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NOTE AND WARRANT PURCHASE AGREEMENT
AMONG
KIDEO PRODUCTIONS, INC.
AND
WHITE RIDGE INVESTMENTS, LTD.
Dated as of August 30, 1999
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NOTE AND WARRANT PURCHASE AGREEMENT
NOTE AND WARRANT PURCHASE AGREEMENT, dated as of August 30, 1999
(the "Agreement"), among Kideo Productions, Inc., a Delaware corporation (the
"Company"), and White Ridge Investments, Ltd., a corporation organized under the
laws of the Turk & Caicos Islands (the "Buyer").
WHEREAS, the Buyer wishes to acquire from the Company (a) a
convertible note in the principal amount of $300,000 bearing interest at the
rate of 10% per annum, due August 31, 2000, in the form attached hereto as
Exhibit A (the "Note") and (b) a warrant to purchase 300,000 shares of its
common stock, par value $.0001 per share (the "Common Stock"), in the form
attached hereto as Exhibit B (the "Warrant"); and
WHEREAS, the Company is willing to sell to the Buyer the Note and
the Warrant in consideration of the aggregate payment to the Company by the
Buyer of $300,000.
NOW, THEREFORE, in consideration of the foregoing premises and the
respective representations, warranties, covenants, agreements and conditions
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. THE CLOSING.
1.1 Time and Place of Closing. Subject to the terms and conditions hereof,
the consummation of the transactions contemplated by this Agreement (the
"Closing") will take place by exchange of all documents and instruments required
hereby at the offices of Solovay Edlin & Eiseman, P.C., 845 Third Avenue, New
York, New York, at 3:00 P.M. (local time) on the August 26, 1999 or at such
other place or time or both as the parties may agree
1.2 Purchase and Sale of the Note and the Warrant. At the Closing, the
Company will issue and sell to the Buyer the Note and the Warrant and the Buyer
will acquire, accept and pay for, as hereinafter provided, the Note and the
Warrant.
1.3 Consideration for the Note and the Warrant. Except as provided in the
Note, the aggregate consideration for the Note and the Warrant shall consist of
immediately available funds in the aggregate amount of $300,000 (the
"Consideration").
1.4 Deliveries by the Company. At the Closing, the Company shall deliver
the following to the Buyer:
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1.4.1 A duly executed copy of this Agreement.
1.4.2 A duly executed Note.
1.4.3 A duly executed certificate representing the Warrant in the
name of the Buyer.
1.4.4 A duly executed security agreement in the form attached hereto
as Exhibit C (the "Security Agreement").
1.4.5 Any other documents and instruments incident to the
transactions contemplated hereby as the Buyer may reasonably
request.
1.5 Deliveries by the Buyer. At the Closing, the Buyer shall deliver the
following to the Company:
1.5.1 A duly executed copy of this Agreement.
1.5.2 Except as provided in the Note, cash in immediately available
funds in the aggregate amount of $300,000 by wire transfer to
the account listed on Schedule 1 hereto.
1.5.3 Any other documents and instruments incident to the
transactions contemplated hereby as the Company may reasonably
request.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Buyer as follows:
2.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to own and operate its properties,
to carry on its business as now conducted and as proposed to be conducted, to
enter into this Agreement, to issue and sell the Note and the Warrant and to
carry out the terms of this Agreement, the Note, the Warrant and the Security
Agreement (collectively, the "Operative Agreements").
2.2 Authority Relative to this Agreement. The Company has full corporate
power and authority to execute and deliver the Operative Agreements and to
consummate the transactions contemplated thereby. The execution and delivery of
the Operative Agreements and the consummation of the transactions contemplated
thereby have been duly and validly authorized by the Board of Directors of the
Company and no other corporate proceedings on the
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part of the Company are necessary to authorize the Operative Agreements or to
consummate the transactions contemplated thereby. The Operative Agreements have
been duly and validly executed and delivered by the Company and constitute valid
and binding agreements or obligations of the Company, enforceable against the
Company in accordance with their respective terms.
2.3 Reports. The Company has filed all forms, reports, statements and
other documents required to be filed with (i) the Securities and Exchange
Commission (the "SEC") including, without limitation, (A) all Annual Reports on
Form 10-KSB, (B) all Quarterly Reports on Form 10-QSB, (C) all Reports on Form
8-K, (D) all other reports or registration statements and (E) all amendments and
supplements to all such reports and registration statements (collectively
referred to as the "SEC Reports") and (ii) any other applicable state securities
authorities (all such forms, reports, statements and other documents in (i) and
(ii) of this Section 2.3 being referred to herein, collectively, as the
"Reports"). The Reports (i) were prepared in all material respects in accordance
with the requirements of applicable law (including, with respect to the SEC
Reports, the Securities Act of 1933 (the "Securities Act") and the Securities
Exchange Act of 1934 (the "Exchange Act"), as the case may be, and the rules and
regulations of the SEC thereunder applicable to such SEC Reports) and (ii) did
not at the time they were filed contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
2.4 Concerning the Shares. The authorized capital stock of the Company
consists of (a) 15,000,000 shares of Common Stock, $.0001 par value per share,
of which 3,775,886 shares are issued and outstanding on the date hereof, and (b)
5,000,000 shares of preferred stock, par value $.01 per share, none of which are
outstanding on the date hereof. All of the outstanding shares of Common Stock of
the Company have been duly and validly authorized and issued and are fully paid
and nonassessable. No shares of Common Stock are subject to preemptive or
similar rights. Except as specifically disclosed on Schedule 2.4 hereto, there
are no outstanding options, warrants, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or, except as a result of
the purchase and sale of the Note and the Warrant, securities, rights or
obligations convertible into or exchangeable for, or giving any person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or any
subsidiary is or may become bound to issue additional shares of Common Stock or
securities or rights convertible or exchangeable into shares of Common Stock.
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2.5 Reporting Company Status. The Company has registered its Common Stock
pursuant to Section 12 of the Exchange Act and the Common Stock is traded on the
bulletin board. The Company is in compliance, to the extent applicable, with all
reporting obligations under either Section 12(b), 12(g) or 15(d) of the Exchange
Act. The Company has complied in all material respects and to the extent
applicable with all reporting obligations, under either Section 13(a) or 15(d)
of the Exchange Act for a period of at least twelve (12) months immediately
preceding the offer and sale of the Securities.
2.6 Authorized Shares. The Company has sufficient authorized and unissued
Shares as may be reasonably necessary to effect the conversion of the Note and
the exercise of the Warrant. The Shares have been duly authorized and, when
issued upon conversion of the Note and upon exercise of the Warrant, will be
duly and validly issued, fully paid and non-assessable and will not subject the
holder thereof to personal liability by reason of being such holder.
2.7 Non-contravention. The execution and delivery of this Agreement, the
Security Agreement and the Note by the Company, the issuance of the Note and the
Warrant, and the consummation by the Company of the other transactions
contemplated by this Agreement, the Security Agreement, the Note, and the
Warrant do not and will not conflict with or result in a breach by the Company
of any of the terms or provisions of, or constitute a default under (i) the
articles of incorporation or by-laws of the Company, each as currently in
effect, (ii) any indenture, mortgage, deed of trust, or other material agreement
or instrument to which the Company is a party or by which it or any of its
properties or assets are bound, including any "lock-up" or similar provision of
any underwriting or similar agreements except as herein set forth, (iii) to its
knowledge, any existing applicable law, rule, or regulation or any applicable
decree, judgment, or (iv) to its knowledge, order of any court, United States
federal or state regulatory body, administrative agency, or other governmental
body having jurisdiction over the Company or any of its properties or assets,
except such conflict, breach or default which would not have a material adverse
effect on the transactions contemplated herein.
2.8 Compliance with Law. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any governmental
entity, except for possible violations that either singly or in the aggregate
would not be expected to have a material adverse effect on the business or
financial condition of the Company, or materially and adversely affect the
ability of the Company to perform its obligations pursuant to this Agreement.
The Company is not required under federal, state or local law, rule or
regulation to obtain any consent,
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authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or issue and sell the Common Stock, the Note,
or the Warrant, in accordance with the terms hereof
2.9 Approvals. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or market or
the stockholders of the Company is required to be obtained by the Company for
the issuance and sale of the Note and the Warrant to the Buyer as contemplated
by this Agreement, except such authorizations, approvals and consents that have
been obtained.
2.10 Use of Proceeds and Modification of Prior Agreement. The proceeds
from the sale of the Note and the Warrant shall be used by the Company to, among
other things, retire all outstanding indebtedness owed to the purchasers (the
"1998 Buyers") of certain notes and warrants of the Company under an agreement,
dated as of January 30, 1998, between the Company and the 1998 Buyers. In
addition, the 1998 Buyers have agreed that the exercise price of all warrants to
be issued to the 1998 Buyers in accordance with a certain letter agreement,
dated May 3, 1999, between the Company and the 1998 Buyers shall be increased to
eighty cents ($.80) per share of Common Stock.
2.11 Full Disclosure. There is no fact known to the Company (other than
general economic conditions known to the public generally) or as disclosed to
the Buyer in writing that (i) would reasonably be expected to have a material
adverse effect on the business or financial condition of the Company or (ii)
would reasonably be expected to materially and adversely affect the ability of
the Company to perform its obligations pursuant to this Agreement.
2.12 Security Interest. The Security Agreement creates and grants to the
Buyer a legal and valid security interest in the Collateral identified therein.
Such Collateral is not subject to any liens whatsoever, except for the Prior
Interest (as defined in the Security Agreement).
3. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
The Buyer represents and warrants to the Company as follows:
3.1 The Buyer is sufficiently experienced in financial and business
matters to be capable of evaluating the merits and risks of this investment and
to make an informed decision relating thereto. The Buyer has the financial
capability for making the investment, can afford a complete loss of the
investment, and the
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investment is a suitable one for the Buyer.
3.2 Prior to the execution of this Agreement, the Buyer has had the
opportunity to ask questions of and receive answers from representatives of the
Company concerning the finances, operations, business and prospects of the
Company.
3.3 The Buyer understands that the Company shall not be deemed to have
made to the Buyer any representation or warranty other than as expressly made in
this Agreement.
3.4 The Buyer understands that the Note and Warrant (and the Common Stock
into which the Warrant may be exercised and into which the Note may be
converted) purchased by the Buyer are not registered under the Securities Act,
and are not registered under any state "blue sky" laws, and the Note and Warrant
(and such Common Stock) may not be transferred except in compliance with such
laws.
3.5 The Buyer understands that the Note and Warrant (and such Common
Stock) purchased by the Buyer are "restricted securities" as that term is
defined in Rule 144 under the Securities Act and that the Note and Warrant (and
such Common Stock) purchased by the Buyer must be held indefinitely unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available. The Buyer understands that in the case of sales in
which Rule 144 is not available, compliance with Regulation A under the
Securities Act or some other exemption under the Securities Act will be
required.
3.6 The Buyer represents that the Buyer is purchasing the Note and Warrant
for its own account for investment and not with a view to the distribution
thereof or with any present intention of distributing or selling any of the Note
and Warrant. The Buyer further represents that it is an "accredited investor"
within the meaning of Rule 501 under the Securities Act.
4. CERTAIN AGREEMENTS.
4.1 Registration and Limitations on Sale.
4.1.1 The Company agrees to include the 675,000 (as appropriately
adjusted for any stock splits, stock dividends or similar events) shares of
Common Stock for which the Warrant may be exercised and into which the Note may
be converted (the "Registrable Securities") in a registration statement (the
"Registration Statement") which shall be filed as promptly as practicable
following the Closing but in no event later than thirty (30) days after the
receipt of the entire amount of the Consideration (such date in referred to as
the "Start Date"). The Company will use its reasonable best efforts to have the
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Registration Statement declared effective as promptly as practicable thereafter
but in no event later than ninety (90) days after the Start Date and shall keep
the Registration Statement effective in order to permit a public offering and
sale of the Registrable Securities thereunder. If the Registration Statement
covering the Registrable Securities required to be filed by the Company pursuant
to this Section 4.1.1 hereof has not been filed within thirty (30) days from the
Start Date and/or has not been declared effective by the earlier of (i) five (5)
business days after the Company receives a notice from the SEC that the
Registration Statement may be declared effective and (ii) ninety (90) days
following the Start Date, then the Company will make payments to the Buyer as
liquidated damages for such failure and not as a penalty, which payment shall be
equal to one percent (1%) of the Consideration paid for the Note purchased
hereunder for the initial thirty (30) day period until the Registration
Statement has been filed and/or declared effective, which shall be pro rated for
such periods less than thirty (30) days and two percent (2%) for each thirty
(30) day period thereafter until the Registration Statement has been filed
and/or declared effective (which shall be also pro rated, as aforesaid). The
liquidated damages shall be paid by the Company in cash upon demand. The Company
shall also use its best efforts to register or qualify all of the Registrable
Securities under such other securities or blue sky laws of such States of the
United States of America where an exemption is not available and as the Buyer
shall reasonably request.
4.1.2 The Company will pay all Registration Expenses (as defined
below) in connection with the Registration Statement. "Registration Expenses"
means all costs, fees and expenses incident to the Company's performance of or
compliance with its obligation to register the Registrable Securities,
including, without limitation, all registration, filing and NASD fees, all fees
and expenses of complying with securities or blue sky laws, all printing
expenses, and delivery expenses, the fees and disbursements of counsel for the
Company and of its independent public accountants, the fees and disbursements of
counsel to the Buyer for the review of the Registration Statement prior to
filing with the SEC, and any fees and disbursements customarily paid by issuers
or sellers of securities (excluding any underwriting discounts or commissions or
transfer taxes with respect to the Registrable Securities and the fees and
disbursements of more than one counsel for the Buyer).
4.1.3 The Company may require, and the Buyer hereby agrees, to
furnish the Company such information regarding the Buyer and the distribution of
the Registrable Securities as the Company may from time to time reasonably
request in writing.
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4.1.4 The Company will use its reasonable best efforts to keep the
Registration Statement effective in order to permit a public offering and sale
of any Registrable Securities registered thereunder until the earlier of (i) the
date that all of the Registrable Securities have been sold pursuant to the
Registration Statement, (ii) the date the Buyer may sell such securities under
the provisions of Rule 144(k) and (iii) the third anniversary of the effective
date of the Registration Statement.
4.1.5 If Company shall inform the Buyer in writing that in the good
faith judgement of the Company's counsel, the sale or transfer of shares of
Registrable Securities by the Buyer would, at such time, require the disclosure
of material information that the Company has a bona fide business purpose for
preserving as confidential or the Company would be required to provide
information required by the SEC or the Securities Act (or the rules and
regulations promulgated thereunder), such as pro forma financial information,
that at such time the Company would be unable to provide, the Company may
postpone or suspend effectiveness of the Registration Statement and the Buyer
will not sell Registrable Securities; provided, that in no event shall the
Company prohibit any sales pursuant to the foregoing for more than 20
consecutive days or more than 45 days in any 12 month period.
4.1.6 The Company shall (a) promptly notify the Buyer upon discovery
that, or upon the happening of any event as a result of which, the prospectus
included in the Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, in
the light of the circumstances under which they were made, and (b) at the
request of the Buyer, promptly prepare and furnish to the Buyer a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made. The Buyer agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in this Section
4.1.6, the Buyer will forthwith discontinue disposition of Registrable
Securities pursuant to the Registration Statement until the receipt by the Buyer
of the copies of the supplemented or amended prospectus and, if so directed by
the Company, will promptly deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in the Buyer's possession of the
prospectus relating to such Registrable Securities current at the time of
receipt of such notice; provided, that in no event shall the Company prohibit
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the Buyer's disposition of Registrable Securities for more than 20 consecutive
days or more than 45 days in any 12 month period.
4.2 Expenses. Except as provided in Section 4.1.2 and except for
reasonable legal fees and expenses of the Buyer not to exceed $2,500 in
aggregate, which will be paid by the Company, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby will be
paid by the party incurring such costs and expenses.
4.3 Best Efforts. Subject to the terms and conditions of this Agreement,
each of the parties hereto will use its best efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement.
4.4 Restrictions on Transfer of Note and Warrant. The Note and the Warrant
issued under this Agreement, including any Notes or Warrants issued upon the
transfer of the Note or the Warrant, shall be stamped or otherwise imprinted
with a legend in substantially the following form:
"This [security] has not been registered under the Securities Act of
1933, as amended, or applicable State securities laws, if any, and
may not be transferred in the absence of such registration or
receipt by the Company of an opinion of counsel reasonably
satisfactory to the Company that the transfer may be properly made
under an exemption from registration under such Act and such laws."
4.5 Information. From and after the date hereof and through August 31,
2000, the Company shall provide the Buyer with such information related to the
Company as may be reasonably requested by the Buyer, subject to the Buyer's
agreement, which is hereby made, to (i) maintain the confidentiality of any such
information which is confidential and (ii) to refrain from trading the Common
Stock while in possession of material confidential information.
4.6 Indemnification in Connection with the Registration Statement.
4.6.1 Indemnification by the Company. The Company will, and hereby
does, indemnify and hold harmless, the Buyer and its directors, officers,
affiliates, agents, successors and assigns from and against any losses, claims,
damages or liabilities to which the Buyer may become subject under the
Securities Act or otherwise, including, without limitation, the
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fees and expenses of legal counsel, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances in which
they were made not misleading, or any violation by the Company of the Securities
Act or any rule or regulation thereunder applicable to the Company and the
Company will promptly reimburse the Buyer for any legal or any other expenses
reasonably incurred by the Buyer in connection with investigating or defending
any such loss, claim, liability, action or proceeding; provided, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company through an instrument duly executed by or on behalf of the Buyer
specifically stating that it is for use in the preparation thereof. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Buyer and shall survive the transfer of the
Registrable Securities by the Buyer.
4.6.2 Indemnification by the Buyer. The Buyer hereby agrees to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 4.6.1) the Company, and each director, officer and employee of
the Company, with respect to any untrue statement or alleged untrue statement of
a material fact contained in or any omission or alleged omission to state
therein a material fact in the Registration Statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by or on behalf of the Buyer specifically stating that
it is for use in the preparation of the Registration Statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement;
provided, however, that the liability of the Buyer under this Section 4.6.2
shall be limited to the amount of proceeds received by the Buyer in the offering
giving rise to such liability. Such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of the Company or
any such director, officer or employee
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and shall survive the transfer of such securities by such seller.
4.6.3 Notices of Claims. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in this Section 4.6, such indemnified party will, if a claim
in respect thereof is to be made against an indemnifying party, give written
notice to the latter of the commencement of such action; provided, however, that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under this Section 4.6, except
to the extent that the indemnifying party is actually prejudiced by such failure
to give notice. In case any such action is brought against an indemnified party,
the indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly notified to
the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
that if the indemnified party reasonably believes it is advisable for it to be
represented by separate counsel because there exists a conflict of interest
between its interests and those of the indemnifying party with respect to such
claim, or there exist defenses available to such indemnified party which may not
be available to the indemnifying party, or if the indemnifying party shall fail
to assume responsibility for such defense, the indemnified party may retain
counsel satisfactory to it and the indemnifying party shall pay all fees and
expenses of such counsel. No indemnifying party shall be liable for any
settlement of any action or proceeding effected without its written consent,
which consent shall not be unreasonably withheld or delayed. No indemnifying
party shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation or which requires action other than the payment of money by the
indemnifying party. Each indemnified party shall furnish such information
regarding itself or the claim in question as an indemnifying party may
reasonably request in writing and as shall be reasonably requested in connection
with the defense of such claim and litigation resulting therefrom.
4.6.4 Contribution. If the indemnification provided for in this
Section 4.6 shall for any reason be held by a court of competent jurisdiction to
be unavailable to an indemnified party in respect of any loss, claim, damage or
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liability, or any action in respect thereof, then, in lieu of the amount paid or
payable under Section 4.6.1 or 4.6.2 hereof, the indemnified party and the
indemnifying party shall contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating the same), (a) in such proportion as is appropriate to
reflect the relative fault of the Company and the Buyer in connection with the
statement or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
consideration (the relative fault of the Company and such prospective sellers to
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Buyer and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission) or (b) if the allocation
provided by clause (a) above is not permitted by applicable law, in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company and the Buyer from the offering of the securities covered by the
Registration Statement. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. In addition, no person shall be obligated to contribute
hereunder any amounts in payment of any settlement of any action or claim
effected without such person's consent, which consent shall not be unreasonably
withheld or delayed.
4.6.5 Other Indemnification. Indemnification and contribution
similar to that specified in the preceding sections of this Section 4.6 (with
appropriate modifications) shall be given by the Company and the Buyer with
respect to any required registration or other qualification of securities under
any federal or state law, rule or regulation of any governmental authority other
than the Securities Act.
4.6.6 Indemnification Payments. The indemnification and contribution
required by this Section 4.6 shall be made by prompt periodic payments of the
amount thereof during the course of the investigation or defense, as and when
bills are received or expense, loss, damage or liability is incurred.
4.7 Existing and Future Warrants. The Company will not, without the prior
written consent of the Buyer, reduce the exercise price of any warrants that are
outstanding as of the date hereof. The Company will not, without the prior
written consent of the Buyer, which consent will not be unreasonably withheld or
delayed, issue additional warrants to purchase Common Stock other than as set
forth on Schedule 2.4 hereof.
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4.8 Perfection of Security Interest. Promptly after the Closing, the
Company will file, or cause to be filed, UCC financing statements (whether Form
UCC-1 naming the Buyer as the Secured Party or Form UCC-3 assigning the
financing statements currently on file to the Buyer) with the Secretary of State
of New York and the County Clerk of New York county.
5. MISCELLANEOUS PROVISIONS.
5.1 Survival of Representations. All representations and warranties made
by either party pursuant to this Agreement shall survive the Closing.
5.2 Indemnification. In addition to the indemnification provided for in
Section 4.6, each of the parties hereto (the "Indemnifying Party") shall, to the
fullest extent permitted under applicable law, indemnify and hold the other (the
"Indemnified Party") harmless against any losses, claims, damages, liabilities,
actions, judgments, causes of action, costs or expenses including without
limitation, interest, penalties and attorneys' fees and expenses (the
"Liabilities") asserted against, resulting from, imposed upon or incurred or
suffered by an Indemnified Party as a result of, arising out of or relating to
any breach of a representation, warranty, covenant or agreement contained in the
Operative Agreements. All procedural and operating terms of such indemnification
shall be as set forth in Section 4.6.
5.3 Amendment and Modification. This Agreement may be amended, modified or
supplemented only by written agreement of the Company and the Buyer.
5.4 Waiver of Compliance; Consents. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party or parties
entitled to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
5.4.
5.5 Investigations. The respective representations and warranties of the
Company and the Buyer contained herein shall not be deemed waived or otherwise
affected by any investigation made by any party hereto.
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5.6 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered faxed to the numbers set forth
below with a record of receipt, personally or mailed by registered or certified
mail (return receipt requested), postage prepaid, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice, provided that notices of a change of address shall be effective
only upon receipt thereof):
(a) if to the Company, to
Kideo Productions, Inc.
611 Broadway
Suite 523
New York, New York 10012
Attention: President
Fax: 212-505-6605
with a copy to
Solovay Edlin & Eiseman, P.C.
845 Third Avenue
New York, New York 10022
Attention: Michael B. Solovay, Esq.
Fax: 212-355-4608
(b) if to the Buyer, to
White Ridge Investments, Ltd.
c/o Gretton House
P.O. Box 65
Duke Street
Turks & Caicos Islands
With a copy to
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attention: Christopher S. Auguste, Esq.
Fax: 212-704-6288
5.7 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties, nor is
this Agreement intended to confer upon any other person except the parties
hereto any rights or remedies hereunder.
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5.8 Governing Law. This Agreement shall be governed by the laws of the
State of Delaware (regardless of the laws that might otherwise govern under
applicable Delaware principles of conflicts of law) as to all matters, including
but not limited to matters of validity, construction, effect, performance and
remedies.
5.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.10 Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.
5.11 Entire Agreement. This Agreement, including the exhibits hereto and
the documents and instruments referred to herein, embodies the entire agreement
and understanding of the parties hereto in respect of the transactions
contemplated by this Agreement. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such
transactions.
5.12 Survival of Certain Agreements. All agreements contained in this
Agreement which by their terms shall survive the Closing hereunder, including,
without limitation, the agreements contained in Sections 4.1 through 4.6 and 5.2
hereof and this Section 5.12, shall survive the Closing for an indefinite period
of time.
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company and the Buyer have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
KIDEO PRODUCTIONS, INC.
By: __________________________
Richard Bulman, President
WHITE RIDGE INVESTMENTS, LTD.
By: __________________________
Name:
Title:
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SCHEDULE 1
WIRE TRANSFER INSTRUCTIONS
Citibank
120 Broadway
New York, New York 10043
Attention: Jeanne Kraemer
Solovay Edlin & Eiseman, P.C. Attorney Trust
Acct. No. 37254709
Bank ABA# 021000089
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SCHEDULE 2.4
Warrants
Exercise Price Number of Shares of Common Stock
-------------- --------------------------------
$4.00 1,611,540
$3.60 83,975
$0.80 2,168,187
$0.80 70,000 (GKM fee)
$1.25 200,000 (Picturevision)
$2.00 100,000 (consultant)
$3.00 100,000 (consultant)
$4.00 100,000 (consultant)
Options
Exercise Price Number of Shares of Common Stock
-------------- --------------------------------
$2.50 251,000
$1.00 99,000
Under the terms of a negotiated but unexecuted extension of his employment
contract, Richard Bulman is to receive options to purchase 150,000 shares
of common stock at a price of $1.00. The Company does not have such number
of options available under its option plan but will propose a new plan at
its next meeting of stockholders.
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