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Title: |
Asset Purchase Agreement |
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Date: |
2001 |
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Preview shows 28KB of 202KB total |
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$66 |
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#1289594 |
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ASSET PURCHASE AGREEMENT
-------------------------
between
CALIFA ENTERTAINMENT GROUP, INC.,
V.O.D., INC.,
STEVEN HIRSCH,
DEWI JAMES
&
WILLIAM ASHER
and
PLAYBOY ENTERPRISES, INC.
dated as of
June 29, 2001
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission.
The omissions have been indicated by asterisks ("*****"), and the omitted
text has been filed separately with the Securities and Exchange Commission.
TABLE OF CONENTS
Page
ARTICLE 1 ASSET PURCHASE......................................................1
1.1 Purchase and Sale of Assets.................................1
1.2 Assumption of Certain Liabilities...........................2
ARTICLE 2 PURCHASE PRICE AND ALLOCATION.......................................4
2.1 Purchase Price..............................................4
2.2 Base Purchase Price.........................................6
2.3 Performance-Based Purchase Price............................7
2.4 Purchase Price Allocation...................................7
2.5 Issuance of PEI Shares......................................8
2.6 *****......................................................14
ARTICLE 3 CLOSING 14
3.1 Closing Date...............................................14
3.2 Items to be Delivered at the Closing by the
Seller Parties........................................14
3.3 Items to be Delivered at the Closing by PEI............. ..15
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE SELLER PArties...............15
4.1 Organization and Related Matters...........................16
4.2 Ownership of Purchased Assets..............................16
4.3 Authorization; No Conflicts................................16
4.4 Financial Statements; No Changes; No Other Liabilities
or Contingencies......................................17
4.5 Receivables................................................18
4.6 Accounting Records; Internal Controls......................18
4.7 Tax and Other Returns and Reports..........................18
4.8 Material Contracts.........................................20
4.9 Intangible Property........................................20
4.10 Legal Proceedings..........................................20
4.11 Insurance..................................................21
4.12 Approvals and Permits......................................21
4.13 Compliance with Law........................................21
4.14 Employee Matters...........................................21
4.15 Certain Interests..........................................22
4.16 Intercompany Transactions..................................22
4.17 Bank Accounts, Powers, etc.................................22
4.18 No Brokers or Finders......................................22
4.19 Accuracy of Information....................................23
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PEI..............................23
5.1 Organization and Related Matters...........................23
5.2 Authorization..............................................23
5.3 No Conflicts...............................................23
5.4 PEI Shares.................................................24
5.5 No Brokers or Finders......................................24
5.6 Legal Proceedings..........................................24
5.7 SEC Filings................................................24
5.8 Bankruptcy.................................................24
ARTICLE 6 PRE-CLOSING COVENANTS..............................................24
6.1 Notification of Certain Matters............................24
6.2 Conduct of the Business Prior to the Closing Date..........24
6.3 Preservation of Business Prior to Closing Date.............27
6.4 Permits and Approvals......................................27
6.5 Exclusivity................................................27
6.6 Sales Tax..................................................28
ARTICLE 7 CONTINUING COVENANTS...............................................28
7.1 Non-Competition Covenants..................................28
7.2 Nondisclosure..............................................30
7.3 ***** .....................................................30
7.4 Employee Related Obligations...............................30
7.5 Bulk Sales Laws............................................31
7.6 Collective Action..........................................31
7.7 Program Supply Agreements..................................31
ARTICLE 8 CONDITIONS OF PURCHASE.............................................31
8.1 General Conditions.........................................31
8.2 Conditions to Obligations of PEI...........................32
8.3 Conditions to Obligations of Sellers.......................33
ARTICLE 9 TERMINATION OF OBLIGATIONS; SURVIVAL...............................33
9.1 Termination of Agreement...................................33
9.2 Effect of Termination......................................34
9.3 Survival of Representations and Warranties.................34
ARTICLE 10 INDEMNIFICATION...................................................34
10.1 Obligations of Sellers.....................................34
10.2 Obligations of PEI.........................................35
10.3 Certain Tax Matters........................................35
10.4 Procedure..................................................36
10.5 Tax Adjustments............................................37
10.6 Limitation on Indemnity....................................38
10.7 Offset.....................................................39
10.8 Notice.....................................................39
10.9 Survival...................................................39
ARTICLE 11 DISPUTE RESOLUTION................................................39
11.1 Alternate Dispute Resolution...............................39
11.2 Notification and Negotiation...............................40
11.3 Arbitration................................................40
11.4 Rules of Arbitration.......................................40
11.5 Damages....................................................41
11.6 Fees and Expenses..........................................41
11.7 Confidential Negotiations and Proceedings..................42
11.8 Service of Process.........................................42
11.9 Choice of Law; Place of Arbitration........................42
11.10 Availability of Equitable Relief...........................42
11.11 Survival...................................................42
ARTICLE 12 GENERAL...........................................................43
12.1 Cash Payments..............................................43
12.2 Waivers, Remedies Cumulative, Amendments, etc..............43
12.3 Schedules; Exhibits; Integration...........................43
12.4 Further Assurances.........................................43
12.5 Governing Law..............................................43
12.6 Representation By Counsel; Interpretation..................44
12.7 No Assignment; Third Party Beneficiary.....................44
12.8 Severability...............................................44
12.9 Headings...................................................44
12.10 Counterparts...............................................44
12.11 Public Announcements.......................................44
12.12 Confidentiality............................................45
12.13 Parties in Interest........................................46
12.14 Performance by Subsidiaries................................46
12.15 Notices....................................................47
12.16 Expenses...................................................48
12.17 Knowledge Convention.......................................48
12.18 Specific Performance.......................................48
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is entered into as of
June 29, 2001 (the "Effective Date") among Playboy Enterprises, Inc., a
Delaware corporation ("PEI"), on the one hand, and Califa Entertainment
Group, Inc., a California corporation ("Califa"), V.O.D., Inc., a California
corporation ("VODI"; and together with Califa, the "Sellers"), Steven
Hirsch, an individual ("Hirsch"), Dewi James, an individual ("James"), and
William Asher, an individual ("Asher"; and together with Hirsch and James,
the "Stockholders"), on the other hand. Sellers, Stockholders and their
respective Affiliates are collectively the "Seller Parties". Capitalized
terms used in the text of this Agreement without definition are defined in
Schedule 1.
R E C I T A L S
A. Sellers own and operate the Business and Stockholders are the
record and beneficial owners of 100% of the Equity Securities of Sellers.
B. Califa desires to sell, and PEI desires to purchase
substantially all of Califa's assets used in the operation and distribution
of the television channels known as "The Hot Network" and "The Hot Zone" on
the terms and conditions set forth in this Agreement (the "Califa Assets").
C. VODI desires to sell, and PEI desires to purchase substantially
all of VODI's assets used in the operation and distribution of the
television channel known as "Vivid TV" and all of the assets used in the
operation and distribution of its video on demand business (other than the
Excluded VODI Businesses) on the terms and conditions set forth in this
Agreement (the "VODI Assets").
In consideration of the mutual promises contained herein and
intending to be legally bound, the parties agree as follows:
ARTICLE 1
ASSET PURCHASE
1.1 PURCHASE AND SALE OF ASSETS.
1.1.1 Purchased Assets. Subject to the terms and conditions of this
Agreement, on the Closing Date Sellers will sell to PEI or its
designated subsidiaries the Califa Assets and VODI Assets, which
are identified in Schedule 1.1.1 (the "Purchased Assets"); *****.
Sellers will identify in Schedule 1.1.1 which Purchased Assets are
Califa Assets, Vivid TV Assets (as defined below) and Other VODI
Assets (as defined below).
1.1.2 Excluded Assets. The following assets used in the Business or
in the Excluded VODI Businesses are expressly excluded from the
Purchased Assets (the "Excluded Assets"):
(a) Tangible personal property consisting of vehicles, furniture,
fixtures, equipment, machinery and other tangible personal property
not identified in Schedule 1.1.1
(b) The Vivid Marks, which will be licensed to PEI pursuant to the
Trademark License Agreement.
(c) Intangible Property not identified in Schedule 1.1.1.
(d) The assets identified in Schedule 1.1.2; provided that, without
limiting Section 4.2, assets of Sellers unintentionally omitted
from Schedule 1.1.2 are not Purchased Assets unless identified on
Schedule 1.1.1.
1.2 ASSUMPTION OF CERTAIN LIABILITIES.
1.2.1 Liabilities Not Assumed. Except for the liabilities and
obligations specifically assumed pursuant to and identified in
Section 1.2.2, PEI will not assume, will not take the Purchased
Assets subject to and will not be liable for, any liabilities or
obligations of any kind or nature, whether absolute, contingent,
accrued, known or unknown, whenever arising, of any of the Seller
Parties (the "Excluded Liabilities"), including:
(a) Liabilities or obligations incurred, arising from or out of, in
connection with or as a result of claims made by or against any of
the Seller Parties or against PEI or its Affiliates as successor(s)
to the Business with respect to the Purchased Assets or conduct of
the Business prior to the Closing Date, including as a result of
the breach of any Contract by any of the Seller Parties prior to
the Closing Date or the violation by any of the Seller Parties of
any applicable Law prior to the Closing Date, whether asserted
before or after the Closing Date *****.
(b) Any liability for indebtedness for borrowed money of any of the
Seller Parties, except as expressly provided for in Section
1.2.2(c), including amounts owed to Hirsch and James for loans in
the amount of $232,950 each, or amounts owed to Califa in the
amount of $1,100,160.
(c) Liabilities or obligations (whether assessed or unassessed) of
any of the Seller Parties for any Taxes, including any Taxes
arising by reason of the transactions contemplated herein, for any
period or portion thereof ending on or prior to the Closing Date,
except as expressly provided for in Section 6.6.
(d) Fees and expenses of any of the Seller Parties incurred in
connection with the transactions contemplated in this Agreement.
(e) Liabilities or obligations to former or current officers,
directors, shareholders, employees, Affiliates or Associates of any
of the Seller Parties, including any severance arrangements of
employees of Califa not employed by PEI following the Closing in
accordance with Section 7.4 and any intercompany loans not
discharged prior to Closing.
(f) Liabilities or obligations of any of the Seller Parties
incurred in connection with or arising out of any real property
lease, except as provided in Section 1.2.2(d).
(g) Liabilities or obligations arising out of any of the Seller
Parties' obligations to MediaPath LLC, a Connecticut limited
liability company ("MediaPath") and/or James Cofer, an individual
("Cofer") under that certain Services Agreement dated March 15,
1999 between Califa and Cofer (the "Services Agreement"), which
was assigned to and assumed by MediaPath effective September 15,
2000, and a verbal agreement between VODI and MediaPath on
substantially the same terms as provided for in the Services
Agreement, except any sales bonus due to MediaPath and/or Cofer
after the Closing relating to an affiliation agreement between
Califa and Echostar.
(h) Liabilities or obligations arising out of any of the Sellers
Parties' obligations to MediaPath and/or Cofer under that certain
indemnification agreement between Califa and Cofer executed
contemporaneously with the execution of the Services Agreement (the
"Indemnification Agreement"), and a verbal agreement between VODI
and MediaPath on substantially the same terms as provided for in
the Indemnification Agreement.
(i) Liabilities or obligations arising out of any of the Seller
Parties' obligations to any licensor under the portions of the
program supply agreements listed in Schedule 1.1.1 (the "Program
Supply Agreements") retained in part by any of the Seller Parties.
1.2.2 Assumed Liabilities. Notwithstanding Section 1.2.1, on the
Closing Date PEI will assume, and will be liable for only the
liabilities or obligations specifically identified in this Section
1.2.2 (the "Assumed Liabilities"), including:
(a) Liabilities or obligations arising under the terms of Contracts
assigned to and assumed by PEI pursuant to this Agreement (to the
extent relating to and arising from the rights and obligations
assumed by PEI herein), but excluding any liability or obligation
arising as a result of (i) a breach of or non-payment of any
Contract by any of the Seller Parties prior to the Closing Date,
(ii) a breach of any Contract not disclosed on Schedule 1.1.1 which
breach arises as a consequence of the consummation of the
transactions contemplated by this Agreement (other than any
Contract assigned to and assumed by the Seller Parties or their
Affiliates in connection with the original sale of Spice assets to
Califa pursuant to that certain asset purchase agreement dated as
of May 29, 1998 (the "Spice Asset Purchase Agreement") if a copy of
such Contract was not provided at or before the closing of the
Spice Asset Purchase Agreement), or (iii) any non-payment under any
Contract by any of the Seller Parties relating to any period prior
to the Closing Date.
(b) Any trade payables incurred in the ordinary course of business
by Sellers in connection with the Business as of the Closing Date
that are not more than 90 days past due.
(c) The remaining principal and all accrued interest under the
$10,000,000 promissory note of Califa in favor of an Affiliate of
PEI dated March 15, 1999 and the accrued and remaining
non-competition payments, as amended, owing from Califa to an
Affiliate of PEI arising from the Spice Asset Purchase Agreement,
which payments totaled $1,600,000 as of May 31, 2001.
(d) Liabilities or obligations arising under the terms of the real
property lease(s) listed in Schedule 1.1.1, but excluding any
liability or obligation arising as a result of (i) a breach of any
real property lease by any of the Seller Parties prior to the
Closing Date, (ii) a breach of any real property lease not
identified on Schedule 1.1.1 which breach arises as a consequence
of the consummation of the transactions contemplated by this
Agreement, or (iii) any non-payment under any real property lease
by any of the Seller Parties relating to any period prior to the
Closing Date.
(e) Any sales bonus due after the Effective Date to any employee or
independent contractor of Sellers listed in and pursuant to
arrangements described in Schedule 1.2.2 for sales arising prior to
the Closing Date.
ARTICLE 2
PURCHASE PRICE AND ALLOCATION
2.1 PURCHASE PRICE. The total purchase price (the "Purchase Price") to be
paid to Sellers by PEI for the Purchased Assets, the license granted to PEI
under the Trademark License Agreement and the Non-Competition Covenants
will be the sum of the amounts described in Sections 2.2 and 2.3. Whenever
any payment under this Section 2 is due on a day that is not a Business
Day, such payment will instead be paid on the Business Day immediately
following the applicable payment date.
2.1.1 Gross Purchase Price Allocation between Sellers. Subject to
Section 2.6, each payment of the Purchase Price will be allocated
40.37% to the Califa Assets and 59.63% to the VODI Assets. *****
2.1.2 Acceleration of Payments. PEI may accelerate all or any
portion of the remaining unpaid Purchase Price, but only by making
the accelerated payment(s) in cash subject to the following:
(a) From the Closing until the end of the 18th month following the
Closing, PEI may not accelerate any portion of the remaining unpaid
Purchase Price unless the parties mutually agree in good faith
negotiations upon a discount rate to be applied to the outstanding
payments in order to determine the accelerated payment(s).
(b) From the beginning of the 19th month following the Closing
until the end of the 36th month following the Closing, PEI may
elect to accelerate all or any portion of the remaining unpaid
Purchase Price as follows: PEI will notify Sellers of its intention
to accelerate and the parties will negotiate in good faith to
determine the appropriate discount rate to be applied to the
outstanding payments in order to determine the accelerated
payment(s). If the parties are unable to agree on such a discount
rate within 10 Business Days of the notice of PEI's intent to
accelerate, PEI may, at its sole discretion, elect to accelerate
payment at a 10% discount rate.
(c) After the end of the 36th month following the Closing, PEI may
elect to accelerate all or any portion of the remaining unpaid
Purchase Price as follows: PEI will notify Sellers of its intention
to accelerate and the parties will negotiate in good faith to
determine the appropriate discount rate to be applied to the
outstanding payments in order to determine the accelerated
payment(s). If the parties are unable to agree on such a discount
rate within 10 Business Days of the notice of PEI's intent to
accelerate, PEI may, at its sole discretion, elect to accelerate
payment at a 12% discount rate.
(d) *****
2.1.3 Late Cash Payments. If PEI does not make any cash payments
owing to Sellers when due, PEI will pay Sellers interest on the
cash due as follows (such interest will accrue from but will
exclude the date payment was due and will include the date payment
is made and will be paid together with the relevant cash payment):
(a) Prime Rate on the date the payment was due plus 200 basis
points for the first 90 days following the date the cash payment
was due; and
(b) Prime Rate on the date the payment was due plus 400 basis
points for the 91st through 180th day following the date the cash
payment was due.
2.1.4 Remedies. Upon the occurrence of an Event of Default, Sellers
may, in their sole discretion but upon delivering not less than 5
Business Days' written notice to PEI, exercise any or all of the
following rights:
(a) Accelerate (i) the remaining unpaid Purchase Price due under
this Agreement and require the immediate payment in cash thereof,
and *****; provided however that if Sellers accelerate the Purchase
Price pursuant to this Section 2.1.4(a) and PEI pays Sellers the
remaining unpaid Purchase Price in cash due under this Agreement,
Sellers may not exercise any other remedy provided for below;
(b) Notwithstanding the provisions of Article 11, file suit and
obtain judgment to collect all amounts owing from PEI;
(c) Terminate the Non-Competition Covenants; provided that if the
Non-Competition Covenants are terminated (under this Agreement or
the Output Agreement) PEGI's Affiliate PEI will be deemed to have
automatically released MediaPath LLC, a Connecticut limited
liability company and James Cofer, an individual, from covenants in
favor for PEI contained in the terms of that certain Termination
and Non-Competition Agreement dated June 26, 2001 between Califa,
VODI and PEI, on the one hand, and MediaPath and Cofer, on the
other hand.
(d) Terminate the Trademark License Agreement and the Output
Agreement.
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