AMENDMENT NO. 1 TO THE ASSET PURCHASE AGREEMENT
AMENDMENT NO. 1 TO THE ASSET PURCHASE AGREEMENT ("Amendment No. 1")
dated as of November 19, 1996 by and among Affinity Entertainment, Inc., a
Delaware corporation ("Buyer"), Tradewinds Television, LLC, a California limited
liability company ("TW"), and Royeric Pack, an individual ("Pack" and together
with TW, the "Sellers").
WHEREAS, Buyer and Sellers are parties to an Asset Purchase Agreement
dated as of October 3, 1996 (the "Agreement"), pursuant to which Sellers would
sell to Buyer certain assets and contract rights representing the film and
television interests directly or indirectly owned and controlled by Sellers; and
WHEREAS, Buyer and Sellers desire to amend certain provisions of the
Agreement as set forth herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Section 1.1 of the Agreement is amended by deleting the following
definitions: "Investment Letter," "Registration Rights Agreement," and
"Securities Act."
2. Section 6.1 of the Agreement is amended by adding the following
sentence at the end thereof:
"Sellers shall make immediately available for inspection by Buyer
and its representatives the foregoing books, records and other
documents."
3. Section 6.2(a) of the Agreement is amended by (i) adding a new
subparagraph (v) thereof to read as follows, and (ii) relettering existing
subparagraph (v) thereof as subparagraph (vi) thereof:
"(v) pay or cause to be paid any bills or other obligations or
indebtedness of TW. In this regard, subject to immediately
providing substantiating documentation to Buyer, Sellers, as soon
as reasonably practicable, shall be permitted to pay off up to
$20,000 in American Express Card bills and up to $14,000 in legal
fees to Long, Aldridge and Norman; or"
4. Section 6.2 of the Agreement is amended by adding a new subparagraph
(c) to read as follows:
"(c) From the date of this Amendment No. 1 through the earlier of
the Closing Date and the date on which this
Agreement is terminated in accordance with Article 8, Sellers
agree to cooperate fully with any designee of Buyer (initially,
Peter Newgard) as to all business decisions relating to TW, and
Pack, if requested by Buyer, shall meet with such designee daily
with respect thereto. Such designee shall have complete authority
to act on behalf of TW and to speak and otherwise deal directly
with anyone doing business with TW, and Sellers agree to
facilitate same, including, if requested by Buyer, by promptly
advising any such third parties in writing of the authority of
such designee."
5. Section 6.8 of the Agreement is amended in its entirety to read as
follows:
"Subject to the Closing, Buyer shall make a $200,000 cash payment
to Pack at the Closing (subject to reduction and offset on a
dollar for dollar basis in the event that (i) Buyer, in its sole
discretion, prepays any portion of such fee prior to Closing,
which prepayment will be documented and approved by TW, or (ii)
Sellers violate 6.2(a)(v) of the Agreement, or (iii) any expenses
paid out of TW bank accounts from September 1, 1996 until the
date of this Amendment No. 1 were other than legitimate expenses
of TW)."
6. Section 7.1 of the Agreement is amended by adding a new subparagraph
(d) to read as follows:
"(d) Releases. The parties shall have provided each other with
mutual releases of any claims, except as arising out of this
Agreement, and Sellers shall cause AMG to provide Buyer with a
release of any claims AMG may have against Buyer."
7. Section 7.2(g) of the Agreement is amended in its entirety to read
as follows:
"(g) AMG Release. Buyer shall have obtained a release or releases
with regard to the indebtedness owed by TW to AMG and any other
claims AMG may have or assert against the assets of TW, on such
terms and conditions and in exchange for such payment and other
consideration (but in no event to exceed $275,000) as Buyer shall
determine in its sole discretion, including such approvals or
orders from the court having jurisdiction over AMG."
2
8. Section 7.2 of the Agreement is amended by deleting subparagraph (j)
and (k) and relettering subparagraph (l) as subpararaph (j).
9. Section 7.3 of the Agreement is amended by deleting subparagraphs
(d) and (e) and relettering subparagraph (f) as subparagraph (d).
10. Sellers agree not to file a voluntary petition for bankruptcy on
behalf of TW.
11. Subject to compliance by Sellers with the terms of this Amendment
No. 1, and with Sellers immediately furnishing Buyer's counsel with due
diligence material requested by such counsel pursuant to letter dated October 7,
1996, as may be supplemented hereafter, Buyer agrees to postpone until December
5, 1996 the ex parte hearing originally scheduled for November 15, 1996, in the
Los Angeles Superior Court. In addition, TW will, and shall cause AMG to,
cooperate fully with the creditors of AMG, including without limitation, World
Champion Wrestling, Inc., the Creditors Committee of AMG, and Buyer to obtain
bankruptcy court approval of that certain motion entitled "Debtor's Motion for
Authority to Compromise Controversies between Debtor and Tradewinds Television .
. ." currently scheduled for December 4, 1996.
12. The effectiveness of this Amendment No. 1 shall be subject, in
Buyer's sole discretion, to the receipt by Buyer no later than November 21, 1996
of an Acknowledgment in the form of Exhibit A hereto signed by either or both of
the parties indicated thereon.
13. Nothing herein shall be deemed to waive, rescind or amend any
notices heretofore provided by Buyer to Sellers pursuant to this Agreement or
otherwise, including without limitation the Demand Notice dated November 5, 1996
and the further Notice dated November 7, 1996 with respect to that certain
Interim Financing and Security Agreement dated September 13, 1996 and those
certain Secured Promissory Notes dated September 13, 1996 and October 17, 1996
in the aggregate amount of $722,997.18; provided, however, in the event of the
Closing (as defined in the Agreement), all such Notices shall be deemed
withdrawn and of no further force or effect.
14. This Amendment No. 1 shall be governed by the laws of the State of
California, applicable to agreements made and to be performed entirely within
such State.
15. This Amendment No. 1 may be executed in one or more counterparts,
each of which shall be deemed an original, with all of which together shall
constitute one in the same instrument.
3
IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 on
the date first written above.
AFFINITY ENTERTAINMENT, INC.
By: _____________________________
Its: ____________________________
TRADEWINDS TELEVISION, LLC
By: _____________________________
Its: ____________________________
-------------------------------
ROYERIC PACK, an individual
4
Exhibit A
Acknowledgment
The undersigned creditors of Action Media Group, Inc. hereby
acknowledge that they have reviewed the Asset Purchase Agreement dated as of
October 3, 1996 and Amendment No. 1 thereto dated as of November 19, 1996 among
Affinity Entertainment, Inc., a Delaware corporation ("Affinity"), Tradewinds
Television, LLC, a California limited liability company, and Royeric Pack, an
individual, and that they approve the form and substance of the transaction
therein set forth and will take no action to object to the consummation of the
transaction or assert any claims against Affinity in connection therewith or the
assets acquired by Affinity pursuant to such transaction.
WORLD CHAMPIONSHIP WRESTLING, INC.
By: ________________________________
Dated: ________________ Its: ________________________________
The Official Creditors Committee
of ACTION MEDIA GROUP, INC.
HEARST ENTERTAINMENT, INC.
By: ________________________________
Dated: ________________ Its: ________________________________
HALLMARK ENTERTAINMENT, INC.
By: ________________________________
Dated: ________________ Its: ________________________________
BOHBOT ENTERTAINMENT & MEDIA, INC.
By: ________________________________
Dated: ________________ Its: ________________________________
5
ITC DISTRIBUTION, INC.
By: ________________________________
Dated: ________________ Its: ________________________________
EDUCATIONAL BROADCASTING
CORPORATION dba THIRTEEN WNET
By: ________________________________
Dated: ________________ Its: ________________________________
6