<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 10, 1997
FOUR MEDIA COMPANY
(Exact name of registrant as specified in its charter)
CALIFORNIA
(State or other jurisdiction of incorporation)
0-21943 95-4599440
(Commission File Number) (I.R.S. Employer Identification No.)
2813 WEST ALAMEDA AVENUE 91505-4455
BURBANK, CALIFORNIA (Zip Code)
(Address of principal executive offices)
(818) 840-7000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
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<PAGE>
Item 2. Acquisition or Disposition of Assets.
------------------------------------
On March 10, 1997, Four Media Company ("4MC"), through its wholly-
owned subsidiary AV Acquisition Corp. ("AV"), completed the acquisition of
equipment, accounts receivable and substantially all of the other assets of
Anderson Film Industries Corp. d/b/a Anderson Video ("Anderson") from Earle
Hagen, assignee for the benefit of Anderson's creditors (the "Assignee").
Concurrently, 4MC completed the acquisition from certain of Anderson's creditors
of certain secured claims against Anderson and certain material personal
property leases utilized in Anderson's business, as well as the payment and
satisfaction of certain liens. In addition, AV completed the acquisition of
equipment, accounts receivable and substantially all of the other assets of
Anderson Graphics, LLC ("Graphics").
The aggregate cost of the transactions totalled approximately
$10,000,000, of which $100,000 was paid to the Assignee for the acquired
Anderson assets, an aggregate of approximately $8,700,000 was paid to personal
property lessors, secured creditors and lienholders of Anderson, approximately
$650,000 was paid for the Graphics assets, and the balance represents related
transaction costs. The consideration paid was based, in each instance, upon
arms-length negotiations between the relevant parties as to the fair value of
acquired assets, claims and/or leases, as applicable.
Anderson provides a variety of technical and creative services to its
television and studio customers. Graphics provides graphic services to its
motion picture, television and video customers and to certain customers of
Anderson. AV intends to conduct the Anderson and Graphics businesses in
substantially similar manner as were conducted by Anderson and Graphics.
In connection with the asset acquisition, 4MC entered into three-year
employment agreements, with each of Darrell L. Anderson and Michael Doggett, the
Chairman of the Board and Chief Executive Officer, respectively, of Anderson,
and a three-year consulting agreement with Darrell A. Anderson.
The source of funds used for this acquisition was from the
proceeds of 4MC's initial public offering.
Item 7. Financial Statements and Exhibits.
---------------------------------
(a) Financial Statements of Business Acquired. It is impractical to
-----------------------------------------
provide the required financial statements for Anderson and Graphics at this
time. 4MC intends to file the required financial statements as soon as
possible, but not later than 60 days after the date this Form 8-K is required to
be filed.
(b) Pro Forma Financial Information. It is impractical to provide the
-------------------------------
required pro forma financial information for Anderson and Graphics at this time.
4MC intends to file the required pro forma financial information as soon as
possible, but not later than 60 days after the date this Form 8-K is required to
be filed.
(c) Exhibits
--------
10.1 Letter Agreement dated February 24, 1997 between Anderson
Film Industries Corp. d/b/a/ Anderson Video and Four Media
Company.
2.
<PAGE>
10.2 Asset Purchase and Sale Agreement between Earle Hagen, Assignee
for the Benefit of Creditors of Anderson Film Industries Corp.
d/b/a Anderson Video and AV Acquisition Corp. dated March 7, 1997
(without exhibits or schedules).
10.3 Agreement dated March 10, 1997 between AV Acquisition Corp. and
Anderson Graphics, LLC (without exhibits).
10.4 Employment Agreement dated March 10, 1997 between Four Media
Company and Darrell L. Anderson.
10.5 Employment Agreement dated March 10, 1997 between Four Media
Company and Michael Doggett.
10.6 Consulting Agreement dated March 10, 1997 between Four Media
Company and Darrell A. Anderson.
3.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FOUR MEDIA COMPANY
Date: March 24, 1997 By /s/ John H. Sabin
------------------
John H. Sabin
Chief Financial Officer
4.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
- ---------- -----------------------------------------------------------
<S> <C>
10.1 Letter Agreement dated February 24, 1997 between
Anderson Film Industries Corp. d/b/a/ Anderson Video and
Four Media Company.
10.2 Asset Purchase and Sale Agreement between Earle Hagen,
Assignee for the Benefit of Creditors of Anderson Film
Industries Corp. d/b/a Anderson Video and AV Acquisition
Corp. dated March 7, 1997 (without exhibits or schedules).
10.3 Agreement dated March 10, 1997 between AV Acquisition
Corp. and Anderson Graphics, LLC (without exhibits).
10.4 Employment Agreement dated March 10, 1997 between
Four Media Company and Darrell L. Anderson.
10.5 Employment Agreement dated March 10, 1997 between
Four Media Company and Michael Doggett.
10.6 Consulting Agreement dated March 10, 1997 between Four
Media Company and Darrell A. Anderson.
</TABLE>
5.
<PAGE>
EXHIBIT 10.1
February 24, 1997
Anderson Film Industries Corp.
d/b/a Anderson Video
100 Universal City Plaza Bldg., Suite 153
Universal City, CA 91608
Attention: Michael Doggett, Chief Executive Officer
Dear Mr. Doggett:
This letter sets forth the principal terms and conditions under which Four
Media Company, its subsidiaries, affiliates and/or assigns ("4MC") will acquire
certain assets of, and claims against, Anderson Film Industries Corp. d/b/a
Anderson Video ("Anderson Video"). Except as provided in Section 4 below, all
property purchased shall be free and clear of all liens, claims, interests and
encumbrances of any kind.
1. General Assignment. Subject to the terms and conditions set forth
------------------
herein, Anderson Video will make a general assignment for the benefit of its
creditors of all of its assets (the "Assignment").
2. Acquisition. A newly organized wholly-owned subsidiary of 4MC ("AV
-----------
Acquisition Corp.") will acquire (the "Acquisition") certain assets of Anderson
Video from the assignee for the benefit of creditors (the "Assignee"). The
terms and conditions of the Acquisition shall be consistent with the terms of
this Letter Agreement and shall be set forth in a definitive purchase and sale
agreement (the "Asset Purchase Agreement") to be entered into by AV Acquisition
Corp. and the Assignee. The assets to be sold to AV Acquisition Corp. will
include substantially all of the assets of Anderson Video.
3. Representations and Warranties. In conjunction with the Assignment and
------------------------------
the Acquisition, Darrell L. Anderson and Michael Doggett will join in certain
representations and warranties (the "Representations and Warranties") to be made
by Anderson Video for the benefit of AV Acquisition Corp. The Representations
and Warranties, relating to certain significant aspects of the assets,
liabilities, business operations and history of Anderson Video, among other
matters, will be made and delivered by Anderson Video and such principals to the
Assignee for the express benefit of, and delivery to, AV Acquisition Corp. in
connection with the Acquisition.
4. No Assumption of Liabilities. Neither 4MC nor AV Acquisition Corp.
----------------------------
will assume any debts, obligations or liabilities whatsoever of Anderson Video.
However, the Acquisition will be subject to certain specified security interests
and leases which will exist as of the "Closing" (as defined below) and continue
after the Closing, as described in Paragraphs 6 and 7 below.
<PAGE>
Anderson Film Industries Corp.
Attention: Michael Doggett, Chief Executive Officer
February 24, 1997
Page 2
5. Closing. The Closing of the Acquisition (the "Closing") will occur as
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soon as practicable following the making of the Assignment by Anderson Video in
order to attempt to minimize disruption of the ongoing business operations of
Anderson Video.
6. Settlement with Secured Creditors. Upon 4MC's satisfactory completion
---------------------------------
of negotiations with (a) third parties (the "Designated Secured Creditors")
holding material claims against Anderson Video, which claims are secured by
certain personal property utilized in the operation of Anderson Video's business
(the "Secured Claims") and (b) third parties ("Designated Personal Property
Lessors") holding leases of material personal property utilized in Anderson
Video's business (the "Designated Personal Property Leases"), 4MC will enter
into written agreements for the purchase of the Secured Claims and all related
rights from the Designated Secured Creditors, and for the purchase of the
Designated Personal Property Leases and all related rights from the Designated
Personal Property Lessors. The Secured Claims and the Designated Personal
Property Leases are collectively referred to as the "Chattel Paper." The
purchase price to be paid by 4MC to each of the Designated Secured Creditors and
the Designated Secured Personal Property Lessors will be in 4MC's sole
discretion. AV Acquisition Corp. and 4MC, respectively, shall seek to negotiate
the most favorable pricing and terms in connection with the Acquisition and the
purchase of the Chattel Paper, respectively. The closing of each purchase of
Chattel Paper will be contingent upon the consummation of the Acquisition and
will occur immediately following the Closing. AV Acquisition Corp.'s obligation
to proceed with the Acquisition will be contingent upon the negotiation by 4MC
of agreements for the purchase of all the Chattel Paper satisfactory to 4MC in
its sole discretion.
7. Conditions to Closing. 4MC's and AV Acquisition Corp.'s obligation to
---------------------
close the Acquisition and to purchase the Chattel paper is subject to the
following:
a. Satisfactory completion of due diligence by 4MC and AV Acquisition
Corp. regarding the assets, operations, historic financial performance and
future prospects of Anderson Video (including without limitation,
satisfactory completion of review by 4MC, its accountants and attorneys of
all of the books, records and financial information regarding Anderson
Video's business);
b. Unanimous consent of Anderson Video's Board of Directors and
consent of two-thirds of Anderson Video's shareholders;
<PAGE>
Anderson Film Industries Corp.
Attention: Michael Doggett, Chief Executive Officer
February 24, 1997
Page 3
c. Execution of employment contracts with Darrell L. Anderson and
Michael J. Doggett in substantially the form previously delivered to Mssrs.
Anderson and Doggett;
d. Satisfactory negotiation with Anderson Video's landlord;
e. No material deterioration of Anderson Video's business operations
between the execution date hereof and the Closing;
f. All necessary consents shall have been obtained prior to Closing;
g. Satisfactory completion and execution of definitive documentation
regarding the Acquisition in substantially the form of the Asset Purchase
and Sale Agreement previously delivered to Anderson Video; and
h. Satisfactory completion and execution of documentation regarding
the purchase of the Chattel Paper.
Anderson Video's obligation to make Assignment and execute and deliver
the Representations and Warranties in connection with the Acquisition is subject
to the following:
a. Approval by the Board of Directors of 4MC and AV Acquisition Corp.
of the Acquisition and the agreements for the purchase of the Chattel
Paper;
b. Execution of employments contracts with Darrell L. Anderson and
Michael J. Doggett in substantially the form previously delivered to Mssrs.
Anderson and Doggett;
c. Execution of definitive documentation regarding the Acquisition in
substantially the form of the Asset Purchase and Sale Agreement previously
delivered to Anderson Video; and
d. Execution by 4MC of agreements for the purchase of the Chattel
Paper by 4MC.
8. Due Diligence Access. Anderson Video's officers, directors,
--------------------
employees, agents and representatives will cooperate with all reasonable
requests for information regarding assets, liabilities, operations, customers
and any other such matters as 4MC deems relevant to its due diligence review.
Anderson Video also authorizes 4MC to contact any Anderson Video client,
creditor, agent or representative to discuss matters relevant to the
transactions contemplated hereby and agrees to cooperate with 4MC
<PAGE>
Anderson Film Industries Corp.
Attention: Michael Doggett, Chief Executive Officer
February 24, 1997
Page 4
in connection with any such discussions, as reasonably requested by 4MC. 4MC
agrees to advise Anderson Video prior to all such inquiries made to outside
persons or entities. 4MC shall only communicate with MCA regarding the Anderson
Video facilities lease with an Anderson Video representative.
9. Closing and Termination. The Closing shall take place as soon as
-----------------------
practicable but in no event later than 12:00 noon P.S.T., March 20, 1997. If
the Closing does not occur by such date, this Agreement shall terminate.
10. Expenses. Each party agrees to pay its respective fees and expenses
--------
incurred in connection with the negotiation, preparation, execution and delivery
of this Letter Agreement and of the definitive agreements and/or documents
contemplated hereby. If the transactions contemplated hereby are not consummated
for any reason other than a breach of this Letter Agreement, neither party shall
be responsible for any of the other's expenses.
11. Dispute Resolution. Any controversy between the parties involving the
------------------
construction or application of any of the terms, provisions or conditions of
this Letter Agreement shall be submitted to binding arbitration governed by the
Federal Arbitration Act, Title 9 of the United States Code. The arbitration
shall be administered by Judicial Arbitration & Mediation Services, Inc.
("JAMS") in accordance with the JAMS procedures then in effect. Any statutes of
limitations which would otherwise be applicable shall apply. Judgment upon the
award may be entered in any court having jurisdiction thereof. The prevailing
party in such arbitration proceeding shall be awarded all reasonable attorneys'
fees and costs incurred in such arbitration proceeding.
12. Announcements. 4MC and Anderson Video agree that prior mutual consent
-------------
is required with respect to the form and content of any press release or other
public announcement concerning this letter agreement or the transactions
contemplated hereby, except as required by law. Notwithstanding the foregoing,
Anderson Video shall be permitted to disclose the terms of this transaction to
its shareholders, directors, lessors, employees, clients, consultants and
creditors, on an as-needed basis only.
13. Governing Law. California law shall govern this Letter Agreement and
-------------
any and all definitive agreements between the parties.
14. Counterparts. This Letter Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one document.
<PAGE>
Anderson Film Industries Corp.
Attention: Michael Doggett, Chief Executive Officer
February 24, 1997
Page 5
If this Letter Agreement reflects your understanding of the transactions
described herein, please so indicate by executing the enclosed copy of this
letter.
Very truly yours,
FOUR MEDIA COMPANY
By: /s/ Robert T. Walston, Chief
-------------------------------
Robert T. Walston, Chief
Executive Officer
Acknowledged, Accepted and
Agreed to as of the date
hereof:
ANDERSON FILM INDUSTRIES CORP.
d/b/a ANDERSON VIDEO
By: /s/ Michael Doggett
----------------------------------------
Michael Doggett, Chief Executive Officer
<PAGE>
EXHIBIT 10.2
ASSET PURCHASE AND SALE AGREEMENT
BETWEEN
EARLE HAGEN AS ASSIGNEE FOR
THE BENEFIT OF CREDITORS OF
ANDERSON FILM INDUSTRIES CORP.
DBA ANDERSON VIDEO
AS
THE SELLER
AND
AV ACQUISITION CORP.
AS
THE BUYER
DATED MARCH 7, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE(S)
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<S> <C>
ARTICLE 1 - PURCHASE AND SALE OF THE ASSETS............................ 1
Section 1.1 Purchase By Buyer and Sale By Assignee
of the Assets................................... 1
ARTICLE 2 - CERTAIN DEFINITIONS........................................ 2
Section 2.1 Accounts Receivable............................. 2
Section 2.2 Affiliate....................................... 2
Section 2.3 Anderson Business............................... 2
Section 2.4 Approved Liens.................................. 2
Section 2.5 Assets.......................................... 2
Section 2.6 Assignment...................................... 3
Section 2.7 Assignor........................................ 3
Section 2.8 Assignee........................................ 3
Section 2.9 Books And Records............................... 3
Section 2.10 Business Day.................................... 3
Section 2.11 Closing......................................... 3
Section 2.12 Closing Date.................................... 3
Section 2.13 Contract........................................ 3
Section 2.14 D.L. Anderson................................... 4
Section 2.15 Doggett......................................... 4
Section 2.16 Environmental Law............................... 4
Section 2.17 Environmental Permit............................ 4
Section 2.18 ERISA........................................... 4
Section 2.19 Excluded Assets................................. 4
Section 2.20 Financial Statements............................ 5
Section 2.21 Governmental Authority.......................... 5
Section 2.22 Governmental Licenses And Permits............... 5
Section 2.23 Hazardous Substance............................. 6
Section 2.24 Intellectual Property........................... 6
Section 2.25 Inventory....................................... 6
Section 2.26 Law............................................. 6
Section 2.27 Leased Premises................................. 6
Section 2.28 Liabilities (Liability)......................... 6
Section 2.29 Liens........................................... 7
Section 2.30 Loss or Losses.................................. 7
Section 2.31 Material Adverse Effect......................... 7
Section 2.32 Person.......................................... 7
Section 2.33 Personal Property............................... 7
Section 2.34 Personal Property Leases........................ 7
Section 2.35 Purchase Price.................................. 7
</TABLE>
i
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<S> <C>
Section 2.36 Real Property................................... 7
Section 2.37 Real Property Lease............................. 8
Section 2.38 Required Consent................................ 8
Section 2.39 Related Agreement............................... 8
Section 2.40 Schedule or Schedules........................... 8
Section 2.41 Subsidiary...................................... 8
Section 2.42 Taxes........................................... 8
ARTICLE 3 - TRANSACTIONS TO BE EFFECTED AT CLOSING..................... 8
Section 3.1 Closing......................................... 8
Section 3.2 Transactions To Be Effected..................... 9
Section 3.3 Possession and Risk of Loss..................... 10
Section 3.4 Employees....................................... 10
ARTICLE 4 - PURCHASE PRICE AND PAYMENT OF THE PURCHASE PRICE........... 10
Section 4.1 Purchase Price.................................. 10
Section 4.2 Payment of the Purchase Price................... 10
ARTICLE 5 - REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS OF
ANDERSON, D.L. ANDERSON AND DOGGETT........................ 11
Section 5.1 Corporate Status and Subsidiaries............... 11
Section 5.2 Authorization of Agreement...................... 11
Section 5.3 Binding Agreement............................... 11
Section 5.4 No Default...................................... 11
Section 5.5 Title To and Interest In the Assets............. 12
Section 5.6 Financial Statements; Undisclosed Liabilities;
Other Documents................................. 12
Section 5.7 Condition and Sufficiency of Assets............. 12
Section 5.8 Real Property................................... 13
Section 5.9 Personal Property............................... 13
Section 5.10 Inventories..................................... 13
Section 5.11 Litigation; Compliance With Laws................ 13
Section 5.12 Permits......................................... 14
Section 5.13 Insurance....................................... 14
Section 5.14 Tax Matters..................................... 14
Section 5.15 Intellectual Property........................... 14
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<S> <C>
Section 5.16 Books and Records............................... 15
Section 5.17 Customers....................................... 15
Section 5.18 Schedules and Exhibits.......................... 15
Section 5.19 Environmental Issues............................ 15
Section 5.20 No Continuing Liabilities to Employees.......... 16
Section 5.21 Employee Benefit Plans.......................... 16
Section 5.22 No Collective Bargaining Agreements............. 16
Section 5.23 Transfer of Masters and Work-in-Progress........ 17
Section 5.24 Accuracy Of Statements.......................... 17
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF THE BUYER TO THE
ASSIGNEE 17
Section 6.1 Corporate Status................................ 17
Section 6.2 Authorization of Agreement...................... 17
Section 6.3 Binding Agreement............................... 18
ARTICLE 7 - OTHER COVENANTS OF ANDERSON, D.L. ANDERSON AND
DOGGETT 18
Section 7.1 Consents and Approvals.......................... 18
Section 7.2 Customer Lists.................................. 18
Section 7.3 Non-Competition................................. 19
Section 7.4 Implementing Agreement.......................... 20
Section 7.5 Required Consents Obtained...................... 20
ARTICLE 8 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER....... 20
Section 8.1 Conditions Precedent............................ 20
Section 8.2 Continued Truth of Representations and
Warranties and Compliance With Covenants........ 20
Section 8.3 Governmental Approvals.......................... 21
Section 8.4 Consent Of Third Parties........................ 21
Section 8.5 Adverse Proceedings............................. 21
Section 8.6 Delivery of Schedules and Other Materials....... 21
Section 8.7 Documents....................................... 21
Section 8.8 Discharge of Federal Tax Liens.................. 21
Section 8.9 Approved Liens.................................. 22
</TABLE>
iii
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
PAGE(S)
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<S> <C>
ARTICLE 9 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ASSIGNEE........ 22
Section 9.1 Conditions Precedent............................ 22
Section 9.2 Continued Truth Of Representations And
Warranties And Compliance With Covenants........ 22
Section 9.3 Governmental Approvals.......................... 22
Section 9.4 Consent of Third Parties........................ 22
Section 9.5 Adverse Proceedings............................. 22
ARTICLE 10 - INDEMNIFICATION........................................... 23
Section 10.1 Survival........................................ 23
Section 10.2 Indemnification by D.L. Anderson and Doggett.... 23
Section 10.3 Failure of D.L. Anderson and Doggett to Act..... 23
Section 10.4 Subrogation and Contribution.................... 23
Section 10.6 Indemnification of Assignee..................... 24
ARTICLE 11 - GENERAL PROVISIONS........................................ 24
Section 11.1 Sales and Use Tax............................... 24
Section 11.2 Seller's Brokers................................ 24
Section 11.3 Buyer's Brokers................................. 24
Section 11.4 Time is of the Essence.......................... 24
Section 11.5 Notices......................................... 24
Section 11.6 Entire Agreement; Amendment..................... 25
Section 11.7 Counterparts.................................... 25
Section 11.8 Governing Law................................... 25
Section 11.9 Partial Invalidity.............................. 26
Section 11.10 Successors and Assigns.......................... 26
Section 11.11 Captions........................................ 26
Section 11.12 Effect Of Investigation......................... 26
Section 11.13 Waivers......................................... 26
Section 11.14 Interpretation.................................. 26
Section 11.15 No Third Party Beneficiaries.................... 27
Section 11.16 Further Assurances.............................. 27
Section 11.17 Remedies Cumulative............................. 27
Section 11.18 Fees, Costs and Expenses........................ 27
</TABLE>
iv
<PAGE>
ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT is made as of the 7th day of
March, 1997 by and between Earle Hagen, assignee ("Assignee" or "Seller") for
the benefit of the creditors of Anderson Film Industries Corp., dba Anderson
Video, a California corporation ("Anderson") and AV Acquisition Corp., a
Delaware corporation (the "Buyer"). This Asset Purchase and Sale Agreement,
including all exhibits and schedules attached hereto, as it may be amended from
time to time, shall be referred to as the "Agreement."
R E C I T A L S:
A. Anderson, on or about March 7, 1997, executed an assignment to
Assignee for the ultimate benefit of its creditors generally of all of the
property and assets of Anderson of every kind and nature wherever located, both
real and personal, and of every type, kind and nature, and any and all right,
title or interest therein, including without limiting the generality of the
foregoing all of the assets pertaining to the Anderson Business (as defined in
Section 2.3 hereof); and
B. Assignee has legal title to and possession of, and is empowered to
sell and dispose of, the assets which are the subject matter of this Agreement
and to execute, deliver and perform this Agreement; and
C. Assignee wishes to sell, assign, transfer, convey and deliver to the
Buyer all of the Assignee's right, title and interest in and to certain assets
used in the conduct of the Anderson Business, and the Buyer wishes to purchase,
accept and take from Assignee those certain assets upon the terms and conditions
set forth below;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, agreements and representations and warranties herein contained, the
parties hereto agree as follows:
ARTICLE 1
---------
PURCHASE AND SALE OF THE ASSETS
-------------------------------
Section 1.1 Purchase By Buyer and Sale By Assignee of the Assets. Upon
----------------------------------------------------
the terms and subject to the conditions of this Agreement, at the Closing,
Assignee shall sell to Buyer and Buyer shall purchase from Assignee the Assets
without the Excluded Assets and Buyer shall not assume any Liabilities.
<PAGE>
ARTICLE 2
---------
CERTAIN DEFINITIONS
-------------------
Section 2.1 Accounts Receivable. The term "Accounts Receivable" shall
-------------------
mean all of the notes and accounts receivable arising out of the operation of
the Anderson Business from formation to the date of the Assignment which remain
unpaid as of the Closing Date.
Section 2.2 Affiliate. The term "Affiliate" shall mean, with respect to
---------
any specified Person, (a) any other Person which, directly or indirectly, owns
or controls, is under common ownership or control with, or is owned or
controlled by, such specified Person; (b) any other Person which is a director,
officer or partner or is, directly or indirectly, the beneficial owner of ten
percent (10%) or more of any class of equity securities of the specified Person
or a Person described in clause (a) of this Section, (c) another Person of which
the specified Person is a director, officer or partner or is, directly or
indirectly, the beneficial owner of ten percent (10%) or more of any class of
equity securities; (d) another Person in which the specified Person has a
substantial beneficial interest or as to which the specified Person serves as
trustee or in a similar capacity, (e) each Subsidiary of such Persons; and/or
(f) any relative or spouse of the specified Person or any of the foregoing
Persons, any relative of such spouse or any spouse of such relative.
Section 2.3 Anderson Business. The term "Anderson Business" shall mean
-----------------
the business of Anderson as it has heretofore been conducted, including studio
services and television services. "Studio services" include provision of the
facilities and services necessary to manage, format and distribute content,
which in turn include archiving original elements and working masters, creating
working masters from original elements, duplicating masters for professional
applications and formatting masters to meet specific end-user standards and
requirements. "Television services" include provision of technical and certain
creative services necessary to conform original film or video principal
photography to a final product suitable for airing on television, which in turn
include converting developed negative to video tape and/or digital formats,
creating visual effects, integrating visual effects in the final program master,
correcting color, removing artifacts and scratches from the program master,
formatting for commercial integration, and delivering the program master for
broadcast.
Section 2.4 Approved Liens. The term "Approved Liens" means Liens
--------------
approved by and acceptable to Buyer at Closing, as provided in Section 8.9.
Section 2.5 Assets. The term "Assets" shall mean all of the assets,
------
properties, leases, leasehold improvements, prepaid expenses and deferred
charges, rights, books, records, files and goodwill of, relating to or used in
the Anderson Business, of every kind, nature and description, real, personal and
mixed, tangible and intangible, whether or not reflected on the books and
records of Anderson including, but not limited to accounts, book accounts,
Accounts Receivable, the Books and Records, the Contracts, the Inventory, the
Personal Property, Anderson's interest in any Real Property, Anderson's interest
in the Real Property Lease, Anderson's interest in the
2
<PAGE>
Personal Property Leases, the Intellectual Property, all assets including
accounts and Accounts Receivable reflected on the Financial Statements (other
than inventory disposed of after the respective dates thereof in the ordinary
course of business), the names "Anderson Film Industries Corp." and "Anderson
Video" and all Governmental Licenses and Permits relating to the Anderson
Business and/or the Assets; provided, however, that for all purposes under this
Agreement, the term "Assets" and any term set forth within the definition of
assets which describes any asset included therein shall not include the
assumption of any Liability associated therewith or arising thereunder.
Section 2.6 Assignment. The term "Assignment" shall mean the General
----------
Assignment of all the property and assets of Anderson dated March 7, 1997, by
Anderson, as "Assignor" to Earle Hagen, as "Assignee" for the ultimate benefit
of the creditors generally of Anderson.
Section 2.7 Assignor. The term "Assignor" shall mean Anderson as the
--------
Assignor under the Assignment.
Section 2.8 Assignee. The term "Assignee" shall mean Earle Hagen as
--------
"Assignee" under the Assignment and as "Assignee" or "Seller" under this
Agreement.
Section 2.9 Books And Records. The term "Books and Records" shall mean
-----------------
all books and records of Anderson including, but not limited to (a) all books
and records relating to (i) employees, agents, dealers, jobbers and other
representatives, (ii) suppliers, (iii) the purchase of raw materials, supplies
and services, (iv) Inventory, (v) customers and (vi) the marketing and sale of
products and services; (b) all financial or other information relating to
Anderson's Business or any of the Assets, which information exists in a form
that may be reproduced in documentary form, transmitted electronically or copied
to computer media, and is or pursuant to the Assignment should be in the
possession of Assignee, or is readily available to Anderson or Assignee; and (c)
all leases and other contracts, surveys and appraisals, and engineering reports
relating to Anderson's Business or any of the Assets.
Section 2.10 Business Day. The term "Business Day" shall mean any day
------------
of the year other than (i) any Saturday or Sunday or (ii) any other day on which
banks located in the State of California generally are closed for business other
than the retail depository business.
Section 2.11 Closing. The term "Closing" shall mean the closing of the
-------
transactions contemplated by this Agreement on the Closing Date, in accordance
with Article 3 hereof and subject to all of the other terms and conditions
hereof.
Section 2.12 Closing Date. The term "Closing Date" shall mean the date
------------
of the Closing.
Section 2.13 Contract. The term "Contract" shall mean any plan,
--------
program, arrangement, lease, commitment, understanding, sales order, purchase
order, agreement,
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indenture, mortgage, note, bond, right, warrant, instrument, plan, permit or
license, whether written or verbal, which is intended or purports to be binding
and enforceable or which is offered to any Person and acted upon or relied upon
by such Person.
Section 2.14 D.L. Anderson. The term "D.L. Anderson" shall mean Darrell
-------------
L. Anderson, individually.
Section 2.15 Doggett. The term "Doggett" shall mean Michael Doggett,
-------
individually.
Section 2.16 Environmental Law. The term "Environmental Law" shall mean
-----------------
any Law which related to or otherwise imposes liability or standards of conduct
concerning mining or reclamation of mined land, discharges, emissions, releases
or threatened releases of noises, odors or any pollutants, contaminants or
hazardous or toxic wastes, substances or materials, whether as matter or energy,
into ambient air, water, or land, or otherwise relating to the manufacture,
processing, generation, distribution, of pollutants, contaminants, or hazardous
or toxic wastes, substances or materials; including (but not limited to) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of 1986, as amended, the
Resource Conservation and Recovery Act of 1976, as amended, the Toxic Substances
Control Act of 1976, as amended, the Federal Water Pollution Control Act
Amendments of 1972, the Clean Water Act of 1977, as amended any so-called
"Superlien" law, and any other similar Federal, state or local statutes.
Section 2.17 Environmental Permit. The term "Environmental Permit"
--------------------
shall mean any permit, license, approval, consent or other authorization
required by or pursuant to any applicable Environmental Law.
Section 2.18 ERISA. The term "ERISA" shall mean the Employee Retirement
-----
Income Security Act of 1974, as amended.
Section 2.19 Excluded Assets. The term "Excluded Assets" shall mean all
---------------
of the following assets of the Assignee obtained from Anderson pursuant to the
Assignment relating to or arising out of the conduct of the Anderson Business:
(a) all cash, bank balances or other cash equivalents on hand
or in banks or other financial institutions of Anderson as of the date
of the Assignment; provided, however, that all checks received by
Anderson, Assignee or Buyer on or after the date of the Assignment
shall not be Excluded Assets, but shall be deemed to be collections
upon the accounts receivable transferred to Buyer and shall be
delivered to Buyer;
(b) all (i) federal, state and local income tax refunds or
credits with respect to any period of time prior to the Closing Date,
and (ii) federal, state and local real property, personal property,
franchise, sales, use and withholding tax and other employee benefit
tax refunds or credits with respect to any period of time prior to the
Closing Date
4
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in each case without regard to the date when any such tax refund is
received or realized by the Assignee;
(c) all amounts paid in cash or cash equivalents to the
Assignee before or after the Closing Date (i) under any policy of
insurance, as a result of or in connection with any claim filed by the
Assignee prior to the Closing Date, or (ii) in connection with any
litigation, arbitration or other legal proceeding instituted by the
Assignee or to which the Assignee is a party as to which it is a
successor (whether under a policy of insurance or otherwise);
(d) all electric, telephone, water, natural gas, sewer and
other related utility deposits; provided, however, that no other
deposits shall be Excluded Assets;
(e) all claims by Anderson for all refunds and discounts of
whatever nature relating to or arising out of the conduct of the
Anderson Business prior to the Closing Date;
(f) all causes of action to avoid and recover fraudulent or
preferential transfers which inure to the benefit of an assignee for
the benefit of creditors; and
(g) all Contracts, whether or not assigned to Assignee;
provided, however, that the following Contracts shall not be Excluded
Assets: (i) those certain Contracts with customers set forth in
Schedule 2.19(g); (ii) the Real Property Lease; (iii) the Personal
Property Leases; and (iv) licenses or permits (including Governmental
Licenses and Permits) granting Anderson rights used or useful in the
conduct of Anderson's Business.
Section 2.20 Financial Statements. The term "Financial Statements"
--------------------
shall mean all of the following: (a) the Financial Statements of Anderson
prepared with respect to its business as of December 31, 1996 which are included
in Schedule 5.6, consisting of the unaudited balance sheet at such date and the
unaudited related statements of earnings and retained earnings and cash flows
for the year ended December 31, 1996; and (b) financial statements prepared with
respect to Anderson as of January 31, 1997, which are listed in Schedule 5.6,
consisting of the unaudited balance sheet at such date and the unaudited related
statements of operations and retained earnings and cash flows for the one month
then ending.
Section 2.21 Governmental Authority. The term "Governmental Authority"
----------------------
shall mean the government of the United States or any foreign country or any
state or political subdivision thereof and any entity, body or authority
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including the Pension Benefit Guaranty
Corporation and other quasi-governmental entities established to perform such
functions.
Section 2.22 Governmental Licenses And Permits. The term "Governmental
---------------------------------
Licenses and Permits" shall mean the licenses, permits or other authorizations
required by any law or
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Governmental Authority to be held by a Person in order to operate the Assets as
they have been operated historically by Anderson and with respect to the
Anderson Business.
Section 2.23 Hazardous Substance. The term "Hazardous Substance" shall
-------------------
have the meaning set forth in 42 U.S.C. ss. 9601 et seq. and the regulations
promulgated thereunder.
Section 2.24 Intellectual Property. The term "Intellectual Property"
---------------------
shall mean any and all (a) trademarks, trade names, logos, service marks,
patents, copyrights (including any registrations, applications, licenses or
rights relating to any of the foregoing, the names "Anderson Film Industries
Corp." and "Anderson Video," and any goodwill associated with any of the
foregoing); (b) technology, trade secrets, inventions, know-how, designs,
computer programs, proprietary information and processes; and (c) all other
intangible assets, properties and rights (whether or not appropriate steps have
been taken to protect, under applicable law, such assets, properties or rights).
Section 2.25 Inventory. The term "Inventory" shall mean all products
---------
(finished or otherwise), if any, held for sale by Anderson on the date of the
Assignment, including stock videotape.
Section 2.26 Law. The term "Law" shall mean any law, statute,
---
regulation, ordinance, rule order, decree, judgment, consent decree, settlement
agreement or governmental requirement enacted, promulgated, entered into, agreed
or imposed by any Governmental Authority.
Section 2.27 Leased Premises. The term "Leased Premises" shall mean
---------------
Anderson's business premises leased pursuant to the Real Property Lease.
Section 2.28 Liabilities (Liability). The term "Liabilities" shall mean
-----------------------
all (a) obligations at any date which, are or should be reflected and classified
as liabilities on Anderson's balance sheet; (b) all contingent liabilities
(including, without limitation, guarantees, endorsements or obligations to pay,
assume or purchase liabilities or any obligation to purchase, sell or otherwise
furnish assets, properties or services primarily for the purpose of enabling
such other Person to make payment of such liabilities or of assuring the owner
of such liabilities against loss with respect thereto); (c) amounts (calculated
on an actuarial basis) that could be payable pursuant to any contract, or other
plan or arrangement by which Anderson is bound with respect to or affecting its
employees, officers,directors, representatives or agents; (d) penalties, charges
and assessments payable by Anderson to any other Person, including penalties,
charges or assessments that are triggered by virtue of the occurrence of a
transaction or event; (e) liabilities secured by any Lien affecting any assets
or properties owned by Anderson (whether or not any such liability has been
assumed by Anderson, and whether it arises under a conditional sale or other
title retention agreement given as a security device); and (f) any other claims,
responsibilities, liabilities or obligations, regardless of whether such claim,
liability, responsibility or obligation is known or unknown, fixed or accrued,
absolute or contingent, determined or determinable and whether such claim,
responsibility, liability or obligation has arisen or has yet to arise or would
be required to be recorded or reflected on the books of
6
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Anderson, including but not limited to obligations for defects in, or otherwise
resulting from, work performed by Anderson.
Section 2.29 Liens. The term "Liens" shall mean all, with respect to
-----
any given property(ies), encumbrances, defects of title, deeds of trust,
security agreements, pledges, liens, conditional sales agreements, claims,
restrictions, charges, options, leases, subleases, encroachments, covenants,
easements and/or rights of third parties of every kind and character arising or
existing by operation of law, by judicial decree or judgment or arbitral
decision, by contract or otherwise, whether or not accrued or fixed, absolute or
contingent, known or unknown, determined or determinable and whenever arising,
including, but not limited to, those evidenced by contracts, agreements, leases,
indentures, deeds of trust and security, conditional sale and other title
retention agreements.
Section 2.30 Loss or Losses. The term "Loss" or "Losses" shall mean any
--------------
and all liabilities, losses, costs, claims, damages, penalties and expenses
(including reasonable attorneys' fees and expenses and costs of investigation
and litigation). In the event any of the foregoing are indemnifiable hereunder,
the terms "Loss" and "Losses" shall include any and all reasonable attorneys'
fees and expenses and costs of investigation and litigation incurred by the
Indemnified Person (as hereinafter defined) in enforcing such indemnity.
Section 2.31 Material Adverse Effect. The term "Material Adverse
-----------------------
Effect" shall mean an effect (or circumstance involving a prospective effect) on
the Assets or on the Anderson Business which is materially adverse.
Section 2.32 Person. The term "Person" shall mean an individual, a
------
corporation, a limited liability company, a partnership, an association, a trust
or any other entity or organization, including, but not limited to, a government
or a political subdivision thereof or an agency or instrumentality of any
government or political subdivision thereof.
Section 2.33 Personal Property. The term "Personal Property" shall mean
-----------------
all machinery, equipment, vehicles, tools, furniture and other tangible personal
property owned or leased by Anderson or assigned or transferred by Anderson to
Assignee.
Section 2.34 Personal Property Leases. The term "Personal Property
------------------------
Leases" shall mean Personal Property lease agreements, as amended, to which
Anderson or Assignee is a party (as lessor or lessee).
Section 2.35 Purchase Price. The term "Purchase Price" shall have the
--------------
meaning ascribed to it in Article 4 hereof.
Section 2.36 Real Property. The term "Real Property" shall mean real
-------------
property, including tenant improvements and fixtures.
7
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Section 2.37 Real Property Lease. The term "Real Property Lease" shall
-------------------
mean (i) that certain lease dated September 15, 1988 by and between Universal
City Studios, Inc., as Landlord, and Anderson Film Industries, Inc., as Tenant,
for premises located in building #153 as Universal City, California, as more
particularly described therein; and (ii) six (6) separate month-to-month leases
for trailers and storage facilities presently used by Anderson which facilities
are located behind and adjacent to Building No. 153.
Section 2.38 Required Consent. All consents required to be obtained by
----------------
Anderson or Assignee to comply with Section 3.2, Section 5.23, Section 8.3,
Section 8.4, Section 9.3 and Section 9.4 of the Agreement.
Section 2.39 Related Agreement. The term "Related Agreement" shall mean
-----------------
any Contract which is or is to be entered into at the Closing or otherwise
pursuant to this Agreement. The Related Agreements executed by a specified
Person shall be referred to as "such Person's Related Agreements," "its Related
Agreements" or another similar expression. Related Agreements shall also include
any "Related Agreement" to the Assignment.
Section 2.40 Schedule or Schedules. The term "Schedule" shall mean any
---------------------
schedule, and the term "Schedules" shall mean all Schedules, attached hereto and
incorporated herein.
Section 2.41 Subsidiary. The term "Subsidiary," with respect to a
----------
Specified Person, shall mean a corporation or other legal entity which such
person beneficially owns, controls or has the ability to control, directly or
indirectly, (a) in excess of fifty percent (50%) of the stock, the holders of
which are ordinarily and generally, in the absence of contingencies, entitled to
vote for the election of a majority of the directors or (b) in excess of fifty
percent (50%) of the aggregate total ownership thereof.
Section 2.42 Taxes. The term "Taxes" shall mean, with respect to any
-----
Person, (a) any net income, gross income, gross receipts, sales, use, ad
valorem, franchise, fuel, profits, license, withholding, payroll, employment,
excise, severance, stamp, transfer, occupation, premium, property or windfall
profit tax, custom duty or other tax, fee, assessment or charge of any kind or
nature whatsoever, together with any interest and any penalty thereon, imposed
by any Governmental Authority on such Person or with respect to the assets or
operations of such Person, and (b) any liability of such Person for the payment
of any amount of the type described in the immediately preceding clause (a) as a
result of such Person's being a member of an affiliated or combined group.
ARTICLE 3
---------
TRANSACTIONS TO BE EFFECTED AT CLOSING
--------------------------------------
Section 3.1 Closing. The Closing shall take place (a) at the offices of
-------
Greenberg Glusker Fields Claman & Machtinger LLP, 1900 Avenue of the Stars,
Suite 2200, Los Angeles,
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California 90067, effective as of the opening of business on
___________________, 1997 or (b) at such other time, date or place as shall be
mutually agreed upon in writing by the parties hereto.
Section 3.2 Transactions To Be Effected. At the Closing, upon the
---------------------------
terms and subject to the conditions of this Agreement:
(a) Assignee shall sell, transfer, assign, convey and deliver
to the Buyer, and the Buyer shall purchase, accept and take from Assignee, the
Assets except for the Excluded Assets, subject to any existing Liens, in an "AS
IS-WHERE IS CONDITION" with a DISCLAIMER BY ASSIGNEE OF ALL WARRANTIES,
INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE, and the Buyer shall not assume any
Liabilities, by delivery to the Buyer of appropriately executed and
authenticated instruments of sale, assignment, transfer and conveyance as the
Buyer or its counsel may reasonably request, including, but not limited to:
(i) a bill of sale in the form of Schedule 3.2A
hereto; and
(ii) such other appropriately executed and
authenticated documents and instruments of sale, transfer,
assignment and conveyance with respect to the Assets as the
Buyer or its counsel may reasonably request, in each case as
shall be necessary to sell, transfer, assign and convey to,
and to vest in, the Buyer, title to the Assets as set forth
above.
(iii) Evidence in form satisfactory to the Buyer,
that all Required Consents have been obtained;
(iv) The originals and/or duly executed assignments
by Anderson and the Assignee (to the extent such Permits are
assignable) (in form suitable for filing or recording with the
appropriate Governmental Authority, if applicable) of all of
the Governmental Licenses and Permits;
(v) A certificate of the secretary of Anderson
certifying (A) resolutions of the board of directors of and of
the stockholders of Anderson approving the Assignment
(together with an incumbency and signature certificate
regarding the officer(s) signing on behalf of Anderson) and
(B) the articles of incorporation and bylaws of Anderson as
amended and/or restated; and
(vi) Certificates of Good Standing for Anderson from
the State of California.
(b) the Buyer shall deliver to Assignee:
(i) Payment of the Purchase Price (as provided in
Section 4.2 hereof);
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(ii) A certificate of the secretary of the Buyer
certifying (A) resolutions of the board of directors of the
Buyer approving this Agreement and the transactions
contemplated hereby, together with an incumbency and signature
certificate regarding the officer(s) signing on behalf of each
such person, and (B) the certificate of incorporation and
bylaws of the Buyer as amended and/or restated.
(c) Notwithstanding the foregoing, Assignee may retain copies
of, or may deliver copies in lieu of, any portion of the Books and Records
required by Assignee.
Section 3.3 Possession and Risk of Loss. Possession of the Assets shall
---------------------------
be delivered to the Buyer as of the Closing. As of and after the Closing, such
risk of loss or damage shall be the sole and complete responsibility of the
Buyer.
Section 3.4 Employees. Buyer shall consider the employment of, but
---------
shall not be obligated to employ, any and all Employees of Anderson terminated
by Anderson on or before the date of the Assignment. No obligations or
liabilities of Anderson for the benefit of or in respect of employees or former
employees, express or implicit, shall be assumed by Buyer.
Section 3.5 Mail. The right of Assignee to direct Anderson's mail to be
----
delivered to Assignee, and to open such mail, shall be transferred to Buyer.
Buyer may retain all mail relating to its use of the Assets or its operation of
the former Anderson Business, but Buyer shall forward to Assignee promptly upon
receipt any mail related to the Excluded Assets, or the duties and
responsibilities of Assignee. To the extent that any such mail relates both to
Buyer's rights and Assignee's rights, Buyer shall forward such mail to Assignee
but Buyer may retain a copy thereof for its own use. The obligation of Buyer to
forward mail to Assignee shall terminate ninety (90) days after Closing.
ARTICLE 4
---------
PURCHASE PRICE AND PAYMENT OF THE PURCHASE PRICE
------------------------------------------------
Section 4.1 Purchase Price. The purchase price that the Buyer shall
--------------
pay to the Assignee for the Assets under this Agreement shall be One Hundred
Thousand Dollars ($100,000). The Buyer shall not assume any Liabilities of
Anderson or any liabilities of Assignee, D.L. Anderson or Doggett.
Section 4.2 Payment of the Purchase Price. At the Closing on the
-----------------------------
Closing Date, the Buyer shall pay One Hundred Thousand Dollars ($100,000) to
Assignee.
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ARTICLE 5
---------
REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS
OF ANDERSON, D.L. ANDERSON AND DOGGETT
--------------------------------------
Anderson, D.L. Anderson and Doggett represent, warrant, covenant and
agree, jointly and severally, to, with and for the benefit of Buyer, its
Affiliates, successors and assigns, as follows:
Section 5.1 Corporate Status and Subsidiaries. Anderson is a
---------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of California. Anderson has all requisite corporate power and
authority to own or lease the Assets and to carry on its business as it is
currently conducted. Anderson is duly qualified to do business and is in good
standing in such other jurisdictions where the nature of the Assets owned,
leased or operated by Anderson would require such qualification. Anderson does
not own, directly or indirectly, the capital stock of any other corporation or
any equity interest in any other business entity or subsidiary.
Section 5.2 Authorization of Agreement. Anderson has full corporate
--------------------------
power and authority to execute, deliver and perform the Assignment and all other
agreements, instruments and certificates entered into or delivered in connection
with the transactions contemplated thereby, including the agreements of Anderson
contained in this Agreement. Copies of the Articles of Incorporation of
Anderson, as amended to date and certified by the Secretary of State of the
State of California, and Bylaws of Anderson, as amended to date and certified by
the Secretary or an Assistant Secretary of such corporation, shall be delivered
to the Buyer at the Closing and such copies shall be complete and correct. The
execution, delivery and performance of the Assignment have been, and all other
agreements, instruments and certificates entered into or delivered in connection
with the transactions contemplated thereby have been duly and validly authorized
by all necessary corporate action of Anderson. On the Closing Date, Anderson
shall deliver to the Assignee and to Buyer certified copies of the resolutions
adopted by the Board of Directors and by the stockholders of Anderson,
authorizing the execution, delivery and performance by such corporation of the
Assignment, and all other agreements, instruments and certificates entered into
or delivered in connection with the transactions contemplated thereby, including
the agreements of Anderson contained in this Agreement.
Section 5.3 Binding Agreement. The Assignment, the agreements of
-----------------
Anderson contained in this Agreement and each of all other Related Agreements is
or will constitute, a valid and binding obligation of Anderson and each is
enforceable against Anderson (or upon execution and delivery will be enforceable
against Anderson) in accordance with its respective terms.
Section 5.4 No Default. Except as set forth on Schedule 5.4, no
consent, authorization or approval of, filing or registration with, or
cooperation from, any Governmental Authority is necessary by the terms of any
Law or Contract applicable to Anderson or the Assets in
11
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connection with the execution, delivery and performance by Anderson of the
Assignment, this Agreement and Related Agreements or the consummation of the
transactions contemplated thereby or in order to transfer to the Assignee all
Assets free of any Lien or Liability. The execution, delivery and performance of
the Assignment, this Agreement and all other Related Agreements by Anderson does
not and will not violate, conflict with, result in a breach or termination of or
constitute a default under (or an event which with due notice or lapse of time,
or both, would constitute a breach of or default under) or give any third party
any additional right (including a claim to additional or escalated payments or
termination rights) under, permit the cancellation of, permit the acceleration
of any liability under or result in the creation of any Lien under (a) the
Articles of Incorporation or the Bylaws, each as amended to date; (b) except as
set forth on Schedule 5.4, any note, Contract or other obligation to which
Anderson is a party or by which either of Anderson or any of the Assets is
bound; (c) any judgment, order, decree, ruling or injunction applicable to
Anderson or any of the Assets; or (d) any law applicable to Anderson or any of
the Assets. Except as set forth on Schedule 5.4, neither Anderson nor any other
party is in default under, nor is there an event which with due notice or lapse
of time, or both, would constitute a default under, any Contract or other right
in favor of Anderson, or obligation by which either of Anderson or any of the
Assets is bound. It is expressly understood that the previous sentence is not
intended to affect or refer to any agreements between or among any creditors of
Anderson and Buyer or any Affiliate of Buyer.
Section 5.5 Title To and Interest In the Assets. Except for Personal
-----------------------------------
Property that is leased by Anderson, and except as set forth on Schedule 5.6,
Anderson had, as of the date of the Assignment, good and marketable title to all
of the Assets. For purposes of this Section 5.5, otherwise marketable title
shall not be rendered unmarketable for the sole reason that on the Closing Date,
the fair market value of an asset is less than the amount representing Liens
upon such asset.
Section 5.6 Financial Statements; Undisclosed Liabilities; Other
----------------------------------------------------
Documents. The Financial Statements are, except as stated therein, and as stated
- ---------
in this Section 5.6, prepared in accordance with generally accepted accounting
principles, consistently applied and present fairly the financial position,
assets and liabilities of Anderson as of the dates thereof and the revenues,
expenses, results of operations and cash flows of Anderson for the periods
covered thereby. The Financial Statements are in accordance with the books and
records of Anderson and do not reflect any transactions which are not bona fide
transactions. There are no Liabilities of Anderson and there are no Liabilities
or Liens relating to or affecting the Assets, other than those Liabilities or
Liens set forth on Schedule 5.6 hereto. The Financial Statements do not reflect
any material items of nonrecurring income; provided, however, that it is
expressly understood that income in respect of the ordinary services provided by
Anderson is not considered to be nonrecurring, even if it may not continue. The
Financial Statements are included in Schedule 5.6.
Section 5.7 Condition and Sufficiency of Assets. Except as disclosed on
-----------------------------------
Schedule 5.7, all of the tangible Assets, whether real or personal, owned or
leased, have been maintained and are in good operating condition and repair
(with the exception of normal wear and tear).
12
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Immediately after the date of the Assignment, the Assignee shall own or have a
permanent right to use all assets, properties, rights and the Intellectual
Property, which are required for or currently used in connection with the
operation of the Anderson Business or Assets, as presently conducted. Except as
described on Schedule 5.7, all of such property which is Personal Property is
located at the Leased Premises.
Section 5.8 Real Property.
-------------
(a) Anderson is the tenant under the Real Property Lease.
Except for the fixtures and tenant improvements at the Leased Premises,
Anderson does not own, hold or use any other Real Property.
(b) Except as set forth in Schedule 5.8, the Real Property
Lease is in full force and effect and neither party is in default
thereunder. A true and correct copy of the Real Property Lease (to the
extent any such Lease is written) has been delivered to Buyer.
Section 5.9 Personal Property. Schedule 5.9A sets forth a true and
-----------------
complete list of all the Personal Property, including Personal Property which is
located other than at or on the Leased Premises. Schedule 5.9B sets forth a true
and accurate description of all Personal Property Leases, together with a
description of the Personal Property subject to each such Personal Property
Lease.
Section 5.10 Inventories. Schedule 5.10 contains a true and accurate
-----------
statement of all Inventory.
Section 5.11 Litigation; Compliance With Laws. Schedule 5.11 hereto
--------------------------------
sets forth actions, lawsuits, and administrative, arbitral or other proceedings
or governmental investigations ("Litigation") which are pending or, to the best
knowledge of Anderson, D.L. Anderson and Doggett, threatened against Anderson,
or its shareholders that would relate to or could affect the Assets except for
Litigation that is covered by insurance (which is in full force and effect).
Anderson is not, and neither the Assignee nor the Assets could be affected by,
or are subject to, any order, writ, decree, injunction or stipulation in respect
of the Assets or the Anderson Business. Anderson is not in the process of
settling any such pending or threatened Litigation. There is no Litigation
pending or threatened against Anderson with respect to the Assignment or the
transactions contemplated thereby and has no reason to believe that there is a
valid basis for instituting such Litigation. Anderson has (i) complied and is
complying in all material respects with all Laws applicable to operation of the
Assets and (ii) has obtained all Governmental Licenses and Permits that are
necessary to the operation of the Assets as being conducted by Anderson on the
date hereof (which are listed on Schedule 5.11 hereto), and Anderson is in full
compliance with the requirements and limitations set forth therein. Without
limiting the foregoing, no notice from any Governmental Authority has been
received by Anderson claiming any violation of any law (including any building,
zoning or other ordinance) or requiring any work, construction or expenditure,
or asserting any Tax, assessment or penalty.
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Section 5.12 Permits. Schedule 5.12 is a true and accurate list of all
-------
Governmental Licenses and Permits (collectively "Permits") held by Anderson.
Except for the Permits listed on Schedule 5.12, there are no Governmental
Licenses and Permits which are necessary for the lawful operation of the Assets.
Section 5.13 Insurance. Schedule 5.13 hereto contains an accurate
---------
description of all material policies of fire, liability, workers' compensation,
health and other forms of insurance owned or held by Anderson. Anderson has
heretofore delivered to Assignee and Buyer a true and complete copy of all such
policies, including all occurrence-based policies for all periods prior to the
date of the Assignment. All such policies are in full force and effect, all
premiums with respect thereto covering all periods up to and including the date
of the Assignment have been paid, and no notice of cancellation or termination
has been received with respect to any such policy. Such policies are sufficient
for compliance with (a) all requirements of Law and (b) all Contracts to which
Anderson is a party. Except as set forth in Schedule 5.13, Anderson has not been
refused any insurance with respect to its assets or operations, and its coverage
has not been limited by any insurance carrier to which it has applied for any
such insurance or with which it has carried insurance, during the last three (3)
years. Except as set forth on Schedule 5.13 hereto, there are no pending or
threatened claims under any insurance policy.
Section 5.14 Tax Matters. Except as listed on Schedule 5.14 hereto,
-----------
Anderson has duly and timely filed all federal, state, local and foreign tax
returns and reports with respect to the operation of its business and the Assets
that Anderson is required to file and has paid all taxes, interest, penalties,
assessments and deficiencies due or claimed to be due thereunder. Except as
listed on Schedule 5.14 hereto, all applicable federal, state, local and foreign
taxes, assessments, fees and other governmental charges imposed on Anderson with
respect to the operation of the Anderson Business and the Assets that have
become due and payable, unless disputed, have been paid.
Section 5.15 Intellectual Property. Schedule 5.15 hereto lists all
---------------------
Intellectual Property as of the date hereof. Except as disclosed on Schedule
5.15, Anderson represents and warrants that:
(a) all of the Anderson Intellectual Property is owned by
Anderson free and clear of all Liens, and is not subject to any
license, royalty or other agreement, and Anderson has not granted any
license or agreed to pay or receive any royalty in respect of any
Intellectual Property;
(b) none of the Intellectual Property or its present or
contemplated use by Anderson infringes upon the rights, assets or
property of any third party or has been or is the subject of any
pending or threatened litigation or claim of infringement; and
(c) no license or royalty agreement which relates to the
Intellectual Property to which Anderson is a party is in breach or
default by any party thereto or the subject of any notice of
termination given or threatened.
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Section 5.16 Books and Records. The Books and Records of Anderson are
-----------------
accurate and complete in all material respects and have been maintained in
accordance with good business practice for businesses similar to the Anderson
Business.
Section 5.17 Customers.
---------
(a) Schedule 5.17A sets forth a list of the ten (10) largest
customers of Anderson in terms of sales volume during the fiscal year
ended December 31, 1996 and the period thereafter to the date of the
Assignment (collectively, the "Major Customers");
(b) Except to the extent set forth in Schedule 5.17B, since
January 1, 1996, there has not been any adverse change in the business
relationship, and there has been no material dispute, between Anderson
and any Major Customer, and there are no indications that any Major
Customer intends to reduce its purchases from Anderson. However,
Anderson, Doggett and D.L. Anderson make no representations or
covenants, express or implied, that any current customer or supplier
will conduct business with any buyer of the Assets.
(c) Anderson has delivered to the Assignee at the date of the
Assignment a true and correct list of all current customers.
Section 5.18 Schedules and Exhibits. All Schedules and Exhibits
----------------------
attached to or referred to in the Assignment and all Schedules and Exhibits
delivered on or required to be delivered pursuant to the Assignment, shall
constitute an integral part of the Assignment. Anderson has delivered to the
Assignee and Buyer, or has otherwise made available to the Assignee and Buyer,
true and correct copies of all written Contracts and has described to Assignee
and Buyer all oral Contracts described in, attached to or referred to in any
Schedule or Exhibit delivered or required to be delivered pursuant to the
Assignment. A true and correct list of all such Contracts, written or oral, not
set forth on or described in other Schedules is set forth on and described in
Schedule 5.18.
Section 5.19 Environmental Issues. Except as set forth on Schedule
--------------------
5.19, (i) Anderson has obtained all Environmental Permits required for the
proper management and operation of the Assets and all such Environmental Permits
are in good standing and Anderson is in compliance with all terms and conditions
of such Environmental Permits; (ii) Anderson is not subject to any pending, or
to Anderson's knowledge threatened, order from or agreement pertaining to the
Assets with any Governmental Authority or private party or any judicial or
administrative proceedings or investigations, respecting any Environmental Law;
(iii) to the best of its knowledge, does not know of any material liabilities,
obligations or costs arising from the Release (as hereinafter defined) of a
Contaminant (as hereinafter defined) into the environment on or from any Real
Property used or occupied by Anderson, or from the Assets; (iv) Anderson has not
filed, and to Anderson's knowledge, is not required to file, any notice under
applicable Environmental law reporting a Release of a Contaminant into the
environment; and (v) Anderson has not received any notice or claim to the effect
that it is or may be liable to any person, entity
15
<PAGE>
or governmental body as a result of the Release of a Contaminant into the
environment or as a result of exposure to asbestos.
(a) As used herein the following terms shall have the
following definitions:
"Contaminant" includes any pollutant or contaminant (as that
term is defined in 42 U.S.C. (S)9601(13)), toxic pollutant (as that
term is defined in 33 U.S.C. (S)1362(13)), Hazardous Substance,
hazardous chemical (as that term is defined by 29 CFR (P)
1910.1200(c)), hazardous waste (as that term is defined by 42 U.S.C.
(S)6903(5)), radioactive material, asbestos and asbestos containing
material, polychlorinated biphenyl, petroleum and petroleum waste,
including crude oil or any petroleum-derived substance, waste or
breakdown or decomposition product thereof, or any constituent of any
such petroleum substance or waste.
"Release" means any spill, emission, leaking, dumping,
pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment or into or out of
any Real Property used or occupied by Anderson, including the movement
of Contaminants through or in the air, soil, surface water or
groundwater of the Real Property used or occupied by Anderson.
Section 5.20 No Continuing Liabilities to Employees. Except as
--------------------------------------
described on Schedule 5.20, Anderson has no obligation to continue the
employment or services of, or has any monetary liability (other than
compensation for the current pay period as well as accrued vacation and sick
leave) with respect to, any persons and Anderson acknowledges and agrees that
(a) Assignee has no liability with respect to any such persons whatsoever; (b)
Buyer shall have no liability to any such persons, and Buyer shall not have any
obligation to employ such persons with respect to Buyer's operation of the
Assets or otherwise. In this connection, Anderson shall notify each of its
employees of their respective terminations on or before delivery of the
Assignment, and of the fact that employment, if any, subsequent to the
Assignment shall be pursuant to the employment policies and practices and terms
and conditions established by a buyer, if any, from Assignee, of the Assets or
Anderson Business.
Section 5.21 Employee Benefit Plans. Except as set forth on Schedule
----------------------
5.21, Anderson has no benefit plan or arrangement for employees, agent or
independent contracts. Except as set forth on Schedule 5.21, none of such
benefit plans or arrangements is an "employee benefit plan" within the meaning
of Section 3(3) of the Employee Retirement Security Act of 1974, as amended, and
at no time during the past six (6) years has Anderson made any contribution to
any other funded employee benefit or welfare or arrangement. The consummation of
the transactions contemplated by the Assignment will not entitle any individual
to severance or termination pay or benefits, other than "COBRA" benefits.
Neither the Assignee nor Buyer shall have any liability arising from any such
benefit plan or arrangement.
Section 5.22 No Collective Bargaining Agreements. Anderson is not a
-----------------------------------
party to any collective bargaining agreement or other similar agreement or
undertaking. No labor
16
<PAGE>
organization has (or claims to have), or is negotiating or seeking to negotiate
for, or otherwise secure, the right to represent any individual rendering
services to Anderson under a collective bargaining agreement or otherwise.
Anderson has no knowledge that a labor organization intends to negotiate or to
seek to negotiate for, or is otherwise seeking to secure, any such right. There
is no pending or threatened labor strike, stoppage, slowdown, picketing or
similar labor dispute affecting Anderson, and Anderson has not experienced any
such matter during the last three (3) years.
Section 5.23 Transfer of Masters and Work-in-Progress. Anderson has the
----------------------------------------
authority and right to transfer custody of all of the masters and elements of a
tape, video, movie or other form of creative production (whether or not the
work-in- progress undertaken by Anderson has been completed) without the consent
of any third party.
Section 5.24 Accuracy Of Statements. Neither the Assignment nor any
----------------------
schedule, exhibit, statement, list, document, certificate or other information
furnished or to be furnished by or on behalf of Anderson to Assignee or any
representative of the Assignee in connection with the Assignment or any of the
transactions contemplated thereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements contained herein or therein, in light of the circumstances
in which they are made, not misleading.
Section 5.25 Intervening Period. The representations, warranties and
------------------
covenants contained in this Article 5 are made as of the time of the Assignment.
No representations, warranties or covenants are made as to any matters arising
out of facts or events arising after the time of the Assignment.
ARTICLE 6
---------
REPRESENTATIONS AND WARRANTIES
------------------------------
OF THE BUYER TO THE ASSIGNEE
----------------------------
Section 6.1 Corporate Status. The Buyer is a corporation duly
----------------
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified to do business and is in good standing in the
state of its incorporation. The Buyer has all requisite corporate power and
authority to own or lease its properties and assets and to conduct its business
as they are currently being conducted.
Section 6.2 Authorization of Agreement. The Buyer has full corporate
--------------------------
power and authority to execute, deliver and perform this Agreement and all other
agreements and instruments entered into or delivered in connection with the
transactions contemplated as of the date hereof, certified by the Secretary of
State of the State of Delaware, and the Buyer's Bylaws, as amended to date,
certified by the Secretary or an Assistant Secretary of the Buyer, shall be
delivered to the Assignee at the Closing on the Closing Date and when delivered,
will be
17
<PAGE>
complete and correct. The execution, delivery and performance of this Agreement
has been, and all other agreements and instruments entered into or delivered in
connection with the transactions contemplated hereby have been, or prior to the
Closing will have been, duly and validly authorized by all necessary corporate
action on the party of the Buyer. On the Closing Date, the Buyer shall deliver
to Assignee certified copies of the resolutions adopted by the board of
Directors of the Buyer authorizing the execution, delivery and performance of
this Agreement by the Buyer.
Section 6.3 Binding Agreement. This Agreement constitutes, and all
-----------------
other agreements and instruments entered into or delivered in connection with
the transactions contemplated hereby do or will constitute, the valid and
binding obligations of the Buyer and are enforceable against the Buyer (or upon
execution and delivery will be enforceable against the Buyer) in accordance with
their respective terms.
ARTICLE 7
---------
OTHER COVENANTS OF ANDERSON, D.L. ANDERSON AND DOGGETT
------------------------------------------------------
Anderson, D.L. Anderson and Doggett jointly and severally covenant and
agree to, with and for the benefit of Buyer, its Affiliates and successors, as
follows:
Section 7.1 Consents and Approvals.
----------------------
(a) Anderson shall, and D.L. Anderson and Doggett shall cause
Anderson to, (i) take all necessary action and use its best efforts to
obtain any and all consents and governmental or other approvals and
authorizations required to be obtained by Anderson to permit Anderson
to consummate the transactions contemplated by the Assignment, to
perform Anderson's obligations under the Assignment and to allow
Assignee to fulfill any conditions to which it agrees in respect of the
sale of the Assets to Buyer by Assignee, and (ii) make all filings,
applications, statements and reports to all Governmental Authorities
and other Persons which are required to be made by or on behalf of
Anderson pursuant to any applicable Law or Contract in connection with
the Assignment or the transactions contemplated thereby; and
(b) In any event, Anderson shall, and D.L. Anderson and
Doggett shall cause Anderson to, take all actions necessary to cause
the sale, assignment, transfer and delivery of the Assets and the
consummation of the transactions contemplated by the Assignment or by
any sale of Assets to Buyer by Assignee.
Section 7.2 Customer Lists. Anderson shall deliver to Assignee on the
--------------
date of the Assignment a customer list as described in Section 5.17 hereof.
18
<PAGE>
Section 7.3 Non-Competition.
---------------
(a) D.L. Anderson and Doggett each agree that from and after
the date of this Agreement, so long as he is either employed by Buyer
or an Affiliate of Buyer, or is receiving compensation from Buyer or an
Affiliate of Buyer, he will not, directly or indirectly:
(i) compete with Buyer or its Affiliates; or
(ii) be interested in, employed by, engaged in or
participate in the ownership, management, operation or control of, or
act in any advisory or other capacity for, any Competitive Business
which conducts its business within the Territory (as such terms are
hereinafter defined); provided, however, that notwithstanding the
-------- -------
foregoing, Executive may make solely passive investments in any
Competitive Business the common stock of which is "publicly held," and
of which Executive shall not own or control, directly or indirectly, in
the aggregate securities which constitute more than one (1%) percent of
the voting rights or equity ownership of such Competitive Business; or
(iii) solicit or divert any business or any customer
from Buyer or its Affiliates or assist any person, firm or corporation
in doing so or attempting to do so; or
(iv) cause or seek to cause any person, firm or
corporation to refrain from dealing or doing business with Buyer or its
Affiliates or assist any person, firm or corporation in doing so or
attempting to do so.
For purposes of this Section, the term "directly or indirectly" shall include
acts or omissions as proprietor, partner, joint venturer, employer, salesman,
agent, employee, officer, director, lender or consultant of or owner of any
interest in any Person. "Competitive Business" shall mean the Anderson Business
or similar or competitive business or any business which engages in the
provision of products or services that are similar to or used for the purposes
that could be served by the products or the services provided by Anderson prior
to the Assignment. "Territory" shall mean any geographic area in which Anderson
has transacted business prior to the Assignment.
(b) D.L. Anderson and Doggett each agree that, from and after
the date of this Agreement, so long as he is either employed by Buyer
or an Affiliate of Buyer or is receiving compensation from Buyer or an
Affiliate of Buyer, and for two (2) years thereafter, he shall not,
directly or indirectly: (a) solicit or hire, or attempt to solicit or
hire, any employee of Buyer or an Affiliate of Buyer, or assist any
person, firm or corporation in doing so or attempting to do so; or (b)
solicit or cause to be solicited the disclosure of, or use or disclose,
any Confidential Information for any purpose whatsoever or for any
other party.
19
<PAGE>
(c) If at any time any of the provisions of this Section shall
be determined to be invalid or unenforceable by reason of being vague
or unreasonable as to duration, area, scope of activity or otherwise,
then this Section shall be considered divisible (with the other
provisions to remain in full force and effect) and the invalid or
unenforceable provisions shall become and be deemed to be immediately
amended to include only such time, area, scope of activity or other
restrictions, as shall be determined to be reasonably and enforceable
by the court or other body having jurisdiction over the matter, and
Anderson, D.L. Anderson and Doggett expressly agree that this Section,
as so amended, shall be valid and binding as though any invalid or
unenforceable provision had not been included herein.
(d) The provisions of this Section shall be in addition to,
and not in limitation of, any other provisions contained in any other
agreement restricting competition by the employees of Anderson.
Section 7.4 Implementing Agreement. Subject to the terms and conditions
----------------------
thereof and compliance with any applicable law, court order or validly enacted
governmental action, Anderson, D.L. Anderson and Doggett shall use their
respective best efforts to take all action required of it or them to fulfill
their respective obligations under the terms of the Assignment and to facilitate
the consummation of the transactions contemplated thereby or by this Agreement.
Anderson agrees that neither Anderson nor any of its officers or directors will
take any action which would have the effect of preventing or disabling
Anderson's performance of its obligations under the Assignment or any in
connection with the sale of the Assets to Buyer by Assignee, and that its
Shareholders will not take any such action prior to the performance of such
obligations by Anderson.
Section 7.5 Required Consents Obtained. All Required Consents shall be
--------------------------
obtained by Anderson or Assignee.
ARTICLE 8
---------
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER
----------------------------------------------------
Section 8.1 Conditions Precedent. The obligations of the Buyer under
--------------------
this Agreement are subject to the fulfillment at the Closing on the Closing
Date, of all of the conditions precedent set forth in this Article 8 and
throughout this Agreement; provided, however, that any of such conditions may be
waived by the Buyer in writing at or prior to the Closing.
Section 8.2 Continued Truth of Representations and Warranties and
-----------------------------------------------------
Compliance With Covenants. The representations and warranties of Anderson, D.L.
- -------------------------
Anderson and Doggett contained in this Agreement shall be true, accurate and
complete in all material respects on and as of the Closing Date and Anderson
shall have performed and complied in all material respects
20
<PAGE>
with all terms, conditions, covenants and agreements required by the Assignment
to be performed or complied with by Anderson on or prior to the Closing Date.
Section 8.3 Governmental Approvals. All necessary consents,
----------------------
authorizations and approvals of all governmental agencies, commissions and
similar bodies, the consent, authorization or approval of which is required
under any applicable Law, in order to permit Anderson to consummate the
transactions contemplated by the Assignment and Assignee to consummate the
transactions contemplated by this Agreement, shall have been obtained and
delivered to Assignee and to Buyer, respectively, and any and all consents
necessary to assign all Governmental Permits, to the extent such Governmental
Permits may be assigned, shall also have been obtained and delivered to the
Assignee and Buyer.
Section 8.4 Consent Of Third Parties. The duly executed written
------------------------
consents and approvals of any third parties necessary to permit Anderson and
Assignee to consummate the transactions contemplated by the Assignment and this
Agreement, respectively, in form and substance satisfactory to Assignee and
Buyer in all material respects shall have been obtained and delivered by
Anderson to Assignee and Assignee to Buyer.
Section 8.5 Adverse Proceedings. There shall be no action, lawsuit or
-------------------
proceeding filed and pending, or any claim or controversy asserted, that in
Buyer's good faith estimate could have a Material Adverse Effect. There shall be
no unsatisfied or outstanding order, writ, judgment, injunction or decree or any
litigation or proceeding filed that seeks to restrain, prohibit or invalidate
the transactions contemplated by this Agreement, or that would, if successful,
affect the right of the Buyer to own, operate or control the Assets or the
Anderson Business.
Section 8.6 Delivery of Schedules and Other Materials. Anderson shall
-----------------------------------------
have delivered to the Assignee all of the Schedules, agreements, transfer and
assumption documents and every other document required to be executed and
delivered pursuant to the Assignment and the Assignee shall have delivered such
Schedules and documents and other materials to Buyer pursuant to Article 3
hereof or otherwise referred to in this Agreement.
Section 8.7 Documents. The Buyer shall have received all of the
---------
agreements, documents and items specified in Section 3.2.
Section 8.8 Discharge of Federal Tax Liens. The Buyer shall have
------------------------------
received (a) a true and correct duly executed original of Internal Revenue
Service Form 669-B (Certificate of Discharge of Property from Federal Tax Lien)
or Form 669-C (Certificate of Discharge of Property from Federal Tax Lien) in
form and substance satisfactory to Buyer, pursuant to which the District
Director of Internal Revenue irrevocably discharges the Assets from all tax
liens filed against Anderson by the Internal Revenue Service on or before the
Closing Date, or (b) evidence satisfactory to Buyer that (i) no tax liens have
been filed against Anderson or the Assets by the Internal Revenue Service on or
before the Closing Date and (ii) all delinquent taxes have been paid or
compromised on or before the Closing Date.
21
<PAGE>
Section 8.9 Approved Liens. The Assets shall not be subject to any
--------------
Liens other than those approved by and acceptable to Buyer at Closing.
ARTICLE 9
---------
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ASSIGNEE
---------------------------------------------------
Section 9.1 Conditions Precedent. The obligations of the Assignee under
--------------------
this Agreement are subject to the fulfillment, at the Closing, on the Closing
Date, of all of the conditions precedent set forth in this Article 9 and
throughout this Agreement; provided, however, that any of such conditions may be
waived by Assignee in writing at or prior to the Closing.
Section 9.2 Continued Truth Of Representations And Warranties And
-----------------------------------------------------
Compliance With Covenants. The representations and warranties of the Buyer
- -------------------------
contained in this Agreement shall be true, accurate and complete in all material
respects on and as of the Closing Date as though such representations and
warranties were made on and as of the Closing Date, and the Buyer shall have
performed and complied in all material respects with all terms, conditions and
agreements required by this Agreement to be performed or complied with by the
Buyer prior to or at the time of Closing on the Closing Date.
Section 9.3 Governmental Approvals. All necessary consents,
----------------------
authorizations and approvals of all governmental agencies, commissions and
similar bodies, the consent, authorization or approval of which is required
under any applicable law, rule, order or regulation for the consummation of the
transactions contemplated by this Agreement, shall have been received.
Section 9.4 Consent of Third Parties. The duly executed written
------------------------
consents and approvals of any third parties necessary to permit the Buyer to
consummate the transactions contemplated by this Agreement shall have been
obtained and delivered by the Buyer to Assignee.
Section 9.5 Adverse Proceedings. There shall be no unsatisfied or
-------------------
outstanding order, writ, judgment, injunction or decree that seeks to restrain,
prohibit or invalidate the transactions contemplated by this Agreement. That
shall be no lawsuit or proceeding filed and pending against Anderson or Assignee
with respect to the Assets or the Anderson Business that has a reasonable
likelihood of success and that seeks to restrain, prohibit or invalidate the
transactions contemplated by this Agreement.
22
<PAGE>
ARTICLE 10
----------
INDEMNIFICATION
---------------
Section 10.1 Survival. The representations, warranties, agreements and
--------
(except for those that by their express terms terminate upon Closing) covenants
of the parties hereto shall survive the Closing.
Section 10.2 Indemnification by D.L. Anderson and Doggett. D.L.
--------------------------------------------
Anderson and Doggett each agree, jointly and severally, to indemnify and,
effective upon the Closing, do indemnify the Buyer and each of the Buyer's
Affiliates, and the Buyer's officers, directors, employees, agents and
representatives (individually, an "Indemnified Person" and collectively, "Buyer
Indemnified Parties") against, and agree to indemnify and hold each of them
harmless from, the amount of any and all Losses incurred or suffered by them
relating to or arising out of or in connection with any or all of the following:
(a) any material breach of or any inaccuracy in any
representation or warranty made by Anderson, D.L. Anderson or Doggett
pursuant to the Assignment, this Agreement or any Related Agreement or
any document delivered at the Closing;
(b) any material non-fulfillment or material breach of or
failure by Anderson, D.L. Anderson or Doggett to perform any
obligations or covenant to be performed by any of them set out in or
contemplated by the Assignment, this Agreement or any Related Agreement
or any document delivered at Closing; and
(c) all material Liabilities and Liens (other than Approved
Liens) arising out of the ownership of or the operation of the Assets,
or the conduct of the Anderson Business prior to the Closing Date,
whether arisen or to arise, fixed or contingent, known or unknown, in
any way relating to conditions, events, transactions, circumstances,
contracts, actions or omissions affecting or relating to Anderson
and/or its operations or the Assets.
Section 10.3 Failure of D.L. Anderson and Doggett to Act. In the event
-------------------------------------------
that D.L. Anderson and/or Doggett do not elect to assume the defense of any
claim, suit, action or proceeding, then any failure of the Indemnified Person to
defend or to participate in the defense of any such claim, suit, action or
proceeding or the cause the same to be done, shall not relieve D.L. Anderson or
Doggett of their respective obligations hereunder.
Section 10.4 Subrogation and Contribution. In the event that D.L.
----------------------------
Anderson and/or Doggett make any payment in respect of indemnification under
this Agreement and the Indemnified Person also has a right to recover from a
third party the Losses paid by D.L. Anderson or Doggett, then D.L. Anderson
and/or Doggett shall, once the Indemnified Person shall have been compensated in
full for all Losses associated with the event, conditions or circumstance giving
rise to such indemnification, to the extent of his payment, be subrogated to,
23
<PAGE>
and be entitled at his own expense to recover under, the claim of the
Indemnified Person against the third party. The Indemnified Person shall
cooperate to the extent reasonably requested by D.L. Anderson and/or Doggett,
and at the expense of D.L. Anderson and/or Doggett, in recovering against the
third party, including (without limitation) transferring or assigning said claim
to D.L. Anderson and/or Doggett. D.L. Anderson and/or Doggett shall indemnify
the Indemnified Person against, and hold it harmless from, the full amount of
any and all Losses incurred or suffered by the Indemnified Person as a result of
D.L. Anderson and/or Doggett collecting, or attempting to collect, such claim.
Section 10.5 Limitations on Indemnity. The maximum amount for which
------------------------
D.L. Anderson and/or Doggett shall be obligated to pay pursuant to paragraph
10.2 hereof shall be One Hundred Thousand Dollars ($100,000) in the aggregate.
Section 10.6 Indemnification of Assignee. Buyer shall indemnify
---------------------------
Assignee against any and all Losses in an amount not to exceed an aggregate of
One Hundred Thousand Dollars ($100,000) arising from any asserted claims against
Assignee of the Internal Revenue Service, California Franchise Tax Board,
California Board of Equalization or the California Employment Development
Department with respect to taxes owed to such agencies respectively arising from
events occurring prior to the date of the Assignment.
ARTICLE 11
----------
GENERAL PROVISIONS
------------------
Section 11.1 Sales and Use Tax. The Buyer shall pay sales and use Taxes
-----------------
determined to be payable with respect to or as the result of the consummation of
the transactions contemplated hereby on personal property transferred hereunder.
Section 11.2 Seller's Brokers. Assignee represents and warrants to the
----------------
Buyer that Assignee has not dealt with, retained or otherwise employed any
broker, finder or agent in connection with the transactions contemplated by this
Agreement.
Section 11.3 Buyer's Brokers. The Buyer represents and warrants to
---------------
Assignee that the Buyer has not dealt with, retained or otherwise employed any
broker, finder or agent in connection with the transactions contemplated by this
Agreement.
Section 11.4 Time is of the Essence. Time is of the essence with regard
----------------------
to the consummation of the transactions contemplated by this Agreement, and both
parties shall use their best efforts to satisfy all obligations imposed upon
such parties under this Agreement in a timely fashion.
Section 11.5 Notices. Any notice, request, instruction or other
-------
document to be given hereunder by a party hereto shall be in writing and shall
be deemed to have been given,
24
<PAGE>
(a) when received if given in person or by courier or a courier service, (b) on
the date of transmission if sent by telex, facsimile or other wire transmission,
or (c) three Business Days after being deposited in the U.S. mail, certified or
registered mail, postage prepaid:
To the Buyer: AV Acquisition Corp.
2813 W. Alameda Ave.
Burbank, California 91505
Attention: Alan Unger
with a copy to: Greenberg Glusker Fields
Claman & Machtinger LLP
1900 Avenue of the Stars, Suite 2200
Los Angeles, California 90067
Attention: Jill A. Cossman
To the Assignee: Earle Hagen, Sr., Esq.
c/o Hagen, Hagen & Hagen
17525 Ventura Boulevard, Suite 201
Encino, California 91316
with a copy to: Anderson Film Industries Corp.
-----------------------------
-----------------------------
-----------------------------
Attention: _________________
or such other address as may be communicated in writing by any party to the
other. Notices shall be deemed given on the day following mailed first class,
proper postage, etc. or when actually delivered.
Section 11.6 Entire Agreement; Amendment. This Agreement and the
---------------------------
Schedules attached hereto contain the entire agreement between the parties
hereto with respect to the sale of the Assets and supersede all previous written
or oral negotiations, commitments and writings between the parties hereto. This
Agreement may be amended, but only in writing, signed on behalf of Assignee by
Earle Hagen, Sr. or any partners of Assignee and signed on behalf of the Buyer
by the Chairman of the Board or the President or any Vice President of the
Buyer.
Section 11.7 Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
Section 11.8 Governing Law. This Agreement shall be governed by and
-------------
construed and enforced in accordance with the laws of the State of California.
The Assignee and the Buyer
25
<PAGE>
covenant and agree that any action or proceeding arising in connection with this
Agreement, specifically including any action or proceeding instituted by the
Buyer against Anderson, D.L. Anderson and Doggett or any other Person, to
enforce the indemnification obligations and liabilities of Anderson to the Buyer
under Article 10 of this Agreement may be instituted only in the Superior Court
of the State of California in Los Angeles, California or in the federal court in
the Central District of the State of California (Los Angeles).
Section 11.9 Partial Invalidity. In the event that any provision or
------------------
part of any provision of this Agreement shall be held invalid or unenforceable
by any court of competent jurisdiction, unless such provision or part of a
provision is material to the performance of this Agreement or the consummation
of the transactions contemplated hereby, as determined by both the Assignee and
the Buyer, this Agreement shall continue in effect and such provision or part of
a provision shall be excised herefrom, and there shall be deemed substituted for
the provision at issue a valid, legal and enforceable provision as similar as
possible to the provision at issue.
Section 11.10 Successors and Assigns. This Agreement shall be binding
----------------------
upon and inure to the benefit of Assignee and the Buyer and their respective
successors and permitted assigns.
Section 11.11 Captions. The Index and the titles of the Articles and
--------
Sections of this Agreement are for convenience only and shall not be construed
as limiting, defining or affecting the substantive terms of this Agreement.
Section 11.12 Effect Of Investigation. Any due diligence review, audit
-----------------------
or other investigation or inquiry undertaken or performed by or on behalf of the
Buyer shall not limit, qualify, modify or amend the representations, warranties
or covenants of, or indemnities by, Anderson, D.L. Anderson and Doggett,
irrespective of the knowledge and information received (or which should have
been received) therefrom by the Buyer.
Section 11.13 Waivers. The failure of a party hereto at any time or
-------
times to required performance of any provision hereof shall in no manner affect
its right at a later time to enforce the same. No waiver by a party of any
condition or of any breach of any term, covenant, representation or warranty
contained in this Agreement shall be effective unless in writing, and no waiver
in any one or more instances shall be deemed to be a further or continuing
waiver of any such condition or breach of any other term, covenant,
representation or warranty.
Section 11.14 Interpretation. The use of the masculine, feminine or
--------------
neuter gender herein shall not limit any provision of this Agreement. The use of
the terms "including" or "include" shall in all cases herein mean "including,
without limitation, or "include, without limitation," respectively. Underscored
references to Articles, Sections, Subsections or Schedules shall refer to those
portions of this Agreement. Consummation of the transactions contemplated herein
shall not be deemed a waiver of a breach of or inaccuracy in any representation,
warranty or covenant or of any party's rights and remedies with regard thereto.
No specific representation, warranty or covenant contained herein shall limit
the generality or applicability of a more general representation, warranty or
covenant contained herein. A breach of or inaccuracy in any
26
<PAGE>
representation, warranty or covenant shall be not be affected by the fact that
any more general or less general representation warranty or covenant was not
also breached or inaccurate.
Section 11.15 No Third Party Beneficiaries. This Agreement is solely
----------------------------
for the benefit of the parties hereto and, to the extent provided herein, their
respective Affiliates, directors, officers, employees, agents and
representatives, and no provision of this Agreement shall be deemed to confer
upon any third parties any remedy, claim, liability, reimbursement, cause of
action or other right.
Section 11.16 Further Assurances. Upon the reasonable request of the
------------------
Buyer, Assignee and Anderson will on and after the Closing Date execute and
deliver to the Buyer such other documents, releases, assignments and other
instruments as may be required to effectuate completely the transfer and
assignment to the Buyer of, and to vest fully in Buyer title to, the Assets, and
to otherwise carry out the purposes of this Agreement.
Section 11.17 Remedies Cumulative. The remedies provided in this
-------------------
Agreement shall be cumulative and shall not preclude the assertion or exercise
of any other rights or remedies available by law, in equity or otherwise.
Section 11.18 Fees, Costs and Expenses. Except as otherwise
------------------------
specifically provided herein, the Assignee (Seller), on the one hand, and the
Buyer, on the other hand, shall each bear their own direct and indirect costs or
expenses incurred in connection with the negotiation and preparation of this
Agreement and the Related Agreements and the consummation and performance of the
transactions contemplated hereby and thereby, including without limitation, all
legal fees and fees of any brokers, finders or similar agents. Buyer shall not
bear the costs or expenses of any other Person.
IN WITNESS WHEREOF, Assignee and the Buyer have executed this Agreement
as of the date written above.
/s/ Earle Hagen
------------------------------------------------
EARLE HAGEN, Assignee
AV ACQUISITION CORP., a Delaware corporation
By: /s/ Robert Walston
_________________________________________
Name: Robert Walston
_________________________________________
Title: Chief Executive Officer
________________________________________
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
27
<PAGE>
The undersigned each jointly and severally join in and agree to be
bound by the representations, warranties, covenants and/or indemnities contained
in the foregoing Agreement which are made only for the benefit of Buyer and
Buyer's Affiliates (as therein defined).
ANDERSON FILM INDUSTRIES CORP., a California
corporation
dba ANDERSON VIDEO
By: /s/ Michael Doggett
_________________________________________
Name: Michael Doggett
_________________________________________
Title: Chairman and CEO
________________________________________
/s/ Darrell L. Anderson
----------------------------------------------
Darrell L. Anderson, individually
/s/ Michael Doggett
----------------------------------------------
Michael Doggett, individually
28
<PAGE>
EXHIBIT 10.3
AGREEMENT
---------
1. Identification.
--------------
This agreement (the "Agreement") is dated March 10, 1997 and is between AV
Acquisition Corp., a Delaware corporation ("Buyer"), and Anderson Graphics, LLC,
a California limited liability company ("Seller").
2. Recitals.
--------
Seller owns and operates a business in Los Angeles, California through
which it provides graphic services for motion pictures, television and video
(the "Business"). Buyer and Seller desire to enter into this Agreement to
provide for the transfer of certain of Seller's assets pertaining to the
Business to Buyer.
3. Transfer of Certain Assets of the Business.
------------------------------------------
3.1 Purchase of Assets. Buyer hereby purchases from Seller and Seller
------------------
hereby sells, transfers and assigns to Buyer those certain assets pertaining to
the Business which are listed on the schedule attached hereto as Exhibit "A"
(collectively, the "Assets").
3.2 Retained Assets. Seller shall retain and not sell to Buyer any assets
---------------
or property rights of Seller other than the Assets.
<PAGE>
4. Purchase Price; Assumption of Liabilities.
-----------------------------------------
4.1 Purchase Price. The purchase price for the Assets shall be Two
--------------
Hundred Fifty Four Thousand Eight Hundred Seventy Two Dollars ($254,872) (the
"Purchase Price") payable upon "Closing" (as hereinafter defined in Section
7.1). The Purchase Price shall be reduced dollar for dollar to the extent that
the Accounts Receivable at Closing have a face amount of less than One Hundred
Thirty Eight Thousand Eight Hundred Forty One Dollars ($138,841), the Prepaid
Expenses at Closing are less than Twelve Thousand Three Hundred Sixty Nine Two
Dollars ($12,369), and/or as provided in Section 4.2.
4.2 Assumption of Certain Liabilities. Buyer hereby assumes and shall
---------------------------------
pay, perform and discharge all of Seller's obligations pursuant to that certain
Lease, No. 1731 between The Terminal Marketing Company, Inc., as Lessor
("Lessor") and Seller as Lessee (the "Lease"). If, at Closing, the remaining
principal balance on the Lease exceed Four Hundred Seven Thousand Four Hundred
Forty Seven Dollars ($407,447), then the Purchase Price shall be reduced on a
dollar-for-dollar basis by the amount of the excess.
4.3 Nonassumption of Liabilities. Except as provided in Section 4.2, it
----------------------------
is expressly understood and agreed that Buyer is not assuming any of the
liabilities, obligations, contracts, debts or payables of Seller pertaining to
the Business, or otherwise; and shall not be liable for any of the obligations
or liabilities of Seller of any kind and nature, including, without limitation,
any liabilities to employees of Seller for salaries, accrued vacation,
termination pay or other forms of employee compensation or
<PAGE>
benefits; any obligation or liability on any installment contract or lease for
real or personal property; or any obligation or liability on any contract
providing for the performance of services by Seller.
5. The Representations and Warranties of Seller.
--------------------------------------------
Seller represents and warrants to Buyer as follows:
5.1 Organization; Standing. Seller is duly organized, validly existing
----------------------
and in good standing as a limited liability company in the State of California.
Seller has all necessary power and authority to own its properties and operate
its Business as now owned and operated by it.
5.2 Consents Required. Seller has the requisite power, authority,
-----------------
capacity and legal right to execute, deliver and perform this Agreement without
obtaining the consent or approval of any other person, entity or governmental
authority, except for Lessor's consent to the assignment and assumption of the
Lease which consent has been previously obtained. This Agreement has been
unanimously approved by Seller's Members in accordance with its charter
documents and Seller shall deliver to Buyer evidence satisfactory to Buyer that
such approval has been obtained.
5.3 Enforceability. This Agreement, when executed and delivered by
--------------
Seller, will constitute legal, valid and binding obligations of Seller
enforceable against it in accordance with its terms, except as otherwise
provided by the laws of bankruptcy, insolvency and similar laws relating to
creditors rights.
<PAGE>
5.4 Balance Sheet. Exhibit "B" to this Agreement sets forth the unaudited
-------------
balance sheet of Seller as of February 28, 1997. This balance sheet is true and
correct and presents fairly the financial condition of Seller as of February 28,
1997; and since such date there has been no material adverse change in such
condition. Seller has no material direct or material contingent liabilities as
of such date which are not provided for or reflected in the balance sheet.
5.5 Accounts Receivable. All accounts receivable of Seller shown on
-------------------
Exhibit "A" arose from valid sales in the ordinary course of business. To the
best of Seller's knowledge, these accounts receivable are collectible at their
full amounts, and Seller has not received any demand for a reduction or
adjustment of any amounts due in connection therewith.
5.6 Lease. The Lease is valid and in full force and effect, and there
-----
does not exist any default or event that with notice or lapse of time, or both,
would constitute a default by any party thereunder.
5.7 Equipment. Attached to the Lease is a list all equipment owned by, in
---------
the possession of, or used by Seller in connection with the Business. The
Equipment constitutes all tangible personal property necessary for the conduct
by Seller of its Business. All of the Equipment is in good condition and
repair, normal wear and tear excepted.
5.8 Scope of Assets. The Assets include all of the assets used by Seller
---------------
in, or which are useful in, the operation of the Business.
<PAGE>
5.9 Marketable Title. Seller has good and marketable title to the Assets.
----------------
All of the Assets are free and clear of restrictions on or conditions to
transfer or assignment, and free and clear of all mortgages, liens, pledges,
encumbrances, equities, claims, charges and restrictions.
5.10 Tax Returns. Within the times and in the manner prescribed by law,
-----------
Seller has filed all federal, state and local tax returns required by law and
has paid all taxes, assessments and penalties due and payable.
5.11 Creation of Liens. Neither the execution and delivery of this
-----------------
Agreement, nor the consummation of the transaction contemplated hereby will,
with or without notice and/or lapse of time, result in the imposition or
creation of any liens, charges, encumbrances, equities, claims or security
interests in or on the Assets.
5.12 Compliance With Law. To the best of Seller's knowledge, Seller has
-------------------
complied with, and is not in violation of all applicable federal, state or local
statutes, laws or regulations affecting the Business, including the Assets.
5.13 Litigation. There is no suit, action, arbitration or legal,
----------
administrative, or other proceeding or governmental investigation pending, or to
the best of Seller's knowledge threatened, against or affecting the Business,
including the Assets. Seller is not in default with respect to any order, writ,
injunction or decree of any federal, state, local or foreign court, department,
agency, or instrumentality which affects the Business, including the Assets.
5
<PAGE>
5.14 Full Disclosure. Neither this Agreement nor any other statement
---------------
furnished by Seller to Buyer in connection with the transaction contemplated
hereby contains any untrue statement of material fact, or omits to state any
material fact necessary in order to make the statements contained herein or
therein true and not misleading.
6. Representations and Warranties of Buyer.
---------------------------------------
Buyer represents and warrants that:
6.1 Organization; Standing. Buyer is a corporation duly organized,
----------------------
validly existing and in good standing under the laws of the State of Delaware,
and is qualified to transact intrastate business in California. Buyer has all
requisite power, corporate or otherwise, to conduct its business, to own its
properties, and to execute, deliver and perform all of its obligations under
this Agreement.
6.2 Corporate Authority. The execution and delivery of this Agreement and
-------------------
the performance of all obligations of Buyer hereunder and thereunder has been
duly authorized by all necessary corporate action.
6.3 Enforceability. This Agreement, when executed and delivered by Buyer,
--------------
will constitute legal, valid and binding obligations of Buyer enforceable
against it, in accordance with its terms.
6.4 Consents Required. Buyer has the requisite power, authority, capacity
-----------------
and legal right to execute, deliver and perform
6
<PAGE>
this Agreement without obtaining the consent or approval of any other person,
entity or governmental authority.
6.5 Full Disclosure. Neither this Agreement nor any other statement
---------------
furnished by Buyer to Seller in connection with the transaction contemplated
hereby contains any untrue statement of material fact, or omits to state any
material fact necessary in order to make the statements contained herein or
therein true and not misleading.
7. Transfer of the Assets.
----------------------
7.1 Closing. The transfer of legal title to the Assets from Seller and to
-------
Buyer (the "Closing") shall occur upon execution and delivery of this Agreement
by Buyer and Seller, and upon Closing Seller shall put Buyer in possession of
the Assets where the Assets are then located.
7.2 Sales Tax. Buyer shall pay all sales and use taxes arising out of or
---------
in respect of this transaction. Buyer shall not be responsible for any
business, occupation, income, franchise, withholding, or similar tax on Seller.
7.3 Work in Process. Seller shall transfer custody of all of the masters
---------------
and elements of a tape, video, movie or other form of creative production
(whether or not the work-in-process undertaken by Seller has been completed) to
Buyer at the Closing. Seller's work-in-process is identified on the schedule
attached hereto as Exhibit "C". Seller makes no representations or warranties
that the customers listed on Exhibit "C", or any customers whatsoever of Seller
will do business with Buyer or its affiliates, subsidiaries
7
<PAGE>
or assigns from and after the Closing, or at any time whatsoever. Buyer shall
complete all such work-in-process and shall be entitled to all revenue
therefrom.
8. Costs; Brokerage.
----------------
8.1 As between Buyer and Seller, Seller shall be responsible for all
broker or finder fees incurred by or agreed to by Seller or which are alleged to
have been incurred by or agreed to by Seller, in connection with this
transaction, and Seller hereby indemnifies, defends and holds harmless Buyer
from and against any claims, damages, liabilities, costs or expenses arising out
of any and all claims by any broker or finder that the broker or finder was
retained by Seller or is owed a commission or fee from Seller in connection with
this transaction.
8.2 As between Seller and Buyer, Buyer shall be responsible for all broker
or finder fees incurred by or agreed to by Buyer or which are alleged to have
been incurred by or agreed to by Buyer, in connection with this transaction, and
Buyer hereby indemnifies, defends and holds harmless Seller from and against any
claims, damages, liabilities, costs or expenses arising out of any and all
claims by any broker or finder that the broker or finder was retained by Buyer
or is owed a commission or fee from Buyer in connection with this transaction.
8.3 Each of the parties shall pay all costs and expenses incurred or to be
incurred by it in negotiating and preparing this Agreement and in closing and
carrying out the transaction contemplated by this Agreement.
8
<PAGE>
9. Indemnification.
---------------
9.1 Seller's Indemnity. Except for obligations expressly assumed
------------------
hereunder, Buyer shall have no liability for any debts, contracts, agreements,
taxes, claims, obligations, liabilities, or deficiencies of Seller. Seller shall
indemnify, defend, and hold harmless Buyer, its directors, officers,
shareholders, agents and attorneys ("Buyer Indemnified Parties") from and
against and in respect of any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries, and deficiencies, including
interest, penalties, and reasonable attorneys' fees and costs, that the Buyer
Indemnified Parties may incur or suffer, which arise out of, result from, or
relate to (i) any breach of, or failure by Seller to perform any of its
representations, warranties, covenants, or agreements contained in this
Agreement; or (ii) any obligation of Seller not assumed by Buyer.
9.2 Buyer's Indemnity. Buyer agrees to indemnify and hold harmless
-----------------
Seller, its managers, members, agents and attorneys ("Seller Indemnified
Parties") from and against and in respect of any and all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries, and
deficiencies, including interest, penalties and reasonable attorneys' fees and
costs, that the Seller Indemnified Parties may incur or suffer as a result of
Buyer's failure to perform any of its representations, warranties, covenants, or
agreements contained in this Agreement.
9.3 Indemnification Procedure. Any party claiming indemnification (the
-------------------------
"Indemnitee") pursuant to this Agreement shall give notice in accordance with
Section 11.12 to the indemnifying
<PAGE>
party (the "Indemnitor") as soon as is reasonably practicable together with the
relevant information pertaining to the indemnifiable claim asserted by the
Indemnitee or by a third party (the "Third Party Claim"). The Indemnitor shall
then have a reasonable opportunity to defend against the Third Party Claim at
its own expense; provided that the Indemnitee shall have the right to fully
participate in the defense at its own expense.
10. Dispute Resolution.
------------------
All disputes arising in connection with this Agreement shall be settled by
final and binding arbitration before a retired California Superior court or
appellate court judge in accordance with the Commercial Arbitration Rules of the
American Arbitration Association which are in effect at the time of the
arbitration (or the demand therefor). Those rules are hereby incorporated by
reference. The arbitration shall be commenced and heard in Los Angeles,
California, and the arbitrator shall be required to apply California substantive
law. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof. Neither this agreement to arbitrate nor any
demand for arbitration hereunder shall waive either party's right to obtain any
provisional remedy, including, without limiting the generality of the foregoing,
injunctive relief, from any court of competent jurisdiction, with respect to
matters otherwise arbitrable under this Agreement. However, in the event that
either party seeks or obtains such a provisional remedy, an arbitration
hereunder shall also be commenced, and, if necessary, the merits of the
controversy
<PAGE>
or claim and/or the determination of an appropriate permanent remedy shall be
settled by arbitration in accordance with this Agreement.
11. Miscellaneous.
-------------
11.1 Headings. The subject headings of the Articles and Sections of this
--------
Agreement are included for purposes of convenience only, and shall not affect
the construction or interpretation of any of its provisions.
11.2 Integration, Amendment, Waiver. This Agreement and the documents and
------------------------------
agreements referred to herein constitute the entire agreement between the
parties pertaining to the subject matter contained herein and supersedes all
prior and contemporaneous agreements, representations, and understandings of the
parties. No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing by the parties. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provisions, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by the
party making the waiver.
11.3 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.4 Third Parties. Nothing in this Agreement, whether express or
-------------
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the
<PAGE>
parties to it and their respective successors and assigns, nor is anything in
this Agreement intended to relieve or discharge the obligation or liability of
any third persons to any party to this Agreement, nor shall any provision give
any third persons any right of subrogation or action over against any party to
this Agreement.
11.5 Binding Effect. This Agreement shall be binding on, and shall inure
--------------
to the benefit of, the parties hereto and their respective heirs, legal
representatives, successors, and assigns.
11.6 Attorneys' Fees and Costs. If any action or proceeding, including
-------------------------
arbitration, is brought by any party to this Agreement with respect to this
Agreement, the transaction referred to herein, or with respect to the
interpretation, enforcement or breach hereof, the prevailing party in such
action shall be entitled to an award of all reasonable costs of litigation
and/or arbitration including, without limitation, attorneys' fees, to be paid by
the losing party, in such amount as may be determined by the court having
jurisdiction of the action. This attorneys' fees clause shall include all post-
judgment attorneys' fees and costs and shall not be merged into, but rather
shall survive, the judgment.
11.7 Governing Law. This Agreement shall be construed in accordance with,
-------------
and governed by, the laws of the State of California. Nothing in this Agreement
shall be construed to require the commission of any act contrary to law, and
wherever there is any conflict between any provision in this Agreement and any
present or future statute, law, ordinance or regulation contrary to which the
parties have no legal right to contract, the latter shall prevail, but in such
event the provision of this
<PAGE>
Agreement so affected shall be curtailed and limited only to the extent
necessary to bring it within the requirements of the law. In the event that any
term or provision of this Agreement is determined by an arbitrator or court of
competent jurisdiction to be illegal, invalid, or unenforceable for any reason
whatsoever, such illegality, invalidity, or unenforceability shall not affect
the remainder of the terms and provisions of this Agreement, which remaining
terms and provisions shall remain in full force and effect.
11.8 Venue and Jurisdiction. Subject to and except as otherwise provided
----------------------
in Article 10, if any action respecting this Agreement, or the transaction
contemplated hereby is brought by Buyer or Seller, Buyer and Seller agree that
venue and jurisdiction of such action shall be proper in either the Superior
Court of the State of California for the County of Los Angeles, the Municipal
Court of the Los Angeles Judicial District, or the United States District Court,
Central District of California, and that any action shall be brought and
maintained exclusively in such courts.
11.9 Survival. All representations, warranties, covenants and agreements
--------
of the parties contained in this Agreement or in any document delivered pursuant
hereto shall survive the transfer of the Assets.
11.10 Exhibits. All references to Exhibits in this Agreement refers to
--------
Exhibits to this Agreement and each Exhibit is incorporated herein at each place
referenced.
11.11 Further Acts. The parties hereto shall use their best efforts and
------------
shall cooperate fully in regard to transferring the
<PAGE>
Assets, notifying other parties to the agreements, contracts and leases being
assigned hereby and maintaining continuing relationships with those parties
previously associated with the Business. The parties hereto shall execute such
other documents and take such other actions as are reasonably necessary to carry
out the purposes of this Agreement.
11.12 Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given on the
date of service, if served personally on the party to whom notice is to be
given, or on the third (3rd) day after mailing, if mailed to the party to whom
notice is to be given by first class, registered or certified mail, return
receipt requested, postage prepaid, or on the date of confirmation of receipt if
sent by facsimile transmission properly addressed as follows:
To Seller: Anderson Graphics, LLC
100 Universal City Plaza
Universal City, CA 91608
Facsimile: (520) 541-1619
To Buyer: AV Acquisition, Corp.
2813 W. Alameda Avenue
Burbank, CA 91505
Facsimile: (818) 846-5197
<PAGE>
Any party may change its address for purposes of this Section by serving the
other parties with notice of the new address in the manner set forth above.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
effective March 10, 1997.
"BUYER"
AV ACQISITION CORP., a
Delaware corporation
By: /s/ Robert Walsh
-------------------------------
Its: CEO
---------------------------
"SELLER"
ANDERSON GRAPHICS, LLC, a California
limited liability company
By: /s/ Michael Doggett
---------------------------------
Michael Doggett, Manager
The Members of Seller hereby approve this Agreement and consent to and
approve the transaction effected thereby.
R&S VIDEO SOLUTIONS, a
California general partnership
<TABLE>
<S> <C>
By: /s/ John Roussey By /s/ John Roussey ATTORNEY IN FACT FOR
--------------------------- -------------------------------------------
General Partner Robert S. Roussey
By: By /s/ Chester L. Doggett ATTORNEY IN FACT FOR
--------------------------- -------------------------------------------
General Partner Chester L. Doggett
By /s/ Darrell A. Anderson ATTORNEY IN FACT FOR
-------------------------------------------
Darrell A. Anderson
</TABLE>
<PAGE>
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
BY AND BETWEEN
FOUR MEDIA COMPANY,
A DELAWARE CORPORATION
AND
DARRELL L. ANDERSON
DATED AS OF MARCH _____, 1997
<PAGE>
TABLE OF CONTENTS
PAGE(S)
-------
INTRODUCTION......................................................... 1
ARTICLE I - EMPLOYMENT; TERM; DUTIES................................. 1
1.1 Employment........................................... 1
1.2 Term................................................. 1
1.3 Duties............................................... 1
1.4 Reporting............................................ 2
1.5 Exclusive Agreement. Execut......................... 2
ARTICLE II - COMPENSATION............................................ 2
2.1 Compensation......................................... 2
2.2 Base Salary.......................................... 2
2.3 Bonus................................................ 2
2.4 Additional Compensation.............................. 2
2.5 Deductions........................................... 3
2.6 Disability Adjustment................................ 3
ARTICLE III - BENEFITS; EXPENSES..................................... 3
3.1 Benefits............................................. 3
3.2 1997 Stock Option Plan............................... 3
3.3 Expenses............................................. 3
3.4 Vacation............................................. 4
ARTICLE IV - TERMINATION; DEATH; DISABILITY.......................... 4
4.1 Termination of Employment With Cause................. 4
4.2 Termination of Employment Without Cause.............. 4
4.3 Death; Disability.................................... 5
4.4 Continued Compliance................................. 6
i
<PAGE>
TABLE OF CONTENTS
(continued)
PAGE(S)
-------
ARTICLE V - OWNERSHIP OF PROCEEDS OF EMPLOYMENT; NON-DISCLOSURE;
NON-COMPETITION............................................. 7
5.1 Ownership of Proceeds of Employment.................. 7
5.2 Non-Disclosure of Confidential Information........... 7
5.3 Non-Competition...................................... 7
5.4 Non-Solicitation..................................... 8
5.5 Breach of Provisions................................. 8
5.6 Reasonable Restrictions.............................. 9
5.7 Definition........................................... 9
ARTICLE VI - MISCELLANEOUS.......................................... 9
6.1 Binding Effect....................................... 9
6.2 Notices.............................................. 9
6.3 Severability......................................... 10
6.4 Confidentiality; Press Releases...................... 10
6.5 Arbitration.......................................... 10
6.6 Attorneys' Fees...................................... 11
6.7 Waiver............................................... 11
6.8 Controlling Nature of Agreement...................... 11
6.9 Entire Agreement..................................... 11
6.10 Amendment............................................ 11
6.11 Authority............................................ 12
6.12 Applicable Law....................................... 12
6.13 Counterparts......................................... 12
ii
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
This Agreement, dated as of March _____, 1997, is entered into by and
between Four Media Company, a Delaware corporation (the "Company"), and Darrell
L. Anderson ("Executive").
INTRODUCTION
------------
The Company and its operating subsidiaries ("Affiliates") are engaged in
the business of providing technical and creative services to the entertainment
industry. The Company desires to employ Executive, and Executive desires to
accept such employment, under the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
---------
EMPLOYMENT; TERM; DUTIES
------------------------
1.1 Employment. Upon the terms and conditions hereinafter set forth, the
----------
Company hereby employs Executive, and Executive hereby accepts employment, as
Vice President-Television Services of the Company.
1.2 Term. Subject to Section 4.1, Executive's employment hereunder shall
----
be for a term of three (3) years commencing on the date hereof and expiring at
the close of business on the day prior to the third anniversary of the date
hereof (the "Term").
1.3 Duties. During the Term, Executive shall perform such executive
------
duties for the Company and/or its Affiliates, consistent with his position
hereunder, as may be assigned to him from time to time by the Company's Board of
Directors (the "Board") or the Company's Chief Executive Officer. Without
limiting the generality of the foregoing, Executive will be primarily
responsible for supervising the television services divisions of Company and its
Affiliates. Executive shall perform industriously and to the best of his
ability, experience and talents all the duties which may be required of him from
time to time, pursuant to the terms of this Agreement. Executive shall devote
his entire productive business time, attention and energies to the performance
of his duties hereunder. Executive shall use his best efforts to advance the
interests and business of the Company and its Affiliates. Executive shall abide
by all rules, regulations and policies of the Company, as may be in effect from
time to time.
<PAGE>
Notwithstanding the foregoing, Executive may act for his own account in passive-
type investments as provided in Section 5.3, or as a member of other boards of
directors, where the time allocated for those activities does not materially
interfere with or create a conflict of interest with the discharge of his duties
for the Company.
1.4 Reporting. Executive shall report directly to the Vice President and
---------
Chief Technology Officer of the Company, or such other officer as the Board may
from time to time determine.
1.5 Exclusive Agreement. Executive represents and warrants to the Company
-------------------
that there are no agreements or arrangements, whether written or oral, in effect
which would prevent Executive from rendering his exclusive services to the
Company during the Term.
ARTICLE II
----------
COMPENSATION
------------
2.1 Compensation. For all services rendered by Executive hereunder and
------------
all covenants and conditions undertaken by him pursuant to this Agreement, the
Company shall pay, and Executive shall accept, as full compensation, the amounts
set forth in this Article II.
2.2 Base Salary. The base salary shall be an annual salary of One Hundred
-----------
Thousand Dollars ($100,000) ("Base Salary"), payable by the Company in
accordance with the Company's normal payroll practices.
2.3 Bonus. In addition to the Base Salary, the Company may make
-----
discretionary bonus payments to Executive, under such terms, conditions and
requirements as may be established by the Company's Board of Directors in its
sole discretion.
2.4 Additional Compensation. Executive shall be eligible to earn
-----------------------
additional compensation (in addition to Base Salary and discretionary bonuses
described above) for successfully arranging, during the first year of the Term,
a strategic alliance or service arrangement for Company or its Affiliates with
one of the following significant clients with whom Executive has previously
commenced discussions: MCA-Universal; Polygram; and Advanced Digital Services
(each, a "New Business Venture") and which would result in revenues not related
to any current book of business of Anderson Film Industries Corp. d/b/a Anderson
Video ("Anderson Video"). Executive shall be eligible to earn such additional
compensation as may be fairly and reasonably determined by the Chief Executive
Officer, based on the profitability of the New Business Venture. In order to be
eligible for any additional compensation in connection with each New Business
Venture, Executive must have secured a binding commitment in writing for such
New Business Venture during the first year of the Term, it being acknowledged
and agreed that the work related to the New Business Venture, and the benefits
therefrom, will not necessarily be in place during the first year of the Term.
2
<PAGE>
2.5 Deductions. The Company shall deduct from the compensation described
----------
in Sections 2.2, 2.3 and 2.4 any federal, state or local withholding taxes,
social security contributions and any other amounts which may be required to be
deducted or withheld by the Company pursuant to any federal, state or local
laws, rules or regulations.
2.6 Disability Adjustment. Any compensation otherwise payable to
---------------------
Executive pursuant to Sections 2.2, 2.3 and 2.4 in respect of any period during
which Executive is disabled (as contemplated in Section 4.3) shall be reduced by
any amounts payable to Executive for loss of earnings or the like under any
insurance plan or policy sponsored by the Company or its Affiliates.
ARTICLE III
-----------
BENEFITS; EXPENSES
------------------
3.1 Benefits. During the Term, Executive shall be entitled to participate
--------
in such group life, health, accident, disability or hospitalization insurance
plans, pension plans and retirement plans as the Company may make available to
its other executive employees as a group, subject to the terms and conditions of
any such plans.
3.2 1997 Stock Option Plan. Executive shall be entitled to participate in
----------------------
Company's 1997 Stock Option Plan (the "Plan") on substantially the same basis as
other similarly-situated senior executives of Company. Company's Board of
Directors (or stock option committee) shall grant Executive nonqualified stock
options covering 100,000 shares of Company's common stock, par value $.01,
within 10 days of the date of this Employment Agreement, at an exercise price
equal to the fair market value of the Company's common stock on the date of the
grant. No options will vest prior to the last day of the Term (the "Vesting
Date"), at which time all options will vest. Notwithstanding the foregoing, (i)
if Executive is terminated "without cause" during the Term, a proportionate
number of the options will automatically be deemed vested on the termination
date, based upon the number of days of employment hereunder to the termination
date divided by 1,095; (ii) if Executive's employment terminates by reason of
death or disability during the second year of the Term, one-third of the options
will automatically be deemed vested on the termination date; and (iii) if
Executive's employment terminates by reason of death or disability during the
third year of the Term, two-thirds of the options will automatically be deemed
vested on the termination date.
3.3 Expenses. The Company agrees that Executive is authorized to incur
--------
reasonable expenses in the performance of his duties hereunder and in promoting
the business of the Company. The Company shall from time to time pay or
reimburse Executive for the reasonable and necessary expenses incurred by
Executive in connection with the performance of his duties hereunder if such
expenses have been previously approved by the Company or if reimbursement
is otherwise appropriate in accordance with the Company's established policies
and if the Company receives such substantiation thereof as the Company may
require in order to qualify such expenses as deductible business expenses.
3
<PAGE>
3.4 Vacation. Executive shall accrue, on a daily basis, a total of four
--------
(4) work weeks of vacation per year following the date of this Agreement. If
Executive's earned but unused vacation time reaches six (6) work weeks,
Executive will not continue to accrue additional vacation time until he uses
enough vacation to fall below this maximum amount. Thereafter, Executive will
start earning vacation benefits again until the six (6) work week maximum is
again reached. Vacation shall be scheduled in Executive's discretion, subject
to and taking into account the business exigencies of Company. Vacation in
excess of two (2) consecutive weeks shall be subject to the reasonable approval
of Company's Chief Executive Officer. Any accrued but unused vacation time will
be paid to Executive (calculated on the assumption that Executive's Base Salary
is pro rated ratably over a fifty-two week period) at termination of employment.
ARTICLE IV
----------
TERMINATION; DEATH; DISABILITY
------------------------------
4.1 Termination of Employment With Cause. In addition to any other
------------------------------------
remedies available to the Company at law, in equity or as set forth in this
Agreement, the Company shall have the right, upon written notice to Executive,
to immediately terminate his employment hereunder without any further liability
or obligation to him in respect of his employment (other than its obligation to
pay Base Salary accrued but unpaid as of the date of termination and to
reimburse expenses incurred through such date pursuant to Section 3.3) if
Executive: (a) breaches any material provision of this Agreement and, if such
breach is curable, in the sole judgment of the Company, such breach is not cured
within ten (10) days after written notice thereof from the Company; or (b) has
committed an act of gross misconduct in connection with the performance of his
duties hereunder, as determined in good faith by the Board of Directors; or (c)
demonstrates habitual negligence in the performance of his duties, as determined
by the Board of Directors; or (d) is convicted of or pleads nolo contendere to
---- ----------
any misdemeanor involving moral turpitude or to any felony; or (e) has committed
any act of fraud, misappropriation of funds or embezzlement in connection with
his employment hereunder (a "Termination With Cause").
4.2 Termination of Employment Without Cause. During the Term, the Company
---------------------------------------
may at any time after one year from the date of this Agreement and not before
the expiration of such one-year period, in its sole discretion, terminate the
employment of Executive hereunder without cause by written notice to him. In
such event, the Company shall pay Executive an amount equal to the sum of the
following:
(a) any Base Salary accrued but unpaid as of the date of termination;
(b) any reimbursement for expenses incurred in accordance with Section
3.3;
(c) an amount equal to Executive's monthly Base Salary in effect on
the date of termination for the lesser of (i) one (1) year, or (ii) the
remainder of the Term, payable as
4
<PAGE>
and when such amounts would have been due and payable hereunder had such
termination not occurred (the "Severance Period"); and
(d) In addition, the Company shall use its best efforts to arrange for
the continuation, through the Severance Period, of such health and/or medical
benefits or plans as are in effect as of the date of termination, if and only if
permissible under such plans. If not so permissible, the Company shall pay to
Executive an amount sufficient to enable Executive to arrange for substantially
equivalent health and/or medical coverage during the Severance Period.
Notwithstanding the foregoing, for purposes of Section 4.2(c), if the
remainder of the Term is less than six (6) months from the date of termination,
and if a Notice has not been given at least six (6) months prior to the end of
the Term, then the Severance Period shall be six (6) months from the date of
such termination. For purposes of the preceding sentence, a Notice shall be a
written notice to Executive that Company does not intend to employ Executive
after the end of the Term either (i) at all, (ii) except upon specified terms
and conditions, or (iii) in the absence of satisfactory negotiations of the
terms of such employment.
Executive acknowledges that the payments and benefits referred to in
this Section 4.2, together with any rights or benefits under any written plan or
agreement which have vested on or prior to the termination date of Executive's
employment under this Section 4.2, constitute the only payments to which
Executive shall be entitled to receive from the Company hereunder in the event
of any termination of his employment pursuant to this Section 4.2, and that
except for such payments or benefits the Company shall have no further liability
or obligation to him hereunder or otherwise in respect of his employment.
If Executive's employment is terminated under this Section 4.2,
Executive shall use all reasonable efforts to obtain other employment or become
self-employed as promptly as possible. If Executive secures other employment or
becomes self-employed during the Severance Period, the Company's obligations
under this Section 4.2 shall be reduced by the earnings from such employment or
self-employment received by Executive; or, if Executive secures Alternate
Employment (as defined in Section 5.3) during the Severance Period, the
Company's obligations under this Section 4.2 shall terminate in their entirety.
During the Severance Period, Executive will notify the Company in writing of any
offer of employment within ten (10) days of Executive's receipt of same. In
addition, Executive will immediately notify the Company in writing if Executive
becomes employed or self-employed during the Severance Period.
4.3 Death; Disability. If Executive dies or becomes Disabled (as defined
-----------------
herein), Executive's employment shall terminate when such death or Disability
occurs and the Company shall pay Executive (or his legal representative, as the
case may be) as follows:
(a) any Base Salary accrued but unpaid as of the date of death or
termination for Disability;
5
<PAGE>
(b) any reimbursement for expenses incurred in accordance with Section
3.2.; and
(c) an amount equal to Executive's monthly Base Salary in effect on
such termination date for the lesser of (i) six months or (ii) the remainder of
the Term, payable as and when such amounts would have been due and payable
hereunder had such termination not occurred. The monthly Base Salary with
respect to any period during which Executive is Disabled shall be reduced by
amounts payable to him under any insurance plan sponsored by the Company,
provided that Executive's aggregate compensation during the period of Disability
shall be equal to 100% of his monthly Base Salary then in effect.
For the purposes of this Agreement, Executive shall be deemed to be
"Disabled" or have a "Disability" if, because of Executive's physical or mental
disability, (a) he has been substantially unable to perform his duties
hereunder for twelve (12) work weeks in any twelve (12)-month period, and (b) he
has utilized any and all benefits available to him under state and federal laws
and is either (i) unable to reasonably and effectively carry out his duties with
reasonable accommodations by the Company or (ii) unable to reasonably and
effectively carry out his duties because any reasonable accommodation which may
be required would cause the Company undue hardship. In the event of a
disagreement concerning Executive's perceived Disability, Executive shall submit
to such examinations as are deemed appropriate by three practicing physicians
specializing in the area of Executive's Disability, one selected by Executive,
one selected by the Company, and one selected by both such physicians. The
majority decision of such three physicians shall be final and binding on the
parties. Nothing in this paragraph is intended to limit the Company's right to
invoke the provisions of this paragraph with respect to any perceived Disability
of Executive.
Executive acknowledges that the payments referred to in this Section
4.3, together with any rights or benefits under any written plan or agreement
which have vested on or prior to the termination date of Executive's employment
under this Section 4.3, constitute the only payments to which Executive (or his
legal representative, as the case may be) shall be entitled to receive from the
Company hereunder in the event of a termination of his employment for death or
Disability, and that except for such payments the Company shall have no further
liability or obligation to him (or his legal representatives, as the case may
be) hereunder or otherwise in respect of his employment.
4.4 Continued Compliance. The amounts or benefits payable by the Company
--------------------
under Sections 4.2(c), 4.2(d) and 4.3(c) are subject to Executive's continued
compliance with the provisions of Article V below. If Executive violates the
provisions of Article V, then the Company will have no obligation to make any of
the payments that remain payable by the Company under Sections 4.2(c), 4.2(d)
and 4.3(c) on or after the date of such violation.
6
<PAGE>
ARTICLE V
---------
OWNERSHIP OF PROCEEDS OF EMPLOYMENT;
------------------------------------
NON-DISCLOSURE; NON-COMPETITION
-------------------------------
5.1 Ownership of Proceeds of Employment. The Company shall be the
-----------------------------------
sole and exclusive owner throughout the universe in perpetuity of all of the
results and proceeds of Executive's services, work and labor during the Term in
connection with Executive's employment by the Company, free and clear of any and
all claims, liens or encumbrances. All results and proceeds of Executive's
services, work and labor during the Term shall be deemed to be works-made-for-
hire for the Company within the meaning of the copyright laws of the United
States and the Company shall be deemed to be the sole author thereof in all
territories and for all purposes.
5.2 Non-Disclosure of Confidential Information. As used herein,
------------------------------------------
"Confidential Information" means any and all information affecting or relating
to the business of the Company and its Affiliates, including without limitation,
financial data, customer lists and data, licensing arrangements, business
strategies, pricing information, product development, intellectual, artistic,
literary, dramatic or musical rights, works, or other materials of any kind or
nature (whether or not entitled to protection under applicable copyright laws,
or reduced to or embodied in any medium or tangible form), including without
limitation, all copyrights, patents, trademarks, service marks, trade secrets,
contract rights, titles, themes, stories, treatments, ideas, concepts,
technologies, art work, logos, hardware, software, and may be embodied in any
and all computer programs, tapes, diskettes, disks, mailing lists, lists of
actual or prospective customers and/or suppliers, notebooks, documents,
memoranda, reports, files, correspondence, charts, lists and all other written,
printed or otherwise recorded material of any kind whatsoever and any other
information, whether or not reduced to writing, including "know-how", ideas,
concepts, research, processes, and plans. "Confidential Information" does not
include information that is in the public domain, information that is generally
known in the trade, or information that Executive can prove he acquired wholly
independently of his employment with the Company. Executive shall not, at any
time during the Term or thereafter, directly or indirectly, disclose or furnish
to any other person, firm or corporation any Confidential Information, except in
the course of the proper performance of his duties hereunder or as required by
law (in which event Executive shall give prior written notice to Company and
shall cooperate with Company and Company's counsel in complying with such legal
requirements). Promptly upon the expiration or termination of Executive's
employment hereunder for any reason or whenever the Company so requests,
Executive shall surrender to the Company all documents, drawings, work papers,
lists, memoranda, records and other data (including all copies) constituting or
pertaining in any way to any of the Confidential Information.
5.3 Non-Competition. Executive shall not, for so long as he is
---------------
entitled to compensation under or pursuant to this Agreement (whether or not he
is actively employed by the Company hereunder), directly or indirectly: (a)
compete with the Company; or (b) be interested in, employed by, engaged in or
participate in the ownership, management, operation
7
<PAGE>
or control of, or act in any advisory or other capacity for, any Competing
Entity which conducts its business within the Territory (as such terms are
hereinafter defined); provided, however, that notwithstanding the foregoing,
-------- -------
Executive may make solely passive investments in any Competing Entity the common
stock of which is "publicly held," and of which Executive shall not own or
control, directly or indirectly, in the aggregate securities which constitute
more than one (1%) percent of the voting rights or equity ownership of such
Competing Entity; or (c) solicit or divert any business or any customer from the
Company or assist any person, firm or corporation in doing so or attempting to
do so; or (d) cause or seek to cause any person, firm or corporation to refrain
from dealing or doing business with the Company or assist any person, firm or
corporation in doing so or attempting to do so.
In the event that Executive shall, during any Severance Period, obtain
employment with a Competing Entity ("Alternate Employment"), then, effective on
the first day of said Alternate Employment, the following shall take place:
(a) The Company shall pay to Executive all compensation payments of
whatsoever kind due Executive up to the first day of Alternate Employment;
(b) The Company's obligation to make any further payments which would
have been due and payable to the Executive on or after the date of the first day
of Alternate Employment shall be extinguished; and
(c) Executive shall be free of the provisions of this Section 5.3.
For purposes of this Section 5.3, (i) the term "Competing Entity"
shall mean any entity which presently or during the period referred to above
engages in any business activity the Company is then engaged in or proposes to
be engaged in; and (ii) the term "Territory" shall mean any geographic area in
which the Company conducts business during such period.
5.4 Non-Solicitation. Executive shall not, for a period of two (2)
----------------
years from the date of any termination or expiration of his employment
hereunder, directly or indirectly: (a) solicit or hire, or attempt to solicit
or hire, any employee of the Company, or assist any person, firm or corporation
in doing so or attempting to do so; or (b) solicit or cause to be solicited the
disclosure of, or use or disclose, any Confidential Information for any purpose
whatsoever or for any other party.
5.5 Breach of Provisions. In the event that Executive shall breach
--------------------
any of the provisions of this Article V, or in the event that any such breach is
threatened by Executive, in addition to and without limiting or waiving any
other remedies available to the Company at law or in equity, the Company shall
be entitled to immediate injunctive relief in any court, domestic or foreign,
having the capacity to grant such relief, without the necessity of posting a
bond, to restrain any such breach
8
<PAGE>
or threatened breach and to enforce the provisions of this Article V. Executive
acknowledges and agrees that there is no adequate remedy at law for any such
breach or threatened breach and, in the event that any action or proceeding is
brought seeking injunctive relief, Executive shall not use as a defense thereto
that there is an adequate remedy at law.
5.6 Reasonable Restrictions. The parties acknowledge that the foregoing
-----------------------
restrictions, the duration and the territorial scope thereof as set forth in
this Article V, are under all of the circumstances reasonable and necessary for
the protection of the Company and its business.
5.7 Definition. For purposes of this Article V, the term "Company"
----------
shall be deemed to include any subsidiary of, Affiliate of, or successor of the
Company.
ARTICLE VI
----------
MISCELLANEOUS
-------------
6.1 Binding Effect. This Agreement shall be binding upon and inure
--------------
to the benefit of the parties hereto and their respective legal representatives,
heirs, distributees, successors and assigns; provided that the rights and
--------
obligations of Executive hereunder shall not be assignable by him.
6.2 Notices. Any notice provided for herein shall be in writing and
-------
shall be deemed to have been given or made when personally delivered or three
(3) days following deposit for mailing by first class registered or certified
mail, return receipt requested, or if delivered by facsimile transmission, upon
confirmation of receipt of the transmission, to the address of the other party
set forth below or to such other address as may be specified by notice given in
accordance with this Section 6.2:
If to the Company:
Four Media Company
2813 W. Alameda Avenue
Burbank, CA 91505
Attention: Robert T. Walston, C.E.O.
Fax No.: (818) 846-5197
With a copy to:
Greenberg Glusker Fields Claman
& Machtinger LLP
1900 Avenue of the Stars, #2100
Los Angeles, CA 90067
Attention: Jill A. Cossman, Esq.
Fax No.: (310) 553-0687
9
<PAGE>
If to Executive:
Darrell L. Anderson
____________________________
____________________________
Fax No.:
With a copy to:
James M. Donovan, Esq.
515 South Figueroa Street
Suite 1000
Los Angeles, CA 90071
Fax No.: (213) 689-8784
6.3 Severability. If any provision of this Agreement, or portion
------------
thereof, shall be held invalid or unenforceable by a court of competent
jurisdiction, such invalidity or unenforceability shall attach only to such
provision or portion thereof, and shall not in any manner affect or render
invalid or unenforceable any other provision of this Agreement or portion
thereof, and this Agreement shall be carried out as if any such invalid or
unenforceable provision or portion thereof were not contained herein. In
addition, any such invalid or unenforceable provision or portion thereof shall
be deemed, without further action on the part of the parties hereto, modified,
amended or limited to the extent necessary to render the same valid and
enforceable.
6.4 Confidentiality; Press Releases. Except as and to the extent
-------------------------------
previously publicly disclosed by Company, Executive agrees that he will not,
during the Term or thereafter, disclose to any other person or entity the terms
or conditions of this Agreement (excluding the financial terms hereof) without
the prior written consent of the Company or as required by law, regulatory
authority or as necessary to obtain personal loans or financing. Company shall
have the sole right to make a public announcement of the terms, provisions, or
execution of this Agreement, subject to reasonable consultation with Executive,
except as may be necessary or desirable in dealing with or in response to a
governmental or administrative agency, including, but not limited to, the
Securities and Exchange Commission, or in connection with the financing or sale
of the Company or its Affiliates.
6.5 Arbitration. Any controversy, claim or dispute arising out of or
-----------
in any way relating to this Agreement, the alleged breach thereof, and/or
Executive's employment with the Company or termination therefrom, including
without limitation, any and all claims for employment discrimination or
harassment, shall be determined by binding arbitration administered by the
American Arbitration Association under its National Rules for Resolution of
Employment Disputes ("Rules") which are in effect at the time of the arbitration
or the demand therefor. The Rules are hereby incorporated by reference.
California Code of Civil Procedure (S)1283.05, which provides for certain
discovery rights, shall apply to any such arbitration, and said code section is
also hereby incorporated by reference. In reaching a
10
<PAGE>
decision, the arbitrator shall have no authority to change, extend, modify or
suspend any of the terms of this Agreement. The arbitration shall be commenced
and heard in Los Angeles County, California. The arbitrator(s) shall apply the
substantive law (and the law of remedies, if applicable) of California or
federal law, or both, as applicable to the claim(s) asserted. Judgment on the
award may be entered in any court of competent jurisdiction, even if a party who
received notice under the Rules fails to appear at the arbitration hearing(s).
The parties may seek, from a court of competent jurisdiction, provisional
remedies or injunctive relief in support of their respective rights and remedies
hereunder without waiving any right to arbitration. However, the merits of any
action that involves such provisional remedies or injunctive relief, including,
without limitation, the terms of any permanent injunction, shall be determined
by arbitration under this paragraph.
6.6 Attorneys' Fees. The parties agree that the prevailing party in
---------------
any action, controversy or dispute arising out of or relating to this Agreement
or the breach of any provision hereof shall be entitled to reimbursement by the
losing party of all costs and expenses including but not limited to reasonable
attorneys' fees and costs resulting from any action or proceeding filed in
accordance with the terms of paragraph 6.5 hereof or otherwise, to enforce any
term of this Agreement or for any damage by reason of an alleged breach of any
term of this Agreement.
6.7 Waiver. No waiver by a party hereto of a breach or default
------
hereunder by the other party shall be considered valid unless in writing signed
by such first party, and no such waiver shall be deemed a waiver of any
subsequent breach or default of the same or any other nature.
6.8 Controlling Nature of Agreement. To the extent any terms of this
-------------------------------
Agreement are inconsistent with the terms or provisions of the Company's
Employee Manual or any other personnel policy statements or documents, the terms
of this Agreement shall control. To the extent that any terms and conditions of
Executive's employment are not covered in this Agreement, the terms and
conditions set forth in the Employee Manual or any similar document shall
control such terms.
6.9 Entire Agreement. This Agreement sets forth the entire agreement
----------------
between the parties with respect to the subject matter hereof, and supersedes
any and all prior agreements or understanding between the Company and Executive,
whether written or oral, fully or partially performed relating to any or all
matters covered by and contained or otherwise dealt with in this Agreement.
This Agreement does not constitute a commitment of the Company with regard to
Executive's employment, express or implied, other than to the extent expressly
provided for herein.
6.10 Amendment. No modification, change or amendment of this
---------
Agreement or any of its provisions shall be valid unless in writing and signed
by the party against whom such claimed modification, change or amendment is
sought to be enforced.
11
<PAGE>
6.11 Authority. The parties each represent and warrant that they
---------
have the power, authority and right to enter into this Agreement and to carry
out and perform the terms, covenants and conditions hereof.
6.12 Applicable Law. This Agreement, and all of the rights and
--------------
obligations of the parties in connection with the employment relationship
established hereby, shall be governed by and construed in accordance with the
substantive laws of the State of California without giving effect to principles
relating to conflicts of law.
6.13 Counterparts. Thus Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
"COMPANY"
FOUR MEDIA COMPANY, a Delaware corporation
By: ____________________________________
Robert T. Walston, Chairman and Chief
Executive Officer
"EXECUTIVE"
__________________________________________
Darrell L. Anderson
12
<PAGE>
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
BY AND BETWEEN
FOUR MEDIA COMPANY,
A DELAWARE CORPORATION
AND
MICHAEL DOGGETT
DATED AS OF MARCH 10th, 1997
----
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C> <C> <C>
INTRODUCTION.................................................. 1
ARTICLE I - EMPLOYMENT; TERM; DUTIES.......................... 1
1.1 Employment................................... 1
1.2 Term......................................... 1
1.3 Duties....................................... 1
1.4 Reporting.................................... 2
1.5 Exclusive Agreement.......................... 2
ARTICLE II - COMPENSATION..................................... 2
2.1 Compensation................................. 2
2.2 Base Salary.................................. 2
2.3 Bonus........................................ 2
2.4 Additional Compensation...................... 2
2.5 Deductions................................... 3
2.6 Disability Adjustment........................ 3
ARTICLE III - BENEFITS; EXPENSES.............................. 3
3.1 Benefits..................................... 3
3.2 1997 Stock Option Plan....................... 3
3.3 Expenses..................................... 3
3.4 Vacation..................................... 4
ARTICLE IV - TERMINATION; DEATH; DISABILITY................... 4
4.1 Termination of Employment With Cause......... 4
4.2 Termination of Employment Without Cause...... 4
4.3 Death; Disability............................ 5
4.4 Continued Compliance......................... 6
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ARTICLE V - OWNERSHIP OF PROCEEDS OF EMPLOYMENT;
NON-DISCLOSURE; NON-COMPETITION................. 7
5.1 Ownership of Proceeds of Employment......... 7
5.2 Non-Disclosure of Confidential Information.. 7
5.3 Non-Competition............................. 7
5.4 Non-Solicitation............................ 8
5.5 Breach of Provisions........................ 8
5.6 Reasonable Restrictions..................... 9
5.7 Definition.................................. 9
ARTICLE VI - MISCELLANEOUS.................................. 9
6.1 Binding Effect.............................. 9
6.2 Notices..................................... 9
6.3 Severability................................ 10
6.4 Confidentiality; Press Releases............. 10
6.5 Arbitration................................. 10
6.6 Attorneys' Fees............................. 11
6.7 Waiver...................................... 11
6.8 Controlling Nature of Agreement............. 11
6.9 Entire Agreement............................ 11
6.10 Amendment................................... 11
6.11 Authority................................... 12
6.12 Applicable Law.............................. 12
6.13 Counterparts................................ 12
</TABLE>
ii
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
This Agreement, dated as of March 10th, 1997, is entered into by and
----
between Four Media Company, a Delaware corporation (the "Company"), and Michael
Doggett ("Executive").
INTRODUCTION
------------
The Company and its operating subsidiaries ("Affiliates") are engaged in
the business of providing technical and creative services to the entertainment
industry. The Company desires to employ Executive, and Executive desires to
accept such employment, under the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
---------
EMPLOYMENT; TERM; DUTIES
------------------------
1.1 Employment. Upon the terms and conditions hereinafter set forth, the
----------
Company hereby employs Executive, and Executive hereby accepts employment, as
Vice President and General Manager - Anderson Video Company, a Four Media
Company.
1.2 Term. Subject to Section 4.1, Executive's employment hereunder shall
----
be for a term of three (3) years commencing on the date hereof and expiring at
the close of business on the day prior to the third anniversary of the date
hereof (the "Term").
1.3 Duties. During the Term, Executive shall perform such executive
------
duties for the Company and/or its Affiliates, consistent with his position
hereunder, as may be assigned to him from time to time by the Company's Board of
Directors (the "Board") or the Company's Chief Executive Officer. Without
limiting the generality of the foregoing, Executive will be primarily
responsible for supervising the television services divisions of Company and its
Affiliates. Executive shall perform industriously and to the best of his
ability, experience and talents all the duties which may be required of him from
time to time, pursuant to the terms of this Agreement. Executive shall devote
his entire productive business time, attention and energies to the performance
of his duties hereunder. Executive shall use his best efforts to advance the
interests and business of the Company and its Affiliates. Executive shall abide
by all rules, regulations and policies of the Company, as may be in effect from
time to time. Notwithstanding the foregoing, Executive may act for his own
account in passive-type
<PAGE>
investments as provided in Section 5.3, or as a member of other boards of
directors, where the time allocated for those activities does not materially
interfere with or create a conflict of interest with the discharge of his duties
for the Company.
1.4 Reporting. Executive shall report directly to the Vice President and
---------
Chief Technology Officer of the Company, or such other officer as the Board may
from time to time determine.
1.5 Exclusive Agreement. Executive represents and warrants to the Company
-------------------
that there are no agreements or arrangements, whether written or oral, in effect
which would prevent Executive from rendering his exclusive services to the
Company during the Term.
ARTICLE II
----------
COMPENSATION
------------
2.1 Compensation. For all services rendered by Executive hereunder and
------------
all covenants and conditions undertaken by him pursuant to this Agreement, the
Company shall pay, and Executive shall accept, as full compensation, the amounts
set forth in this Article II.
2.2 Base Salary. The base salary shall be an annual salary of One Hundred
-----------
Seventy-five Thousand Dollars ($175,000) ("Base Salary"), payable by the Company
in accordance with the Company's normal payroll practices.
2.3 Bonus. In addition to the Base Salary, the Company may make
-----
discretionary bonus payments to Executive, under such terms, conditions and
requirements as may be established by the Company's Board of Directors in its
sole discretion.
2.4 Additional Compensation. Executive shall be eligible to earn
-----------------------
additional compensation (in addition to Base Salary and discretionary bonuses
described above) for successfully arranging, during the first year of the Term,
a strategic alliance or service arrangement for Company or its Affiliates with
one of the following significant clients with whom Executive has previously
commenced discussions: MCA-Universal; Polygram; and Advanced Digital Services
(each, a "New Business Venture") and which would result in revenues not related
to any current book of business of Anderson Film Industries Corp. d/b/a Anderson
Video ("Anderson Video"). Executive shall be eligible to earn such additional
compensation as may be fairly and reasonably determined by the Chief Executive
Officer, based on the profitability of the New Business Venture. In order to be
eligible for any additional compensation in connection with each New Business
Venture, Executive must have secured a binding commitment in writing for such
New Business Venture during the first year of the Term, it being acknowledged
and agreed that the work related to the New Business Venture, and the benefits
therefrom, will not necessarily be in place during the first year of the Term.
2
<PAGE>
2.5 Deductions. The Company shall deduct from the compensation described
----------
in Sections 2.2, 2.3 and 2.4 any federal, state or local withholding taxes,
social security contributions and any other amounts which may be required to be
deducted or withheld by the Company pursuant to any federal, state or local
laws, rules or regulations.
2.6 Disability Adjustment. Any compensation otherwise payable to
---------------------
Executive pursuant to Sections 2.2, 2.3 and 2.4 in respect of any period during
which Executive is disabled (as contemplated in Section 4.3) shall be reduced by
any amounts payable to Executive for loss of earnings or the like under any
insurance plan or policy sponsored by the Company or its Affiliates.
ARTICLE III
-----------
BENEFITS; EXPENSES
------------------
3.1 Benefits. During the Term, Executive shall be entitled to participate
--------
in such group life, health, accident, disability or hospitalization insurance
plans, pension plans and retirement plans as the Company may make available to
its other executive employees as a group, subject to the terms and conditions of
any such plans.
3.2 1997 Stock Option Plan. Executive shall be entitled to participate in
----------------------
Company's 1997 Stock Option Plan (the "Plan") on substantially the same basis as
other similarly-situated senior executives of Company. Company's Board of
Directors (or stock option committee) shall grant Executive nonqualified stock
options covering 100,000 shares of Company's common stock, par value $.01,
within ten (10) days of the date of this Employment Agreement, at an exercise
price equal to the fair market value of the Company's common stock on the date
of the grant. No options will vest prior to the last day of the Term (the
"Vesting Date"), at which time all options will vest. Notwithstanding the
foregoing, (i) if Executive is terminated "without cause" during the Term, a
proportionate number of the options will automatically be deemed vested on the
termination date, based upon the number of days of employment hereunder to the
termination date divided by 1,095; (ii) if Executive's employment terminates by
reason of death or disability during the second year of the Term, one-third of
the options will automatically be deemed vested on the termination date; and
(iii) if Executive's employment terminates by reason of death or disability
during the third year of the Term, two-thirds of the options will automatically
be deemed vested on the termination date.
3.3 Expenses. The Company agrees that Executive is authorized to incur
--------
reasonable expenses in the performance of his duties hereunder and in promoting
the business of the Company. The Company shall from time to time pay or
reimburse Executive for the reasonable and necessary expenses incurred by
Executive in connection with the performance of his duties hereunder if such
expenses have been previously approved by the Company or if reimbursement is
otherwise appropriate in accordance with the Company's established policies and
if the
3
<PAGE>
Company receives such substantiation thereof as the Company may require in order
to qualify such expenses as deductible business expenses.
3.4 Vacation. Executive shall accrue, on a daily basis, a total of four
--------
(4) work weeks of vacation per year following the date of this Agreement. If
Executive's earned but unused vacation time reaches six (6) work weeks,
Executive will not continue to accrue additional vacation time until he uses
enough vacation to fall below this maximum amount. Thereafter, Executive will
start earning vacation benefits again until the six (6) work week maximum is
again reached. Vacation shall be scheduled in Executive's discretion, subject
to and taking into account the business exigencies of Company. Vacation in
excess of two (2) consecutive weeks shall be subject to the reasonable approval
of Company's Chief Executive Officer. Any accrued but unused vacation time will
be paid to Executive (calculated on the assumption that Executive's Base Salary
is pro rated ratably over a fifty-two week period) at termination of employment.
ARTICLE IV
----------
TERMINATION; DEATH; DISABILITY
------------------------------
4.1 Termination of Employment With Cause. In addition to any other
------------------------------------
remedies available to the Company at law, in equity or as set forth in this
Agreement, the Company shall have the right, upon written notice to Executive,
to immediately terminate his employment hereunder without any further liability
or obligation to him in respect of his employment (other than its obligation to
pay Base Salary accrued but unpaid as of the date of termination and to
reimburse expenses incurred through such date pursuant to Section 3.3) if
Executive: (a) breaches any material provision of this Agreement and, if such
breach is curable, in the sole judgment of the Company, such breach is not cured
within ten (10) days after written notice thereof from the Company; or (b) has
committed an act of gross misconduct in connection with the performance of his
duties hereunder, as determined in good faith by the Board of Directors; or (c)
demonstrates habitual negligence in the performance of his duties, as determined
by the Board of Directors; or (d) is convicted of or pleads nolo contendere to
---- ----------
any misdemeanor involving moral turpitude or to any felony; or (e) has committed
any act of fraud, misappropriation of funds or embezzlement in connection with
his employment hereunder (a "Termination With Cause").
4.2 Termination of Employment Without Cause. During the Term, the Company
---------------------------------------
may at any time after one year from the date of this Agreement and not before
the expiration of such one-year period, in its sole discretion, terminate the
employment of Executive hereunder without cause by written notice to him. In
such event, the Company shall pay Executive an amount equal to the sum of the
following:
(a) any Base Salary accrued but unpaid as of the date of termination;
(b) any reimbursement for expenses incurred in accordance with Section
3.3;
4
<PAGE>
(c) an amount equal to Executive's monthly Base Salary in effect on
the date of termination for the lesser of (i) one (1) year, or (ii) the
remainder of the Term, payable as and when such amounts would have been due and
payable hereunder had such termination not occurred (the "Severance Period");
and
(d) In addition, the Company shall use its best efforts to arrange for
the continuation, through the Severance Period, of such health and/or medical
benefits or plans as are in effect as of the date of termination, if and only if
permissible under such plans. If not so permissible, the Company shall pay to
Executive an amount sufficient to enable Executive to arrange for substantially
equivalent health and/or medical coverage during the Severance Period.
Notwithstanding the foregoing, for purposes of Section 4.2(c), if the
remainder of the Term is less than six (6) months from the date of termination,
and if a Notice has not been given at least six (6) months prior to the end of
the Term, then the Severance Period shall be six (6) months from the date of
such termination. For purposes of the preceding sentence, a Notice shall be a
written notice to Executive that Company does not intend to employ Executive
after the end of the Term either (i) at all, (ii) except upon specified terms
and conditions, or (iii) in the absence of satisfactory negotiations of the
terms of such employment.
Executive acknowledges that the payments and benefits referred to in
this Section 4.2, together with any rights or benefits under any written plan or
agreement which have vested on or prior to the termination date of Executive's
employment under this Section 4.2, constitute the only payments to which
Executive shall be entitled to receive from the Company hereunder in the event
of any termination of his employment pursuant to this Section 4.2, and that
except for such payments or benefits the Company shall have no further liability
or obligation to him hereunder or otherwise in respect of his employment.
If Executive's employment is terminated under this Section 4.2,
Executive shall use all reasonable efforts to obtain other employment or become
self-employed as promptly as possible. If Executive secures other employment or
becomes self-employed during the Severance Period, the Company's obligations
under this Section 4.2 shall be reduced by the earnings from such employment or
self-employment received by Executive; or, if Executive secures Alternate
Employment (as defined in Section 5.3) during the Severance Period, the
Company's obligations under this Section 4.2 shall terminate in their entirety.
During the Severance Period, Executive will notify the Company in writing of any
offer of employment within ten (10) days of Executive's receipt of same. In
addition, Executive will immediately notify the Company in writing if Executive
becomes employed or self-employed during the Severance Period.
4.3 Death; Disability. If Executive dies or becomes Disabled (as defined
-----------------
herein), Executive's employment shall terminate when such death or Disability
occurs and the Company shall pay Executive (or his legal representative, as the
case may be) as follows:
5
<PAGE>
(a) any Base Salary accrued but unpaid as of the date of death or
termination for Disability;
(b) any reimbursement for expenses incurred in accordance with Section
3.2.; and
(c) an amount equal to Executive's monthly Base Salary in effect on
such termination date for the lesser of (i) six months or (ii) the remainder of
the Term, payable as and when such amounts would have been due and payable
hereunder had such termination not occurred. The monthly Base Salary with
respect to any period during which Executive is Disabled shall be reduced by
amounts payable to him under any insurance plan sponsored by the Company,
provided that Executive's aggregate compensation during the period of Disability
shall be equal to 100% of his monthly Base Salary then in effect.
For the purposes of this Agreement, Executive shall be deemed to be
"Disabled" or have a "Disability" if, because of Executive's physical or mental
disability, (a) he has been substantially unable to perform his duties
hereunder for twelve (12) work weeks in any twelve (12)-month period, and (b) he
has utilized any and all benefits available to him under state and federal laws
and is either (i) unable to reasonably and effectively carry out his duties with
reasonable accommodations by the Company or (ii) unable to reasonably and
effectively carry out his duties because any reasonable accommodation which may
be required would cause the Company undue hardship. In the event of a
disagreement concerning Executive's perceived Disability, Executive shall submit
to such examinations as are deemed appropriate by three practicing physicians
specializing in the area of Executive's Disability, one selected by Executive,
one selected by the Company, and one selected by both such physicians. The
majority decision of such three physicians shall be final and binding on the
parties. Nothing in this paragraph is intended to limit the Company's right to
invoke the provisions of this paragraph with respect to any perceived Disability
of Executive.
Executive acknowledges that the payments referred to in this Section
4.3, together with any rights or benefits under any written plan or agreement
which have vested on or prior to the termination date of Executive's employment
under this Section 4.3, constitute the only payments to which Executive (or his
legal representative, as the case may be) shall be entitled to receive from the
Company hereunder in the event of a termination of his employment for death or
Disability, and that except for such payments the Company shall have no further
liability or obligation to him (or his legal representatives, as the case may
be) hereunder or otherwise in respect of his employment.
4.4 Continued Compliance. The amounts or benefits payable by the Company
--------------------
under Sections 4.2(c), 4.2(d) and 4.3(c) are subject to Executive's continued
compliance with the provisions of Article V below. If Executive violates the
provisions of Article V, then the Company will have no obligation to make any of
the payments that remain payable by the Company under Sections 4.2(c), 4.2(d)
and 4.3(c) on or after the date of such violation.
6
<PAGE>
ARTICLE V
---------
OWNERSHIP OF PROCEEDS OF EMPLOYMENT; NON-DISCLOSURE;
----------------------------------------------------
NON-COMPETITION
---------------
5.1 Ownership of Proceeds of Employment. The Company shall be the sole
-----------------------------------
and exclusive owner throughout the universe in perpetuity of all of the results
and proceeds of Executive's services, work and labor during the Term in
connection with Executive's employment by the Company, free and clear of any and
all claims, liens or encumbrances. All results and proceeds of Executive's
services, work and labor during the Term shall be deemed to be works-made-for-
hire for the Company within the meaning of the copyright laws of the United
States and the Company shall be deemed to be the sole author thereof in all
territories and for all purposes.
5.2 Non-Disclosure of Confidential Information. As used herein,
------------------------------------------
"Confidential Information" means any and all information affecting or relating
to the business of the Company and its Affiliates, including without limitation,
financial data, customer lists and data, licensing arrangements, business
strategies, pricing information, product development, intellectual, artistic,
literary, dramatic or musical rights, works, or other materials of any kind or
nature (whether or not entitled to protection under applicable copyright laws,
or reduced to or embodied in any medium or tangible form), including without
limitation, all copyrights, patents, trademarks, service marks, trade secrets,
contract rights, titles, themes, stories, treatments, ideas, concepts,
technologies, art work, logos, hardware, software, and may be embodied in any
and all computer programs, tapes, diskettes, disks, mailing lists, lists of
actual or prospective customers and/or suppliers, notebooks, documents,
memoranda, reports, files, correspondence, charts, lists and all other written,
printed or otherwise recorded material of any kind whatsoever and any other
information, whether or not reduced to writing, including "know-how", ideas,
concepts, research, processes, and plans. "Confidential Information" does not
include information that is in the public domain, information that is generally
known in the trade, or information that Executive can prove he acquired wholly
independently of his employment with the Company. Executive shall not, at any
time during the Term or thereafter, directly or indirectly, disclose or furnish
to any other person, firm or corporation any Confidential Information, except in
the course of the proper performance of his duties hereunder or as required by
law (in which event Executive shall give prior written notice to Company and
shall cooperate with Company and Company's counsel in complying with such legal
requirements). Promptly upon the expiration or termination of Executive's
employment hereunder for any reason or whenever the Company so requests,
Executive shall surrender to the Company all documents, drawings, work papers,
lists, memoranda, records and other data (including all copies) constituting or
pertaining in any way to any of the Confidential Information.
5.3 Non-Competition. Executive shall not, for so long as he is entitled
---------------
to compensation under or pursuant to this Agreement (whether or not he is
actively employed by the Company hereunder), directly or indirectly: (a)
compete with the Company; or (b) be interested in, employed by, engaged in or
participate in the ownership, management, operation
7
<PAGE>
or control of, or act in any advisory or other capacity for, any Competing
Entity which conducts its business within the Territory (as such terms are
hereinafter defined); provided, however, that notwithstanding the foregoing,
-------- -------
Executive may make solely passive investments in any Competing Entity the common
stock of which is "publicly held," and of which Executive shall not own or
control, directly or indirectly, in the aggregate securities which constitute
more than one (1%) percent of the voting rights or equity ownership of such
Competing Entity; or (c) solicit or divert any business or any customer from the
Company or assist any person, firm or corporation in doing so or attempting to
do so; or (d) cause or seek to cause any person, firm or corporation to refrain
from dealing or doing business with the Company or assist any person, firm or
corporation in doing so or attempting to do so.
In the event that Executive shall, during any Severance Period, obtain
employment with a Competing Entity ("Alternate Employment"), then, effective on
the first day of said Alternate Employment, the following shall take place:
(a) The Company shall pay to Executive all compensation payments of
whatsoever kind due Executive up to the first day of Alternate Employment;
(b) The Company's obligation to make any further payments which would
have been due and payable to the Executive on or after the date of the first day
of Alternate Employment shall be extinguished; and
(c) Executive shall be free of the provisions of this Section 5.3.
For purposes of this Section 5.3, (i) the term "Competing Entity"
shall mean any entity which presently or during the period referred to above
engages in any business activity the Company is then engaged in or proposes to
be engaged in; and (ii) the term "Territory" shall mean any geographic area in
which the Company conducts business during such period.
5.4 Non-Solicitation. Executive shall not, for a period of two (2) years
----------------
from the date of any termination or expiration of his employment hereunder,
directly or indirectly: (a) solicit or hire, or attempt to solicit or hire, any
employee of the Company, or assist any person, firm or corporation in doing so
or attempting to do so; or (b) solicit or cause to be solicited the disclosure
of, or use or disclose, any Confidential Information for any purpose whatsoever
or for any other party.
5.5 Breach of Provisions. In the event that Executive shall breach any of
--------------------
the provisions of this Article V, or in the event that any such breach is
threatened by Executive, in addition to and without limiting or waiving any
other remedies available to the Company at law or in equity, the Company shall
be entitled to immediate injunctive relief in any court, domestic or foreign,
having the capacity to grant such relief, without the necessity of posting a
bond, to restrain any such breach or threatened breach and to enforce the
provisions of this Article V. Executive acknowledges and agrees that there is no
adequate remedy at law for any such breach
8
<PAGE>
or threatened breach and, in the event that any action or proceeding is brought
seeking injunctive relief, Executive shall not use as a defense thereto that
there is an adequate remedy at law.
5.6 Reasonable Restrictions. The parties acknowledge that the foregoing
-----------------------
restrictions, the duration and the territorial scope thereof as set forth in
this Article V, are under all of the circumstances reasonable and necessary for
the protection of the Company and its business.
5.7 Definition. For purposes of this Article V, the term "Company" shall
----------
be deemed to include any subsidiary of, Affiliate of, or successor of the
Company.
ARTICLE VI
----------
MISCELLANEOUS
-------------
6.1 Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of the parties hereto and their respective legal representatives, heirs,
distributees, successors and assigns; provided that the rights and obligations
--------
of Executive hereunder shall not be assignable by him.
6.2 Notices. Any notice provided for herein shall be in writing and shall
-------
be deemed to have been given or made when personally delivered or three (3) days
following deposit for mailing by first class registered or certified mail,
return receipt requested, or if delivered by facsimile transmission, upon
confirmation of receipt of the transmission, to the address of the other party
set forth below or to such other address as may be specified by notice given in
accordance with this Section 6.2:
If to the Company:
Four Media Company
2813 W. Alameda Avenue
Burbank, CA 91505
Attention: Robert T. Walston, C.E.O.
Fax No.: (818) 846-5197
With a copy to:
Greenberg Glusker Fields Claman
& Machtinger LLP
1900 Avenue of the Stars, #2100
Los Angeles, CA 90067
Attention: Jill A. Cossman, Esq.
Fax No.: (310) 553-0687
9
<PAGE>
If to Executive:
Michael Doggett
____________________________
____________________________
Fax No.:
With a copy to:
James M. Donovan, Esq.
515 South Figueroa Street
Suite 1000
Los Angeles, CA 90071
Fax No.: (213) 689-8784
6.3 Severability. If any provision of this Agreement, or portion thereof,
------------
shall be held invalid or unenforceable by a court of competent jurisdiction,
such invalidity or unenforceability shall attach only to such provision or
portion thereof, and shall not in any manner affect or render invalid or
unenforceable any other provision of this Agreement or portion thereof, and this
Agreement shall be carried out as if any such invalid or unenforceable provision
or portion thereof were not contained herein. In addition, any such invalid or
unenforceable provision or portion thereof shall be deemed, without further
action on the part of the parties hereto, modified, amended or limited to the
extent necessary to render the same valid and enforceable.
6.4 Confidentiality; Press Releases. Except as and to the extent
-------------------------------
previously publicly disclosed by Company, Executive agrees that he will not,
during the Term or thereafter, disclose to any other person or entity the terms
or conditions of this Agreement (excluding the financial terms hereof) without
the prior written consent of the Company or as required by law, regulatory
authority or as necessary to obtain personal loans or financing. Company shall
have the sole right to make a public announcement of the terms, provisions, or
execution of this Agreement, subject to reasonable consultation with Executive,
except as may be necessary or desirable in dealing with or in response to a
governmental or administrative agency, including, but not limited to, the
Securities and Exchange Commission, or in connection with the financing or sale
of the Company or its Affiliates.
6.5 Arbitration. Any controversy, claim or dispute arising out of or in
-----------
any way relating to this Agreement, the alleged breach thereof, and/or
Executive's employment with the Company or termination therefrom, including
without limitation, any and all claims for employment discrimination or
harassment, shall be determined by binding arbitration administered by the
American Arbitration Association under its National Rules for Resolution of
Employment Disputes ("Rules") which are in effect at the time of the arbitration
or the demand therefor. The Rules are hereby incorporated by reference.
California Code of Civil Procedure (S)1283.05, which provides for certain
discovery rights, shall apply to any such arbitration, and said code section is
also hereby incorporated by reference. In reaching a
10
<PAGE>
decision, the arbitrator shall have no authority to change, extend, modify or
suspend any of the terms of this Agreement. The arbitration shall be commenced
and heard in Los Angeles County, California. The arbitrator(s) shall apply the
substantive law (and the law of remedies, if applicable) of California or
federal law, or both, as applicable to the claim(s) asserted. Judgment on the
award may be entered in any court of competent jurisdiction, even if a party who
received notice under the Rules fails to appear at the arbitration hearing(s).
The parties may seek, from a court of competent jurisdiction, provisional
remedies or injunctive relief in support of their respective rights and remedies
hereunder without waiving any right to arbitration. However, the merits of any
action that involves such provisional remedies or injunctive relief, including,
without limitation, the terms of any permanent injunction, shall be determined
by arbitration under this paragraph.
6.6 Attorneys' Fees. The parties agree that the prevailing party in any
---------------
action, controversy or dispute arising out of or relating to this Agreement or
the breach of any provision hereof shall be entitled to reimbursement by the
losing party of all costs and expenses including but not limited to reasonable
attorneys' fees and costs resulting from any action or proceeding filed in
accordance with the terms of paragraph 6.5 hereof or otherwise, to enforce any
term of this Agreement or for any damage by reason of an alleged breach of any
term of this Agreement.
6.7 Waiver. No waiver by a party hereto of a breach or default hereunder
------
by the other party shall be considered valid unless in writing signed by such
first party, and no such waiver shall be deemed a waiver of any subsequent
breach or default of the same or any other nature.
6.8 Controlling Nature of Agreement. To the extent any terms of this
-------------------------------
Agreement are inconsistent with the terms or provisions of the Company's
Employee Manual or any other personnel policy statements or documents, the terms
of this Agreement shall control. To the extent that any terms and conditions of
Executive's employment are not covered in this Agreement, the terms and
conditions set forth in the Employee Manual or any similar document shall
control such terms.
6.9 Entire Agreement. This Agreement sets forth the entire agreement
----------------
between the parties with respect to the subject matter hereof, and supersedes
any and all prior agreements or understanding between the Company and Executive,
whether written or oral, fully or partially performed relating to any or all
matters covered by and contained or otherwise dealt with in this Agreement.
This Agreement does not constitute a commitment of the Company with regard to
Executive's employment, express or implied, other than to the extent expressly
provided for herein.
6.10 Amendment. No modification, change or amendment of this Agreement or
---------
any of its provisions shall be valid unless in writing and signed by the party
against whom such claimed modification, change or amendment is sought to be
enforced.
11
<PAGE>
6.11 Authority. The parties each represent and warrant that they have the
---------
power, authority and right to enter into this Agreement and to carry out and
perform the terms, covenants and conditions hereof.
6.12 Applicable Law. This Agreement, and all of the rights and obligations
--------------
of the parties in connection with the employment relationship established
hereby, shall be governed by and construed in accordance with the substantive
laws of the State of California without giving effect to principles relating to
conflicts of law.
6.13 Counterparts. Thus Agreement may be executed in counterparts, each of
------------
which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"COMPANY"
FOUR MEDIA COMPANY, a Delaware corporation
/s/ Robert Walston
By: ____________________________________
Robert T. Walston, Chairman and Chief
Executive Officer
"EXECUTIVE"
/s/ Michael Doggett
__________________________________________
Michael Doggett
12
<PAGE>
EXHIBIT 10.6
CONSULTING AGREEMENT
1. Identification
--------------
This Consulting Agreement (the "Agreement"), dated as of March 10, 1997, is
entered into by and between Four Media Company, a Delaware corporation
("Company"), and Darrell A. Anderson, an independent contractor ("Consultant").
2. Recitals
--------
2.1. Company and its operating subsidiaries ("Affiliates") are engaged in
the business of providing technical and creative services to the entertainment
industry.
2.2. Consultant has extensive experience in the business in which Company
is engaged.
2.3. Company desires to engage Consultant as an independent contractor to
render advice and guidance in connection with Company's business.
3. Term
----
3.1. Subject to the terms and conditions set forth herein, Consultant's
services hereunder shall be for a term of three (3) years commencing on the date
hereof and expiring at the close of business on the day prior to the third
anniversary of the date hereof (the "Term").
4. General Terms
-------------
4.1. Nature of Agreement. The parties acknowledge and agree that
-------------------
Consultant will be retained by Company as an independent contractor, and not as
an employee, and that, as an independent contractor of Company, Consultant will
be under the control, supervision and direction of Company only as to the
results of the services provided to Company under the terms of this Agreement
and not as to the means by which such services are provided.
4.2. Duties and Services. During the Term, Consultant agrees to perform
-------------------
such reasonable consulting services as may be assigned to Consultant by
Company's Board of Directors (the "Board") or Company's Chief Executive Officer.
Except as specifically set forth herein, or as directed by Company, it is agreed
that Consultant shall have no other authority to
<PAGE>
act on behalf of Company. The services to be performed by Consultant during the
Term shall be determined solely by Company, and shall include but not be limited
to the provision of advice and counsel, and such related services, as Company
may deem appropriate to assist it in its business. The services to be provided
by Consultant shall be rendered in Los Angeles County. Consultant shall have no
obligation or duty to travel outside of Los Angeles County in rendering such
services. Consultant, in the rendition of such services, shall not be required
to render any particular amount of time or to be available except by telephone
upon reasonable notice.
5. Compensation
------------
5.1. Compensation for Services. Subject to Consultant's adherence to the
-------------------------
terms and conditions of this Agreement, Consultant shall be paid an annual fee
of Seventy-five Thousand Dollars ($75,000), payable by Company monthly.
5.2. No Withholding. Because Consultant is retained as Company's
--------------
independent contractor and not as an employee, Company and Consultant
acknowledge and agree that no federal or state taxes, social security
contributions or other deductions shall be made by Company from the payments
made to Consultant pursuant to this Article 5, and that Consultant will remain
solely liable for the payment of all such taxes. Consultant further
acknowledges that Company will report compensation paid pursuant to this
Agreement on a Form 1099 at the end of each year in which Consultant's services
were provided. Consultant expressly covenants to make such tax payments as may
be required by applicable law and to indemnify and hold Company harmless from
and against any liability Company may incur as a consequence of Consultant's
failure to make such failure to make such payments.
6. Benefits
--------
6.1. No Additional Benefits. Consultant shall receive no additional
----------------------
benefits hereunder, and Consultant acknowledges that Company shall not be
responsible for providing Consultant with health insurance, pension benefits or
any other benefits.
7. Termination
-----------
7.1. This Agreement shall terminate upon:
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7.1.(a) The death of Consultant.
7.1.(b) The Disability of Consultant.
7.1.(c) Termination of the employment of Darrell L. Anderson by Company
for any reason whatsoever, it being understood that Consultant's services to a
large extent will be rendered by and through consultation with Darrell L.
Anderson.
7.2. For purposes hereof, the term "disability" shall mean that, because
of Consultant's physical or mental condition (a) he has been substantially
unable to perform his duties hereunder for twelve (12) weeks in any twelve (12)
month period; and (b) he has utilized any and all benefits available to him
under state and federal laws, if applicable, and is either (i) unable to
reasonably and effectively carry out his duties with reasonable accommodation by
Company or (ii) unable to reasonably and effectively carry out his duties
because any reasonable accommodation which may be required would cause Company
undue hardship.
7.3. In the event this Agreement is terminated solely by reason of the
termination of Darrell L. Anderson as an employee of Company the compensation to
Consultant herein shall continue during the Severance Period as defined and set
forth in Darrell L. Anderson's written Employment Agreement with Company.
7.4. Except as provided in paragraph 7.3 hereof, upon the termination of
this Agreement, Consultant shall be entitled only to compensation accrued
through such date, and to no other payments or benefits.
8. Results and Proceeds
--------------------
8.1. Company shall own all results and proceeds of Consultant's services
rendered under this Agreement, in perpetuity and throughout the universe.
Consultant and Company hereby agree that all of such results and proceeds shall
constitute work specifically ordered or commissioned by Company and shall
therefore constitute "works made for hire" for the Company within the meaning of
the copyright laws of the United States and Company shall be deemed to be the
sole author thereof in all territories and for all purposes. Without limiting
the foregoing, to the extent any of the results and proceeds of such services
are not deemed "works made for hire," Consultant hereby irrevocably and
unconditionally assigns each and all the
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copyrights in and to such results and proceeds to Company, throughout the
universe and in perpetuity.
9. Confidential Information; Non-Solicitation; Non-Use
---------------------------------------------------
9.1. Non-Disclosure of Confidential Information. As used herein,
------------------------------------------
"Confidential Information" means any and all information affecting or relating
to the business of the Company and its Affiliates, including without limitation,
financial data, customer lists and data, licensing arrangements, business
strategies, pricing information, product development, intellectual, artistic,
literary, dramatic or musical rights, works, or other materials of any kind or
nature (whether or not entitled to protection under applicable copyright laws,
or reduced to or embodied in any medium or tangible form), including without
limitation, all copyrights, patents, trademarks, service marks, trade secrets,
contract rights, titles, themes, stories, treatments, ideas, concepts,
technologies, art work, logos, hardware, software, and may be embodied in any
and all computer programs, tapes, diskettes, disks, mailing lists, lists of
actual or prospective customers and/or suppliers, notebooks, documents,
memoranda, reports, files, correspondence, charts, lists and all other written,
printed or otherwise recorded material of any kind whatsoever and any other
information, whether or not reduced to writing, including "know-how", ideas,
concepts, research, processes, and plans. "Confidential Information" does not
include information that is in the public domain, information that is generally
known in the trade, or information that Consultant can prove he acquired wholly
independently of his relationship with the Company. Consultant shall not, at
any time during the Term or thereafter, directly or indirectly, disclose or
furnish to any other person, firm or corporation any Confidential Information,
except in the course of the proper performance of his duties hereunder or as
required by law (in which event Consultant shall give prior written notice to
Company and shall cooperate with Company and Company's counsel in complying with
such legal requirements). Promptly upon the expiration or termination of
Consultant's engagement hereunder for any reason or whenever the Company so
requests, Consultant shall surrender to the Company all documents, drawings,
work papers, lists, memoranda, records and other data (including all copies)
constituting or pertaining in any way to any of the Confidential Information.
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9.2. Non-Solicitation; Non-Use. Consultant shall not, during the Term and
-------------------------
for a period of two (2) years from the date of any termination or expiration of
his services hereunder, directly or indirectly: (a) solicit or hire, or attempt
to solicit or hire, any employee of the Company, or assist any person, firm or
corporation in doing so or attempting to do so; or (b) solicit or cause to be
solicited the disclosure of, or use or disclose, any Confidential Information
for any purpose whatsoever or for any other party.
10. Non-Competition
---------------
10.1. Non-Competition. Consultant shall not, for so long as he is
---------------
entitled to compensation under or pursuant to this Agreement (whether or not he
is actively engaged by the Company hereunder), directly or indirectly: (a)
compete with the Company; or (b) be interested in, employed by, engaged in or
participate in the ownership, management, operation or control of, or act in any
advisory or other capacity for, any Competing Entity which conducts its business
within the Territory (as such terms are hereinafter defined); provided, however,
-------- -------
that notwithstanding the foregoing, Consultant may make solely passive
investments in any Competing Entity the common stock of which is "publicly
held," and of which Consultant shall not own or control, directly or indirectly,
in the aggregate securities which constitute more than one (1%) percent of the
voting rights or equity ownership of such Competing Entity; or (c) solicit or
divert any business or any customer from the Company or assist any person, firm
or corporation in doing so or attempting to do so; or (d) cause or seek to cause
any person, firm or corporation to refrain from dealing or doing business with
the Company or assist any person, firm or corporation in doing so or attempting
to do so.
For purposes of this Article 10, (i) the term "Competing Entity" shall mean
any entity which presently or during the period referred to above engages in any
business activity the Company is then engaged in or proposes to be engaged in;
and (ii) the term "Territory" shall mean any geographic area in which the
Company conducts business during such period.
11. Breach; Restrictions
--------------------
11.1. Breach of Provisions. In the event that Consultant shall breach any
--------------------
of the provisions of Articles 9 or 10, or in the event that any such breach is
threatened by Consultant,
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in addition to and without limiting or waiving any other remedies available to
the Company at law or in equity, the Company shall be entitled to immediate
injunctive relief in any court, domestic or foreign, having the capacity to
grant such relief, without the necessity of posting a bond, to restrain any such
breach or threatened breach and to enforce the provisions of Articles 9 or 10.
Consultant acknowledges and agrees that there is no adequate remedy at law for
any such breach or threatened breach and, in the event that any action or
proceeding is brought seeking injunctive relief, Consultant shall not use as a
defense thereto that there is an adequate remedy at law.
11.2. Reasonable Restrictions. The parties acknowledge that the foregoing
-----------------------
restrictions, the duration and the territorial scope thereof as set forth in
Articles 9 and 10, are under all of the circumstances reasonable and necessary
for the protection of the Company and its business.
12. Miscellaneous
-------------
12.1. Binding Effect. This Agreement shall be binding upon and inure to
--------------
the benefit of the parties hereto and their respective legal representatives,
heirs, distributees, successors and assigns; provided that the rights and
--------
obligations of Consultant hereunder shall not be assignable by him.
12.2. Notices. Any notice provided for herein shall be in writing and
-------
shall be deemed to have been given or made when personally delivered or three
(3) days following deposit for mailing by first class registered or certified
mail, return receipt requested, or if delivered by facsimile transmission, upon
confirmation of receipt of the transmission, to the address of the other party
set forth below or to such other address as may be specified by notice given in
accordance with this Section 6.2:
If to the Company: Four Media Company
2813 W. Alameda Avenue
Burbank, CA 91505
Attention: Robert T. Walston, C.E.O.
Fax No.: (818) 846-5197
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With a copy to: Greenberg Glusker Fields Claman
& Machtinger LLP
1900 Avenue of the Stars, #2100
Los Angeles, CA 90067
Attention: Jill A. Cossman, Esq.
Fax No.: (310) 553-0687
If to Consultant: Darrell A. Anderson
10063 Toluca Lake Avenue
Toluca Lake, CA 91602
Fax No.:
With a copy to: James M. Donovan, Esq.
515 South Figueroa Street
Suite 1000
Los Angeles, CA 90071
Fax No.: (213) 689-8784
12.3. Severability. If any provision of this Agreement, or portion
------------
thereof, shall be held invalid or unenforceable by a court of competent
jurisdiction, such invalidity or unenforceability shall attach only to such
provision or portion thereof, and shall not in any manner affect or render
invalid or unenforceable any other provision of this Agreement or portion
thereof, and this Agreement shall be carried out as if any such invalid or
unenforceable provision or portion thereof were not contained herein. In
addition, any such invalid or unenforceable provision or portion thereof shall
be deemed, without further action on the part of the parties hereto, modified,
amended or limited to the extent necessary to render the same valid and
enforceable.
12.4. Arbitration. Any controversy, claim or dispute arising out of or in
-----------
any way relating to this Agreement, the alleged breach thereof, and/or
Consultant's engagement with the Company or termination therefrom, including
without limitation, any and all claims for discrimination or harassment, shall
be determined by binding arbitration administered by the American Arbitration
Association under its National Rules for Resolution of Employment Disputes
("Rules") which are in effect at the time of the arbitration or the demand
therefor. The Rules are hereby incorporated by reference. California Code of
Civil Procedure (S)1283.05, which provides for certain discovery rights, shall
apply to any such arbitration, and said code section is also hereby incorporated
by reference. In reaching a decision, the arbitrator shall have no authority to
change, extend, modify or suspend any of the terms of this Agreement. The
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arbitration shall be commenced and heard in Los Angeles County, California.
The arbitrator(s) shall apply the substantive law (and the law of remedies, if
applicable) of California or federal law, or both, as applicable to the claim(s)
asserted. Judgment on the award may be entered in any court of competent
jurisdiction, even if a party who received notice under the Rules fails to
appear at the arbitration hearing(s). The parties may seek, from a court of
competent jurisdiction, provisional remedies or injunctive relief in support of
their respective rights and remedies hereunder without waiving any right to
arbitration. However, the merits of any action that involves such provisional
remedies or injunctive relief, including, without limitation, the terms of any
permanent injunction, shall be determined by arbitration under this paragraph.
12.5. Attorneys' Fees. The parties agree that the prevailing party in any
---------------
action, controversy or dispute arising out of or relating to this Agreement or
the breach of any provision hereof, shall be entitled to reimbursement by the
losing party of all costs and expenses including but not limited to reasonable
attorneys' fees and costs resulting from any action or proceeding filed in
accordance with the terms of Section 12.4 hereof or otherwise, to enforce any
term of this Agreement or for any damage by reason of an alleged breach of any
term of this Agreement.
12.6. Waiver. No waiver by a party hereto of a breach or default
------
hereunder by the other party shall be considered valid unless in writing signed
by such first party, and no such waiver shall be deemed a waiver of any
subsequent breach or default of the same or any other nature.
12.7. Entire Agreement. This Agreement sets forth the entire agreement
----------------
between the parties with respect to the subject matter hereof, and supersedes
any and all prior agreements or understanding between the Company and
Consultant, whether written or oral, fully or partially performed relating to
any or all matters covered by and contained or otherwise dealt with in this
Agreement. It is expressly understood that this Agreement is deemed delivered
to Company after the delivery by Consultant of a Release and Indemnity Agreement
in favor of Company.
12.8. Amendment. No modification, change or amendment of this Agreement
---------
or any of its provisions shall be valid unless in writing and signed by the
party against whom such claimed modification, change or amendment is sought to
be enforced.
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12.9. Applicable Law. This Agreement, and all of the rights and
--------------
obligations of the parties in connection with the employment relationship
established hereby, shall be governed by and construed in accordance with the
substantive laws of the State of California without giving effect to principles
relating to conflicts of law.
12.10. Counterparts. Thus Agreement may be executed in counterparts, each
------------
of which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"COMPANY"
FOUR MEDIA COMPANY, a Delaware corporation
By: ____________________________________
Robert T. Walston, Chairman and Chief
Executive Officer
"CONSULTANT"
__________________________________________
Darrell A. Anderson
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