EXHIBIT 2.2
________________________________________________________________________________
ASSET PURCHASE AND SALE AGREEMENT
DATED AS OF FEBRUARY 23, 2005
BY AND AMONG
CROWN MEDIA DISTRIBUTION, LLC,
BAGBRIDGE LIMITED
AND, SOLELY WITH RESPECT TO SECTION 10.14 OF THIS AGREEMENT,
CROWN MEDIA HOLDINGS, INC.
________________________________________________________________________________
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TABLE OF CONTENTS
PAGE
ARTICLE 1 CERTAIN
DEFINITIONS................................................1
ARTICLE 2 PURCHASE AND
SALE.................................................10
2.1
Purchased
Assets..................................................10
2.2
Rights under the
Excluded License Agreements......................11
2.3
No Assignment in
Conflict with Existing Agreements................11
2.4
Compliance with
Bulk Sales Law....................................11
2.5
Assumption of
Liabilities.........................................11
ARTICLE 3 PURCHASE PRICE AND
PAYMENT........................................11
3.1
Purchase
Price....................................................11
3.2
Allocation of
Purchase Price......................................12
3.3
Post-Closing
Purchase Price Adjustment............................12
3.4
Sales
Tax.........................................................14
ARTICLE 4 REPRESENTATIONS AND
WARRANTIES OF SELLER..........................14
4.1
Organization and
Qualification....................................14
4.2
Authorization
and Validity of Agreement...........................14
4.3
No Violation;
Consents and Approvals..............................15
4.4
Legal
Proceedings.................................................15
4.5
Compliance with
Applicable Laws and Permits.......................16
4.6
Taxes.............................................................16
4.7
Contracts.........................................................17
4.8
Liens.............................................................17
4.9
Film Properties
and Rights........................................17
4.10
Music
Rights......................................................18
4.11
Film Rights and
Availabilities of Films...........................18
4.12
Quality of Film
Properties........................................19
4.13
Brokers...........................................................19
4.14
Intellectual
Property.............................................19
4.15
No
Change.........................................................19
4.16
Sale and
Leaseback................................................20
4.17
Information.......................................................20
ARTICLE 5 REPRESENTATIONS AND
WARRANTIES OF BUYER...........................20
5.1
Organization and
Qualification....................................20
5.2
Authorization
and Validity of Agreement...........................20
5.3
No Violation;
Consents and Approvals..............................21
5.4 Legal
Proceedings.................................................21
5.5
Availability of
Funds.............................................21
ARTICLE 6
COVENANTS.........................................................22
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6.1
Access to
Information.............................................22
6.2
Information.......................................................22
6.3
Operations in
the Ordinary Course of Business.....................22
6.4
Forbearance by
Seller.............................................22
6.4
Notification of
Claims............................................23
6.6
Regulatory
Consents, Authorizations, etc..........................23
6.7
No Inconsistent
Action............................................24
6.8
Laboratory
Letters................................................24
6.9
Third Party
Consents..............................................25
6.10
No Additional
Representations.....................................25
6.11
Updating
Schedules................................................25
6.12
Financing
Commitments.............................................26
6.13
Participations and
Residuals......................................26
6.14
Additional
Agreements.............................................27
6.15
Confidentiality...................................................28
6.16
Right of First
Offer..............................................28
ARTICLE 7 CONDITIONS TO
CLOSING.............................................29
7.1
Conditions of
Each Party's Obligation to Close....................29
7.2
Conditions to
Buyer's Obligation to Close.........................30
7.3 Conditions to Seller's
Obligation to Close........................30
7.4
Undertakings......................................................31
ARTICLE 8 THE
CLOSING.......................................................31
8.1
Time and
Location of Closing......................................31
8.2
Actions by
Seller at the Closing..................................31
8.3
Actions by Buyer
at the Closing...................................31
ARTICLE 9
INDEMNIFICATION...................................................32
9.1
Indemnification
by Seller.........................................32
9.2
Indemnification
by Buyer..........................................33
9.3
Defense of
Claims.................................................33
9.4
Survival of
Representations and Warranties........................34
9.5
Limitation on
Rights..............................................34
9.6
Indemnity
Payments................................................35
ARTICLE 10 GENERAL
PROVISIONS................................................36
10.1
Further
Assurances................................................36
10.2
Termination.......................................................36
10.3
Arbitration.......................................................37
10.4
Successors and
Assigns............................................38
10.5
No
Waiver.........................................................38
10.6
Entire Agreement;
Amendments......................................38
10.7
Notices...........................................................39
10.8
Governing
Law.....................................................40
10.9
Publicity.........................................................40
10.10
Section
Headings..................................................40
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10.11
Severability......................................................40
10.12 No
Third-Party
Beneficiaries......................................40
10.13
Counterparts......................................................40
10.14
Guarantee.........................................................41
10.15 No
Set-Off........................................................43
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Schedules
Seller
Disclosure Schedules
Buyer
Disclosure Schedules
Exhibits
Exhibit A
Form of
Assignment and Assumption Agreement
Exhibit B
Form of
Bill of Sale
Exhibit C
Form of
Copyright Assignment Agreement
Exhibit D
Form of
Laboratory Letter
Annexes
Annex A
Debt Commitment Letter
Annex B
Equity Financing Commitment Letters
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THIS ASSET PURCHASE AND SALE AGREEMENT is made and entered into as
of
February 23, 2005 by and among Crown Media
Distribution, LLC, a Delaware limited
liability company ("SELLER"), Bagbridge
Limited, a company registered in England
and Wales ("BUYER"), and, solely with
respect to Section 10.14 of this
Agreement, Crown Media Holdings, Inc., a
Delaware corporation ("HOLDINGS").
WHEREAS, Seller owns a library of theatrical films,
made-for-television movies, specials,
mini-series, series and other television
programming as described herein; and
WHEREAS, Buyer desires to purchase from Seller, and Seller desires
to
sell, assign, transfer and convey to Buyer,
certain rights in such library on
the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual
covenants, representations, warranties and
agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
Capitalized
terms not otherwise defined herein shall have the following
meanings when used in this Agreement:
1.1 "2002 ACT" shall be as defined in Section 7.1(c).
1.2 "AFFILIATE" shall mean with respect to any Person, any
other
Person that, directly or indirectly,
through one or more intermediaries,
Controls, is Controlled by, or is under
common Control with, such Person.
1.3 "AGREEMENT" shall mean this Asset Purchase and Sale Agreement
as
amended and modified from time to time in
accordance with Section 10.6.
1.4 "ANCILLARY RIGHTS" shall mean:
(a) the production, remake, prequel, sequel, serial or series
production rights for programming, based
upon, derived from or inspired by any
Film or any part thereof,
(b) the rights to use, exploit and license others to use or
exploit
the novelization, publishing or, arising
out of or connected with or inspired by
any Film, the characters appearing in any
Film or the names or characteristics
of these characters,
(c) the rights to exploit the rights in paragraph (b) above
commercially in connection with or related
to any Film or any remakes, prequels,
sequels or other derivative works thereof,
and
(d) music publishing rights or merchandising rights relating to
any
Film.
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1.5 "ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean the
Assignment
and Assumption Agreement substantially in
the form attached as Exhibit A.
1.6 "ASSUMED LIABILITIES" shall mean any Liability in, of, or
related
to any Purchased Asset arising on or after
the Closing Date (other than Retained
Liabilities).
1.7 "AVAILABILITIES SCHEDULE" shall be as defined in Section
4.11(b).
1.8 "BASE AMOUNT" shall be as defined in Section 3.3(c).
1.9 "BILL OF SALE" shall mean the Bill of Sale substantially in
the
form attached as Exhibit B.
1.10 "BUYER" shall be as defined in the preamble to this
Agreement.
1.11 "BUYER CONFIDENTIAL INFORMATION" shall be as defined in
Section
6.15.
1.12 "BUYER MATERIAL ADVERSE EFFECT" shall mean any event,
occurrence,
fact, condition, change or effect that has
a materially adverse effect on the
ability of Buyer to consummate the
transactions contemplated hereby or that
would materially delay or prevent Closing.
In this definition, "materially"
means that the financial consequences of
the adverse effect or the delay exceeds
$100,000.
1.13 "CASH CONSIDERATION" shall be as defined as in Section
3.1(a).
1.14 "CASH EQUITY" shall be as defined in Section 5.5(b).
1.15 "CLOSING" shall be as defined in Section 8.1.
1.16 "CLOSING DATE" shall be as defined in Section 8.1.
1.17 "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
1.18 "COMMITMENTS" shall be as defined in Section 5.5(b).
1.19 "CONFIDENTIAL INFORMATION" shall mean all information relating
to
business, financial or other affairs
(including, without limitation, future
programming and distribution plans and
targets and subscriber counts) that is
not in the public domain.
1.20 "CONFIDENTIAL MEMORANDUM" shall be as defined in Section
6.10.
1.21 "CONFIDENTIALITY AGREEMENT" shall mean the Confidentiality
Agreement dated as of May 11, 2004, by and
between Crown Media Holdings, Inc.
and Brooks Production Limited.
1.22 "CONTRACT" shall mean any note, bond, indenture, mortgage,
deed
of trust, contract, instrument or other
agreement.
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1.23 "CONTROL" shall mean the possession, directly or indirectly,
of
the affirmative power to direct or cause
the direction of the management and
policies of a Person (whether through
ownership of securities, partnership
interests or other ownership interests, by
contract, by membership or
involvement in the board of directors,
management committee or management
structure of such Person, or otherwise) and
"CONTROLLED" and "CONTROLLING" shall
be construed accordingly.
1.24 "COPYRIGHT ASSIGNMENT" shall mean a short form assignment
of
copyright substantially in the form
attached as Exhibit C.
1.25 "COPYRIGHT REGISTRATION" shall mean the copyright
registration
with respect to the Films, issued by the
U.S. Copyright Office in the claimant
or author name of Seller, or such foreign
Copyright Office, or equivalent
thereof.
1.26 "CREDIT AGREEMENT" shall mean the Credit, Security, Guaranty
and
Pledge Agreement, dated as of August 31,
2001, as amended, among Crown Media
Holdings, Inc., the guarantors named
therein, the lenders referred to therein
and JPMorgan Chase Bank, as administrative
agent and issuing bank for the
lenders.
1.27 "DEBT AGREEMENT" shall mean the agreement to be entered into
by
Buyer, ABN AMRO Bank N.V., Barclays Bank
PLC, Societe Generale and others as
contemplated by the Debt Commitment
Letter.
1.28 "DEBT COMMITMENT LETTER" shall be as defined in Section
5.5(a).
1.29 "DEBT FINANCING" shall be as defined in Section 5.5(a).
1.30 "EQUITY FINANCING COMMITMENT LETTERS" shall be as defined
in
Section 5.5(b).
1.31 "EXCLUDED LICENSE AGREEMENTS" shall mean the Excluded
Preexisting
HEI License Agreements and the Excluded
Seller License Agreements.
1.32 "EXCLUDED PREEXISTING HEI LICENSE AGREEMENTS" shall mean
those
Contracts entered into by Hallmark
Entertainment Distribution LLC or any of its
Affiliates or any of their predecessors in
interest (or any such Contracts of
which any of them is the assignee,
transferee, or beneficiary, in whole or in
part), prior to January 1, 2001 pursuant to
which any of them licensed, granted,
conveyed, assigned and/or transferred, in
whole or in part, any rights in the
Purchased Assets, to any Person. A true,
complete and accurate list of the
Excluded Preexisting HEI License Agreements
is set forth on Schedule 1.32.
1.33 "EXCLUDED SELLER LICENSE AGREEMENTS" shall mean those
Contracts
set forth on Schedule 1.33.
1.34
"EXPLOITATION" shall mean, in relation to any Film, the
release,
sale, distribution, sub-distribution,
leasing, sub-leasing, marketing,
licensing, sub-licensing, exhibition,
broadcasting or other exploitation of such
Film, and "EXPLOIT" shall be construed
accordingly.
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1.35 "FILM AGREEMENTS" shall mean those Contracts, documents,
judicial
awards and/or rulings pursuant to which
Seller or its predecessors in interest
acquired from any other Person any of the
Film Rights, as such agreements have
been amended from time to time. Such
agreements shall include, but not be
limited to, any and all: production
services agreements, writer agreements,
literary or other rights acquisition
agreements, work-for-hire agreements,
producer agreements, talent agreements,
assignment of rights agreements,
assignments of Film Rights, releases and/or
any and all other documents,
agreements, letters, releases, contracts,
or memoranda, (whether in written or
electronic format) pertaining to the Film
Rights of each such Film.
1.36 "FILM PROPERTIES" shall mean all existing and future
physical
properties (other than Literary Property)
owned or controlled by Seller or,
where Seller does not own or control, to
which Seller has rights of access, of
or relating to the Films, including, but
not limited to, film, film negatives
and positives; sound effect tracks; master
tapes and other duplicating materials
of any kind; original art work; and other
tangible elements and materials and
properties in respect of the Films; foreign
language dubbed and titled versions;
prints and negatives of stills; trailers
and television spots and all
promotional and other advertising and
publicity materials of all kinds; cuts,
trims, outtakes and stock footage together
with digital copies of any of the
foregoing.
1.37 "FILM RIGHTS" shall mean any and all right and interest
outside
the United States of Seller, Crown Media
Holdings, Inc. or any of their
respective Subsidiaries in or relating to
the Films (other than any Literary
Properties (subject to subsection (e)
below) or Ancillary Rights, and subject to
any License Agreements, Excluded License
Agreements and Film Agreements),
including, but not limited to, the
following:
(a) copyrights, rights and interests in copyrights, renewals
and
extensions of copyrights outside the United
States, including any such rights
that revert to Seller after the date hereof
pursuant the Sale and Leaseback
Rights or otherwise, obtained upon any
Film, rights (but not the obligation) to
make publication thereof for copyright
purposes and to register claims under
copyright, rights (but not the obligation)
to renew and extend such copyrights
and rights (but not the obligation) to sue
in the name of any Person for past,
present or future infringements of
copyright;
(b) the right to Exploit any Film in any Media in any language
outside
the United States or authorize third
parties to do so, including, without
limitation, the music synchronization
rights for the music composition and
musical recording rights as contained in
such Films and language dubbing rights
including, without limitation, the rights
to edit, alter, dub, subtitle and
voiceover;
(c) rights to advertise, promote and publicize the Films in any
Media
and any language outside the United States
in connection with the Exploitation
of the Films outside the United States,
including, but not limited to, the right
to create and use trailers and promotional
material, the use of synopses of or
brief excerpts from the Films, or from the
literary material on which the Films
are based; the use of music and dialogue of
the Films, and the names, voices,
images, likenesses and biographies of the
lead cast, director, producer,
writers, composers, and other significant
personnel or entities rendering
services for or connected with the
Films;
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(d) rights to use in connection with the Exploitation of the Films
in
any Media and any language, the soundtrack,
the names, credits, logos,
tradenames, trademarks and titles contained
in or incorporated into the Films,
trailers, positive prints, preprint
materials and video masters of the Films and
marketing, advertising and publicity
materials relating to the Films; and
(e) the perpetual, irrevocable, royalty-free, fully paid-up and
non-exclusive right to use the Literary
Properties as necessary to Exploit any
Film in any Media and any language outside
the United States and to market,
advertise, promote and publicize such
Exploitation.
1.38 "FILMS" shall mean the Group A Films and the Group B
Films.
1.39 "FINAL RECEIVABLES STATEMENT" shall be as defined in
Section
3.3(c).
1.40 "FINANCING" shall be as defined in Section 5.5(b).
1.41 "GAAP" shall mean United States generally accepted
accounting
principles as in effect on the date
hereof.
1.42 "GOVERNMENTAL ENTITY" shall mean any court, arbitrator,
administrative or other governmental
department, agency, commission, authority
or instrumentality, domestic (including
federal, state or local) or foreign,
including, without limitation and for the
avoidance of doubt, any Tax authority,
the EC Commission, the EFTA Surveillance
Authority and any national competition
authority.
1.43 "GROUP A AVAILABILITIES SCHEDULE" shall be as defined in
Section
4.11(a).
1.44 "GROUP B AVAILABILITIES SCHEDULE" shall be as defined in
Section
4.11(b).
1.45 "GROUP A FILMS" shall mean those Films set forth on
Schedule
1.45.
1.46 "GROUP B FILMS" shall mean those Films set forth on
Schedule
1.46.
1.47 "GUILD" shall mean the Screen Actors Guild (SAG), American
Federation of Television and Radio Artists
(AFTRA), American Federation of
Musicians (AFM), Directors Guild of America
(DGA), Writers Guild of America
(WGA), British Equity, ACTRA, DGC, American
Society of Composers and all or any
other applicable guilds or unions anywhere
in the world.
1.48
"GUILD ASSUMPTION AGREEMENTS" shall mean the standard
assumption
agreements required by any Guild in
connection with the sale of the Purchased
Assets.
1.49 "HED LIABILITY" shall be as defined in Section 6.14(e).
1.50 "HEI" shall mean Hallmark Entertainment, Inc.
1.51 "HOLDINGS" shall be as defined in the preamble to this
Agreement.
1.52 "INDEMNIFIED BUYERS" shall be as defined in Section 9.1.
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1.53
"INDEMNIFIED SELLER PARTIES" shall be as defined in Section
9.2.
1.54 "INDEPENDENT ACCOUNTANTS" shall mean any of Deloitte &
Touche
LLP, PricewaterhouseCoopers LLP, KPMG
L.L.P. and Ernst & Young, L.L.P. mutually
acceptable to Buyer and Seller, PROVIDED
that if Buyer and Seller do not agree
upon a mutually acceptable public
accounting firm within ten days of the first
date of any dispute on which any party
elects to submit such dispute to the
Independent Accountants in accordance with
the terms of this Agreement, the New
York City office of the American
Arbitration Association shall choose an
internationally recognized certified public
accounting firm.
1.55 "INTELLECTUAL PROPERTY" shall mean all of the (a) patents,
patent
applications, patent disclosures and
improvements thereto, (b) trademarks,
service marks, logos, trade names, domain
names and corporate names and
registrations and applications for
registration thereof, (c) any and all other
intellectual property assets of any nature
whatever which may now or in the
future exist in any part of the world,
including, but not limited to, all marks
registered in the United States Patent and
Trademark Office, (d) copyrights
(including, without limitation, all rights
to distribute, reproduce and prepare
derivative works) and registrations and
applications for registration thereof,
(e) trade secrets, confidential business
information and know-how and (f) any
copies and tangible embodiments thereof (in
whatever form or medium).
1.56 "LIABILITY" shall mean, with respect to any Person, any direct
or
indirect liability, indebtedness,
obligation, commitment, expense, claim, or
guaranty of such Person of any kind,
whether accrued or unaccrued, and whether
or not the same is required by applicable
GAAP to be accrued on the financial
statements of such Person.
1.57 "LICENSE AGREEMENT" shall mean those Contracts, other than
the
Excluded License Agreements, entered into
by Seller or Seller's predecessor in
interest (or any such Contracts of which
Seller or Seller's predecessor in
interest is the assignee, transferee or
beneficiary, in whole or in part), on or
after January 1, 2001 and prior to the date
hereof pursuant to which Seller or
Seller's predecessor in interest licensed,
in whole or in part, any rights in
the Purchased Assets or granted an option
in respect of any of the foregoing, to
any Person, PROVIDED, HOWEVER, that to the
extent that such Contracts licensed
any rights in or to assets other than the
Purchased Assets, such term shall only
mean those rights under such Contracts that
relate to the Purchased Assets.
License Agreements shall be deemed to
include any Sale and Leaseback Rights. A
true, accurate and complete list of the
material License Agreements as of the
date hereof is set forth on Schedule
1.57.
1.58 "LICENSE PAYMENTS" shall mean all payments due or which
may
become due after Closing under the Excluded
Preexisting HEI License Agreements
or the Excluded Seller License Agreements,
as applicable.
1.59 "LIEN" shall mean any lien, encumbrance, pledge, mortgage,
charge
(fixed or floating) under English law,
hypothecation, right of set off, right of
pre-emption, assignment by way of security,
reservation of title or any other
security interest, howsoever created or
arising, claim under bailment or storage
contract.
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1.60 "LITERARY PROPERTY" shall mean the literary and musical
material
upon which, in whole or in part, any Film
is based, or which has been used or
included in any Film, including, without
limitation, the screenplay, and all
other scripts, scenarios, stories,
treatments, movies, outlines, titles,
concepts, manuscripts, recorded music
scores and lead sheets or other properties
or materials of any kind or nature, in
whatever state of completion and all
drafts, versions and variations
thereof.
1.61 "LOSSES" shall be as defined in Section 9.1.
1.62 "MATERIAL CONTRACTS" shall be as defined in Section 4.7.
1.63 "MEDIA" shall mean any and all forms of exhibition and
delivery
by every means, method, process, medium or
device now or hereafter known,
invented, contemplated or devised
throughout the universe, including without
limitation: theatrical, television,
Internet, broadband and narrowband digital
delivery, and Videogram (as defined below)
exhibition, free (or over-the-air),
cable and basic cable television and
community antenna systems, low and full
power television, multi-point distribution
systems, wire, fiber optics,
microwave, Telstar-type, DBS, all other
forms of satellite and relay television,
so-called "interactive television,"
video-on-demand, near-video-on-demand,
high-definition television (HDTV) and any
and all other kinds of open or closed
circuit systems (as now or hereafter
known), only to the extent distribution and
exploitation over such Media occurs solely
outside the United States.
1.64 "NOTICE OF DISAGREEMENT" shall be as defined in Section
3.3(b).
1.65 "OUTSIDE DATE" shall be as defined in Section 7.4.
1.66 "PERMIT" shall mean a material permit, license, consent,
approval, certificate, qualification,
registration or other authorization or a
filing of a notification report or
assessment necessary in any jurisdiction for
the ownership, possession, occupation or
use of the Purchased Assets for
Exploitation as currently conducted.
1.67 "PERMITTED LIENS" shall mean (a) Liens for taxes or
governmental
assessments, charges or claims the payment
of which is not yet due, or for taxes
the validity of which are being contested
in good faith; (b) Liens of
laboratories, carriers, warehousemen,
mechanics, materialmen and other similar
persons and other Liens imposed by
applicable law, other than Liens in respect
of amounts due and owing prior to the
Closing, incurred in the ordinary course
of business for sums not yet delinquent or
being contested in good faith
exerciseable against Seller; (c) Liens set
forth in the agreements related to
the Purchased Assets, access to which has
been provided to Buyer; and (d) Liens
granted in connection with tax financings
in relation to those sale and
leaseback films set forth on Schedule
4.16.
1.68 "PERSON" shall mean an individual, partnership,
corporation,
business trust, limited liability company,
limited liability partnership, joint
stock company, trust, unincorporated
association, joint venture or other entity
or a Governmental Entity.
1.69 "PURCHASE AND SALE AGREEMENT" shall mean an agreement as of
the
date hereof entered into by CM Intermediary
LLC, Buyer and, solely with respect
to Section 10.14
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thereof, Holdings, relating to the
acquisition of Crown Media International, LLC
and Crown Entertainment Limited.
1.70 "PURCHASE PRICE" shall be as defined in Section 3.1.
1.71 "PURCHASED ASSETS" shall mean:
(a) the Film Rights,
(b) all the rights of Seller under the Film Agreements outside
the
United States,
(c) the Copyright Registration for rights outside the United
States,
(d) the right to perpetual, irrevocable, assignable and
unconditional
access to and the right to use the Film
Properties for purposes of exercising
the rights granted to Buyer hereunder,
(e) the goodwill associated with the foregoing,
(f) the License Agreements and, to the extent Buyer does not make
the
election set forth in Section 3.1(b), the
Excluded Seller License Agreements,
and
(g) those
Contracts entered into by Seller on or after the date hereof
and prior to the Closing pursuant to which
Seller licensed, in whole or in part,
any rights in the Purchased Assets or
granted an option in respect of any of the
foregoing, to any Person, PROVIDED,
HOWEVER, that to the extent that such
Contracts licensed any rights in or to
assets other than the Purchased Assets,
such term shall only mean those rights
under such Contracts that relate to the
Purchased Assets (the "NEW LICENSE
AGREEMENTS");
PROVIDED, HOWEVER, that the Purchased
Assets are subject to the License
Agreements and the Excluded License
Agreements and shall not include the right
to receive License Payments made or to be
made pursuant to the Excluded
Preexisting HEI License Agreements, or in
the event Buyer makes the election set
forth in Section 3.1(b), License Payments
made or to be made pursuant to the
Excluded Seller License Agreements; and
PROVIDED, FURTHER, that notwithstanding
anything to the contrary in this Agreement,
the Purchased Assets shall not
include any Retained Assets or be subject
to any Retained Liabilities.
1.72 "RECEIVABLES AMOUNT" shall be as defined in Section
3.3(c).
1.73 "RECEIVABLES STATEMENT" shall be as defined in Section
3.3(a).
1.74 "RECEIVING PARTY" shall be as defined in Section 6.15.
1.75 "RELATED PARTY" shall be as defined in Section 6.15.
1.76 "REFUND" shall be as defined in Section 3.3(c).
1.77 "REGULATION" shall be as defined in Section 6.6.
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1.78 "RETAINED ASSETS" shall mean
(a) any and all assets, contracts and agreements that are not
expressly described as Purchased Assets and
all rights and interests, tangible
and intangible, in, of, or related to the
Films in the United States, including
the Film Rights in the United States, the
rights of Seller under the Film
Agreements in the United States, the
Copyright Registration for rights in the
United States, the Film Properties that
relate solely or in part to Films
exploited in the United States, and the
goodwill associated with the foregoing,
(b) all trademark registrations with respect to the Films in
the
United States,
(c) any Ancillary Rights or Literary Properties,
(d) the Excluded Preexisting HEI License Agreements and, in the
event
Buyer makes the election set forth in
Section 3.1(c), the Excluded Seller
License Agreements, and
(e) the masters and other original copies of the Film
Properties
1.79 "RETAINED LIABILITIES" shall mean (a) any Liability in, of,
or
related to any Purchased Asset arising
prior to the Closing Date and any
Liability in, of, or related to any
Excluded Preexisting HEI License Agreement,
and to the extent Buyer makes the election
set forth in Section 3.1(b), the
Excluded Seller License Agreements, (b) any
Liability to pay any profit
participation due and payable related to
any Film Rights, solely to the extent
arising prior to the tenth anniversary of
the Closing Date and (c) any Liability
to pay any residual costs due and payable
to creative artists or Guilds for the
exploitation of the Film Rights, solely to
the extent arising prior to the tenth
anniversary of the Closing Date, no matter
whether such exploitation takes
places within or outside the group of
Buyer's Affiliates and no matter in which
country such exploitation takes place, so
long as such exploitation is pursuant
to licenses granted by Buyer or one of its
Affiliates; PROVIDED that Retained
Liabilities shall not include any
penalties, interest, fees, or other
Liabilities resulting from Buyer's failure
to promptly perform its obligations
under Section 6.13.
1.80 "REVISED RECEIVABLES STATEMENT" shall be as defined in
Section
3.3(b).
1.81 "SALE AND LEASEBACK RIGHTS" shall mean rights granted to
or
retained by third parties in connection
with sale and leaseback and other
financing transactions related to the
Films.
1.82 "SECONDARY FILM LOSSES" shall be as defined in Section
9.1.
1.83 "SECTION 6.4 FAILURE" shall be as defined in Section 6.4.
1.84 "SELLER" shall be as defined in the preamble to this
Agreement.
1.85 "SELLER CONFIDENTIAL INFORMATION" shall be as defined in
Section
6.15.
1.86 "SELLER DISCLOSURE SCHEDULE" shall mean the schedules of
Seller
attached hereto.
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1.87 "SELLER'S INDEMNIFICATION CLAIM" shall be as defined in
Section
9.1.
1.88 "SELLER'S KNOWLEDGE" shall mean the actual knowledge of David
J.
Evans, Robert Halmi, Jr., William J.
Aliber, Charles L. Stanford, Mark Thompson,
Peter Lamberti, Diane Keating or Leslie
Park and the knowledge that any of these
individuals would have had if they had made
reasonable inquiry in connection
with the (a) normal performance of their
respective duties and (b) the sale of
the Purchased Assets.
1.89 "SERVICE AGREEMENT" shall mean the Service Agreement,
dated
September 28, 2001, by and between HEI and
Holdings, as assigned to Seller
pursuant to letter dated December 14,
2001.
1.90 "SUBSIDIARY" of any Person means any corporation or other
entity
of which securities or other ownership
interests having ordinary voting power to
elect a majority of the Board of Directors
or other Persons performing similar
functions are at the time directly or
indirectly owned or Controlled by such
Person or one or more Subsidiaries of such
Person.
1.91 "TAX" or "TAXES" shall include all taxes imposed by any
U.S.
federal, state, local, foreign or other
taxing authority, including all income,
gross receipts, gains profits, windfall
profits, gift, severance, ad valorem,
capital, social security, unemployment
disability, premium, recapture, credit,
excise, property, sales, use, occupation,
service, service use, leasing, leasing
use, value added, transfer, payroll,
employment, withholding, estimated,
license, stamp, franchise or similar taxes
of any kind whatsoever, including
interest, penalties or additions
thereto.
1.92 "TAX RETURN" shall mean any report, return, documents,
declaration or other information (and any
supporting schedules or attachments
thereto) required to be supplied to any
taxing authority or jurisdiction with
respect to Taxes (including any returns or
reports filed on a consolidated,
unitary, or combined basis).
1.93 "UNITED STATES" shall mean the United States of America,
its
territories and possessions including
Puerto Rico.
1.94 "UPFRONT PAYMENTS" shall be as defined in Section 3.3(c).
1.95 "VIDEOGRAM" shall mean any and all forms of videocassette,
DVD,
CD-Rom, videodisc, video cartridge,
audiovisual tape, or other device now known
or hereafter devised and designed primarily
(but not exclusively) for in-home
exhibition by means of any playback device
which causes a visual image (whether
or not synchronized with sound and/or
whether or not two or three dimensional)
to be seen through any device now known or
hereafter devised.
ARTICLE 2
PURCHASE AND SALE
2.1 PURCHASED ASSETS. Upon the terms and subject to conditions
set
forth in this Agreement, Seller shall, at
Closing, sell, assign, grant, convey
and deliver to Buyer or
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Buyer's nominee, and Buyer or Buyer's
nominee shall acquire from Seller free
from any Lien, other than Permitted Liens,
all of its right, title and interest
in and to the Purchased Assets. For the
avoidance of doubt, nothing in this
Agreement shall constitute a transfer of
legal or beneficial title of the Film
Properties.
2.2 RIGHTS UNDER THE EXCLUDED LICENSE AGREEMENTS. Seller shall
retain
all rights and obligations under the
Excluded Preexisting HEI License
Agreements, and in the event Buyer makes
the election set forth in Section
3.1(b), the Excluded Seller License
Agreements (including the right to receive
and retain License Payments thereunder). If
after Closing, Buyer receives any
License Payments attributable to the
Excluded Preexisting HEI License Agreements
or the Excluded Seller License Agreements,
if applicable, Buyer shall promptly
deliver or pay the same over to Seller in
the form as so received (with any
necessary endorsements).
2.3 NO ASSIGNMENT IN CONFLICT WITH EXISTING AGREEMENTS.
Notwithstanding any other provision of this
Agreement, this Agreement shall not
constitute an assignment of, or an
agreement to assign, any Film Rights if any
attempted assignment thereof without the
consent of a third party (a) would
constitute a breach of a Film Agreement or
any License Agreement; (b) would in
any other way materially and adversely
affect the rights of Seller or Buyer
thereunder or (c) is ineffective so that
Buyer would be unable to exercise such
Film Rights with respect to any Film
subject to such Film Agreement or License
Agreement. In such event, Seller shall, for
the benefit of Buyer, cooperate in
any reasonable arrangement that Buyer may
request to enable Buyer to receive and
enjoy the full benefits of the Film Rights,
including, without limitation,
collecting payments (without the deduction
of any fee or commission for the
account of Seller) for the account and
benefit of Buyer.
2.4 COMPLIANCE WITH BULK SALES LAW. Buyer and Seller hereby
waive
compliance with the provisions of any bulk
sales or transfer laws that may be
applicable to the sale of the Purchased
Assets. Seller shall indemnify and hold
Buyer harmless from and against any and all
losses, costs, damages, liabilities
and expenses (including, without
limitation, reasonable attorneys' fees and
court costs) which Buyer may incur due to,
or as a result of, Seller's failure
to comply with any bulk sales or transfer
laws which may be applicable to the
transactions contemplated by this
Agreement.
2.5 ASSUMPTION OF LIABILITIES. Notwithstanding anything to the
contrary herein, at the Closing, Buyer
shall assume and become liable for, and
shall pay, perform and discharge as and
when due, the Assumed Liabilities
pursuant to the Assignment and Assumption
Agreement.
ARTICLE 3
PURCHASE PRICE AND PAYMENT
3.1 PURCHASE PRICE. The full and complete consideration for the
Purchased Assets shall be as follows (the
"PURCHASE PRICE"):
(a) At Closing, Buyer or Buyer's nominee shall pay or procure
the
payment to Seller of $180 (One Hundred
Eighty) million (subject to adjustment
pursuant to Section 3.1(b)
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<PAGE>
(the "CASH CONSIDERATION") in United States
dollars by wire transfer of
immediately available funds to such account
as Seller shall direct for the
purchase of the Purchased Assets.
(b) Buyer shall have the right to elect not to purchase the
Excluded
Seller License Agreements. In the event
Buyer elects in writing not to purchase
the Excluded Seller License Agreements, the
Cash Consideration shall be
decreased by $20 million.
3.2 ALLOCATION OF PURCHASE PRICE. Buyer and Seller agree to
allocate
the total consideration in accordance with
Schedule 3.2. Buyer and Seller shall
(except as may be required by a
"determination" within the meaning of Section
1313(a) of the Code or any similar state,
local or foreign Tax law) (i) report
the allocation of the total consideration
among the Purchased Assets in
accordance with Schedule 3.2 and (ii) act
in accordance with Schedule 3.2 (x) in
the preparation and filing of all Tax
Returns (including filing Form 8594 with
their respective federal income Tax Returns
for the taxable year that includes
the Closing Date and any other forms or
statements required by the Code,
Treasury Regulations, the Internal Revenue
Service or any applicable state,
local or foreign Tax authority) and (y) in
the course of any Tax proceeding.
Buyer and Seller shall promptly inform one
another of any challenge by any
Governmental Entity to Schedule 3.2 and
agree to consult and keep one another
informed with respect to the status of, and
any discussion, proposal or
submission with respect to, such
challenge.
3.3 POST-CLOSING PURCHASE PRICE ADJUSTMENT.
(a) CLOSING STATEMENT. As promptly as practicable, but in no
event
later than 45 days after the Closing Date,
Seller shall cause to be prepared and
delivered to Buyer a statement setting
forth the amount of accounts receivable
as of the Closing Date (the "RECEIVABLES
STATEMENT") in the format set forth in
Part I of Schedule 3.3(a), certified by
Seller's independent certified public
accountants in the form of a review report,
to have been prepared on the basis
of the accounting policies and procedures
set forth in Part II of Schedule
3.3(a).
(b) DISPUTES. If Buyer in good faith disagrees with the
Receivables
Statement, then Buyer shall notify Seller
in writing (the "NOTICE OF
DISAGREEMENT") of such disagreement within
30 days after delivery of the
Receivables Statement to Buyer. During such
30-day period, Buyer and its
representatives shall be permitted to
review during normal business hours the
working papers of Seller, but not the
working papers of Seller's accountants,
relating to the Receivables Statement. The
Notice of Disagreement shall set
forth in reasonable detail the basis for
the disagreement and specify the
adjustments which, in its opinion, should
be made to the Receivables Statement
in order to comply with the requirements of
this Agreement. Thereafter, Buyer
and Seller shall attempt in good faith to
reconcile their differences, and any
resolution by them as to any disputed items
shall be final, binding and
conclusive on the parties and shall be
evidenced by a writing signed by Buyer
and Seller, including a revised Receivables
Statement reflecting such resolution
(a "REVISED RECEIVABLES STATEMENT"). If
Buyer and Seller are unable to resolve
the disagreement within 20 days after
delivery of the Notice of Disagreement,
then Buyer and Seller shall instruct the
Independent Accountants to resolve the
disputed items and make a determination
with respect thereto, which
determination shall be provided to Buyer
and Seller by the Independent
Accountants in a written notice, within 30
days after selection of the
Independent Accountants. Buyer and Seller
shall instruct the Independent
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Accountants to include a Revised
Receivables Statement in such written notice
provided by the Independent Accountants.
The Independent Accountants shall, for
purposes of English law, act as experts and
not as arbitrators (as such terms
are understood in English law) in making
their final determination, and such
determination shall be final, binding and
conclusive upon the parties hereto.
The scope of such Independent Accountants'
engagement (which shall not be an
audit) shall be limited to the resolution
of the items contained in the Notice
of Disagreement and the recalculation, if
any, of the items in the Receivables
Statement in light of such resolution. The
following provisions shall apply to
the Independent Accountants' determination:
(i) Buyer and/or Buyer's accountants
and Seller and/or Seller's accountants
shall each promptly (and in any event
within such time frame as reasonably
enables the Independent Accountants to make
their decision in accordance with the time
frame set forth in this Section
3.3(b)) prepare and deliver to the
Independent Accountants a written statement
on the matters in dispute (together with
the relevant documents); (ii) in giving
their determination, the Independent
Accountants shall state what adjustments
(if any) are necessary to the preliminary
Receivables Statement in respect of
the matters in dispute in order to comply
with the requirements of this
Agreement and shall give their reasons
therefor; (iii) each of Buyer and Seller
shall bear the costs and expenses of all
counsel and other advisers, witnesses
and employees retained by it, and the fees,
costs and expenses of the
Independent Accountants, if any, selected
in accordance with this Section 3.3(b)
will be shared equally by Buyer, on the one
hand, and Seller, on the other hand.
(c) ADJUSTMENT. The Receivables Statement, or, if one has been
adopted
pursuant to Section 3.3(b), the Revised
Receivables Statement, shall be deemed
to be final, binding and conclusive on
Buyer and Seller (the "FINAL RECEIVABLES
STATEMENT") upon the earliest of (i) the
failure of Buyer to deliver to Seller
the Notice of Disagreement within 30 days
of Seller's delivery of the
Receivables Statement to Buyer; (ii) the
resolution of all disputes by Buyer and
Seller, as evidenced by a Revised
Receivables Statement and (iii) the resolution
of all disputes by the Independent
Accountants, as evidenced by the Revised
Receivables Statement. As used herein, (x)
"REFUND" shall mean the amount, if
any, by which the accounts receivable set
forth on the Final Receivables
Statement (the "RECEIVABLES AMOUNT") is
less than the sum of $4 (Four) million
plus the Upfront Payments (collectively,
the "BASE AMOUNT"). In the event that
the Receivable Amount is less than the Base
Amount, then within five days after
the Final Receivables Statement is deemed
final, binding and conclusive, Seller
shall pay to Buyer or Buyer's nominee the
Refund by wire transfer in immediately
available funds to an account specified by
Buyer. As used herein, "UPFRONT
PAYMENT" shall mean, in respect of each
applicable License Agreement or New
License Agreement the positive amount equal
to, (the quotient of "a" divided by
"b") multiplied by "c" where:
a = that number of months by which the term
of that License Agreement or New
License Agreement exceeds a period of 18
months following Closing;
b = the total number of months in the term
of that License Agreement or New
License Agreement; and
c = the aggregate amount of any cash down
payment or other cash advance or
extraordinary payment or any other payment
not consistent with pro rata amounts
over the term of such License Agreement or
New License Agreement received by
Seller or CMI prior to the Closing Date in
respect of such License Agreement or
New License Agreement.
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<PAGE>
and "UPFRONT PAYMENTS" shall mean the
aggregate of all such amounts that
constitute an Upfront Payment.
Any adjustments to the Purchase Price made pursuant to this
Section 3.3(c) shall bear interest from the
Closing Date through the date of
payment at the rate 1% above the rate of
interest publicly announced by
Citibank, N.A., in New York, New York, from
time to time as its prime rate.
If any amounts are payable under this
Section 3.3(c), Buyer and Seller shall
agree to such consequential adjustments as
are reasonably required to any
amounts allocated in accordance with
Section 3.2(c).
(d) Subject to any rule of law or regulatory body or any provision
of
any contract or arrangement entered into
prior to the date of this Agreement to
the contrary, Seller shall procure that
each member of Seller's Group (as
defined in the Purchase and Sale Agreement)
shall, and Buyer shall procure that
the Group (as defined in the Purchase and
Sale Agreement) shall, as promptly as
reasonably practicable, provide each other,
the Independent Accountants, Buyer's
accountants and Seller's accountants with
all information (in their respective
possession or control) relating to the
Purchased Assets, including reasonable
access during normal business hours to
books, records and such other relevant
information and all cooperation and
assistance as may be reasonably required, to
(i) enable Seller's production of the
Calculation Statement and (ii) enable the
Independent Accountants to satisfy their
obligations as contemplated hereby, if
necessary.
3.4 SALES TAX. Buyer shall be liable for, and timely pay 75% of,
and
Seller shall be liable for, and timely pay,
25% of, any sales, transfer, stamp,
stock transfer, use, real property, goods
and services and similar Taxes (other
than any value-added Tax in the United
Kingdom, which shall be borne solely by
Buyer) which are payable in connection with
the purchase of the Purchased Assets
by Buyer pursuant to this Agreement. Buyer
shall prepare the Tax Returns in
connection therewith. Seller shall
cooperate with Buyer in the determination of
such Taxes and the preparation of such Tax
Returns as reasonably requested by
Buyer.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as
disclosed in the Seller Disclosure Schedule, Seller hereby
represents and warrants to Buyer as
follows:
4.1 ORGANIZATION AND QUALIFICATION. Seller is a limited
liability
company duly organized, validly existing
and in good standing under the laws of
the state of Delaware and has all requisite
corporate power and authority to
own, license and/or lease the Purchased
Assets being transferred by it, and to
carry on its business as now being
conducted and as and where the business is
located.
4.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Seller has all
requisite
power and authority to execute and deliver
this Agreement and to carry out and
perform its obligations under this
Agreement and to consummate the transactions
contemplated hereby. The execution,
delivery and performance by Seller of this
Agreement, and the consummation of the
transactions
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<PAGE>
contemplated hereby, have been duly and
validly authorized by all necessary
action of Seller and no other action on the
part of Seller is necessary for the
authorization, execution, delivery or
performance by Seller of this Agreement
and the consummation of the transactions
contemplated hereby. This Agreement has
been duly executed and delivered by Seller
and, assuming the due authorization,
execution and delivery by Buyer constitutes
the valid and binding obligation of
Seller enforceable against Seller in
accordance with its terms (except insofar
as enforceability may be limited by
applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws
affecting creditors' rights
generally, or by principles governing the
availability of equitable remedies).
4.3 NO VIOLATION; CONSENTS AND APPROVALS. (a) Neither the
execution
and delivery of this Agreement by Seller,
nor the consummation of the
transactions contemplated hereby, do or
would after the giving of notice or the
lapse of time or both, (i) violate,
conflict with, result in a breach of, or
constitute a default under, the certificate
of incorporation, certificate of
formation, bylaws or other similar
governing documents of Seller; (ii) violate
or conflict with in any material respect
any U.S. federal, state, local or
foreign law, statute, regulation or court
or administrative order or process;
(iii) to Seller's Knowledge, result in the
creation of, or give any party the
right to create, any Lien upon the
Purchased Assets; (iv) violate or conflict
with in any material respect, or result in
the loss of any material right with
respect to or result in a material breach
of, or constitute a material default
under, or terminate or give any party the
right to terminate, amend, abandon or
refuse to perform any Material Contract to
which the Purchased Assets are
subject or bound; (v) modify in any
material respect or accelerate, or give any
party thereto the right to modify in any
material respect or accelerate the time
within which, or the terms under which, any
party is to perform any duties or
obligations or receive any rights or
benefits under any agreement or contract
affecting the Purchased Assets; (vi) result
in the loss of the benefit of a
Permit held or enjoyed by Seller as of the
date of this Agreement in any
applicable jurisdiction or (vii) result in
the loss of the benefit of any
Purchased Assets, except for such loss as
would not reasonably be expected to be
material to the Exploitation of the Films
as currently conducted.
(b) All consents, approvals, authorizations and other
requirements
prescribed by law, rule or regulation that
are necessary for the execution and
delivery by Seller of this Agreement or the
consummation by Seller of the
transactions contemplated by this Agreement
have been obtained and satisfied,
other than as required under the antitrust,
trade regulation or competition laws
of any jurisdiction or as would not
reasonably be expected to have a material
adverse effect on the ability of Seller to
consummate the transactions
contemplated hereby.
4.4 LEGAL PROCEEDINGS. There are no, nor have there been during the
18
months ending on the date of this
Agreement, any suits, actions, claims or
litigation, or legal, administrative, Guild
actions, arbitration, mediation or
other proceedings, or investigations or
inquiries of any Governmental Entity
pending or, to Seller's Knowledge,
threatened against Seller in respect of the
Purchased Assets, except for such suits,
actions, claims or litigation, or
legal, administrative, arbitration,
mediation or other proceedings as would not,
individually or, in the case of related
claims, in the aggregate, reasonably be
expected to be material to the Purchased
Assets taken as a whole, or that
challenge or restrict the ability of Seller
to consummate the transactions
contemplated hereby, nor is there any
judgment, decree, injunction, ruling,
award, order or writ of any court,
governmental department, commission, agency,
Guild,
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<PAGE>
instrumentality, arbitration or other
Person outstanding against or binding upon
Seller in respect of the Purchased Assets
or that challenges or restricts the
ability of Seller to consummate the
transactions contemplated hereby. To
Seller's Knowledge, there are no
outstanding threats of legal, administrative,
arbitration, mediation or other proceedings
pending in respect of the Purchased
Assets, except for such threats as would
not reasonably be expected to be
material to the Purchased Assets taken as a
whole.
4.5 COMPLIANCE WITH APPLICABLE LAWS AND PERMITS. (a) Seller is
in
compliance with all laws, statutes,
ordinances, rules, regulations and orders of
all Governmental Entities applicable to the
Purchased Assets, except for such
non-compliance as would not be material to
the Purchased Assets taken as a
whole. To Seller's Knowledge, prior to the
date hereof there have been no events
of non-compliance with laws, statutes,
ordinances, rules, regulations or orders
of Governmental Entities or Guilds
applicable to the Purchased Assets that
continue to be, or would reasonably be
expected to be, material to the Purchased
Assets taken as a whole.
(b) Seller has obtained all material permits, licenses,
consents,
approvals, certificates, qualifications,
registrations or other authorizations
or filings of notification reports or
assessments required of Seller and
necessary for the Exploitation of the
Purchased Assets as currently Exploited by
Seller in each jurisdiction in which such
assets are Exploited, and Seller has
complied in all material respects with the
terms and conditions of each Permit
and each Permit is in full force and
effect. There are no pending or, to
Seller's Knowledge, threatened proceedings
which would reasonably be expected to
adversely affect such Permits, and to
Seller's Knowledge, no such Permits are
threatened to be suspended, revoked or
otherwise rendered invalid.
(c) Seller: (i) has not given any written undertaking, commitment
or
assurance to any Governmental Entity in
relation to the Purchased Assets; (ii)
is not subject to any order, regulation or
decision made by any Governmental
Entity in relation to the Purchased Assets
(iii) has not received a written
communication or request for information in
relation to the Purchased Assets
from any Governmental Entity, in the case
of clauses (i) through (iii) above,
under anti trust or similar legislation
applicable to Seller in any
jurisdiction.
(d) To Seller's knowledge, no complaints in relation to the
Purchased
Assets have been made or threatened by any
third party to any Governmental
Entity under any anti trust or similar
legislation.
(e) To Seller's Knowledge, no Group Company (as defined in the
Purchase and Sale Agreement) has ever
received, or is expecting to receive, any
aid (in whatever form) from a Member State
of the European Community or from
State resources such as could be regarded
as State aid for the purposes of
Articles 87 to 89 of the Treaty of
Rome.
4.6 TAXES. (a) (i) All Tax Returns required to be filed with
respect
to the Purchased Assets have been duly
filed (taking into account extensions of
time approved by the appropriate taxing
authority) and all such Tax Returns are
true, complete and correct in all material
respects; (ii) all Taxes due and
payable with respect to the Purchased
Assets have been paid in all material
respects and (iii) there are no material
Tax Liens, whether imposed by any
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U.S. federal, state, county, municipal or
foreign taxing authority, outstanding
against the Purchased Assets, except for
Permitted Liens.
(b) (i) Seller does not have a Seller's Permit as that term is used
in
Section 6006.5(a) of the State of
California Revenue and Tax Code, and (ii) to
Seller's Knowledge, Seller has not engaged
in any taxable sale in respect of the
Purchased Assets, such that it would be
required to have a Seller's Permit as
that term is used in Section 6006.5(a) of
the State of California Revenue and
Tax Code. Nothing in this Section 4.6(b)
shall affect the sales tax liability
allocation set forth in Section 3.4. Seller
shall not have any liability under
Article 9 or otherwise with respect to the
representation and warranty in
Section 4.6(b)(ii), other than in
determining whether the condition set forth in
Section 7.2(a) has been satisfied.
4.7 CONTRACTS. Seller has provided Buyer with access to true
and
complete copies of (a) all material
agreements, to which Seller is a party, that
relate to the Purchased Assets and which
would reasonably be expected to have a
material effect on the ability of Buyer to
Exploit the Films in accordance with
the Availabilities Schedule (other than
agreements that will not affect the
Purchased Assets following Closing) and (b)
all License Agreements (the
"MATERIAL CONTRACTS"). A true, accurate and
complete list of the material
License Agreements as of the date hereof is
set forth on Schedule 1.57. As of
the date hereof, other than the Service
Agreement, Seller is not party to any
material distribution, advertising or sales
agency contracts relating to the
Purchased Assets, except as set forth on
Schedule 4.7. Each License Agreement
and, to Seller's Knowledge, each other
Material Contract is a valid and binding
agreement, enforceable in accordance with
its terms, and in full force and
effect, subject to applicable bankruptcy,
insolvency, reorganization, moratorium
and similar laws affecting creditors'
rights generally and to general principles
of equity, regardless of whether
enforcement is sought in a proceeding at law or
in equity, of Seller and, to Seller's
Knowledge, each other party thereto. There
are no material breaches or defaults under
any License Agreement by Seller or,
to Seller's Knowledge, by any other party
thereto, nor has Seller, or to
Seller's Knowledge, any other party
thereto, performed any act or omitted to
perform any act under any such License
Agreement which, with notice or lapse of
time or both, will become or result in a
material breach or default thereunder.
To Seller's Knowledge, there are no
material breaches or defaults under any
Material Contract other than the License
Agreements, by Seller or any other
party thereto, nor, to Seller's Knowledge,
has Seller or any other party thereto
performed any act or omitted to perform any
act under any such Material Contract
which, with notice or lapse of time or
both, will become or result in a material
breach or default thereunder or give such
party thereto the right to terminate,
amend, abandon or refuse to
