EXHIBIT 10.47
AGREEMENT BETWEEN INTELEFILM CORPORATION, F/K/A CHILDREN'S BROADCASTING
CORPORATIONAND LAWFINANCE GROUP, INC.
This Agreement is made and entered into as of December 14,
2001 by and between: INTELEFILM CORPORATION, FORMERLY KNOWN AS CHILDREN'S
BROADCASTING CORPORATION, c/o Mr. Mark A. Cohn, CEO, 6385 Old Shady Oak Road,
Eden Prairie, Minnesota, 55344 (hereafter, "SELLER"); and LAWFINANCE GROUP,
INC., a California corporation, 1000 Sansome Street, Suite 250, San Francisco,
California 94111 (hereafter "PURCHASER").
THE PARTIES AGREE, AS FOLLOWS:
1. DEFINITIONS. The following definitions shall apply to terms used in
this Agreement:
1.1. "ADVERSE PARTY" - refers, individually or collectively, to THE
WALT DISNEY COMPANY, and ABC RADIO NETWORKS, INC., and any
other or later added party(ies) in the Litigation, whose
interests are or may become adverse to SELLER.
1.2. "AGREEMENT" - refers to this agreement, all documents
described herein as Exhibits and documents referred herein as
part of this agreement.
1.3. "APPEAL" - refers to the appeal of the Lawsuit recently
resolved in the UNITED STATES COURT OF APPEALS FOR THE EIGHTH
CIRCUIT and any further appeals related thereto.
1.4. "ASSIGNED PORTION" - refers to the sum of One Million Dollars
($1,000,000.00), (U.S.).
1.5. "ASSIGNMENT" - refers to the document entitled Assignment of
Litigation Proceeds/Acknowledgement of Assignment, attached
hereto as Assignment, Exhibit 2 and incorporated herein by
this reference, and all those other or related documents
evidencing and acknowledging assignment of an interest in the
Judgment to PURCHASER executed by SELLER and SELLER'S
successors and assigns.
1.6. "ATTORNEY" - refers to Judite Fluger, General Counsel,
Intelefilm Corporation, f/k/a Children's Broadcasting
Corporation, 6385 Old Shady Oak Road, Eden Prairie, Minnesota,
55344, Tel. No. (952) 925-8848/ Fax No. (952) 925-8875, and
such other attorneys as may be consulted or engaged by SELLER
in connection with the Appeal and the Litigation.
1.7. "CLOSING DATE" - refers to that date on which the PURCHASER
remits the Purchase Price to SELLER.
1.8. "COURT" - refers to the UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF MINNESOTA.
1.9. "DISCOUNT" - refers to Fifty percent (50%), which is the
percentage by which the Assigned Portion has been reduced to
establish the Purchase Price
1.10. "JUDGMENT" - refers to: (i) the judgment for the SELLER as to
liability to be re-entered by the Court after re-trial of
damages, only in the Lawsuit, or settlement arrangement; (ii)
any later amended, modified, augmented, supplemental or other
judgment and judgment on appeal; and (iii) any and all rights
of SELLER and their successors and assigns to Proceeds, as
defined below, from the Litigation, as defined below.
1.11. "JUDGMENT AMOUNT ASSIGNED" - refers to the Assigned Portion
plus the interest accruing on the Judgment, allocable to the
Assigned Portion, commencing on the Closing Date January 3,
2002, Provided, however, if
the Judgment is set aside and remanded for Further
Proceedings, and if interest is ultimately awarded as to any
claim for the period on or after the Closing Date ("Accrual
Period"), the "Judgment Amount Assigned" shall be the Assigned
Portion plus the portion of the interest awarded or later
accruing that is allocable to the Assigned Portion for the
Accrual Period. In addition, should SELLER, or either of them,
be in default or breach of this Agreement, there shall be
added to the Judgment Amount Assigned, all expenses, costs
(including reasonable attorneys fees), and the amount of all
damages sustained by PURCHASER on account of any such default
or breach.
1.12. "JUDGMENT COLLATERAL" - refers to: (i) the bond or other
undertaking lodged with the Court to secure payment of the
Judgment; (ii) any other bond or other undertaking, serving as
collateral for the Judgment (including all interest, income or
proceeds accruing or paid thereon); and (iii) any additional
or substitute security, guaranty, bond, surety, segregated
account or other undertaking given on account of the Judgment.
1.13. "JUDGMENT DEBTOR(S)" - refers to the Adverse Party and any
affiliate, successor, surety or guarantor, as may assume or be
bound by the Judgment or other obligations to SELLER arising
out of the Litigation.
1.14. "LAWSUIT" - refers to the case of Children's Broadcasting
Corporation v. The Walt Disney Company, et al., Civil Action
No. 3-96-907 DDA/FLN.
1.15. "LITIGATION" - refers to the (i) Lawsuit; (ii) all appellate
proceedings, proceedings on remand re-trial proceedings,
enforcement, ancillary, parallel or alternate dispute
resolution proceedings and processes arising out of or related
to the Lawsuit; (iii) any other proceedings founded on the
underlying facts giving rise to the Lawsuit, in which SELLER
or SELLER'S successor in interest is a party; and (iv) all
arrangements made with SELLER by or among any Adverse Party
having the effect of resolving any of SELLER'S claims against
any Adverse Party.
1.16. "LITIGATION PROCEEDS" - refers to all Proceeds of the
Litigation.
1.17. "PURCHASE PRICE" - refers to the sum of Five Hundred Thousand
Dollars ($500,000.00), (U.S.).
1.18. "PROCEEDS" - refers to cash, negotiable instruments, contract
rights, annuities, and any other rights to payment of cash and
transfer of things of value or other property.
1.19. "RECEIPT" - refers to the SELLER'S Acknowledgment of Receipt
of Purchase Price, the form of which is attached hereto as
Receipt, Exhibit 3, and incorporated herein by this reference.
1.20. "SELLER'S LITIGATION PROCEEDS" - refers to all of SELLER'S
legal and/or equitable rights, title and interest in and to
the Litigation Proceeds thereof, whether in the nature of
ownership, lien, security interest or otherwise, on account of
Clients' claims against the Adverse Party, Attorney's fees and
costs, or any other agreement with one or more SELLER.
2. UNDERLYING FACTS. SELLER represents and acknowledges the following
underlying facts as true and correct and on which PURCHASER has placed
material reliance in entering and which form the factual foundation for
this Agreement:
2.1. SELLER is a party to the Lawsuit.
2.2. SELLER obtained a jury verdict against the Adverse Party(ies)
in the Lawsuit. The jury verdict was set aside by the trial
judge, who entered a judgment in favor of the Adverse
Party(ies) and, in the alternative, ordered a new trial.
SELLER appealed the trial judge's order. The Court of Appeals
reversed the trial judge's order, affirmed the verdict as to
liability of Adverse Party(ies) and remanded the Lawsuit to
the Court for a re-trial as to damages, only.
2.3. The following documents in the Lawsuit, provided to PURCHASER,
(i) are complete, accurate and genuine, (ii) remain in full
force and effect as of the date hereof, and to the best of
SELLER'S knowledge after due
inquiry to Attorney, have not been and (except as to issues
that may be raised on appeal), are not currently proposed by
any party to be modified or superseded (unless copy of the
modifying, superceding or amended document(s) or written
notice thereof have been provided to PURCHASER):
2.3.1. Reference Documents Exhibit, the Judgment and Bond,
Undertaking or other Judgment collateral, if any;
2.3.2. The Appellate Briefs, Notice(s) of Appeal and other
documents filed in the Appellate Court;
2.3.3. If all briefs have not been filed; all trial briefs
and related points and authorities filed in the
Lawsuit; the verdict, all post-trial motion papers
and rulings, if any;
2.3.4. All other papers and documents supplied by Attorney
with respect to the Appeal and the Lawsuit.
2.4. ATTORNEY IS SELLER'S GENERAL COUNSEL. SELLER HEREBY
IRREVOCABLY INSTRUCTS ATTORNEY AND ALL OTHER ATTORNEYS
HEREAFTER ENGAGED BY SELLER IN THE LITIGATION TO DO THE
FOLLOWING: (I) PROVIDE ALL DOCUMENTS REQUESTED BY PURCHASER
RELATING TO THE APPEAL, THE LITIGATION, SETTLEMENT OF THE
LITIGATION, SELLER'S ATTORNEY'S, OR OTHER PERSONS' INTEREST IN
OR CLAIM AGAINST THE JUDGMENT AND THE SUBJECT MATTER OF THIS
AGREEMENT; (II) WHEN REQUESTED BY PURCHASER, TO PROVIDE
FACTUAL INFORMATION WITHIN THE KNOWLEDGE OF ATTORNEY; AND
(III) TO PERFORM ALL THOSE ACTION(S) TO BE TAKEN BY ATTORNEY,
AS AGENT OF SELLER, PROVIDED FOR IN THIS AGREEMENT. PROVIDED,
HOWEVER, NOTHING IN THIS AGREEMENT SHALL: A) REQUIRE THE
DISSEMINATION OF INFORMATION TO PURCHASER OR OTHER PERSONS,
WHICH IS SUBJECT TO ATTORNEY-CLIENT OR OTHER EVIDENTIARY
PRIVILEGE, UNLESS IT IS DONE IN A MANNER THAT DOES NOT
CONSTITUTE A WAIVER OF THE APPLICABLE PRIVILEGE; OR B) GIVE
PURCHASER ANY RIGHT TO DIRECT OR CONTROL THE SELLER OR
ATTORNEY IN PURSUING OR SETTLEMENT OF THE LITIGATION. ANY
INFORMATION DISCLOSED TO PURCHASER SHALL BE TREATED AS
CONFIDENTIAL BY PURCHASER AND MAY BE USED BY PURCHASER SOLELY
FOR PURPOSES RELATED TO OR ARISING OUT OF THIS AGREEMENT.
2.5. The transaction provided for in this agreement involves
substantial economic risk to PURCHASER.
3. PURPOSES.
3.1. SELLER is in need of funds to provide for SELLER'S obligations
and to accomplish SELLER'S current economic objectives. The
parties have entered into this Agreement for the underlying
purpose of providing SELLER the opportunity to receive cash
now on account of the Litigation, without regard to the
outcome of the Litigation. PURCHASER acquires partial
assignments of civil money judgments and litigation proceeds
for cash. Being a purchase, PURCHASER is at risk as to the
outcome of the litigation. In arriving at the Purchase Price,
the Litigation Proceeds to be purchased under the Agreement
have been discounted, taking into account PURCHASER'S risks in
buying a portion of the Litigation Proceeds when an appeal has
been taken or a re-trial ordered, among other things.
3.2. PURCHASER has offered to pay SELLER the Purchase Price in
exchange for an assignment of the Litigation Proceeds in the
amount of the Judgment Amount Assigned. SELLER has accepted
PURCHASER'S offer and the parties intend to set forth their
contract in this Agreement. The Purchase Price and Judgment
Amount Assigned have been agreed to on an arms' length basis.
4. NATURE OF TRANSACTION. The parties recognize and acknowledge that the
rights granted PURCHASER will be purchased and an ownership interest
will be sold, transferred and assigned by SELLER to PURCHASER. This
transaction is not a loan. It is not intended as collateral for any
loan. Unless otherwise stated in this Agreement, SELLER has no personal
obligation to pay any amount to PURCHASER.
5. AGREEMENT TO SELL AND BUY/NON-ASSUMPTION BY PURCHASER.
5.1. Under and subject to the terms and conditions of this
Agreement and in exchange for the Purchase Price, SELLER
agrees to and, upon remittance of the Purchase Price by
PURCHASER, shall, sell, transfer, assign and deliver to
PURCHASER, SELLER'S legal and equitable rights, title and
interest in and to the SELLER'S
Litigation Proceeds, the Judgment Collateral and all Proceeds
and or other rights and property SELLER has the right to
recover on account of the Litigation or that arise therefrom
in and up to the amount of the Judgment Amount Assigned.
PURCHASER agrees to buy all of said rights and interests from
SELLER and to pay the Purchase Price under and subject to the
terms and conditions of this Agreement.
5.2. In making this Agreement and purchasing a portion of SELLER'S
Litigation Proceeds, PURCHASER is not otherwise acquiring or
assuming any responsibility, obligation or liability of SELLER
or arising out of any rights or interests of SELLER being
purchased including, but not limited to, any duty or
obligation to the Judgment Debtor(s), the Client or any
obligation or expense with regard to the Litigation, the
Appeal or any retrial of the subject matter of the Litigation
or issues related thereto (including court costs or
sanctions).
5.3. It is acknowledged and agreed that, this Agreement does not,
and shall not be interpreted so as to, affect any rights of
SELLER to make such claims against SELLER's Attorney, as may
be otherwise permitted by law or rule of professional conduct.
Attorney and SELLER having disclosed to PURCHASER the material
provisions of their fee agreement with outside counsel, and in
reliance thereon by PURCHASER, it is understood that the
agreement of SELLER to permit the sale and assignment to
PURCHASER a portion of SELLER'S Litigation Proceeds for cash
hereunder shall in no way supersede, amend, modify, or
otherwise detract from or expand SELLER's rights or
obligations under Attorney's existing contract with SELLER for
legal representation.
6. RIGHTS IN PROCEEDS.
6.1. That portion of the Litigation Proceeds and the rights to the
Judgment Collateral and the Litigation assigned to PURCHASER
shall be satisfied and paid to PURCHASER in full, on a
priority basis, prior to any Proceeds or other consideration
paid to or received by SELLER, or any other assignee(s) of
SELLER. Neither SELLER nor any other assignee(s) of SELLER
shall be entitled to receive any recovery or any rights or
interests on account of the Litigation, unless and until the
full Judgment Amount Assigned has been received by PURCHASER.
6.2. PURCHASER'S rights in the Litigation Proceeds and Judgment
Collateral shall be satisfied at such time as PURCHASER has
received the full Judgment Amount Assigned.
6.3. The rights of SELLER to recover and receive amounts due under
the Judgment and Judgment Collateral and the Litigation, in
excess of the Judgment Amount Assigned, are and shall remain
the property of SELLER.
6.4. Notwithstanding Section 6.1, it is understood and acknowledged
that the rights purchased by PURCHASER hereunder are subject
to: the liens, if any, identified in Rights In Judgment,
Exhibit 1.a., or approved in writing by PURCHASER in
accordance with the provisions of this Agreement; and the
rights of Attorney to costs and attorneys' fees under the
presently existing fee agreement between SELLER and outside
counsel Attorney, as described in Rights In Judgment, Exhibit
1.d., herein.
7. REPRESENTATIONS. SELLER hereby represents, warrants and agrees with
PURCHASER as follows:
7.1. The documents and information provided by SELLER to PURCHASER,
including but not limited to the Funding Application and
Reference Documents Exhibits, attached hereto, are accurate
and complete and, as of the date hereof, have not been
superseded or altered as to legal effect, validity or amount
by the Court, stipulation or otherwise. As of the date of this
Agreement, no action has been taken and, as of the Closing
Date, no action shall have been taken which has the effect of
settling or resolving the Litigation or which materially
alters or changes the legal validity, effect of or amounts
stated in said documents and information or the value of
SELLER'S Litigation Proceeds, the Judgment or Judgment
Collateral.
7.2. The representations and warranties of SELLER contained in this
Agreement shall be true and correct in all material respects
on and as of the Closing Date with the same force and effect
as though such representations and warranties had been made on
and as of that date. Notwithstanding any other provision of
this Agreement, should the case be settled or decided in whole
or in part or all representations or
warranties not be fully true and correct at the time SELLER
receives the Purchase Price, the sale shall not close and
PURCHASER'S rights under Section 20, below will apply. SELLER
shall not be entitled to accept the Purchase Price without
first giving written notice to PURCHASER and obtaining
PURCHASER'S written consent.
7.3. Except as set forth in Rights In Judgment, Exhibit 1.c.,
SELLER has not assigned, transferred or given, as collateral
to any party other than PURCHASER, any right or interest of
SELLER in the Litigation, the Litigation Proceeds, the
Judgment, the Judgment Collateral, or any Proceeds thereof.
SELLER shall not: make any assignment or transfer or give, as
collateral, any right or beneficial interest of SELLER in the
Litigation, the Litigation Proceeds, the Judgment, the
Judgment Collateral or any Proceeds thereof or rights therein,
or take any other action that could have the effect of
impairing or delaying PURCHASER'S receipt of the Judgment
Amount Assigned. It is intended and understood that any
assignment or transfer of right or beneficial interest in the
Litigation, the Litigation Proceeds, the Judgment, the
Judgment Collateral, or any Proceeds thereof or rights therein
shall be subordinate to and shall not adversely affect any
right or interest of PURCHASER in the Litigation, the
Litigation Proceeds, the Judgment, the Judgment Collateral or
any Proceeds thereof or rights therein. Except as disclosed by
SELLER in Rights In Judgment, Exhibit 1, or otherwise agreed
to by PURCHASER in writing, all Proceeds to which SELLER is
entitled on account of Litigation, the Litigation Proceeds,
the Judgment and the Judgment Collateral shall be paid first
to PURCHASER, until the full Judgment Amount Assigned has been
paid to PURCHASER.
7.4. Except as set forth in Rights In Judgment, Exhibit 1.a., there
are no persons who have liens against amounts to which SELLER
may be entitled on account of the Litigation. SELLER agrees to
refrain from causing or permitting any other liens to be
placed against the Judgment, without the prior written consent
of PURCHASER, which consent may not be withheld unless a
proposed lien materially impairs the rights, value, priority
or collectability of the rights assigned to PURCHASER
hereunder.
7.5. Except as set forth in Rights In Judgment, Exhibit 1.c.,
SELLER is not aware of any asserted or unasserted claims,
liens or judgments against the SELLER which would materially
impair the rights, value, priority or collectability of the
rights assigned to PURCHASER hereunder.
7.6. SELLER has the power, authority, right and competence to enter
into this Agreement, and does so willingly and freely. All
approvals, actions and consents required to authorize SELLER
to enter into this Agreement have been obtained and taken and,
upon execution by SELLER, this Agreement and all documents
contemplated to be signed by SELLER herein shall be valid and
binding obligations and undertakings of SELLER. Entering into
this Agreement and carrying out the actions provided for in
this Agreement and the Exhibits will not cause SELLER to be in
breach or violation of any other agreement or legal obligation
to which SELLER is a party or subject.
7.7. SELLER shall use best efforts and exercise good faith to
pursue SELLER'S rights in the Litigation; to bring the
Litigation to good faith settlement or final judgment; and to
enforce collection of all money and other Proceeds due on
account of the Litigation, including any settlement with
Judgment Debtor(s).
7.8. SELLER has not and shall not, directly or indirectly, delay,
seek to prevent, impair, or frustrate the rights granted to
PURCHASER under this Agreement, or payment of the Judgment
Amount Assigned to PURCHASER, in any way.
7.9. SELLER shall vigorously:
7.9.1. Omitted.
7.9.2. Pursue SELLER'S underlying claims in the Litigation,
unless advised by Attorney that pursuit of such
claims would be fruitless or not economically
feasible, in light of the likely cost and risks in
doing so.
7.9.3. Pursue collection of the Judgment and promptly
exercise collection rights against the Judgment
Collateral.
7.10. SELLER shall notify PURCHASER and keep PURCHASER advised
regarding: the name(s), address(es), telephone and fax numbers
of SELLER and of all legal counsel engaged to represent SELLER
in the Litigation; and the nature and scope of representation
of all such legal counsel and any change therein.
7.11. SELLER shall give PURCHASER prompt written notice of any
material change in any of the information contained in the
representations and warranties or Exhibits to this Agreement.
8. LITIGATION DOCUMENTATION. Unless otherwise requested in writing by
PURCHASER and subject to Section 2.4, SELLER shall, and SELLER hereby
instructs Attorney, as SELLER'S agent, to promptly provide and continue
to provide PURCHASER with:
8.1. All future Court documents, including but not limited to any
Notices, Orders, Briefs, Verdicts, or Judgments, presented to
any party to the Litigation or filed with any court.
8.2. All future correspondence, written proposals or agreements,
and notice of any oral proposals or agreements between SELLER
and Judgment Debtor(s) relating to the Litigation, the
Judgment Collateral, settlement, alternative dispute
resolution procedures, or collection and payment of the
Judgment or the Litigation.
8.3. Any proposed assignment by SELLER of any interest in the
Judgment, Judgment Collateral or rights in the Litigation, and
written notice of any other similar proposed action on the
part of SELLER. Unless waived in writing by PURCHASER, such
proposed assignment or notice shall be provided to PURCHASER
not less than 7 days prior to SELLER making the proposed
assignment or taking the proposed action.
8.4. Notice of and documents relating to payment or receipt of any
money, consideration or other Proceeds by SELLER or Attorney
on account of the Judgment, the Judgment Collateral or the
Litigation, settlement or payment of the Judgment, and all
accountings of the application of said money or other things
of value received.
8.5. Information requested by PURCHASER relating to the status of ,
the Litigation, settlement, alternative dispute resolution
proceedings and any efforts to enforce the Judgment.
9. ASSIGNMENT OF LITIGATION PROCEEDS. It is understood and agreed that the
Assignment evidences the transfer of the Judgment Amount Assigned and
PURCHASER'S right to receive payment hereunder and shall remain in full
force and effect until the entire Judgment Amount Assigned has been
received by PURCHASER. Upon PURCHASER'S remittance of the Purchase
Price to SELLER, PURCHASER shall be the sole and absolute owner of the
first except as provided for in6.4 above Litigation Proceeds which
SELLER is entitled to collect or receive on account of the Judgment,
the Judgment Collateral and the Litigation, up to the full Judgment
Amount Assigned, whether by way of enforcement of the Judgment,
compromise and settlement of SELLER'S rights arising out of the
Judgment and Litigation, or otherwise. As collateral for and to secure
SELLER'S representations, warranties, undertaking and agreements made
or given under this Agreement, SELLER hereby grants PURCHASER a
security interest in all of SELLER'S Litigation Proceeds and interests
in the Judgment, the Judgment Collateral and the Litigation not
otherwise assigned and transferred to PURCHASER under this Agreement
(the "Collateral"). This shall constitute a security agreement between
SELLER and PURCHASER for that purpose. It shall not in any way affect
or impair any rights or fee lien of Attorney in and to the Judgment,
the Judgment Collateral, or the Litigation, absent an express written
agreement with Attorney to the contrary. SELLER shall execute, and
PURCHASER may file, one or more UCC-1 Financing Statement Forms for the
purpose of perfecting PURCHASER'S security interest in the Collateral,
and as notice to third parties that SELLER has conveyed an interest in
the SELLER'S Litigation Proceeds.
10. ACKNOWLEDGMENT/ASSIGNMENT OF LITIGATION PROCEEDS. It is understood and
agreed that the Assignment is intended to serve as evidence and notice
of the Assignment. Upon PURCHASER'S remittance of the Purchase Price,
PURCHASER is fully authorized to and shall insert the Closing Date on
the Assignment. The Assignment may be filed by PURCHASER with the
Court, on or after the Closing Date, pursuant to the provisions of
applicable laws, court rules or local custom, and served upon such
persons as may be deemed necessary by PURCHASER to perfect and give
effect to PURCHASER'S ownership of and right to receive the Judgment
Amount Assigned.
11. ACKNOWLEDGMENT OF RECEIPT OF PURCHASE PRICE. The Acknowledgment of
Receipt of Purchase Price (hereafter the "Receipt") is attached hereto
as Receipt, Exhibit 3 and incorporated herein by this reference. Seller
agrees to deliver the signed and dated Receipt to Purchaser immediately
upon SELLER'S receipt of the Purchase Price.
12. BREACH. SELLER understands and acknowledges that PURCHASER is relying
on all of SELLER'S agreements, representations and warranties in
entering into this Agreement and in purchasing the Judgment Amount
Assigned. The parties agree that, if SELLER breaches any material part
of this Agreement or if any of SELLER'S representations or warranties
fail to be correct in any respect, SELLER will be in breach of this
Agreement.
12.1. If SELLER breaches any material part of this Agreement, and
SELLER fails to cure said breach within seven (7) days of
PURCHASER'S notice to SELLER of such breach, PURCHASER is
granted the right to immediately recover from the SELLER all
amounts due under this Agreement and the Judgment Amount
Assigned. This right of PURCHASER is in addition to any other
rights to which PURCHASER is entitled by law because of any
breach by SELLER, including PURCHASER'S rights in and to
Collateral given by SELLER. Any breach or failure of the
representations and warranties of Section 7.2, above, shall
not be subject to cure and SELLER shall have no rights to
receive any payment absent the expressed written approval of
PURCHASER.
12.2. Should SELLER fail to adhere to the representations and
warranties set forth in Section 7.9, above, or if Attorney
dies, becomes incompetent or otherwise abandons the SELLER and
Attorney or any other SELLER'S lawyer (including the members
of Attorney's firm, if any) ceases or is otherwise unable to
represent SELLER in connection with the Litigation, then
PURCHASER is fully authorized and permitted, but not
obligated, on behalf of SELLER and PURCHASER and subject
always to the rights and informed consent of the SELLER to
engage a new Attorney, to prosecute, enforce and resolve the
rights of SELLER and PURCHASER in furtherance of the
Litigation, to the fullest extent as if done by the SELLER.
SELLER hereby appoints PURCHASER as SELLER'S attorney-in-fact,
in the event of such default or breach under this sub-section,
to do all things and take all actions in its own name and as
attorney-in-fact for SELLER to pursue such actions and to
engage such legal counsel for the account of SELLER and
PURCHASER, subject always to the rights and informed consent
of the SELLER, as PURCHASER shall, in its good faith judgment,
deem to be in the best interests of the PURCHASER, SELLER and
Attorney. In such event, any amounts recovered on account of
the SELLER'S interests in the SELLER'S Litigation Proceeds,
shall be applied except as provided for in 6.4 above: (i)
first, to recoup all fees and expenses incurred in exercise of
said authority (including attorneys fees and costs); (ii)
next, to PURCHASER on account of the Judgment Amount Assigned;
(iii) the balance to SELLER, as SELLER'S interests may appear
and as SELLER may direct.
13. INDEMNIFICATION.
13.1. PURCHASER agrees to indemnify, defend and hold SELLER harmless
from and against any and all losses, costs, damages, claims
and expenses (including reasonable attorneys' fees) which
SELLER may sustain at anytime by reason of: (a) any debt,
liability or obligation incurred by PURCHASER, (b) any
liability or obligation of any kind for prosecution or defense
thereof, or (c) the breach of, inaccuracy of, or failure to
comply with, or the existence of any facts resulting in the
inaccuracy of, any of the warranties, representations, or
covenants of PURCHASER contained in this Agreement or in any
Exhibits or documents delivered pursuant hereto or in
connection with the subject matter of this Agreement.
13.2. SELLER agrees to indemnify, defend and hold PURCHASER harmless
from and against any and all losses, costs, damages, claims
and expenses (including reasonable attorneys' fees) which
PURCHASER may sustain at anytime by reason of: (a) any debt,
liability or obligation incurred by SELLER, (b) any liability
or obligation of any kind for prosecution or defense of such
debt, liability or obligation incurred by SELLER, and (c) the
breach of, inaccuracy of, or failure to comply with, or the
existence of any facts resulting in the inaccuracy of, any of
the warranties, representations, or covenants of SELLER
contained in this Agreement or in any Exhibits or documents
delivered pursuant hereto or in connection with the subject
matter of this Agreement.
13.3. Any party who receives notice of a claim for which it will
seek indemnification ("Indemnified Party") hereunder shall
promptly notify the party from which the Indemnified Party
will see indemnification ("Indemnifying Party") of such claim
in writing. The Indemnifying Party shall have the right to
assume the defense of such action at its cost with counsel
reasonably satisfactory to the Indemnified Party. The
Indemnified Party shall have the right to participate in such
defense with its own counsel at its cost.
14. ATTORNEY - CLIENT RELATIONSHIP.
14.1. NOTHING IN THIS AGREEMENT IS INTENDED TO REQUIRE ACTION THAT
MAY IMPAIR THE ATTORNEY-CLIENT PRIVILEGE, OR OTHER EVIDENTIARY
PRIVILEGE AS MAY EXIST IN FAVOR OF SELLER IN CONNECTION WITH
THE LITIGATION. THIS AGREEMENT SHALL NOT BE INTERPRETED OR
ENFORCED IN A MANNER THAT WOULD HAVE THE EFFECT OF LOSS OF ANY
SUCH PRIVILEGE. IF REDACTING PORTIONS OF ANY WRITING, REQUIRED
TO BE GIVEN PURCHASER IN THIS AGREEMENT, WOULD AVOID WAIVER OR
LOSS OF ANY SUCH PRIVILEGE: THE WRITING SHALL BE REDACTED BY
ATTORNEY SO AS TO AVOID WAIVER OR LOSS OF PRIVILEGE AND
PROVIDED TO PURCHASER. PURCHASER SHALL BE NOTIFIED THAT THE
WRITING WAS REDACTED FOR THAT PURPOSE AND SHALL BE ADVISED OF
THE GENERAL SUBJECT MATTER OF THE REDACTED MATERIAL. FURTHER,
NOTHING IN THIS AGREEMENT IS INTENDED TO PREVENT OR IMPAIR
SELLER'S AND ATTORNEY'S ABILITY TO VIGOROUSLY CONDUCT THE
LITIGATION IN SUCH MANNER AS THEY DEEM IN GOOD FAITH AND IN
THEIR SOLE DISCRETION WILL BENEFIT SELLER, WITHOUT
INTERFERENCE FROM PURCHASER. PROVIDED, HOWEVER, NOTHING SHALL
BE INTERPRETED AS RESTRICTING PURCHASER'S EXERCISE OF ITS
DISCRETION IN ANALYSIS OF THE RESULTS OF ITS DUE DILIGENCE
UNDER SECTION 16, BELOW, OR ENFORCEMENT OF PURCHASER'S RIGHTS
UNDER THIS AGREEMENT AND THE ASSIGNMENT, IN THE EVENT OF A
BREACH OF THE TERMS OF THIS AGREEMENT.
14.2. Should a dispute arise at anytime between SELLER and Attorney
regarding payment or application of any sums recovered on the
Judgment, which dispute may delay, reduce or otherwise affect
payment or retention of the Judgment Amount Assigned to
PURCHASER, SELLER shall promptly notify PURCHASER in writing
and shall nevertheless immediately pay, on a pro rata basis,
any undisputed portion of the sums recovered. The Notice shall
state the facts of the dispute in order that PURCHASER may
fully assert its rights. In order to allow PURCHASER to become
fully aware of the dispute, SELLER hereby authorizes Attorney
to provide PURCHASER all facts and information related to the
dispute. Notwithstanding any other provisions of this
Agreement, including Section 14.1, above, SELLER expressly
waives attorney-client privilege as to information requested
by PURCHASER under these limited circumstances and for this
limited purpose. Should the dispute delay payment of any
amount otherwise due or payable to PURCHASER, all amounts due
or payable to PURCHASER shall begin to bear interest at the
rate of 18% per annum, or such lesser rate as shall be the
maximum rate permitted by applicable law, from the date any
amounts are paid or payable by the Adverse Party until said
sums due or payable to PURCHASER have been paid in full.
15. COOPERATION. SELLER will, and will so instruct Attorney to, keep
PURCHASER fully advised about and will cooperate and consult with
PURCHASER in connection with any and all matters relating to the
Litigation including, but not limited to, matters with regard to
SELLER'S and Attorney's legal positions, briefs and oral arguments,
settlement negotiations, alternate dispute resolution proceedings, and
engagement of counsel.
16. CONTINGENCIES. This Agreement is expressly conditioned upon PURCHASER
conducting and completing its due diligence with regard to the subject
matter of this Agreement and providing SELLER with PURCHASER'S written
approval of its intent to complete the purchase. PURCHASER'S approval
and intention to complete the purchase shall be determined in
PURCHASER'S sole and absolute discretion. PURCHASER shall have 30 days
from the receipt of all documents and Exhibits, properly signed and
witnessed, to provide SELLER and Attorney with written approval of its
intention to complete the purchase.
17. PURCHASER'S DUE DILIGENCE/SELLER'S REIMBURSEMENT. SELLER UNDERSTANDS
THAT PURCHASER WILL INCUR COSTS AND EXPENSES IN CONNECTION WITH THE
CLOSING OF THE TRANSACTION AND WITH THE COMPLETION OF PURCHASER'S DUE
DILIGENCE REFERRED TO HEREIN ABOVE. IT IS UNDERSTOOD THAT UPON RECEIPT
OF THE SIGNED AGREEMENT, PURCHASER WILL INCUR EXPENSES FOR A CREDIT AND
LIABILITIES INVESTIGATION AND REPORT. IT IS FURTHER UNDERSTOOD THAT
UPON RECEIPT OF THE SIGNED AGREEMENT, PURCHASER WILL ENGAGE AN
ATTORNEY, FOR THE PURPOSE OF REVIEWING THE LAWSUIT AND ADVISING
PURCHASER AS PART OF PURCHASER'S DUE DILIGENCE. SHOULD PURCHASER BE
SATISFIED WITH THE RESULTS OF PURCHASER'S DUE DILIGENCE AND NOTIFY
SELLER IT INTENDS TO CONCLUDE THE
ASSIGNMENT, AS AGREED SELLER WILL REIMBURSE PURCHASER THE SUM OF
$5,000.00 OR 1% OF THE PURCHASE PRICE, WHICHEVER IS GREATER, ON ACCOUNT
OF THE PURCHASER'S DUE DILIGENCE, AND CLOSING COSTS AND EXPENSES.
PURCHASER SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, TO DEDUCT FROM
THE PURCHASE PRICE THE AMOUNT TO WHICH PURCHASER IS ENTITLED TO PAYMENT
OR REIMBURSEMENT FROM SELLER. IT IS ACKNOWLEDGED THAT ANY ANALYSIS OR
OPINION RECEIVED BY PURCHASER FROM LEGAL COUNSEL ENGAGED TO REVIEW AND
EVALUATE THE LITIGATION: (I) IS LEGAL ADVICE RENDERED SOLELY FOR
PURCHASER'S BENEFIT IN COMPLETING ITS DUE DILIGENCE; (II) IS SUBJECT TO
CERTAIN PRIVILEGES IN FAVOR OF PURCHASER AND SAID ATTORNEY; (III) AND
IN NO WAY CONSTITUTES LEGAL ADVICE TO, NOR MAY IT BE RELIED UPON BY
SELLER OR ATTORNEY, SHOULD INFORMATION RELATING TO SAID ATTORNEYS'
ADVICE BE MADE AVAILABLE TO SELLER OR ATTORNEY, ABSENT PRIOR WRITTEN
CONSENT FROM THE INDIVIDUAL ATTORNEY ENGAGED BY PURCHASER.
18. DELIVERY BY PURCHASER/CLOSING. PURCHASER shall pay SELLER the Purchase
Price (less any amounts deductible therefrom) within ten (10) business
days after it has completed its due diligence and approved of and
expressed its intention, in writing, to complete the purchase. Except
as hereafter provided, upon PURCHASER'S tender of the Purchase Price to
SELLER: the PURCHASER'S rights in the SELLER'S Litigation Proceeds, the
Judgment Proceeds, the Judgment Amount Assigned, and the Litigation,
and all of PURCHASER'S rights, as provided for in this Agreement, shall
be fully vested; SELLER'S assignment shall be absolute and irrevocable
by SELLER; and PURCHASER shall be entitled to file with the Court and
serve the Exhibit(s) evidencing SELLER'S Assignment and the form UCC-1
giving effect to the parties agreements hereunder.
19. MISCELLANEOUS.
19.1. Entire Agreement. This Agreement, including the Exhibits
hereto, sets forth the entire agreement and understanding
between the parties as to the subject matter hereof and merges
and supersedes all prior discussions, agreements and
understandings of every kind and nature between them. No party
hereto shall be bound by any term, condition, warranty or
representation other than as expressly provided for in this
Agreement, or as may be on a date on or after to the date
hereof duly set forth in writing signed by the party hereto
which is to be bound thereby. This Agreement shall not be
changed, modified or amended except by a writing dated and
signed by the party to be charged.
19.2. Governing Law. This Agreement and its validity, construction
and performance shall be governed in all respects by the laws
of the State of California, without giving effect to
principles of conflicts of laws.
19.3. Severability. If any provision of this Agreement or the
application of any provision hereof to any person or
circumstance is held invalid, the remainder of this Agreement
and the application of such provision to other persons or
circumstances shall not be affected unless the provision held
invalid shall substantially impair the benefits of the
remaining portions of this Agreement.
19.4. Benefits of Parties. This Agreement shall be binding upon, and
inure to the benefit of the parties hereto, individually and
to each and all their agents, attorneys, beneficiaries,
representatives and its respective successors, spouses, heirs,
legal representatives and assigns. No assignments by any party
shall relieve the assigning party from any obligation, duty,
representation, warranty or agreement absent an express
written release given by the non-assigning party.
19.5. Headings Singular/Plural. The headings in the section of this
Agreement are inserted for convenience or reference only and
shall not constitute a part hereof. Where context so permits,
the singular form of a word shall include the plural and the
plural form shall include the singular.
19.6. Notices. All notices, requests, demands and other
communications provided for by this Agreement shall be in
writing and, unless otherwise specifically provided for
herein, shall be deemed to have been given upon transmission
by telecopy, with receipt confirmed, upon hand delivery or
delivery by air freight or courier service, or three (3) days
after the time when deposited with the United States Postal
Service, enclosed in a registered, certified or other
postage-paid envelope, addressed to the address of the parties
stated below or to such changed address as such party may have
fixed by notice:
IF TO SELLER: IF TO PURCHASER:
-------------- ----------------
Intelefilm Corporation, f/k/a Children's LawFinance Group, Inc.
Broadcasting Corporation
c/o Mr. Mark A. Cohn, CEO 1000 Sansome Street, Suite 250
6385 Old Shady Oak Road, Suite 290 San Francisco, CA 94111
Eden Prairie, , MN 55344 Fax: (415) 617-9201/Tel.: (415) 617-9200
Fax: (952) 925-8875/Tel.: (952) 925-8848
provided, however, that any such change of address shall be
effective only upon receipt.
19.7. Attorney's Fees. In the event that any action or proceeding is
brought to enforce or interpret any provision, covenant or
condition contained in the Agreement on the part of PURCHASER
or SELLER, the prevailing party in such action or proceeding
shall be entitled to recover from the party not prevailing its
expenses therein, including reasonable attorneys' fees and
allowable costs.
19.8. Disputes Between The Parties. At the request of any party, any
dispute between the parties arising out of the transaction
provided for in this Agreement, and the Exhibits to this
Agreement, shall be submitted to final and binding arbitration
in Minneapolis, Minnesota, by a three (3) member panel, under
the Commercial Arbitration Rules of the American Arbitration
Association then in effect. The Association shall be requested
to provide a panel of prospective arbitrators consisting of
persons experienced in business law matters. Prior to
appointment of the arbitrator, either party may commence
judicial proceedings, in either the state or federal court
having jurisdiction over the party against whom relief is
sought, to obtain preliminary relief, including injunctive
relief, for the purposes of: (i) enforcement of this
arbitration provision; (ii) obtaining appointment of
arbitrator(s); (iii) preserving the status quo; (iv)
preventing the disbursement by any person of disputed funds;
and (v) preserving and protecting the rights of either party
pending the outcome of the arbitration. Any party may have
judgment entered on the arbitration award. Section 19.7,
above, shall apply to any arbitration or court proceeding
between the parties.
19.9. Further Assurances. Each party agrees to execute and file or
caused to be filed such other or further documents as may be
requested by the other party to give effect to the purposes of
the Agreement. Such further documents shall include, but not
be limited to: (i) documents intended to perfect PURCHASER'S
ownership of and power to exercise the rights herein granted
by SELLER; (ii) if the Judgment is modified, vacated and there
are further proceedings, a replacement Assignment in order to
give effect to PURCHASER'S rights in and to the Litigation
Proceeds, the Judgment Collateral, Judgment and this
Agreement.
20. RESOLUTION OF LITIGATION PRIOR TO CLOSING. In the event the Appeal is
resolved, whether by settlement, judicial decision, or otherwise, on or
before Closing Date, PURCHASER'S obligation to purchase and SELLER'S
obligation to sell under this Agreement shall cease. In such event,
SELLER shall pay PURCHASER out of any proceeds of the Litigation the
sum of $5,000.00, on account of PURCHASER'S administrative and due
diligence activities and expenses incurred by PURCHASER in connection
with this Agreement.
21. THE PARTIES EACH ACKNOWLEDGE AND AGREE THAT: (I) THIS AGREEMENT HAS
BEEN ENTERED INTO VOLUNTARILY AND FREELY; AND (II) THE PURCHASE PRICE
HAS BEEN DETERMINED AT ARM'S LENGTH AND IS REASONABLE IN LIGHT OF THE
RISKS ASSUMED BY PURCHASER.
22. SELLER ACKNOWLEDGES THAT SELLER HAS READ THIS AGREEMENT, INCLUDING ALL
OF EXHIBITS ATTACHED HERETO. SELLER IS AWARE THAT THIS AGREEMENT
AFFECTS SELLER'S LEGAL RIGHTS. PRIOR TO SIGNING THIS AGREEMENT, SELLER
HAS CONSULTED WITH ATTORNEY AND/OR OTHER LEGAL COUNSEL, CONCERNING THIS
TRANSACTION. ATTORNEY HAS REVIEWED THE TERMS AND CONDITIONS OF THE
ENTIRE AGREEMENT. SELLER UNDERSTANDS THE MEANING AND EFFECT OF THE
TERMS AND CONDITIONS CONTAINED IN THE AGREEMENT. SELLER HAS RECEIVED NO
LEGAL ADVICE WITH RESPECT TO THIS AGREEMENT OR THE LITIGATION FROM
PURCHASER OR ANYONE ASSOCIATED WITH PURCHASER.
SELLER'S INITIALS: /S/ MAC ATTORNEY'S INITIALS: /S/ JF
-------------- ----------------------
IN WITNESS WHEREOF, the parties have entered into this Agreement at San
Francisco, California.
Dated: Deceber 17, 2001
SELLER:
/s/ Mark A. Cohn
- ------------------------------------------------------
Intelefilm Corporation, f/k/a Children's Broadcasting Corporation
By: Mark A. Cohn, CEO
ACKNOWLEDGMENT
STATE OF Minnesota )
-----------------------------------------------------
COUNTY OF Hennepin )
----------------------------------------------------
On Dec. 17, 2001 before me, Judite P. Fluger, personally appeared Mark A. Cohn
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Judite P. Fluger
--------------------------------
Notary's Signature
PURCHASER:
Dated: December 21, 2001
---------
LAWFINANCE GROUP, INC.:
a California corporation
By: /s/ Michael Blum
-------------------------------
ACKNOWLEDGMENT
STATE OF California )
COUNTY OF San Francisco )
On 12/12/01 before me, Dawn Bui, personally appeared Michael Blum , personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/Dawn Bui
-----------------------------
Notary Public