirect costs or
expenses incurred in connection with the negotiation and preparation of this
Agreement and the Related Agreements and the consummation and performance of the
transactions contemplated hereby and thereby, including without limitation, all
legal fees and fees of any brokers, finders or similar agents. Buyer shall not
bear the costs or expenses of any other Person.
IN WITNESS WHEREOF, Assignee and the Buyer have executed this Agreement
as of the date written above.
/s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Assignee
AV ACQUISITION CORP., a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
_________________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
_________________________________________
Title: Chief Executive Officer
________________________________________
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
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The undersigned each jointly and severally join in and agree to be
bound by the representations, warranties, covenants and/or indemnities contained
in the foregoing Agreement which are made only for the benefit of Buyer and
Buyer's Affiliates (as therein defined).
▇▇▇▇▇▇▇▇ FILM INDUSTRIES CORP., a California
corporation
dba ▇▇▇▇▇▇▇▇ VIDEO
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
_________________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
_________________________________________
Title: Chairman and CEO
________________________________________
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, individually
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, individually
28