EXHIBIT 10.1 ASSET PURCHASE AGREEMENT

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Title: EXHIBIT 10.1 ASSET PURCHASE AGREEMENT
Governing Law: New York Date: 3/31/2005
Law Firm: Brewer & Pritchard, PC; Dechert LLP

EXHIBIT 10.1

ASSET PURCHASE AGREEMENT

ASSET PURCHASE AGREEMENT, dated as of March 18, 2005 (this "Agreement"),

by and between AMITY ENTERTAINMENT, INC., a Delaware corporation ("Purchaser"),

and MAC FILMWORKS, INC., a Delaware corporation (the "Seller"). Certain

capitalized terms used herein are defined in Article XIII hereof.

WHEREAS, upon the terms and subject to the conditions set forth in this

Agreement, the Seller desires to sell to Purchaser, and Purchaser desires to

purchase from the Seller, certain assets of the Seller, as more particularly

described herein, in consideration for the payments from the Purchaser and the

assumption of certain liabilities of the Seller each as specified herein.

NOW, THEREFORE, in consideration of the foregoing and the representations,

warranties, covenants and agreements contained herein, intending to be legally

bound hereby, the parties hereto agree as follows:

ARTICLE I.

PURCHASE AND SALE OF ASSETS

Section 1.01. Purchase and Sale of Assets. Except as set forth in Section

1.02, upon the terms and subject to the conditions set forth herein, at the

Closing, the Seller shall sell, convey, transfer, assign and deliver to the

Purchaser, and the Purchaser shall purchase, acquire and accept from the Seller,

free and clear of Encumbrances (other than the Permitted Encumbrances), all of

the Seller's right, title and interest in and to the following properties,

assets, Contracts, rights and choses in action, whether tangible or intangible,

whether real, personal or mixed, whether accrued, contingent or otherwise, and

wherever located, as the same existed on the Closing Date as provided in this

Agreement (collectively, the "Assets"):

(a) subject to the terms of the Film Contracts, all right, title and

interest of the Seller, in and to the programs and films set forth on Schedule

3.06(a), including but not limited to, all literary, dramatic and musical

material therein contained (collectively and individually as to each film or

program, the "Film Library");

(b) all of the Seller's Film Assets associated with the Film

Library, including all inventories of films, videos, DVDs and other similar

products, availability schedules, historical information, and film elements;

sheet), notes, prepaid items and expenses, deferred charges, rights of offset,

claims for refund, and other receivables or right to payment of any nature

whatsoever relating to the Film Library (collectively, "Receivables") existing

on the Closing Date, and all such items arising thereafter, a true, correct and

complete list of which, as they existed on the Closing Date, is set forth hereto

as Schedule 3.04;

<PAGE>

(d) cash and cash equivalents of Seller received from the Film

Library on and after the Closing Date;

(e) all Film Asset Acquisition Agreements, Film Asset Exploitation

Agreements, all Contracts for the distribution by Seller of products or services

relating to the Film Library, and all other Contracts entered into by the Seller

relating to the Film Library, including those specified on Schedule 3.07 (the

"Assumed Contracts");

(f) all of the Seller's (i) trademarks and service marks relating to

the Film Library, and any registrations, registration certificates and

applications for registration therefor, and the goodwill associated therewith

(the "Trademarks"), (ii) trade names, assumed and fictitious names and

registered user names relating to the Film Library, and registrations and any

applications for registration therefor, and the goodwill associated therewith

and related internet domain names (the "Trade Names"), and (iii) copyrights and

registrations relating to the Film Library and any applications for registration

therefor (the "Copyrights"), including, without limitation, those items which

are specified on Schedule 3.06(c)(i);

(g) all of the Seller's available books, records, files, manuals and

other similar materials, including, advertising materials, marketing materials,

brochures, business and marketing plans and proposals, production data, sales

and promotional materials and records, purchasing materials and records, files

for past, existing and contemplated projects, media materials, financial and

fiscal records (copies), sales order files, customer lists and customer records

in any form (and all software related to any such customer records, to the

extent transferable), whether of past or present customers or potential future

customers, related to or arising from the Film Library, advertiser lists,

receipts and computer records relating to the Film Library, standard operating

procedures, correspondence, customer relations information, and any other trade

secrets, confidential or proprietary information pertaining to the Film Library

(the "Business Records");

(h) all of Seller's claims, choses in action, causes of action and

judgments relating to the Film Library, including those listed on Schedule

1.01(h);

(i) all certifications, franchises, approvals, permits licenses,

orders, registrations, certificates, variances and other similar permits or

rights obtained from any Governmental Entity or professional or trade

organization relating to the Film Library and all pending applications therefor;

(j) all third party warranties and guarantees with respect to any of

the Assets; and

(k) all rights to receive insurance proceeds relating to the damage,

destruction or impairment of any of the Assets on or subsequent to the Closing

Date.

Section 1.02. Excluded Assets. Notwithstanding anything else contained

herein, the Seller shall not sell, transfer, convey or assign to the Purchaser

the following (the "Excluded Assets"):

<PAGE>

(a) all cash and cash equivalents of the Seller arising from the

Assets received prior to the Closing Date;

(b) all original versions of accounting, financial and fiscal

records; and

destruction or impairment of any of the Assets prior to the Closing Date.

Section 1.03. Assumed Liabilities. Subject to the terms and conditions

contained in this Agreement, at the Closing, the Purchaser agrees to assume, pay

and perform when due the following liabilities and obligations of the Seller as

of the Closing Date and for all periods thereafter all as further described on

Schedule 1.03 (the "Assumed Liabilities"):

(a) all Residuals, Participations, Guild Payments and other third

party obligations owed on or after the Closing Date that arise from receipts

relating to the Film Assets received on or after the Closing Date (but excluding

any penalties for, or interest on, payments due prior to the Closing Date and

not paid on a timely basis);

(b) all obligations arising or coming due under the Assumed

Contracts in accordance with their terms with respect to acts or services to be

performed under such Assumed Contracts after the Closing Date, except for any

obligation (a) that relates to any breach or default (or an event which might,

with the passing of time or the giving of notice, or both, constitute a default)

under any such Assumed Contract arising out of or relating to periods on or

prior to the Closing Date, (b) for which the Seller owes any amounts to its

Affiliates (except as disclosed on Schedule 3.08), or (c) that relates to any

indemnity, defense or hold harmless provision or agreement for occurrences prior

to the Closing Date, provided that if any such obligation relates to actions or

the failure to act on the part of the Seller, such obligation shall remain the

Seller's responsibility and shall not become an Assumed Liability; and

intellectual property included in the Film Assets.

Section 1.04. Excluded Liabilities. Except for the Assumed Liabilities,

Purchaser shall not assume or be bound by any Liabilities of the Seller of any

kind or nature, known, unknown, accrued, absolute, contingent, recorded or

unrecorded or otherwise, whether now existing or hereafter arising (the

"Excluded Liabilities"). The Excluded Liabilities shall include, without

limitation, the following: (i) all Residuals, Participations and Guild Payments

arising from receipts relating to the Film Library received prior to the Closing

Date (including any penalties for, or interest on, payments due and not paid on

a timely basis prior to the Closing Date); (ii) any Liability of the Seller with

respect to unpaid laboratory costs, tape duplication costs or unpaid advances,

guaranties or deferments (except as disclosed on Schedule 1.03) in connection

with any Film Contract; (iii) any Liability of the Seller with respect to unpaid

synchronization or music license fees used in the Film Library prior to the

Closing Date; (iv) any Liability of the Seller with respect to unpaid production

costs arising prior to the Closing Date and (v) any Liability related to the

Seller Obligations. All responsibility for the Excluded Liabilities shall remain

with the Seller.

<PAGE>

Section 1.05. Purchase Price. The purchase price for the Assets shall be

an amount equal to either (i) one million eight hundred fifty thousand dollars

($1,850,000) if Schedule 3.06(a) is updated by Seller between the date hereof

and the Closing Date to include additional titles having a fair market value of

at least $100,000 as determined by Purchaser in its sole and absolute discretion

and that are otherwise acceptable to Purchaser in its sole and absolute

discretion, or (ii) one million seven hundred fifty thousand dollars

($1,750,000) if Schedule 3.06(a) is not updated by Seller between the date

hereof and the Closing Date in accordance with Section 1.05(i) above.

Section 1.06. Payment of Purchase Price. Subject to the conditions,

representations and warranties and covenants hereof, at the Closing the

Purchaser shall pay the Purchase Price as follows, each by federal funds wire

transfers of immediately available funds to accounts designated in writing by

each of the payees set forth below.

(a) to Seller, the Purchase Price as calculated in Section 1.05 less

(i) the principal amount of the Seller Note (the "Closing Cash Consideration"),

and (ii) the amounts paid to the obligors under the Seller Obligations pursuant

to Section 1.06(b) below, to the Seller;

(b) to each obligor under a Seller Obligation, an amount sufficient

to satisfy in full Seller's obligations to such obligor pursuant to the

Settlement Agreement; and

upon by Seller and Purchaser (the "Seller Note") in the amount of two hundred

fifty thousand dollars ($250,000) that will be secured by the Assets and due and

payable on the date that is twenty four (24) months from the Closing Date

(subject to the Right of Setoff in Section 9.05).

Section 1.07. Transfer Taxes. Seller shall be responsible for, and shall

pay on or prior to their due date, all municipal, county, state and federal

sales, use and transfer taxes incurred and the related costs of preparing or

documenting the same, if any, in connection with the Transactions contemplated

by the Agreement.

Section 1.08. Allocation of Purchase Price. The consideration provided for

herein has been allocated among the Assets in the manner required by Treasury

Regulation ss.1.1060-1 as set forth in more detail on Schedule 1.08 (the

"Allocation"). The parties hereto agree that, except as otherwise required by

law (i) the Allocation shall be binding on the parties for all federal, state,

local and foreign tax purposes and (ii) the parties shall file with their

respective federal income tax returns consistent Internal Revenue Service Forms

8594 - Asset Acquisition Statements under Section 1060, including any required

Internal Revenue Service forms, schedules or amendments thereto which shall

reflect the allocation set forth in the Allocation.

ARTICLE II.

THE CLOSING

Section 2.01. Closing Date. Unless this Agreement shall have been

terminated and the Transactions shall have been abandoned pursuant to Article X,

and subject to the satisfaction or waiver of the conditions set forth in

Articles VII and VIII, the closing of the Transactions contemplated by this

Agreement (the "Closing") shall take place at the offices of Dechert, LLP, 30

Rockefeller Plaza, New York, New York 10112 at 10:00 a.m. on April 30, 2005,

provided that the satisfaction or waiver of each condition set forth in Articles

VII and VIII has occurred by such date, or such other place, date and time as

the parties shall mutually agree (such date and time of the Closing is referred

to herein as the "Closing Date").

<PAGE>

Section 2.02. Deliveries at Closing.

(a) At the Closing, the Purchaser shall deliver the following to the

Seller:

(i) the Closing Cash Consideration and the Seller Note;

(ii) a certificate of Purchaser, duly executed by an

appropriate officer thereof, certifying to compliance with the

covenants set forth in Article VI, and satisfaction (or, as

specified, waiver) of the conditions set forth in Article VIII;

(iii) true, correct and complete copies of resolutions duly

and validly adopted by the Board of Directors of the Purchaser

evidencing the authorization of the execution and delivery of this

Agreement, the other Transaction Documents to which Purchaser is a

party and the consummation of the Transactions contemplated hereby

and thereby, and with respect to the resolutions of the Board of

Directors, accompanied by a certificate of the Secretary of the

Purchaser, dated as of the Closing Date, stating that no amendments

have been made thereto from the date thereof through the Closing

Date;

(iv) a duly executed Assignment, Bill of Sale and Assumption

Agreement in a form to be mutually agreed upon by Seller and

Purchaser;

(v) confirmation that the Seller Obligations have been paid in

full in accordance with the Settlement Agreement; and

(vi) a certificate from the Secretary of State of the State of

Delaware as to the good standing of Purchaser dated within ten (10)

days of the Closing.

(b) At the Closing, the Seller shall deliver to the Purchaser:

(i) a certificate from the Secretary of State of the State of

Delaware as to the good standing of the Seller dated within ten (10)

days of the Closing;

(ii) an Assignment, Bill of Sale and Assumption Agreement in a

form to be mutually agreed upon by Seller and Purchaser, duly

executed by Seller, and all such other instruments of assignment,

transfer or conveyance as shall, in the reasonable opinion of

Purchaser and its counsel, be necessary to vest in Purchaser, good,

valid and marketable title to the Assets, subject to no Encumbrances

(other than Permitted Encumbrances) and to put Purchaser in actual

possession or control of the Assets;

<PAGE>

(iii) one or more Copyright Assignments in a form to be

mutually agreed upon by Seller and Purchaser, duly executed by

Seller, assigning all of the Copyrights to Purchaser;

(iv) one or more Trademark Assignments in a form to be

mutually agreed upon by Seller and Purchaser, duly executed by

Seller, assigning all of the Trademarks to Purchaser;

(v) one or more Domain Name Transfers in a form to be mutually

agreed upon by Seller and Purchaser, duly executed by Seller,

assigning all of the internet domain names relating to the Film

Library to Purchaser;

(vi) a certificate of the Seller, duly executed by an

appropriate officer thereof, certifying to compliance with the

covenants set forth in Article V and Article VI, and satisfaction

(or, as specified, waiver) of the conditions set forth in Article

VII;

(vii) true, correct and complete copies of (1) the certificate

of incorporation, as amended to date, of the Seller, certified as of

a recent date by the Secretary of State of the State of Delaware,

(2) the by-laws of the Seller, (3) resolutions duly and validly

adopted by the Board of Directors of the Seller evidencing the

authorization of the execution and delivery of this Agreement, the

other Transaction Documents to which Seller is a party and the

consummation of the Transactions contemplated hereby and thereby,

and with respect to the resolutions of the Board of Directors,

accompanied by a certificate of the Secretary of the Seller, dated

as of the Closing Date, stating that no amendments have been made

thereto from the date thereof through the Closing Date;

(viii) pursuant to Section 3.04, updates of Schedule 1.03 and

Schedule 3.04;

(ix) all Consents, waivers and estoppels from third parties as

required to consummate the Transactions contemplated by this

Agreement, all as set forth on Schedule 3.02(c);

(x) Lien searches, a clearance certificate or similar

document(s) that may be required by any state, local or foreign

Governmental Entity in order to relieve Purchaser of any obligation

to withhold any portion of the Purchase Price and such other

instruments showing that there were no financing statements,

judgments, Taxes or other Liens outstanding against the Seller with

respect any of the Assets;

(xi) to the extent applicable, payoff letters, UCC-3

termination statements and other documentation relating to the

release of all security interests as necessary, all as set forth on

Schedule 3.02(c);

(xii) a Laboratory Transfer Letter, in a form to be mutually

agreed upon by Seller and Purchaser, executed by the Seller;

<PAGE>

(xiii) the Business Records;

(xiv) an opinion, dated the Closing Date, of counsel to the

Seller, in a form and substance reasonably satisfactory to

Purchaser; and

(xv) a duly executed Settlement Agreement (the "Settlement

Agreement") among the Seller and each obligor under the Seller

Obligations whereby each such obligor agrees that upon the payment

of certain amounts to such obligor the Seller Obligations will be

satisfied in full.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller represents and warrants to and for the benefit of the

Purchaser, as of the date hereof and as of the Closing Date, as follows:

Section 3.01. Organization and Qualification. The Seller is a corporation

duly organized, validly existing and in good standing under the laws of the

State of Delaware. The Seller has all corporate or other power and authority,

and is duly authorized by all necessary regulatory approvals and orders, to own,

lease and operate the Assets and properties and to carry on the Business as it

is now being conducted, and is duly qualified and in good standing to do

business in each jurisdiction in which the nature of the Business or the

ownership or leasing of the Assets and properties makes such qualification

necessary.

Section 3.02. Authority.

(a) Authority.

(i) The Board of Directors of the Seller has taken all action

to authorize and approve the Transaction Documents and the

Transactions. The Seller has all requisite power and authority to

enter into the Transaction Documents to which it is a party and to

consummate the Transactions contemplated hereby and thereby.

(ii) The execution, delivery and performance by the Seller of

each Transaction Document to which it is a party and the

consummation by the Seller of the Transactions contemplated hereby

and thereby have been duly authorized by all corporate action on the

part of the Seller, and no other corporate proceeding on the part of

the Seller is necessary to authorize each Transaction Document.

(iii) Each Transaction Document to which the Seller is a party

has been duly and validly executed and delivered by the Seller and,

assuming the due authorization, execution and delivery hereof by the

other parties hereto, constitutes the valid and binding obligation

of the Seller, enforceable against it in accordance with its

respective terms.

<PAGE>

(b) Non-Contravention. Neither the execution and delivery by the

Seller of any Transaction Document to which it is a party nor the consummation

or performance by the Seller of any of the Transactions contemplated hereby and

thereby will contravene, conflict with or result in any violation by the Seller

under any provisions of or result in acceleration, termination, cancellation or

modification of, or constitute a default under:

(i) the articles of incorporation, bylaws or similar governing

documents of the Seller;

(ii) any Requirements of Law;

(iii) any order of any Governmental Entity; or

(iv) any note, bond, mortgage, indenture, deed of trust,

license, franchise, permit, concession, Contract, lease or other

instrument, obligation or agreement of any kind relating to the

Assets to which the Seller is now a party or by which the Assets may

be bound or affected, except for Permitted Encumbrances.

Neither the execution nor the delivery by the Seller of any Transaction Document

will result in the creation or imposition of any Encumbrance (other than

Permitted Encumbrances) of any nature whatsoever upon the Assets.

declaration, filing or registration with, or notice to or Consent of, any

Governmental Entity or any other Person is necessary for the execution and

delivery by the Seller of any Transaction Document to which it is a party or the

consummation by the Seller of the Transactions contemplated hereby and thereby.

(d) Compliance.

(i) With regards to the Assets, neither the Seller nor its

employees or agents is, or has been in the last 3 years, in

violation in any material respect of, or has been given notice or

been charged with any material violation of, any law, order,

regulation, ordinance or judgment of any Governmental Entity.

(ii) The Seller has all permits, licenses and franchises from

Governmental Entities necessary for the ownership, marketing,

distribution, licensing and exploitation of the Assets and is in

compliance in all material respects with the terms thereof. No

violations have been reported in writing to Seller in respect of

such permits, licenses and franchises. Schedule 3.02(d)(ii) lists

each permit, license and franchise of the Seller relating to the

Assets. A true and complete copy of each such material permit,

license and franchise of the Seller relating to the Assets has been

provided to Purchaser and as of the date of the Closing each such

permit, license and franchise shall be assigned to Purchaser and be

in full force and effect upon such assignment.

<PAGE>

Section 3.03. Title to Properties; Liens; Condition of Assets. The Seller

has good, valid and marketable title to all of the Assets, free and clear of any

Encumbrances, other than (i) Liens on properties and assets securing Taxes,

assessments, governmental charges or levies, in each case, which are not yet due

and payable, (ii) Liens held by licensees under Assumed Contracts, SAG, WGA or

the DGA which arose in the ordinary course of business consistent with industry

standards and which did not arise from any action or inaction of Seller, and

(iii) Liens disclosed on Schedule 3.03 ((i) through (iii), collectively, the

Permitted Encumbrances). At the Closing, the Seller will convey to the Purchaser

good title to the Assets, free and clear of any Encumbrances, other than the

Permitted Encumbrances (except for Permitted Encumbrances relating to the Seller

Obligations). All of the Physical Properties are in good operating condition and

repair, subject to normal wear and tear, none of such Physical Properties are in

need of maintenance or repairs except for ordinary, routine maintenance and such

Physical Properties are suitable for and operating according to their intended

use.

Section 3.04. Receivables and Assumed Liabilities.

(a) Schedule 3.04 sets forth a true, correct and complete aged list

of the Receivables of the Seller as of the date hereof. At Closing, the Seller

shall deliver a true, correct and complete updated list of such Receivables as

of the Closing Date. Except as set forth on Schedule 3.04, all Receivables

outstanding as of the date hereof, and as of the Closing Date (i) are bona fide,

or will have been bona fide, and arose, or will have arisen, from the sale of

inventory or services to Persons not affiliated with the Seller and in the

ordinary course of business consistent with past practice and (ii) are supported

by a valid and enforceable Assumed Contract.

(b) Schedule 1.03 sets forth a true, correct and complete list of

the Assumed Liabilities as such items exist as of the date hereof. At Closing,

the Seller shall deliver a true, correct and complete updated list of such

Assumed Liabilities as of the Closing Date. Each Assumed Liability (i) has

arisen, or will have arisen, from the operation of the Business in the ordinary

course of business consistent with past practice and (ii) is properly, or will

be, properly and accurately reflected in the Business Records of the Seller.

Section 3.05. Litigation; Investigations. Except as specifically set forth

on Schedule 3.05, there are: (i) no claims, actions, suits, investigations or

proceedings pending or, to the knowledge of the Seller, threatened against,

relating to, or affecting the Seller, the Assets, or to the knowledge of the

Seller, any employee, officer or director of the Seller relating to the Assets,

and (ii) no orders of any Governmental Entity or arbitrator outstanding against

either of the Seller (in connection with the Assets), the Assets, or to the

knowledge of the Seller, any employee, officer or director of the Seller

relating to the Assets, or that could prevent or enjoin or delay in any respect,

consummation of the Transactions contemplated hereby.

Section 3.06. Matters Regarding the Film Library.

(a) Schedule 3.06(a) sets forth, on a title-by-title basis, a true,

correct and complete list of the principal films and programs that constitute

the Film Library.

<PAGE>

(b) Except with respect to the Permitted Encumbrances and the terms

of the Film Contracts, the Seller owns good and marketable title to, holds fully

valid, enforceable and exclusive licenses of or is otherwise duly authorized to

use substantially all rights under all copyrights, trademarks, service marks,

trade secrets and other Intellectual Property used or otherwise exploited by

Seller in connection with the Assets, including, without limitation, the Film

Assets and the Film Library, and the rights to use, duplicate, distribute,

merchandise, create derivative works based upon, publicly perform, and publicly

display the Film Assets.

of all of Seller's copyright registrations, registration numbers and serial

numbers by the issuing authority related to the Film Library. Schedule

3.06(c)(ii) sets forth a true, correct and complete list of all of Seller's

trademarks, service marks, trade names, domain names and logos, and all

registrations, registration numbers and serial numbers by the issuing authority

thereof, included in the Film Library. Schedule 3.06(c)(iii) sets forth a true,

correct and complete list (the "Physical Properties Schedule") of each location

at which the Physical Properties are held or stored and a general description of

the nature or type of Physical Properties held or stored thereat and, at the

Closing, Purchaser shall have exclusive ownership of such Physical Properties,

subject to any Permitted Encumbrances.

(d) The ownership, use or exploitation of the Film Library by any

means in connection with the operations of the Seller or its Affiliates with

respect to the Assets prior to the Closing does not and will not infringe or

misappropriate the rights of any other Person, including, without limitation,

any rights relating to defamation, contract, trademark, unfair competition,

3.06(d), neither the Seller nor any Affiliate of the Seller has received any

notice of infringement or misappropriation or other notice of claim relating to

the Film Library including, without limitation, oppositions filed in respect to

the Seller's trademark applications, if any. Further, no presently existing

assignment, license or other transfer to the Seller of any portion of the Film

Library or of any rights thereunder is now or, to the knowledge of the Seller,

will in the future become subject to rescission, cancellation or termination

(except as may occur by operation of statute pursuant to Section 304 of the

the Film Assets may be subject, or, with respect to any Assumed Contract, as

expressly set forth by its terms).

(e) All advances, guarantees, Guild Payments, Residuals and

Participations, laboratory payments, open purchase orders, costs and fees

charged by agents and sub-agents, and other amounts or obligations owed, due,

invoiced or payable prior to or on the Closing Date by the Seller, any of its

Affiliates or any of its predecessors-in-interest pursuant to or under the

Assumed Contracts or otherwise in respect of the Film Library have been paid, or

at the Closing will be retained by Seller.

(f) Except pursuant to the Assumed Contracts, there are no Persons

that have (or will have) any rights to participate in the development,

production, distribution or financing of any portion of the Film Library.

(g) None of the licensors under any Film Asset Acquisition Agreement

to which the Seller is a party has exercised any right to buy back any rights

granted to Seller in the Film Library nor have any such rights reverted to any

licensor nor has any such licensor purported to terminate or rescind any such

rights.

<PAGE>

(h) All of the artwork, packaging, publicity, promotional materials

and advertising prepared by Seller relating to the Film Library has been

prepared in accordance with and is in compliance in all material respects with

all of the requirements of the applicable Film Contracts and requirements of

applicable laws which are customarily applicable to transactions of the type

contemplated herein.

(i) The transfer of the Assets pursuant to this Agreement will vest

in Purchaser all rights with respect to musical compositions and sound

recordings licensed from third parties by Seller and contained in the Assets

necessary for the lawful distribution, exhibition and exploitation of the Film

Library without infringing or violating any laws or rights of third parties; and

the performance rights of all non-dramatic music contained in the Film Library

(whether in connection with musical compositions or sound recordings) are: (i)

controlled by a performing rights organization such as the American Society for

Composers Authors and Publishers, Broadcast Music Inc., SESAC, Inc., PRS, and/or

SOCAN, (ii) available for license from the party(ies) controlling such rights,

(iii) in the public domain, or (iv) controlled by Seller directly or through

license(s), and if so, then such rights are granted herewith.

(j) The Seller has not sold, leased, pledged, disposed of or

otherwise transferred or encumbered in any way any of the Film Assets since the

date the Seller acquired such Film Assets.

Section 3.07. Contracts. Schedule 3.07 sets forth a complete and accurate

list of all Assumed Contracts. Each of the Assumed Contracts is in full force

and effect and enforceable in accordance with its terms. The Seller has not

received notice of cancellation of or intent to cancel, or notice to make a

modification or intent to make a modification in, any of the Assumed Contracts.

The consummation of the Transactions hereunder will not result in the early

termination of any of the Assumed Contracts or have a material adverse effect on

the relationships between the Purchaser (as the new owner of the Film Library)

and the customers who have licensed or otherwise acquired rights in portions of

the Film Library. There exists no event of default or occurrence, condition or

act on the part of the Seller or, to the best knowledge of the Seller, on the

part of the other parties to such Assumed Contracts which constitutes or would

constitute (with notice or lapse of time or both) a breach under, or cause or

permit acceleration of, any obligation of the Seller. Except as specifically set

forth on Schedule 3.02(c) no Consent of any other party to any of the Assumed

Contracts is required in connection with the execution, delivery and performance

of this Agreement by the Seller, which Consents shall be obtained prior to

Closing. The Seller has delivered or made available to Purchaser true and

complete copies of each Assumed Contract listed on Schedule 3.07.

Section 3.08. Transactions with Affiliates. Except as set forth on

Schedule 3.08, none of the officers, directors, employees or stockholders of the

Seller (a) is a party to any Assumed Contract with the Seller, (b) has asserted

or threatened to assert any claim against the Seller, (c) is engaged in any

transaction with the Seller relating to the Assets, or (d) to the actual

knowledge of the Seller, has any direct or indirect financial interest in any

competitor, supplier, customer, or distributor of the Seller as it relates to

the Assets.

<PAGE>

Section 3.09. Taxes.

(a) All material Tax Returns required by applicable law to be filed

by or on behalf of the Seller prior to or as of the Closing Date have been

timely filed or will be timely filed as of the Closing Date, and all such Tax

Returns are true, complete and correct in all material respects.

(b) All material Taxes that are due or claimed to be due from Seller

on or prior to the Closing Date have been paid or will have been paid as of the

Closing Date, other than those (A) currently payable without penalty or interest

or (B) being contested in good faith and by appropriate proceedings, which

proceedings are described in Schedule 3.09.

Section 3.10. Bulk Sales. The bulk sales laws of the jurisdictions in

which the Assets are located are not applicable to the Transactions contemplated

hereby.

Section 3.11. Disclosure. No representation, warranty or statement made by

the Seller in (i) this Agreement or (ii) the Schedules attached hereto, contains

or will contain any untrue statement of a material fact, or omits or will omit

to state a material fact required to be stated herein or therein or necessary to

make the statements contained herein or therein, in light of the circumstances

under which they were made, not misleading.

Section 3.12. Insurance. Seller does not currently have and has never had

any insurance policies related to the Assets.

Section 3.13. Permits. No permits, license or franchise from a

Governmental Entity is necessary for Seller's ownership, marketing,

distribution, or exploitation of the Assets.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

Purchaser represents and warrants to and for the benefit of the Seller, as

of the date hereof and as of the Closing Date, as follows:

Section 4.01. Organization and Qualification. Purchaser is a corporation

duly organized, validly existing and in good standing under the laws of the

State of Delaware.

Section 4.02. Authority.

(a) Authority.

(i) The Board of Directors of the Purchaser has taken all

action to authorize and approve the Transaction Documents and the

Transactions. The Purchaser has all requisite power and authority to

enter into the Transaction Documents to which it is a party and to

consummate the Transactions contemplated hereby and thereby. At the

Closing, Purchaser will have adequate financial resources to fund

the transactions contemplated by this Agreement.

<PAGE>

(ii) The execution, delivery and performance by the Purchaser

of each Transaction Document to which it is a party and the

consummation by the Purchaser of the Transactions contemplated

hereby and thereby have been duly authorized by all corporate action

on the part of the Purchaser and no other corporate proceeding on

the part of the Purchaser is necessary to authorize each Transaction

Document.

(iii) Each Transaction Document to which Purchaser is a party

has been duly and validly executed and delivered by Purchaser and,

assuming the due authorization, execution and delivery hereof by the

other parties hereto, constitutes the valid and binding obligation

of Purchaser, enforceable against it in accordance with its

respective terms.

(b) Non-Contravention. Neither the execution and delivery by Purchaser of

any Transaction Document to which it is a party nor the consummation or

performance by Purchaser of any of the Transactions contemplated hereby and

thereby will contravene, conflict with or result in any violation by Purchaser

under any provisions of or result in acceleration, termination, cancellation or

modification of, or constitute a default under:

(i) the articles of incorporation, bylaws or similar governing

documents of Purchaser;

(ii) any Requirements of Law;

(iii) any order of any Governmental Entity; or

(iv) any note, bond, mortgage, indenture, deed of trust,

license, franchise, permit, concession, Contract, lease or other

instrument, obligation or agreement of any kind to which Purchaser

is now a party.

or Consent of, any Governmental Entity or any other Person is necessary for the

execution and delivery by Purchaser of any Transaction Document to which it is a

party or the consummation by Purchaser of the Transactions.

Section 4.03. Disclosure. No representation, warranty or statement made by

Purchaser in (i) this Agreement or (ii) the Schedules attached hereto, contains

or will contain any untrue statement of a material fact, or omits or will omit

to state a material fact required to be stated herein or therein or necessary to

make the statements contained herein or therein, in light of the circumstances

under which they were made, not misleading.

<PAGE>

ARTICLE V.

PRE-CLOSING COVENANTS OF SELLER

Except with the prior written consent of the Purchaser, the Seller shall

comply with the provisions of this Article V after the date hereof and prior to

the Closing Date or earlier termination of this Agreement.

Section 5.01. Ordinary Course of Business. The Seller shall conduct its

business as it relates to the Assets in th

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