SALE OF ASSETS
This Agreement (the "Agreement"), entered into as of this 16th day of
January, 1996, sets forth the terms whereby Canal+ D.A., or one or more of
its permitted assignees, as set forth in Paragraph 4 (collectively, "Canal+"),
subject to the approval of the Bankruptcy Court (defined in Paragraph 3.3),
as provided below, will purchase specified assets of Carolco Pictures Inc.
("CPI") and of its subsidiaries listed on Exhibit "A" attached hereto (such
subsidiaries being the "Carolco Subsidiaries"). Together, CPI and the Carolco
Subsidiaries are referred to as "Carolco."
1. Assets Acquired. Subject to the terms and conditions of this
Agreement, Carolco shall sell, transfer and assign to Canal+ and Canal+
shall purchase from Carolco the following assets (collectively referred to as
the "Assets"):
1.1 Carolco Pictures. All of Carolco's right, title and
interest in and to each of the 22 motion pictures produced or acquired by
Carolco and listed in Schedule 1.1 ("Carolco Pictures") including, without
limitation, to the extent of Carolco's interest therein, all rights of every
kind and nature in such motion pictures including, without limitation, with
respect to each such Carolco Picture the maximum extent of Carolco's interest in
each of the following: (a) all copyrights (other than "Excluded Rights" as
defined in Paragraph 1.1(a) below), trademarks, service marks, tradenames and
other intellectual property rights throughout the world and all renewals and
extensions thereof to each of the Carolco Pictures and the underlying rights
upon which each Carolco Picture is based; (b) the right to use the present title
of such Carolco Pictures and other titles; (c) subject to existing distribution
agreements referred to in Schedule 8.4(b) or otherwise disclosed on Schedule
1.1, all rights of distribution and exhibition in all media and territories
throughout the universe by any means, method or device now known or
hereinafter devised, including, without limitation, all forms of theatrical
distribution, non-theatrical distribution (including, without limitation, all
airplane and ship rights), home video distribution (including videocassettes,
videodiscs and all other forms of video devices now known or hereinafter
devised), all forms of television distribution and exhibition (including,
without limitation, pay television including, without limitation, all forms of
subscription and pay-per-view television, cable television, free television,
satellite television, digital television, video-on-demand and near-video-on-
demand), all allied and subsidiary rights including, without limitation,
Carolco's music rights, soundtrack rights, literary publishing rights, clip
rights, merchandising rights, theme park rights, interactive, multimedia and
optical rights and on-line and other forms of electronic data transmission
rights; (d) subject to applicable talent and guild/collective bargaining
agreements (i) the right to modify, edit, alter and abbreviate the Carolco
Pictures for any purpose including censorship and the exigencies of
distribution, (ii) the right to insert commercials and other material during,
before or after the picture, (iii) all rights and benefits under contracts with
third parties relating to the development, production and distribution of the
Carolco Pictures (including all agreements for services and facilities and
acquisition of underlying rights) to the extent necessary for Canal+ to exploit
its rights under this Agreement, (iv) all rights to advertise, promote and
publicize the Carolco Pictures including the rights to the titles, trademarks,
logos, artwork and publicity materials and to prepare and exploit trailers,
spots and excerpts of the Carolco Pictures.
(a) Excluded Rights. For purposes of this
Agreement, "Excluded Rights" shall mean the Remake and Sequel
rights to the Carolco Pictures and the "Additional Pictures" (defined
below). "Remake" rights shall mean the right to develop, produce
and distribute one or more motion pictures (feature, television, video,
etc. and all ancillary rights relating thereto) using substantially the
same characters and story line as the original motion picture.
"Sequel" rights shall mean the right to develop, produce and exploit
one or more motion pictures using one or more of the principal
characters from the original film in a different story line taking place
before or after the story line of the original motion picture.
(b) Schedule 1.1. Schedule 1.1 also
specifies the Carolco entity holding the rights to the Carolco Pictures
and any third parties holding any ownership interest (such as co-production
interests, as opposed to distribution rights or contingent participation
interests) in the Carolco Pictures, and the general nature
of that ownership and, to the best of Carolco's knowledge, any
consents necessary to transfer to Canal+ the right, title and interest
of Carolco or the relevant Carolco entity in and to the Carolco
Pictures.
1.2 Additional Pictures. All of Carolco's right,
title and interest in and to the 62 theatrical motion pictures, eight
television motion pictures and six television series acquired by
Carolco and listed in Schedule 1.2 ("Additional Pictures"). Carolco's
right, title and interest in each such Additional Picture is held by
Carolco under the terms of the applicable acquisition agreement for
such Additional Picture specified in such Schedule 1.2. Schedule 1.2
shall also specify the types of rights acquired by Carolco, the entity
holding such rights, the duration and territories of such rights, any
other material conditions under such agreements, and any consents
necessary to transfer to Canal+ Carolco's right, title and interest in
and to the Additional Pictures. The Carolco Pictures and the
Additional Pictures are collectively referred to as the "Library."
1.3 Related Contract Rights. All of Carolco's
material right, title and interest under the distribution, exhibition and
licensing agreements relating to the Library and all related rights as
listed in Schedule 8.4(b), including, without limitation, the right to
any payments or other proceeds thereunder to the extent included in
the Included Payment Rights.
1.4 Audit Proceeds. One-half of all proceeds
relating to the Library (net of costs incurred by either party related
to such audit) from any audit that was initiated by Carolco prior to
the Closing (other than the Pioneer Audit and the TriStar Audit),
whenever received; provided, however, that if, after the Closing,
issues are raised in such audit that relate to Included Payment Rights
(as defined in Paragraph 1.6), any recovery in respect of such issues
shall constitute Assets. As used in this Agreement, "Included Audit
Rights" means rights to payments in respect of audits to which
Canal+ is entitled under this Agreement. The "Tristar Audit" means
the proceeds which may result from claims which arise out of or are
related to that certain letter dated February 10, 1995 from Greenberg,
Glusker, Claman, Fields & Machtinger to Tristar Pictures which was
initial correspondence in an ongoing arbitration. The "Pioneer
Audit" means proceeds which may result from claims under the audit
report from Film Financial Consultants dated June 1995. As
promptly as possible after signature of this Agreement, Carolco shall
deliver to Canal+ Schedule 1.4 which will set forth all current or
planned audits of the Library conducted by Carolco.
1.5 Physical Properties. All of Carolco's right, title
and interest in and to tangible personal property in Carolco's
possession or under its control relating to the Library, including,
without limitation, all material property relating to the development,
production, completion, delivery, exhibition, distribution or other
exploitation, including, without limitation, literary property, exposed
film, videotapes, developed film, positives, negatives, prints, answer
prints, television spots, radio spots, dialogue continuities, press
clippings, all versions including television, airlines and foreign
language, special effects, pre-print materials, soundtracks, recordings,
audio and video tapes and discs of all types and gauges, advertising
and promotional materials relating to the Library, transparencies,
posters, pressbooks, publicity kits, correspondence, contracts,
agreements, licenses, and related documents, books, records and
instruments and all duplicates, drafts, versions, variations and copies
of each; and all pledgeholder, laboratory, access or film warehousing
agreements related thereto (which shall be assigned to Canal+) and
any and all documents issued by any pledgeholder, warehouseman or
bailee with respect thereto (the "Physical Properties").
1.6 Accounts Receivable and Other Payment Rights.
Accounts receivable (whether on or off Carolco's balance sheet), cash
or cash equivalents received as a result of such accounts receivable,
royalties, participations, fees, overages and other consideration from
any source relating to the Assets, whether in bank accounts, in escrow
accounts or held pursuant to escrow arrangements for the benefit of
Carolco, and royalties and other amounts payable pursuant to any
distribution or output contract relating to the Library (collectively, the
"Payment Rights") that either (i) are earned in accordance with
generally accepted accounting principles after the first to occur of
March 31, 1996 or the Closing or (ii) are received after the first to
occur of March 31, 1996 or the Closing, regardless of when earned,
but in all cases excluding proceeds of the Pioneer Audit and the TriStar
Audit (collectively, the "Included Payment Rights").
2. Treatment of Included Payment Rights. Carolco shall
not expend or otherwise dissipate the Included Payment Rights. To the
extent permissible under Carolco's agreements with its creditors, all
proceeds from Included Payment Rights will be segregated by Carolco
as received pending the Closing, and deposited in a separate account
requiring the joint signature of Carolco and Canal+. If such proceeds
cannot be deposited in a joint account because of Carolco's agreements
with its creditors, or if, notwithstanding the foregoing, any Included
Payment Rights are expended or otherwise dissipated, the full amount
of the Included Payment Rights received shall be credited against the
purchase price at the Closing. At reasonable times and upon
reasonable notice, Canal+, its employees and agents, shall have the
right to review, copy, and audit, at Canal+'s expense, the books and
records of Carolco related to all amounts received by Carolco from
whatever source to determine compliance with the provisions of this
Agreement. Any dispute as to the amount of credit against the
purchase price shall be fully and finally resolved by a binding decision
made by a mutually satisfactory independent accountant familiar with
the business and assets of an entertainment business, who shall
establish the offset amount, if any, within 30 days of referral of the
matter to him. The name of the accounting firm and accountant shall
be agreed to by the parties within five business days of the date either
party notifies the other in writing that, in such party's good faith
opinion, the matter cannot be resolved by the parties. If the parties
cannot agree on the accounting firm and accountant within the five
business day period, the Bankruptcy Court shall select a recognized
accounting firm that is not the current accounting firm of either
Canal+ or Carolco.
3. Purchase Terms.
3.1 Purchase Price. At the Closing, CPI shall sell,
and shall cause the Carolco Subsidiaries to sell, and Canal+ shall
purchase, the Assets for $58,000,000, less any credit that has been
retained by Carolco as described in Paragraph 2, and less the
reductions, if applicable, described in Paragraph 11.12. The purchase
price shall be payable by wire transfer (or other cash equivalent) at the
Closing as CPI directs in conformity with the order of the Bankruptcy
Court.
3.2 Offset Rights. Except for the right to offset
against the purchase price and reduce the purchase price as described
in Paragraph 3.1, Canal+ shall not offset against the purchase price or
in any way reduce the purchase price by the amount of any claims
Canal+ may have against Carolco or any claims against Carolco that
Canal+ may acquire from others in the future.
3.3 Bankruptcy Court Approval. Carolco shall
immediately use its best efforts to seek approval and authorization
from the U.S. Bankruptcy Court for the Central District of California
(the "Bankruptcy Court") to sell the Assets to Canal+ in accordance
with the terms of this Agreement and pursuant to Section 363 of the
U.S. Bankruptcy Code (the "Code") and to assume and assign
applicable executory contracts to Canal+ on the terms and conditions
of the Agreement pursuant to Section 365 of the Code. The date for
the Bankruptcy Court hearing for such approval shall be March 5,
1996 or such other date set by the Bankruptcy Court ("Hearing Date").
3.4 Allocation of Purchase Price. The purchase
price shall be allocated among the Assets as the parties shall, in good
faith, mutually agree, based upon fair market values. If the parties do
not reach agreement within 30 days prior to the Closing (but in no
event shall any such failure to agree delay the Closing), the issue of the
allocation shall be resolved by referral to a mutually satisfactory
independent accountant familiar with the business and assets of an
entertainment business, who shall establish the allocation within 30
days after appointment. The decision of the accountant shall be final
and binding on the parties, and the parties shall share equally in the
cost of the accountant. The name of the accounting firm and
accountant shall be agreed to by the parties within five business days
of the date the parties have determined they cannot reach agreement on
the allocation. The parties acknowledge and agree that Canal+ is not
acquiring any goodwill of Carolco as a going concern and no value
shall be allocated to such items.
3.5 No Discounts on Included Payment Rights.
Carolco shall not enter into any agreement with any third party that
results in any discount, compromise or acceleration of payment with
respect to any Included Payment Rights; provided, however, that
Carolco may accelerate accounts receivable set forth on Carolco's
September 30, 1995 balance sheet.
3.6 Deposit. Canal+ shall deposit into an escrow
account on or before January 22, 1996, the amount of $2 Million,
representing a good faith deposit. If the Agreement is terminated for
any reason other than a breach by Canal+ of the Agreement, such $2
Million shall be immediately returned to Canal+. The terms of the
escrow agreement and the escrow agent shall be reasonably satisfactory
to Canal+ and Carolco.
4. Assignment of Rights by Canal+. Canal+ may, in its
sole discretion and without obtaining the consent of Carolco, assign
any or all of its rights and obligations hereunder to any one or more
existing or to be formed domestic or foreign subsidiaries or affiliates
of Canal+ or its parent company. Notwithstanding anything in the
preceding sentence to the contrary, Canal+ D.A. shall be liable for the
payment of the purchase price and the Assumed Obligations (as defined
in Paragraph 6.3); provided, however, that the liability of
Canal+ D.A. for the payment of the purchase price and the Assumed
Obligations shall be deemed satisfied to the extent such obligations are
paid by another party.
5. Closing. Subject to the satisfaction or waiver of the
conditions set forth in Paragraph 12, the closing (the "Closing") shall
be held on the first business day after the tenth calendar day after the
entry of the order by the Bankruptcy Court referred to in Paragraph
12.1; provided, however, if there is a stay of such order (or other
injunction with respect to such order), the Closing shall occur on the
first business day after the expiration of the stay (and any other
injunction) so long as the stay (and any other injunction) is dissolved
within ten (10) calendar days of its effectiveness. If the stay (and any
other injunction) is not dissolved within the 10-day period, Canal+
may, in its sole discretion, elect not to proceed with the transaction and
shall have no liability for any such election not to proceed. At the
Closing, Carolco shall deliver to Canal+ such executed and, if
required, notarized documents of transfer for the Assets which Canal+
may reasonably request. At the Closing, Canal+ shall deliver to
Carolco such executed documents evidencing Canal+'s assumption of
the Assumed Obligations which CPI may reasonably request.
6. Assumption of Obligations.
6.1 Intent of Parties. Throughout this
Paragraph 6.1, reference is made to the responsibility of the parties
hereto for pre- and post-Closing obligations to third parties. The
parties hereto intend that such obligations be the responsibility of the
party which receives revenues related to such obligation, and the
provisions of this Paragraph 6.1 should be read in conjunction with
this statement of intent. For example, if Carolco is the party to a
contract which requires payments (whether such payments be Residuals
as defined in Paragraph 6.2(c), Participations as defined in Paragraph
6.2(f), or other types of payments), and Carolco, either before or after
the Closing, receives revenues related to such contract, which revenues
Carolco is entitled to retain under this Agreement, Carolco is obligated
to make any payments of amounts as determined under the third party
contract which relate to (and only to) the revenues Carolco receives.
Conversely, if Canal+, as assignee, is the party to a contract which
requires payments (whether such payments be Residuals, Participations
or other types of payments) and Canal+ receives revenues after the
Closing related to such contract, which revenues Canal+ is entitled to
retain under this Agreement, Canal+ would be obligated to make any
payments of amounts as determined under the third party contract
which relate to (and only to) the revenues Canal+ receives.
6.2 Obligations Not Assumed. Canal+ shall not
assume and shall not be liable for any obligations or liabilities of
Carolco not expressly assumed herein. Without affecting the
generality of the foregoing, Canal+ shall not be liable for:
(a) any costs, expenses, obligations, or
liabilities which result from benefits received by Carolco;
(b) any costs, expenses, obligations, or
liabilities related to or arising out of any employment relationships of
Carolco;
(c) any residual payments pursuant to
collective bargaining agreements (collectively, "Residuals") resulting
from Excluded Payment Rights or Excluded Audit Rights; "Excluded
Payment Rights" means all Payment Rights that are earned in
accordance with generally accepted accounting principles and collected
before the first to occur of March 31, 1996 or the Closing; "Excluded
Audit Rights" means rights to payments in respect of audits to which
Carolco is entitled under this Agreement;
(d) obligations in respect of any litigation,
claims, demands or proceedings including those listed on Schedule 8.5
or related to any of the activities of Carolco prior to the Closing;
(e) any judgments, claims, damages, fees,
fines, or costs awarded against or incurred by Carolco, or agreed to by
Carolco in connection with the TriStar Audit and any TriStar
counterclaims against Carolco arising out of the TriStar Audit (the
"TriStar Counterclaims");
(f) any talent participations or producer
royalties, including any fees payable for merchandising and music
rights (collectively, "Participations") that are not listed on Schedule
8.4(c); and any Participations, whether or not listed on Schedule
8.4(c), resulting from Excluded Payment Rights or Excluded Audit
Rights;
(g) obligations under output agreements
unless such obligations are contained in executory contracts assigned
to Canal+ pursuant to Paragraph 11.7, and then only with respect to
obligations which result from Included Payment Rights or Included
Audit Rights; and
(h) obligations arising out of audits,
arbitrations, settlements, or judgments with respect to the
Participations or Residuals that are not the obligation of Canal+
pursuant to Paragraphs 6.2(c) or 6.2(f) above, even if the audit,
arbitration, settlement, or judgment requires a payment after the
Closing.
6.3 Obligations Assumed. From and after the date
of the Closing, Canal+ agrees to assume and be liable only for the
following specifically identified obligations (collectively, the "Assumed
Obligations"):
(a) Residuals resulting from Included
Payment Rights and Included Audit Rights;
(b) obligations under executory contracts
assigned to Canal+ pursuant to Paragraph 11.7 which result from
benefits under such executory contracts to which Canal+ is entitled
under this Agreement;
(c) payment or other contractual obligations
to talent with respect to the Participations entered into prior to the date
of this Agreement that are listed on Schedule 8.5(c) and that result
from Included Payment Rights or Included Audit Rights; and
(d) obligations under distribution agreements
(relating exclusively to the Library) assigned to Canal+ pursuant to
Paragraph 11.7 that result from Included Payment Rights or Included
Audit Rights.
7. Other Offers.
7.1 Procedure for Handling Competing Offers.
(a) At all times between the date of the
execution of this Agreement and the earlier of its termination or the
Closing, CPI will not, and will not permit the Carolco Subsidiaries or
any of its or their officers, directors or representatives, directly or
indirectly and in any capacity, to take any action to solicit or initiate
any Acquisition Proposal (as defined in clause (c) below) for the
Assets; provided, however, that Carolco may engage in negotiations
concerning an Acquisition Proposal with, or disclose any nonpublic
information relating to the Assets, or afford access to the properties,
books, or records of Carolco related to the Assets, to any person or
entity with whom Carolco has had prior to the date hereof discussions
regarding the purchase of the Assets or which person or entity contacts
Carolco about such Acquisition Proposal.
(b) Carolco shall promptly notify Canal+ in
writing, in accordance with Paragraph 19, after receipt of any
Acquisition Proposal or an offer that is, in the written opinion of
Carolco's investment banker, on terms financially superior to those
offered in this Agreement ("Competing Offer"), which notice shall
specify the terms of the Acquisition Proposal or Competing Offer and,
if a Competing Offer, shall include a copy of the opinion of Carolco's
investment banker.
(c) "Acquisition Proposal" means any offer
or proposal to Carolco for all of the Assets and no other assets of
Carolco.
7.2 Canal+ Matching Rights.
(a) Canal+ shall have five (5) business days
after its receipt of Carolco's notice of receipt of a Competing Offer
that includes the acquisition of all of the Assets which Carolco intends
to accept to amend the terms of this Agreement to be at least as
favorable as the terms in the Competing Offer, in which case this
Agreement, as amended, will remain in effect. Carolco shall not have
the right to accept one or more Competing Offers for less than all of
the Assets. Canal+ shall have the right, by giving notice to Carolco
within five (5) business days after its receipt of Carolco's notice of
each Competing Offer, whether the Competing Offers are received
concurrently or over time, and including higher Competing Offers
made after Canal+ has made Replacement Offers (as defined below)
(but subject to a matching period of three (3) business days after
Canal+'s receipt of Carolco's notice of a higher Competing Offer), to
make one or more replacement offers for the Assets that are the subject
of one or more of the Competing Offers at a price that matches or
exceeds that set forth in the Competing Offers (the "Replacement
Offer"). In each such case Carolco shall accept Canal+'s Replacement
Offer as an amendment to this Agreement and in lieu of the Competing
Offer that was the subject of the Replacement Offer. Carolco shall use
its best efforts to promptly obtain the Bankruptcy Court's approval of
and consummate the transaction described in this Agreement, as
amended to include the Replacement Offer. Canal+'s delivery to
Carolco of a Replacement Offer shall automatically amend this
Agreement as set forth in the Replacement Offer.
(b) If Canal+ fails to notify Carolco of its
desire to so amend this Agreement within the time periods described
above, Carolco may enter into a contract with the third party who
made the Competing Offer (the "Third Party") on the same terms and
conditions described in Carolco's notice within 30 calendar days after
the date of Carolco's notice. If (i) the final agreement between
Carolco and the Third Party is not fully executed within 30 calendar
days after the date of Carolco's notice, or (ii) the transaction with the
Third Party is not closed within nine (9) months after the date of
Carolco's notice, or (iii) the terms of the final agreement are different
in any material respect from the terms described in Carolco's notice to
Canal+, then the Competing Offer shall again be subject to Canal+'s
rights to amend or terminate this Agreement and match a Competing
Offer as described above. If a Competing Offer is conditioned upon
the results of a due diligence investigation, Canal+'s Replacement
Offer may include a conforming due diligence right.
(c) Carolco's signing of such an agreement
with a Third Party after fully complying with the terms and conditions
of this Section 7 shall immediately terminate this Agreement; provided,
however, that the terms of Paragraph 7.2 and the terms of Paragraphs
14.2 through and including 14.5 shall survive such termination. If,
following the 9-month period described above, the final agreement
between Carolco and the transaction with the Third Party does not
close, Canal+, at its option, may deliver to Carolco notice of
reinstatement and the parties shall reinstate this Agreement giving
effect to any Replacement Offers made and consummate the transaction
on the terms described herein, except that the dates shall be amended
to take account of the delay.
(d) If Canal+ makes a Replacement Offer,
as described in Paragraph 7.2(a), or meets the terms of a Competing
Offer as described in Paragraph 7.2(b), and the party making the
Competing Offer makes another Competing Offer, Canal+ shall again
have the right to make a Replacement Offer or meet the terms of the
Competing Offer within three (3) business days of notice of such
Replacement Offer or Competing Offer, and such rights shall continue
under the terms described in Paragraph 7.2, so long as Carolco
continues to receive Competing Offers.
(e) Any order of the Bankruptcy Court
establishing an overbidding procedure with respect to the sale of the
Assets (including a public or private auction held before the
Bankruptcy Court on March 5, 1996 (or any adjourned or continued
date thereof) subject to Canal+'s matching rights and minimum
overbids of at least $500,000 and other terms and conditions
reasonably satisfactory to Canal+) shall be consistent with the terms
of this Agreement, including the procedures set forth in this Paragraph
7 except the three (3) and five (5) business day periods described in
Paragraphs 7.2(a) and 7.2(d) shall not be applicable at the "in person"
auction. The terms of this Paragraph 7.2(e) shall survive the
termination of this Agreement.
7.3 Exceptions. Nothing contemplated in this
Paragraph 7 shall prohibit Carolco or the members of its board of
directors from complying with its and their (a) fiduciary duties; (b)
obligations under applicable state and federal law or rules and
regulations promulgated thereunder; and (c) obligations to comply with
any orders of the Bankruptcy Court, including the obligation to
disclose information. Canal+ agrees that it shall not file a claim or
complaint or bring a cause of action against a Carolco director who,
in good faith and after sufficient evaluation and analysis, and in
compliance with his fiduciary duty, votes to approve or accept a
Competing Offer.
8. Representations and Warranties of Carolco. Carolco
represents and warrants to Canal+ that:
8.1 Authorization of Agreement. Subject to approval
of its shareholders or approval of the Bankruptcy Court, CPI's and the
Carolco Subsidiaries' execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action of
CPI and the Carolco Subsidiaries. This Agreement has been duly
executed and delivered by CPI and the Carolco Subsidiaries and
constitutes a legal, valid and binding obligation of CPI and the Carolco
Subsidiaries, enforceable in accordance with its terms, subject to
approval of the Bankruptcy Court.
8.2 Insurance. All causes of action, claims, and
other actions asserted by third parties against Carolco with which
Carolco has been served in regard to the Assets have been reported to
Transamerica Insurance Group ("TIG"), Carolco's insurance carrier,
during the policy period in which the causes of action, claims, or other
actions were made.
8.3 Governmental Approvals. Except for (a)
approval of a sale by the Bankruptcy Court as described in Paragraph
12 below, and (b) compliance with any applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
Act"), no approval of any court or administrative agency is required
for the execution, delivery, and performance by Carolco of this
Agreement.
8.4 Title to Assets; Absence of Liens and
Encumbrances. Except as set forth on Schedule 8.4, a copy of which
is attached hereto or delivered herewith, and incorporated herein by
this reference, Carolco has not sold, conveyed, transferred,
hypothecated or otherwise disposed of any of Carolco's right, title or
interest in and to any Asset, or agreed to sell, convey, transfer,
hypothecate (except for any replacement liens required as a result of
any adequate protection order) or otherwise dispose of any of
Carolco's right, title or interest in and to any Asset to any other person
or entity. At the Closing, Carolco shall have the legal right and
capacity to convey, and shall convey to Canal+ all of the right, title,
and interest owned or held by Carolco in and to the Assets. Except as
set forth in Schedule 8.4(a), such conveyance shall be free and clear
of all liens, claims, charges, pledges, security interests or other
encumbrances of any nature whatsoever other than the Assumed
Obligations. For purposes of this Agreement, free and clear shall
mean, without limiting the generality of the foregoing, free and clear
of any claims or liens asserted by the Guilds as defined in Paragraph
11.12, any replacement liens that were required as a result of an
adequate protection order, any liens purporting to secure obligations
of Carolco in respect of the Library or other Assets, any liens or
mortgages held or owned by CPI, the Carolco Subsidiaries or the
Controlled Entities, and any liens or mortgages held or owned by third
parties on any copyrights owned by Carolco ("Free and Clear").
Schedule 8.4(a) lists all exceptions to Carolco's obligation to convey
Free and Clear; 8.4(b) lists all binding distribution agreements related
to the Library that exist as of the date of this Agreement; 8.4(c) lists
all Participations relating to the Assets (including any applicable
merchandising and music Participations); and 8.4(d) lists all Residuals
relating to the Assets.
8.5 Litigation; Claims. As of the date hereof, all
litigation to which Carolco is a party and on which Carolco has been
served is listed on Schedule 8.5, attached hereto and incorporated
herein. Schedule 8.5 also sets forth all proceedings, demands or
claims (including governmental proceedings, demands or claims)
pending or threatened in writing against Carolco to the best of
Carolco's knowledge which are material to Carolco or this Agreement.
Carolco shall, once per quarter and five (5) business days prior to the
Closing, provide Canal+ with an updated Schedule 8.5.
8.6 No Infringement. Carolco's ownership of the
Assets does not violate or infringe on the right of any other person or
entity in any material respect. The signatories to this Agreement are
the sole entities that are required to sign this Agreement in order to
convey all of Carolco's right, title and interest in and to the Assets to
Canal+ on the terms described in this Agreement.
8.7 Accuracy. All of the documents provided to
Canal+ by Carolco in connection with this transaction are accurate
copies of the original documents. The information in the documents
and other information provided in writing and in this Agreement and
the Schedules and Exhibits attached thereto to Canal+ by Carolco is
true and accurate in all material respects and does not omit material
facts necessary to make the statements therein not misleading, in light
of the circumstances under which they were made.
9. Representations and Warranties of Canal+. Canal+
represents and warrants to Carolco that:
9.1 Authorization of Agreement. Canal+'s
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action. This Agreement has been
duly executed and delivered by Canal+ and constitutes a legal, valid
and binding obligation of Canal+ enforceable in accordance with its
terms.
9.2 Non-Contravention. Canal+'s execution,
delivery, and performance of this Agreement will not contravene any
agreement to which it is a party or any order or judgment of any court.
9.3 Governmental Approvals. Except for
compliance with any applicable requirements of the HSR Act, no
approval of any court or administrative agency is required for the
execution, delivery, and performance by Canal+ of this Agreement.
10. Miscellaneous. This Agreement shall be governed by
the laws of California (except to the extent that the U.S. bankruptcy
laws control, and except to the extent that matters related to corporate
procedure and consents are subject to Delaware law). The forum for
resolution of any dispute shall be in Los Angeles, California. All
parties to this Agreement shall submit to the jurisdiction of the Federal
Courts in the Central District of California and the California State
Courts for Los Angeles County. Service of process on Canal+ shall
be made by delivering a copy of any summons, complaint or other
appropriate documents to the offices of Le Studio Canal+ (U.S.) at
301 North Canon Drive, Suite 228, Beverly Hills, California 90210,
Attention: Richard J. Garzilli, Esq. in Los Angeles. This Agreement
contains the entire understanding and agreement of the parties in
regard to the subject matter set forth herein. If any material term or
material provision hereof is determined by a court to be invalid or
unenforceable, (a) Canal+ may, at its option, terminate this
Agreement, or (b) if Canal+ has not exercised its option to terminate,
the term or provision shall be limited to the extent necessary to make
it enforceable or severed from the Agreement, in which case, all of the
remaining terms and provisions of this Agreement shall remain in full
force and effect. This Agreement has been negotiated, and the parties
agree that no party is the "drafter" for purposes of any rule of
construction to the effect that contracts are to be construed adversely
to the drafter. Carolco's obligations under this Agreement shall
constitute administrative expense liability of Carolco and its estate
under Bankruptcy Code Sections 507(a)(1) and 503(b)(1)(A). In order
to permit the parties more readily to comply with requirements of the
Federal Communications Commission, Securities and Exchange
Commission, and/or other governmental regulatory bodies, Carolco
and Canal+ shall each deliver to the other, on a regular basis, word
processing disks in a WordPerfect 5.1/6.0 format containing copies of
all documents prepared by such parties which are reasonably requested
by the other party in connection with this Agreement.
11. Pre-Closing Actions and Other Covenants. Between the
execution of this Agreement and the Closing, the following actions
shall be completed within the time frames set forth below:
11.1 [Intentionally omitted.]
11.2 Bankruptcy Court Actions.
(a) Carolco shall serve by U.S. mail all
notices with respect to the hearing upon which the Bankruptcy Court
will enter its order as described in Paragraphs 11.4 and 12.1 to all
creditors including, without limitation, parties to executory contracts
(even if not so required by the Code) (the "Notice re Order") in form
reasonably approved by Canal+, and shall serve all other notices
pertaining to the disposition of the Assets in accordance with the
provisions of the Code and the rules promulgated thereunder, and shall
otherwise comply with the requirements of the Code and such rules.
The Notice re Order shall be published in a newspaper of national
circulation, such as the Wall Street Journal, National Edition, and a
trade journal. Canal+ shall reimburse Carolco for the cost of
publication. The Notice re Order shall state that Carolco is seeking an
order of the Bankruptcy Court approving and authorizing the sale of
the Assets, which shall be the property generally listed by type (unless
circumstances warrant listing specific properties), and that Carolco has
the legal right and capacity to convey, and all of the right, title, or
interest owned or held by Carolco is being conveyed to Canal+ free
and clear of all liens, claims, and encumbrances except for the
Assumed Obligations and other claims or encumbrances listed on
Schedule 8.4(a). With respect to executory contracts being assigned
to Canal+, the Notice re Order and a separate notice (the "Notice re
Contracts") shall be served by U.S. mail on any non-Carolco party
asserting a claim in, or based on, the contract and shall state the
amount necessary to cure any default under Section 365 of the Code
and shall specify the date by which the creditor or party to the contract
must object to the cure amount. If there is a dispute between Carolco
and the creditor or other party as to the amount required to cure, the
Bankruptcy Court shall make a final and binding determination of the
amount. The Notice re Contracts shall state that upon Carolco's
tendering of the amount required to cure material defaults, which will
occur on or before the Closing, the creditor shall be barred from
asserting against Canal+, as assignee, or any affiliate of Canal+, any
default or unpaid obligation under such contract allegedly arising or
incurred prior to the Closing.
11.3 Bankruptcy Court Filings. Carolco shall proceed
diligently with filing with the Bankruptcy Court, documents and
pleadings, in form and substance reasonably acceptable to Canal+,
required pursuant to Sections 363 and 365 of the Code but in no event
later than February 12, 1996.
11.4 Bankruptcy Court Order. By March 10, 1996,
the Bankruptcy Court shall have entered the order referred to in
Paragraph 12.1 approving the sale by Carolco pursuant to Sections 363
and 365 of the Code in form and substance reasonably acceptable to
Canal+.
11.5 No Sale, Etc. of Assets. Between the date
hereof and the Closing, Carolco shall not sell, assign, amend, convey,
hypothecate (except for any replacement liens required as a result of
any adequate protection order), or grant any rights or interests to any
of the Assets to any third party without the prior written consent of
Canal+ or take any other action which could adversely affect the
Assets.
11.6 Carolco's Best Efforts Undertaking. Carolco
shall use its best efforts to consummate this transaction by, among
other things (a) encouraging Carolco's bondholders and others with an
interest in the transaction described herein to meet directly with
Canal+ at Canal+'s request; (b) coordinating with Canal+ during the
preparation of the bankruptcy documents and accepting reasonable
comments from Canal+ in connection with the preparation and filing
of the bankruptcy documents; and (c) causing the Carolco Subsidiaries
or other Carolco entity (i) to sell and deliver to Canal+ any of the
Assets in which such Carolco Subsidiary or other entity has an interest
and (ii) to take any required action (including, without limitation,
delivery of documents and making of filings) to consummate the
transactions contemplated in this Agreement.
11.7 List of Contracts to be Assumed. On or before
February 6, 1996, and based on the Schedules to be provided by
Carolco, Canal+ shall deliver to Carolco a preliminary list identifying
the executory contracts that Canal+ elects to have assigned to it.
Canal+ may modify such list by written notice delivered to Carolco
on or before 25 days in advance of the Hearing Date. Such contracts
shall include binding distribution agreements related exclusively to the
Library that exist as of the date of this Agreement which are listed on
Schedule 8.4(b); provided, however, that nothing stated herein
obligates Canal+ to elect to have assigned to it any executory
contracts, other than distribution agreements that relate exclusively to
the Library.
11.8 Canal+'s Best Efforts Undertaking. Canal+
shall use its best efforts to consummate this transaction subject to the
terms and conditions of this Agreement, and shall take any required
action (including, without limitation, delivery of documents and
making of filings) to consummate the transactions contemplated in this
Agreement.
11.9 No Assumption of Contracts. Carolco shall not,
before or after the Closing, assume any executory contract that
Canal+ has not elected to have assigned to it pursuant to Paragraph
11.7 if such executory contract relates to an Asset and could create or
impose any material obligation or liability for Canal+ after the
Closing. On or before February 6, 1996, and based on the Schedules
to be provided by Carolco, Canal+ shall deliver to Carolco a
preliminary list identifying any executory contracts referred to in the
preceding sentence. Canal+ may modify such list by written notice
delivered to Carolco on or before the date which is 25 in advance of
the Hearing Date. As to any such executory contract, on or before
March 10, 1996, Carolco shall obtain entry of order or orders of the
Bankruptcy Court on notice to the non-Carolco parties to any such
contract (a) authorizing and providing for rejection of any such
executory contract in the bankruptcy proceeding effective as of the
Closing, or (b) determining that any such executory contract will not
create or impose any material obligation or liability for Canal+ after
the Closing. Notwithstanding the foregoing, Carolco may, at
Canal+'s written request delivered to Carolco by the Hearing Date,
assume such contracts that have been modified in a manner that is
reasonably acceptable to Canal+ and insures that Canal+ has no
obligations or liability in connection with such executory contracts.
This Paragraph 11.9 shall survive the Closing. If such modifications
to assumed contracts requested by Canal+ result in the expenditure of
funds, Canal+ shall bear the out-of-pocket costs incurred by Carolco.
11.10 E&O Insurance and Indemnification.
(a) Prior to the Closing, Carolco shall deliver
to Canal+ a copy of written notice from TIG confirming that Carolco
has paid the necessary premiums on its Errors & Omissions Policy (the
"TIG Policy") to keep the TIG Policy in effect through its scheduled
expiration date of September 15, 1996, and a copy of the policy. Prior
to the Closing, Carolco shall deliver to Canal+ a letter from TIG or
other evidence reasonably satisfactory to Canal+ stating that the
existing TIG Policy does not vary in any material respect from the
prior policy. Carolco shall not terminate, nor cause to be terminated,
the TIG Policy prior to its scheduled expiration date of September 15,
1996.
(b) Carolco shall indemnify, defend, and hold
harmless Canal+, its past, present or future shareholders, officers,
directors, affiliates, agents, servants, representatives, successors,
assigns and all other persons or organizations acting on their behalf,
and each of them, from and against any and all claims, actions,
judgments, costs (including without limitation, reasonable attorneys'
fees and costs), expenses, causes of action, obligations, debts,
damages, losses and liabilities of whatever kind of nature brought by
any third party with respect to the Assets (collectively, "Claims");
however, Carolco's obligations pursuant to this paragraph shall be
limited to only those obligations for which coverage is provided to
Carolco under the TIG Policy or any other insurance available to
Carolco.
(c) Prior to the Closing, Carolco shall use
its reasonable efforts, at Canal+'s expense, to cause Canal+ to be
named as an additional insured on Carolco's TIG Policy.
11.11 Lien Releases. Prior to the Closing, Carolco
shall deliver written termination and release forms to all third
parties holding liens of record (including without limitation
copyright mortgages) which have been satisfied and shall use its
reasonable efforts to obtain from such third parties executed and, if
required, notarized releases of all liens of record that have been
satisfied. The releases shall be filed or recorded by Carolco
immediately upon receipt.
11.12 Guild Certification. At or prior to the
Closing, Carolco shall obtain from each of SAG, DGA, WGA, the
Motion Picture Industry Pension and Health Plans and, if a secured
party, IATSE (collectively, the "Guilds") a certificate of
acknowledgement ("Certificate"). Each Certificate shall be duly
authorized and signed by an authorized officer of the Guild, and
shall state the full amount, if any, of the Residuals (including, for
purposes of this Paragraph 11.12, any payments due to the pension,
health and welfare plans of the Guild) that remain unpaid through
the date of the Certificate, which date shall not be more than 30
days prior to the Closing, that is based upon Excluded Payment
Rights and Excluded Audit Rights. The Certificate shall also state
the estimated amount of the Residuals that is based upon Excluded
Payment Rights and Excluded Audit Rights that is estimated to be
unpaid from the date of the Certificate through the Closing. The
Certificate will further state that, upon the Guild's receipt of the
amounts set forth in the Certificate, no further amounts are owed to
that Guild through the date of the Certificate, and that, conditioned
upon the tender of the amount, if any, set forth in the Certificate,
the Guild has no right or claim against Carolco or Canal+, and the
Guild fully and finally releases Carolco and Canal+ from any
obligation to pay or be liable for Residuals that were based upon
Excluded Payment Rights and Excluded Audit Rights. On the
Closing, proceeds from the purchase price shall be delivered to the
Guilds in the full amount of the Certificates. Notwithstanding the
above, if Carolco, in good faith, notifies Canal+ in writing ten (10)
business days prior to the Closing that, in Carolco's reasonable
judgment, the amount set forth in any particular Certificate is not
correct, the amount set forth in the Certificate shall be withheld
from the purchase price by Canal+ and retained by Canal+ in a
segregated account pending receipt by Canal+ of a settlement
agreement and release signed by the Guild or a final judgment, not
subject to any further appeal to any court, by a court of competent
jurisdiction, setting forth the amount, if any, owed to the Guild in
accordance with the terms of this paragraph, and that, upon tender
of such amount, the Guild will have no right or claim against
Canal+. Upon receipt of such document, Canal+ shall deliver to
the Guild from the funds in such segregated account any funds
owing to it, and to Carolco any amounts owing to it from the funds
in such segregated account. If (a) any Guild fails to timely return
its Certificate; or (b) Canal+ reasonably believes that any other
guild, union, or collective bargaining organization, or any pension,
health, or welfare plan associated with a Guild, any other guild,
union or collective bargaining organization anywhere in the world
(collectively, "Other Union"), may claim that Residuals are unpaid
by Carolco as of the Closing, and Canal+ reasonably believes it
could be liable to any Other Union due to Canal+'s independent
relationship or agreements with such Other Union for amounts
owing by Carolco as a result of Canal+'s purchase of the Assets,
Canal+ shall withhold from the purchase price and maintain in the
segregated account the amount that Canal+ reasonably determines
as being the amount owed to that Guild or Other Union pending
final judgment, not subject to any further appeal to any court, by a
court of competent jurisdiction setting forth the amount, if any,
owed to the Guild or Other Union in accordance with the terms of
this paragraph.
11.13 Termination of Interests of Atalanta,
Anabasis. Prior to the Closing, any right, title or interest of
Atalanta Films International B.V., Atalanta Films International
(Australia) Pty., Ltd., Atalanta Films Japan, BV and any other
Atalanta entities (collectively, "Atalanta") in or to the Library or
other Assets shall have been terminated by Carolco, or transferred,
conveyed and delivered to Carolco, and such transfer or termination
shall (a) not create any liability or obligation to Canal+ and (b) be
properly documented, duly authorized, and fully enforceable. Prior
to the Closing, Carolco shall cause Anabasis B.V. and Anabasis
Investments N.V. (collectively, "Anabasis") to transfer, convey and
deliver, in a properly documented, duly authorized and fully
enforceable manner, any right, title or interest of Anabasis in or to
the Assets to either Canal+ or Carolco without such transfer
creating any liability or obligation to Canal+.
11.14 Participation Statements. By no later than
February 15, 1996, Carolco shall deliver to Canal+, for Canal+'s
information purposes only, and not for purposes of determining
Assumed Obligations, a statement for each Participation listed on
Schedule 8.4(c), prepared in Carolco's normal and customary
manner, listing, among other things, gross receipts and allowable
deductions, if any, and any amounts which are owing as a result of
revenues that have been received and retained by Carolco, with
such amounts being calculated through and as of December 31,
1995. Carolco shall deliver an updated statement for each
Participation listed on Schedule 8.4(c) calculated through the
Closing within 60 days after the Closing.
11.15 List of Material Contracts. On or before
January 31, 1996, Carolco shall deliver to Canal+ the list of all
material executory contracts of Carolco relating to the Assets
(which list may be a copy of the list of executory contracts required
to be filed with the Bankruptcy Court if such list identifies those
material executory contracts relating to the Assets), and a list of all
material rights Carolco has granted to third parties with respect to
the Assets.
11.16 Schedules. Within ten (10) days after the date
of this Agreement, Carolco shall deliver to Canal+ all Schedules
to this Agreement, including the following additional Schedules:
(a) Availability Dates. Schedule 11.16(a)
shall set forth the names of the motion pictures in the Library and
with respect to each such motion picture the names of the
distributors under existing distribution and sales agency agreements,
the rights licensed to each such distributor or sales agent, the
territory licensed and the termination date of such agreement.
(b) Copyrights, Trademarks. Schedule
11.16(b) shall set forth information in Carolco's possession about
copyright and trademark registrations for each of the Carolco
Pictures and, to the best of Carolco's knowledge, the dates of the
most recent copyright and trademark searches for such motion
pictures.
(c) Physical Properties. Schedule
11.16(c) shall set forth for each motion picture in the Library the
location and means of access to the material Physical Properties
described under Paragraph 1.5 and the person or entity under whose
name the Physical Properties are held.
(d) E&O Policies. Schedule 11.16(d)
shall set forth all errors and omissions policies in effect with respect
to the Library and maintained by Carolco or applicable to the
Library, indicating the name of the carrier, the policy number, the
amount of the premium, the policy period, the scope and amount of
coverage, and the amount of deductibles.
11.17 Cutthroat Consent. Carolco shall also use its
best efforts to obtain any required consents for the transfer to
Canal+ of all outstanding stock of Cutthroat Management Inc., the
entity holding the interest in the partnership owning the copyright
to Cutthroat Island.
12. Conditions to Closing. Notwithstanding anything to
the contrary in this Agreement, the obligations of Canal+ to
purchase the Assets under this Agreement are subject, at its option,
to the satisfaction or waiver at or prior to the Closing of each of the
conditions set forth in Paragraphs 12.1 through and including 12.12
(except for Paragraph 12.4(b)). The obligations of Carolco to sell
the Assets under this Agreement are subject, at its option, to the
satisfaction or waiver at or prior to the Closing of each of the
conditions set forth in Paragraphs 12.1, 12.4(b), 12.5, 12.6, 12.7
and 12.10.
12.1 Bankruptcy Court Order. By March 10,
1996, the Bankruptcy Court shall have entered an order approving
the sale of the Assets, enabling Carolco to sell, transfer and deliver
the Assets to Canal+ Free and Clear of all liens, claims, interests,
and other encumbrances, except as set forth in Schedule 8.4(a) and
except for the Assumed Obligations. The Bankruptcy Court shall
issue separate findings of fact and conclusions of law that:
(a) Canal+ acted in good faith under
Bankruptcy Code Section 363(m) or otherwise;
(b) notice of the hearing concerning
approval of the sale and that the transactions contemplated thereby
(x) was given in accordance with applicable Bankruptcy Rules and
any applicable order of the Bankruptcy Court and (y) constitutes
such notice is appropriate under the particular circumstances and in
accordance with Bankruptcy Code Section 102(l)(A);
(c) Carolco has the legal right and
capacity to convey, and all of the right, title, and interest owned or
held by Carolco in and to the Assets as described in this Agreement
can and shall be conveyed and transferred to Canal+ Free and
Clear of all liens, claims, charges, pledges, security interests or
other encumbrances other than the Assumed Obligations and other
than as set forth in Schedule 8.4(a); and
(d) Canal+ shall only be liable, with
respect to the executory contracts that are assumed by Carolco and
assigned to Canal+, for liabilities and obligations in accordance
with the terms of this Agreement, and such executory contracts can
and shall be assumed by Carolco and assigned to Canal+. Nothing
in this Paragraph 12.1(d) shall relieve Canal+ of its obligations in
respect of Participations as described in Paragraph 6.3.
(e) Canal+ shall not be liable for any
obligations in respect of any of the claims, demands, proceedings
or litigation referred to in Schedule 8.5 or for any Participations or
Residuals other than those specifically agreed to under the
Agreement or for any other obligations not specifically assumed
under this Agreement.
12.2 [Intentionally Omitted.]
12.3 No Material Change. There shall have been
no material adverse change to the Assets, and Carolco shall have
the right and ability to convey all of the Assets to Canal+ in the
condition described in and otherwise in accordance with the terms
of this Agreement.
12.4 Performance of Obligations.
(a) (i) Carolco shall have performed in all
material respects all of its material obligations hereunder required
to be performed by it at or prior to the Closing including, without
limitation, any material obligations set forth in Paragraph 17; and
(ii) the representations and warranties of Carolco contained in this
Agreement shall be true in all material respects at and (except to the
extent that such representations and warranties speak only as of an
earlier date) as of the Closing as if made at and as of such time.
(b) Canal+ shall have performed in all
material respects all of its material obligations hereunder required
to be performed by it at or prior to the Closing; the representations
and warranties of Canal+ contained in this Agreement shall be true
in all material respects at and (except to the extent that such
representations and warranties speak only as of an earlier date) as
of the Closing as if made at and as of such time.
12.5 Absence of Court Order. No court, arbitrator
or governmental body, agency or official shall have issued any
order, and there shall not be any statute, rule or regulation,
restraining or prohibiting the consummation of the transaction
contemplated hereunder, and no proceeding shall have been filed (a)
challenging this Agreement or the transactions contemplated hereby
or seeking to prohibit, alter, prevent or materially delay the sale of
the Assets (other than motions filed pursuant to Section 363 and 365
of the Code concerning the sale of the Assets); or (b) seeking to
restrain or prohibit Canal+'s ownership or operation or use (or that
of its subsidiaries or affiliates) of the Assets.
12.6 No Action or Order. There shall be no action
taken, or any statute, rule, regulation, injunction, order or decree
proposed, enacted, enforced, promulgated, issued or deemed
applicable to the transaction contemplated hereunder, by any court,
government or governmental authority or agency, domestic or
foreign, other than the application of the waiting period provisions
of the HSR Act (including any extensions thereof); in effect at the
Closing that is likely, directly or indirectly, to result in any of the
consequences referred to in clauses (a) or (b) of Paragraph 12.5
above.
12.7 No HSR Action. The parties shall not have
received any communication from the Department of Justice or
Federal Trade Commission (each, an "HSR Authority") (which
communication shall be confirmed to the other party by the HSR
Authority) that caused such party reasonably to believe that any
HSR Authority has authorized the institution of litigation
challenging, impairing or diminishing the benefits with respect to
any of the transactions contemplated by this Agreement, and the
waiting period provisions of the HSR Act shall have expired.
12.8 Cure of Defaults. Carolco shall have made
definitive provisions satisfactory to Canal+, in its sole discretion,
to cure, at or before Closing, any material defaults and material
monetary obligations related to any executory contracts, including,
without limitation, Participations, to be assigned to Canal+, as
required by Bankruptcy Code Section 365; and Carolco shall have
delivered to Canal+ full and complete releases signed by the Guilds
as described in Paragraph 11.12 and, if applicable, Canal+ shall
have held back from the purchase price an amount determined in
accordance with Paragraph 11.12.
12.9 Consents. Carolco shall have caused Pioneer
LDCA, Inc., which is a partner in the Dutch partnership known as
Cliffhanger C.V. (the "Partnership"), in accordance with the
agreement governing the Partnership, to consent to the transfer by
Cliffhanger Investment Holdings Inc. ("Holdings") to Canal+ of
Holdings' interest in the Partnership and shall have obtained any
other consents referred to in Schedules 1.1 or 1.2 (with respect to
material Additional Pictures).
12.10 No Stay. There shall have been no stay of the
Bankruptcy Court's order, as described in Paragraphs 11.4 and
12.1, or other injunction pertaining thereto, or the stay and
injunction pertaining thereto shall have been dissolved within the
time periods described in Paragraph 5.
12.11 [Intentionally Omitted.]
12.12 RCS Transfer. RCS shall have taken all
necessary steps to transfer all of its right, title and interest in and to
Chaplin to Carolco pursuant to the settlement between RCS and
Carolco and such transfer has become unconditional.
12.13 Settlement Agreements. Carolco shall have
obtained authorization from the Bankruptcy Court to assume the
Memorandum of Le Studio Canal+/Carolco Settlement Agreement
dated as of May 31, 1995, the Release and Quitclaim Agreement
relating to Spiderman dated as of November 7, 1995, under the
Release and Quitclaim Agreement with RCS Video Services Antilles
NV and its affiliate dated as of March 28, 1995 and other executory
settlement agreements entered in the last twelve months with third
party participants involved in the production of the Carolco Pictures
which, in Canal+'s reasonable judgment, should be assumed by
Carolco, or not rejected by, in order to prevent any possible
material reduction to the value of such Carolco Pictures.
12.14 Assets Owned by Any of the Controlled
Entities. If any asset, which, if owned by CPI or any of the
Carolco Subsidiaries would be deemed an Asset, is owned by a
subsidiary, partnership or other entity which is wholly owned by
CPI or any of Carolco Subsidiaries, then Carolco shall, prior to the
Closing, cause such subsidiary, partnership or other entity (a) to
transfer such asset to CPI or Carolco Subsidiary, (b) to
acknowledge that such transfer shall be deemed for good and
valuable consideration, and (c) to irrevocably waive any right to
challenge or otherwise contest such transfer.
13. Certain Canal+ Options. If this transaction does not
close or the Closing is delayed because of a dispute over the
allocation of the purchase price proceeds among CPI and the
Carolco Subsidiaries, Canal+ may deposit the purchase price
proceeds in trust. Immediately following such deposit, the Closing
will occur, and the Bankruptcy Court shall thereafter allocate and
distribute the proceeds of the purchase price to CPI and the Carolco
Subsidiaries in accordance with an allocation formula determined by
the Bankruptcy Court.
14. Termination.
14.1 This Agreement may be terminated at any
time prior to the Closing by mutual written consent of Carolco and
Canal+.
14.2 The terms of Paragraphs 14.2 through and
including 14.5 shall survive the termination of this Agreement.
Subject to the survival of Paragraphs 7.2, 14.2 through 14.5 and 15
(the "Surviving Paragraphs"), this Agreement shall terminate
automatically, without further action required by either party,
immediately upon the occurrence of any event or delivery of any
notice as set forth in this Paragraph 14.2; provided, however, that
Canal+ may, in its sole discretion, deliver to Carolco, within 30
days after the occurrence or delivery of notice, notice that it waives
the automatic termination in accordance with the terms of its notice
of waiver and the Agreement shall thereupon continue in full force
and effect.
(a) If one or more of the actions set forth
in Paragraphs 11.2 through 11.4 has not been accomplished within
the time frame for that action set forth therein.
(b) If any of the conditions set forth in
Paragraph 12 have not been achieved on or before March 30, 1996.
(c) If there has been a material adverse
change in or to the ownership of, rights to, or condition of the
Assets, or Carolco is unable to convey to Canal+ one or more of
the material Assets Free and Clear of all liens, claims, charges,
pledges, security interests or other encumbrances other than the
Assumed Obligations and other than as set forth in Schedule 8.4(a).
(d) If a trustee has been appointed by the
Bankruptcy Court to handle the estate of CPI or any Carolco
Subsidiary or the Chapter 11 proceeding has been (i) converted to
a Chapter 7 proceeding, or (ii) dismissed.
(e) If any action or pleading has been filed
by Carolco challenging the enforceability of this Agreement.
14.3 Breakage Fee. If (a) this Agreement is
terminated because Carolco has accepted an Acquisition Proposal
for the Assets from a Third Party in lieu of this Agreement by
executing an agreement with a Third Party in accordance with
Paragraph 7 or; (b) Carolco has failed to use its best efforts to
accomplish one or more of the actions set forth in Paragraphs 11.2
through 11.4 and 12.10 and one or more of the actions set forth in
Paragraphs 11.2 through 11.4 and 12.10 has not been achieved
within the time frame for that action set forth therein; Carolco shall,
in recognition and consideration of the time, effort, and costs
incurred by Canal+ in pursuing this transaction, and preparing to
develop and use the Assets upon the completion of the transaction,
pay to Canal+ a fee in the amount of $500,000 including
reimbursement for all reasonable fees payable and expenses
incurred by Canal+ (including, without limitation, the fees and
expenses of its accountants, attorneys, and other consultants) in
connection with this Agreement (the "Fee"); provided, however,
that Canal+ shall refund all or any portion of the Fee paid to it
pursuant to the operation of clauses 14.3(a) or 14.3(b) if Canal+
ultimately acquires the Assets or a material portion thereof through
Carolco bankruptcy proceedings for no more consideration than
would have been allocated pursuant to this Agreement to the Assets
ultimately acquired by Canal+. The amount of the Fee represents
Canal+'s and Carolco's good faith attempt to place a reasonable
monetary value on (a) the tangible and intangible costs likely to be
incurred by Canal+ in connection' with the negotiation of this
Agreement and the conduct of due diligence in connection with its
purchase of the Assets; and (b) the tangible and intangible benefits
likely to be conferred on Carolco or its estate as a result of
Canal+'s participation in the sale process, which costs and benefits
the parties agree are not readily quantifiable and may exceed
Canal+'s actual out-of-pocket expenses. In no event shall the Fee
and the Reimbursement (as defined in Paragraph 14.4 below) be
aggregated, and if one is payable, the other shall not be payable;
provided, however, that if events occur which would otherwise
result in both the Fee and the Reimbursement being payable, only
the Fee shall be payable. The Fee shall represent the maximum
aggregate amount Carolco shall collectively be required to pay to
Canal+ in the event of a termination pursuant to this Paragraph
14.3 and shall represent the sole monetary remedy of Canal+ if this
Agreement is terminated due to the occurrence of an event set forth
in clause (a) or (b) of the first sentence of this Paragraph 14.3 or
any breach or default by Carolco under this Agreement. However,
the parties specifically agree that Canal+ shall have all equitable
remedies such as specific performance and injunctive relief (but not
including monetary equitable remedies) if Carolco breaches the
Agreement by attempting to sell the Assets to a third party in
violation of this Agreement.
14.4 Reimbursement. If this Agreement is
terminated at any time because of failure of a condition described
in Paragraph 12.4(a) or 14.2(e), Carolco shall pay Canal+
$250,000, as reimbursement for Canal+'s actual out-of-pocket
costs (including,. without limitation, attorneys' fees and costs) in
connection with the transaction (the "Reimbursement"); provided,
however, that Canal+ shall refund all or any portion of the
Reimbursement paid to it pursuant to the operation of this
Paragraph 14.4 if Canal+ ultimately acquires the Assets or a
material portion thereof through Carolco bankruptcy proceedings
for no more consideration than would have been allocated pursuant
to this Agreement to the Assets ultimately acquired by Canal+.
The Reimbursement shall represent the maximum aggregate amount
Carolco shall collectively be required to pay to Canal+ in the event
of a termination pursuant to this Paragraph 14.4. The sole remedies
of Canal+ if this Agreement is terminated due to the occurrence of
an event set forth in Paragraph 12.4(a) or 14.2(e) shall be limited
to payment of the Reimbursement, and specific performance,
injunctive relief and other equitable remedies (but not including
monetary equitable remedies).
14.5 Agreement Void Upon Termination. Except
for the terms set forth in the Surviving Paragraphs, all of which
shall survive the termination of this Agreement, upon the
termination of this Agreement, this Agreement shall become void
and have no effect, and no party hereto shall have any liability to
any other party or its stockholders or directors or officers or
creditors. Subject to Paragraphs 14.3 and 14.4, nothing herein
shall relieve any party from liability for any breach or default
hereof.
15. Confidentiality; Publicity. Carolco and Canal+
agree that, except as disclosures may be required by law, and
except for press releases and announcements that may be made as
described below, all of the terms and conditions of this Agreement
shall be confidential, and neither party shall disclose any of the
terms and conditions hereof to any other party (except to its board
members and officers, attorneys, accountants, and other
professional advisors). The parties agree to cooperate in making
any disclosures required by law or issuing press releases or other
public announcements concerning this Agreement or the
transactions contemplated hereby at a time and in a manner
reasonably satisfactory to both parties. Each party shall furnish to
the other drafts of all disclosures required by law and all
contemplated press releases or announcements prior to their filing
or release. Carolco shall obtain the consent of Canal+ (which
consent shall not be unreasonably withheld) with respect to the
contents and timing thereof prior to any such release. The terms of
this Paragraph 15 shall survive the termination of this Agreement
and the Closing.
16. Responsibility of Parties for Taxes and other
Expenses. Carolco shall (a) pay or reimburse Canal+ for all sales,
use, transfer, excise, customs, or other taxes or duties applicable to
the sale to Canal+ of the Assets (and any deficiency, interest or
penalty asserted with respect thereto); (b) pay when due all foreign,
federal, state or local taxes measured by or with respect to the
income or gross receipts of Carolco prior to the Closing or resulting
from the sale to Canal+ of the Assets; and (c) pay all attorney and
other professional fees incurred by Carolco prior to or after the
Closing in connection with this transaction and its bankruptcy, and
all other liabilities attendant to Carolco's operations and Carolco's
liabilities as debtor-in-possession, all in accordance with the Code
and orders of the Bankruptcy Court. Carolco shall put into an
escrow account at the Closing an amount equal to the estimated
taxes payable under clause (a) above as security for Carolco's
obligation thereunder. The amount to be put into escrow shall be
determined in accordance with and as part of the procedures
provided for in Paragraph 3.4 to determine the allocation of the
Purchase Price.
17. Further Assurances. Prior to and after the Closing,
Carolco and Canal+ will take all appropriate action and execute
any documents, instruments or conveyances of any kind which may
be reasonably necessary or advisable to carry out the intent of any
of the provisions hereof, including, without limitation, putting
Canal+ in possession and operating control of the Assets. Without
limiting the generality of the foregoing, on or prior to the Closing,
Carolco shall deliver to Canal+ notice of the location of Physical
Properties and physical lab access letters granting rights to the
Physical Properties; an assignment of the claims, causes of action
and choses in action that constitute Assets hereunder; and an
assignment of all of Carolco's worldwide trademark, copyrights,
rights and interests in copyrights, renewals and extensions of
copyrights, domestic and foreign, relating to the Assets, all of
which documents shall be in form and substance reasonably
satisfactory to Canal+. Carolco shall also deliver to Canal+, on
or prior to the Closing, all of the following documents which exist
as of the date of this Agreement for all years available: copies of all
originals of all contracts and agreements with third parties, and
copies of all other documents, books, records, computer programs,
software, computerized data, ledgers, work sheets, files,
summaries, correspondence, and notes of Carolco relating to the
Assets and copies of Carolco's system, if any, that, among other
things, documents and/or calculates the Participations. Canal+
shall, upon reasonable request by Carolco, make available to
Carolco reasonable information and documents to evidence
Canal+'s compliance with the terms of this Agreement.
18. No Partnership. No relationship of partner, joint
venturer or any other relationship which may give rise to liability
on the part of Canal+ as a result of the direct or indirect acts or
omissions of Carolco is intended to, or is, created by this
Agreement. The parties acknowledge and agree that this is an
arms-length transaction and that the sole relationship between the
parties is that of buyer and seller. Each of CPI and the Carolco
Subsidiaries filing a Chapter 11 petition has made its own decision
to so file and to enter into this Agreement.
19. Notices. All notices, demands, and other
communications required or permitted to be given hereunder shall
be deemed to have been duly given and received if in writing and
delivered either (a) personally (effective as of the date of delivery),
(b) by facsimile transmission with telephonic confirmation of receipt
(effective as of the date of telephonic confirmation), (c) by deposit
in the United States mail, first class, postage prepaid, registered or
certified mail, return receipt requested (effective on date of receipt),
or (d) by overnight courier (effective on date of receipt), in each
case addressed,as set forth on the signature page of this Agreement.
Any party may change the address to which communications are to
be directed by giving written notice to the other party in the manner
provided for herein.
20. Time of Essence. Time is of the essence in the
performance of all obligations and with respect to all deadlines
specified in this Agreement.
Executed as of the date first above written.
Canal+ D.A.,
a French corporation
By:
Name:
Title:
Carolco Pictures Inc.,
a Delaware corporation
By:
Name:
Title:
Carolco International Inc.,
a Delaware corporation
By:
Name:
Title:
Carolco Production Services Inc.,
a California corporation
By:
Name:
Title:
Carolco Service Inc.,
a Delaware corporation
By:
Name:
Title:
Carolco Television Inc.,
a Delaware corporation
By:
Name:
Title:
Cliffhanger Investment Holdings Inc.,
a California corporation
By:
Name:
Title:
International Production Services Inc.,
a Delaware corporation
By:
Name:
Title:
Exhibit A
Carolco International Inc.
Carolco Pictures Inc.
Carolco Production Services Inc.
Carolco Service Inc.
Carolco Studios Inc. (Delaware)
Carolco Television Inc.
Cliffhanger Investment Holdings Inc.
International Production Services Inc.