UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Kings Road Entertainment, Inc.
- - - --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.01 par value
- - - --------------------------------------------------------------------------------
(Title of Class of Securities)
496162 20 7
- - - --------------------------------------------------------------------------------
(CUSIP NUMBER)
Phillip Cook, President
1901 Avenue of the Stars
Los Angeles, California 90067
(310) 552-0057
- - - --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
November 6, 1998
- - - --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d- 1(b)(3) or (4), check the following box [ ].
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act.
<PAGE>
SCHEDULE 13D
CUSIP NO. 496162 20 7
1. Name of Reporting Person;
S.S. or I.R.S. Identification No. of Above Person
RAS Securities Corp.
I.D. No.:
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
3. SEC Use Only .................................................
4. Source of Funds: OO
5. Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) ..........................[ ]
6. Citizenship or Place of Organization: New York
Number of 7. Sole Voting Power: 100
Shares
Beneficially 8. Shared Voting Power: 0
Owned By 9. Sole Dispositive Power: 100
Each Reporting
Person With 10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting
Person: 100
12. Check if the Aggregate Amount in Row 11 Excludes
Certain Shares (See Instructions) ........................[ ]
13. Percent of Class Represented by Amount In Row 11:
0%
14. Type of Reporting Person: BD
2
<PAGE>
CUSIP NO. 496162 20 7
15. Name of Reporting Person;
S.S. or I.R.S. Identification No. of Above Person
FAB Capital Corporation
I.D. No.:
16. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
17. SEC Use Only ................................................
18. Source of Funds: OO
19. Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e)..........................[ ]
20. Citizenship or Place of Organization: Idaho
Number of 21. Sole Voting Power: 1,082,580
Shares
Beneficially 22. Shared Voting Power: 0
Owned By 23. Sole Dispositive Power: 1,082,580
Each Reporting
Person With 24. Shared Dispositive Power: 0
25. Aggregate Amount Beneficially Owned by Each Reporting
Person: 1,082,580 Shares
26. Check if the Aggregate Amount in Row 11 Excludes
Certain Shares (See Instructions) .......................[ ]
27. Percent of Class Represented by Amount In Row 11:
31.9%
28. Type of Reporting Person: CO
3
<PAGE>
CUSIP NO. 496162 20 7
29. Name of Reporting Person;
S.S. or I.R.S. Identification No. of Above Person
MBO Music Verlag GmbH
I.D. No.:
30. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
31. SEC Use Only ................................................
32. Source of Funds: OO
33. Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) .........................[ ]
34. Citizenship or Place of Organization: Germany
Number of 35. Sole Voting Power: 950,829
Shares
Beneficially 36. Shared Voting Power: 0
Owned By 37. Sole Dispositive Power: 950,829
Each Reporting
Person With 38. Shared Dispositive Power: 0
39. Aggregate Amount Beneficially Owned by Each Reporting
Person: 950,829 Shares
40. Check if the Aggregate Amount in Row 11 Excludes
Certain Shares (See Instructions) .......................[ ]
41. Percent of Class Represented by Amount In Row 11:
28.1%
42. Type of Reporting Person: CO
4
<PAGE>
CUSIP NO. 496162 20 7
43. Name of Reporting Person;
S.S. or I.R.S. Identification No. of Above Person
Western Union Leasing Ltd.
I.D. No.:
44. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
45. SEC Use Only ................................................
46. Source of Funds: OO
47. Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) .........................[ ]
48. Citizenship or Place of Organization: Ireland
Number of 49. Sole Voting Power: 406,418
Shares
Beneficially 50. Shared Voting Power: 0
Owned By 51. Sole Dispositive Power: 406,418
Each Reporting
Person With 52. Shared Dispositive Power: 0
53. Aggregate Amount Beneficially Owned by Each Reporting
Person: 406,418 Shares
54. Check if the Aggregate Amount in Row 11 Excludes
Certain Shares (See Instructions) .......................[ ]
55. Percent of Class Represented by Amount In Row 11:
12.0%
56. Type of Reporting Person: CO
5
<PAGE>
CUSIP NO. 496162 20 7
57. Name of Reporting Person;
S.S. or I.R.S. Identification No. of Above Person
Christoph Martin
I.D. No.:
58. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
59. SEC Use Only ................................................
60. Source of Funds: OO
61. Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) .........................[ ]
62. Citizenship or Place of Organization: Germany
Number of 63. Sole Voting Power: 406,418
Shares
Beneficially 64. Shared Voting Power: 0
Owned By 65. Sole Dispositive Power: 406,418
Each Reporting
Person With 66. Shared Dispositive Power: 0
67. Aggregate Amount Beneficially Owned by Each Reporting
Person: 406,418 Shares
68. Check if the Aggregate Amount in Row 11 Excludes
Certain Shares (See Instructions) .......................[ ]
69. Percent of Class Represented by Amount In Row 11:
12.0%
70. Type of Reporting Person: IN
6
<PAGE>
CUSIP NO. 496162 20 7
71. Name of Reporting Person;
S.S. or I.R.S. Identification No. of Above Person
Michael Berresheim
I.D. No.:
72. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
73. SEC Use Only ................................................
74. Source of Funds: OO
75. Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) .........................[ ]
76. Citizenship or Place of Organization: Germany
Number of 77. Sole Voting Power: 950,829
Shares
Beneficially 78. Shared Voting Power: 0
Owned By 79. Sole Dispositive Power: 950,829
Each Reporting
Person With 80. Shared Dispositive Power: 0
81. Aggregate Amount Beneficially Owned by Each Reporting
Person: 950,829 Shares
82. Check if the Aggregate Amount in Row 11 Excludes
Certain Shares (See Instructions) .......................[ ]
83. Percent of Class Represented by Amount In Row 11:
28.1%
84. Type of Reporting Person: IN
7
<PAGE>
Item 1. Security and Issuer
This statement relates to the common stock, $.01 par value ("Common
Stock"), of Kings Road Entertainment, Inc. (the "Issuer"), with its principal
executive offices at 1901 Avenue of the Stars, Los Angeles, California 90067.
Item 2. Identity and Background
(a) This statement is filed by FAB Capital Corporation, an Idaho
corporation ("FAB"), RAS Securities Corp., a New York corporation which is
expected to become a wholly-owned subsidiary of FAB ("RAS"), MBO Music Verlag
GmbH, a German corporation ("MBO"), and Western Union Leasing Ltd., a trust
incorporated in Ireland ("Western") (collectively, the "Acquirors"). This
statement is also filed by Christoph Martin, the sole shareholder and sole
trustee of Western and Michael Berresheim, the sole shareholder of MBO.
(b) The addresses of each of the Acquirors' and Mr. Martin's and Mr.
Berresheim's principal place of business and principal office are as follows:
for FAB, 1461 First Avenue, New York, New York 10021; for RAS, 50 Broadway, New
York, New York 10004; for MBO and Mr. Berresheim, Gerauer Street, 58A Moerfelden
- - - - Walldorf, Germany 64546; and for Western and Christoph Martin, the principal
business address is Rothhaus Street 1, 67348 Bad Hamburg Germany and the
principal office of Western is 10 Greycoat Place, 1 Premier House, London SW1
England.
(c) The principal businesses of the Acquirors are as follows: FAB is a
private investment firm and holding company with diverse business interests; RAS
is a broker dealer and investment banking firm; MBO is a music publisher,
primarily receiving royalties from recorded music; and Western is an offshore
private financing company. Information with respect to the officers, directors
and principal stockholders of each of the Acquirors (the "Individual
Affiliates") is set forth in the following Schedule A.
8
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
RAS SECURITIES CORP.
Executive Officers; Directors; Other Principal
Controlling Shareholders Occupation/Name
(name and addressees) Citizenship Capacity, Title of Employer
- - - ------------------------------- ----------- --------------- ---------------
<S> <C> <C> <C>
1. Robert A. Schneider USA 100% n/a
21 East 66th Street Common Stock
New York, NY ownership
2. Gerald Heilpern USA President n/a
50 Broadway
New York, NY
3. David Parsons USA Vice President & n/a
50 Broadway Director of
New York, NY Compliance
4. Julia Mold-Torres USA Chief Financial n/a
50 Broadway Officer
New York, NY
FAB is the sole preferred shareholder of RAS with a call option
on 100% of the outstanding common stock of RAS pursuant to a transaction
among Robert Schneider, RAS and FAB.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
MBO Music Verlag GmbH
Executive Officers; Directors; Other Principal
Controlling Shareholders Occupation/Name
(name and addresses) Citizenship Capacity, Title of Employer
- - - ------------------------------ ----------- --------------- ---------------
<S> <C> <C> <C>
Michael L. Berresheim Germany Managing Director; n/a
Eppsteiner Strasse 55 100%
D60323 Frankfurt shareholder
</TABLE>
<TABLE>
<CAPTION>
WESTERN UNION LEASING LTD.
Executive Officers; Directors; Other Principal
Controlling Shareholders Occupation/Name
(name and addresses) Citizenship Capacity, Title of Employer
- - - ------------------------------ ----------- --------------- -------------------
<S> <C> <C> <C>
Western is a trust with
Christoph Martin as
sole trustee
Attorney with
Christoph Martin Germany Trustee own practice
Rathausstrabe 1, for Mr. Martin
61348 Bad Homburg v.d.H.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
FAB CAPITAL CORPORATION
Executive Officers; Directors; Other Principal
Controlling Shareholders Occupation/Name
(name and addresses) Citizenship Capacity, Title of Employer
- - - ------------------------------ ----------- --------------- ---------------
<S> <C> <C> <C>
1. Philip G. Cook Australia Chairman; CEO; Private Investor
50 Broadway Director
New York, NY 10004 25% shareholder
2. Randy Strausberg USA Chief Financial n/a
50 Broadway Officer
New York, NY 10001
3. Marc Greenspan USA Director n/a
50 Broadway
New York, NY
4. Mercury Blaze Limited an Ireland 32% n/a
Irish Trust Shareholder
Trustee is Colin Pearse
</TABLE>
11
<PAGE>
(d) None of the Acquirors or the Individual Affiliates has, during the
last five years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) None of the Acquirors or the Individual Affiliates has, during the
last five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and, as a result of such
proceeding, was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws, or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds
By agreement dated November 6, 1998 (the "Agreement," which is Exhibit
10(a) of this Schedule), FAB purchased 421,949 shares, MBO purchased 373,350
shares, Western purchased 159,461 shares and RAS purchased 100 shares of Common
Stock from the Estate of Stephen Friedman (the "Estate"), and FAB simultaneously
acquired 7,500 shares of Common Stock from Christopher Trunkey. The purchase
price for each such purchase was $2.35 per share or $2,261,546 in the aggregate.
RAS is expected to become a wholly-owned subsidiary of FAB upon the consummation
of a pending transaction. Each of the Acquirors disclaims beneficial ownership
of the shares of Common Stock acquired by the other Acquirors.
For each of the Acquirors, the source and the amount of the funds used
in acquiring shares of Common Stock from the Estate and Mr. Trunkey were as
follows: As described below, FAB, MBO and Western borrowed $991,580.15,
$877,372.50 and $374,733.35, respectively, to fund their respective purchases of
shares from the Estate. FAB used internal working capital ($17,625) to acquire
7,500 shares of Common Stock from Mr. Trunkey as did RAS ($235) to acquire 100
shares of Common Stock from the Estate.
FAB, MBO and Western borrowed an aggregate of $2,243,686 as follows:
$1,500,000 from Riverrock Ltd.; $200,000 from Long Valley Associates; and
$543,686 from North American International Capital, Inc. FAB, MBO and Western
borrowed 44.2%, 39.1% and 16.7%, respectively, of the amount loaned by each of
these lenders. The entire amount loaned by North American International Capital,
Inc. was first borrowed by FAB and FAB loaned $212,673 to MBO and $90,835 to
Western. FAB, MBO and Western each has repaid such loans described above.
In addition, Music Action Ltd., a German corporation ("MAC"), agreed
that it will, as soon as practicable but in any event within 120 days after
November 6, 1998, make or cause to be made an offer to each of the Company's
shareholders, other than the Estate and Mr. Trunkey, for the purchase of up to
ninety
12
<PAGE>
percent (90%) of such shareholder's shares at the price of $2.35 per share (the
"Purchase Offer"). MAC has agreed that, in the event the Purchase Offer is not
made within ninety (90) days after November 6, 1998, it will deposit $1,800,000
into escrow to be applied toward the Purchase Offer. FAB has agreed to make the
$1,800,000 deposit into escrow in the event MAC does not do so.
Also pursuant to the Agreement, the Issuer entered into a consulting
agreement with Kenneth Aguado, the former Chief Executive Officer of the Issuer,
providing him with a fee of $10,000 per month, plus certain other incentive fees
for projects, for a term of one year, renewable by mutual consent of the
parties.
Item 4. Purpose of Transaction
The purposes of the Acquirors in purchasing shares of Common Stock
from the Estate and Mr. Trunkey were to acquire collectively over 50% of the
outstanding shares of the Issuer, to cause the appointment of the designees of
the acquirors as the members of the Board of Directors of the Issuer, to expand
and diversify the Issuer's operations and to involve the Company in future stock
purchase, asset purchase, merger or acquisition transactions, including with
Immediate Entertainment Group, Inc., a Nevada corporation ("Immediate"). Such
transactions may require the Company to amend its Certificate of Incorporation
to authorize additional shares of capital stock.
MAC has agreed to make or cause to be made the Purchase Offer as
described in Item 3, above. MAC has agreed that, in the event the Purchase Offer
is not made within ninety (90) days after November 6, 1998, it will deposit
$1,800,000 into escrow to be applied toward the Purchase Offer. FAB has agreed
to make the $1,800,000 deposit into escrow in the event MAC does not do so.
Effective November 9, 1998, the Issuer acquired 20% of the common
stock of Immediate at a price of $2.50 per share, paid with a combination of
stock of the Issuer and cash. Pursuant to such transaction, Western sold 400,000
Immediate shares for $419,650.00 and 246,957 shares of Common Stock; FAB sold
1,057,885 Immediate shares for $1,109,853.60 and 653,131 shares of Common Stock;
and MBO sold 935,350 Immediate shares for $981,299.07 and 577,479 shares of
Common Stock. The Issuer also entered into a non-binding Letter of Intent with
Immediate pursuant to which Immediate will merge into a newly formed, wholly
owned subsidiary of the Issuer in a proposed tax-free transaction. The merger is
conditioned upon the negotiation and execution of definitive final agreements
and the satisfaction of any legal requirements including the consent of
shareholders, if required. Immediate is a diversified entertainment holding
company that provides services relating to music production, audio recording, CD
manufacturing, film soundtrack and script development, and operates a mail order
music club.
13
<PAGE>
Pursuant to the Agreement, the existing members of the Issuer's Board
of Directors resigned and elected in their place Phillip Cook and James
Leaderer, who constitute the Board of Directors. It is anticipated that
additional members will be elected to the Board. In addition, the existing
management of the Company, except Christopher Trunkey, the Chief Financial
Officer of the Company, resigned and Phillip Cook was appointed President and
James Leaderer was appointed Senior Vice President of the Company.
Except as set forth above in this Item 4, each of the Acquirors does
not have any present plans or proposals which would relate to or result in any
of the events or actions described in subparagraphs (a) through (j) of this Item
4. Nothing set forth above should be interpreted to preclude the Acquirors from
making any plans or proposals which would relate to or result in any of the
events or actions described in subparagraphs (a) through (j) of this Item 4.
Item 5. Interest in Securities of the Issuer
FAB beneficially owns 1,082,580 shares of Common Stock (31.9% of the
outstanding), MBO and Mr. Berresheim each beneficially owns the same 950,829
shares of Common Stock (28.1% of the outstanding), Western and Mr. Martin each
beneficially owns the same 406,418 shares of Common Stock (12.0% of the
outstanding) and RAS beneficially owns 100 shares of Common Stock, which
together constitute 2,439,927 shares, or 72.0% of the outstanding. Each of
Acquirors disclaims beneficial ownership of the shares of Common Stock acquired
by the other Acquirors. RAS is expected to become a wholly-owned subsidiary of
FAB upon the consummation of a pending transaction.
Each of the Acquirors has the sole power to vote and dispose of the shares
of Common Stock acquired and beneficially owned by it. Mr. Martin and Mr.
Berresheim have the power to control the voting and disposition of Western's
shares and MBO's shares, respectively, of Common Stock.
Other than the transactions described above, none of the Acquirors has
effected any transaction involving the Issuer's securities within the preceding
sixty (60) days.
Item 6. Contracts, Arrangements, Understandings or
Relationships, with Respect to Securities of the Issuer
RAS is expected to become a wholly-owned subsidiary of FAB
upon the consummation of a pending transaction. Mr. Martin is
the sole trustee and shareholder of Western and Mr. Berresheim is
the sole shareholder of MBO.
14
<PAGE>
Item 7. Material to be filed as Exhibits
Exhibit
Numbers Exhibit
------- -------
A Joint Acquisition Statement, dated
November 13, 1998, by RAS
Securities Corp., Western Union
Leasing Ltd., Christoph Martin,
Michael Berresheim, FAB Capital
Corporation and MBO Music Verlag
GmbH.
10(a) Stock Acquisition Agreement, dated
November 6, 1998, by and among the
Estate of Stephen Friedman, RAS
Securities Corp., Kings Road
Entertainment, Inc., FAB Capital
Corporation and Christopher
Trunkey.
10(b) Stock Purchase Agreement, dated
November 9, 1998, by and among,
Western Union Leasing Ltd., FAB
Capital Corporation, MBO Music
Verlag GmbH, Kings Road
Entertainment, Inc. and Immediate
Entertainment Group, Inc.
10(c) Form of Demand Promissory Note and
Pledge Agreement, dated November 9,
1998, entered into by each of
Riverrock Ltd., Long Valley
Associates with FAB Capital
Corporation, MBO Music Verlag GmbH
and Western Union Leasing Ltd. and
North American International
Capital, Inc. with FAB Capital
Corporation.
15
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
November 13, 1998
RAS SECURITIES CORP.
By:/s/
-----------------------------------
Gerald Heilpern, Vice President
16
Exhibit A
JOINT ACQUISITION STATEMENT
PURSUANT TO RULE 13d-1(k) (1)
The undersigned acknowledge and agree that the foregoing statement on
Schedule 13D is filed on behalf of each of the undersigned and that all
subsequent amendments to this statement on Schedule 13D shall be filed on behalf
of each of the undersigned without the necessity of filing additional joint
acquisition statements. The undersigned acknowledge that each shall be
responsible for the timely filing of such amendments, and for the completeness
and accuracy of the information concerning him or it contained therein, but
shall not be responsible for the completeness and accuracy of the information
concerning the other, except to the extent that he or it knows or has reason to
believe that such information is inaccurate.
Dated: November 13, 1998
RAS SECURITIES CORP.
By: /s/
----------------------------------
Gerald Heilpern,
Vice President
WESTERN UNION LEASING LTD.
By: /s/ Attorney-in-fact
----------------------------------
Christopher Martin,
Managing Director
FAB CAPITAL CORPORATION
By: /s/
----------------------------------
Phillip Cook, President
MBO MUSIC VERLAG GmbH
By: /s/
----------------------------------
Michael Berresheim, President
By: /s/
----------------------------------
Christoph Martin
By: /s/
----------------------------------
Michael Berresheim
EXHIBIT 10(a)
-------------
STOCK ACQUISITION AGREEMENT
---------------------------
This AGREEMENT (this "Agreement"), dated November 6, 1998, is made and
entered into by and among the Estate of Stephen Friedman, C/O William Immerman,
Executor (the "Seller"); RAS Securities Corp., a New York corporation ("RAS"),
acting for itself and certain of its customers or designees, if any, listed on
Exhibit F hereto (the "Buyer"); Kings Road Entertainment, Inc., a Delaware
corporation (the "Company"); FAB Capital Corporation, an Idaho corporation
("FAB"); and the party or parties, listed on Exhibit A hereto (the "Other
Selling Shareholders").
WHEREAS, the Buyer desires to purchase from the Seller, and the Seller
desires to sell to the Buyer, 954,860 shares (the "Shares") of the Company's
common stock, $.01 par value ("Common Stock"), comprising approximately 90% of
the shares of Common Stock beneficially owned by the Seller and 49.9% of the
1,911,748 shares of Common Stock issued and outstanding on the date hereof;
WHEREAS, the Buyer also desires to purchase additional shares of
Common Stock (the "Additional Shares"), comprising 90% of the shares of Common
Stock beneficially owned by each of the Other Selling Shareholders, set forth
with respect to each Other Selling Shareholder and in the aggregate on Exhibit A
hereto;
WHEREAS, each of the Buyer and the Company desires that, subsequent to
the execution of this Agreement, a bona fide offer be made to purchase from all
shareholders of the Company (other than the Seller and the Other Selling
Shareholders) up to 90% of the shares owned by each of them at the same price
offered to the Seller and the Other Selling Shareholders;
WHEREAS, the Buyer, in anticipation of its purchases of Common Stock
as set forth herein, has been actively exploring the possibility of stock
purchase, asset purchase, merger or acquisition transactions between the Company
and Immediate Entertainment Group, Inc., DCC Compact Classics, Inc. and
potentially other entities (the "Acquisitive Transactions"); and the Board of
Directors of the Company (the "Board") is aware that the Acquisitive
Transactions could occur subsequent to the date hereof but the Board has no
knowledge of the nature of, and has not reviewed any information regarding or
conducted any investigation of, the Acquisitive Transactions; and
WHEREAS, the members of the Board are resigning simultaneously with
the execution of this Agreement and, after reviewing the professional
biographies of certain individuals nominated by the Buyer, are electing such
individuals to serve on the Board;
NOW, THEREFORE, the parties hereto agree as follows:
<PAGE>
1. Purchase of Stock. Subject to the terms and conditions herein set forth
-----------------
and in reliance on the representations, warranties and agreements of the
Company, the Buyer, the Seller and each of the Other Selling Shareholders herein
contained, the Buyer agrees to purchase from the Seller and each of the Other
Selling Shareholders, and each of the Seller and the Other Selling Shareholders
agrees to sell to the Buyer, the Shares and the Additional Shares, as the case
may be, at a per share price equal to the Purchase Price (as defined below) as
hereinafter set forth. Immediately upon execution of this agreement, each of the
Seller and the Other Selling Shareholders shall execute an order through the
Buyer, as its broker, to sell the Shares or the Additional Shares, as the case
may be, to the Buyer after the close of trading on The Nasdaq SmallCap Market on
the date hereof (i.e. in an aftermarket trade) at an asking price of $2.35 per
share (the "Purchase Price"), or $2,261,546 in the aggregate. The Buyer shall
simultaneously execute an order for the Buyer to buy from the Seller and the
Other Selling Shareholders the Shares and the Additional Shares, as the case may
be, at the Purchase Price after the close of trading on the date hereof. The
parties understand that RAS may purchase the Shares or the Additional Shares
hereunder for its own account and for the account of certain of its customers or
designees, if any (the "RAS Clients"), listed on Exhibit F hereto.
Notwithstanding anything to the contrary in this Agreement, the parties to this
Agreement acknowledge and agree that the Seller may deliver some or all of the
Additional Shares on behalf of the Other Selling Shareholders (such shares, the
"Loaned Shares"), in which case the proceeds from the sale of the Loaned Shares
shall be delivered to the Seller pending receipt of replacement shares by the
Seller from the Other Selling Shareholders. Each Other Selling Shareholder on
whose behalf Loaned Shares are delivered to the Buyer by the Seller shall
promptly deliver an equal number of shares of Common Stock to the Seller in
exchange for the related proceeds. If such delivery does not occur within 15
days from the date hereof, the Seller may at its option either keep the proceeds
from such Loaned Shares or sue for delivery of a number of shares equal to the
number of Loaned Shares attributable hereunder to the non-delivering Other
Selling Shareholder. In any case, the Buyer shall have no obligation or
liability of any kind to such Other Selling Shareholder after the Buyer makes
the payments required hereunder to the Seller with respect to the Loaned Shares.
2. Change in the Board. Simultaneously with the execution of this
---------------------
Agreement, all of the existing members of the Board will resign and elect in
their place Phillip G. Cook (as Chairman of the Board) and James P. Leaderer,
each of whose professional biographies are attached hereto as Exhibit B, all of
---------
the officers of the Company, except Christopher Trunkey, shall resign and the
authority of all existing officers to act on behalf of the Company or to manage
the Company assets or operations, including cash on hand, shall cease except as
determined by the newly elected Board and all existing bank signature cards will
be canceled and reissued at the direction of the newly elected Board.
-2-
<PAGE>
3. Purchase Offer. a. The Buyer has arranged for the execution and
---------------
delivery, on the date hereof, of the letter of Music Action Ltd. ("MAC") to the
Company, the form of which is attached hereto as Exhibit C (the "Commitment
---------
Letter"). The Buyer agrees to cause the Company to cooperate with MAC to
complete the Purchase Offer (as defined in the Commitment Letter) and not to
cause the Board to take any action inconsistent with the completion of the
Purchase Offer as contemplated herein.
b. Each of FAB and the Company hereby covenants that it will cause the
Purchase Offer to be made as soon as practicable but in any event within 120
days following the date hereof. FAB represents, warrants and covenants that it
has a net worth of at least $5,000,000 and has, and will have for at least 120
days, cash, cash equivalents and/or credit lines equal to not less than
$1,800,000. In the event that within 90 days of the date hereof the Purchase
Offer is not made and MAC has failed to deposit not less than $1.8 million into
an irrevocable escrow account to be established by the Company with a bank with
assets of not less than $500,000,000 (the proceeds of which will be reserved for
and applied to consummate the Share Purchase, as defined in the Commitment
Letter) (the "Escrow Account"), FAB will immediately deposit not less than $1.8
million into the Escrow Account. This covenant to deposit $1,800,000 into the
Escrow Account and to cause the consummation of the Purchase Offer will be
enforceable against FAB only if the conditions to MAC's obligations set forth in
the Commitment Letter have been satisfied.
c. Each of the Buyer, FAB and the Company acknowledges that,
notwithstanding anything to the contrary in this Agreement, the shareholders of
the Company (other than the Seller and the Other Selling Shareholders) are
intended by FAB and the Company to be third party beneficiaries of the
provisions of this Section 3.
4. Acquisitive Transactions. The Company has been informed that the Buyer,
------------------------
in anticipation of its purchases of Common Stock as set forth herein, has been
actively exploring the Acquisitive Transactions (which may be with entities
having affiliations with the Buyer) and the Company is aware that the
Acquisitive Transactions may occur subsequent to the date hereof although the
Company has no knowledge of the nature of, and has not reviewed any information
regarding or conducted any investigation of, the Acquisitive Transactions.
5. Consulting Agreement. Simultaneously with the execution of this
---------------------
Agreement, the Company and Kenneth Aguado shall enter into a consulting
agreement, the form of which is attached hereto as Exhibit D.
---------
-3-
<PAGE>
6. Representations and Warranties
------------------------------
a. Representations and Warranties by the Seller and Other Selling
------------------------------------------------------------------
Shareholders. The Seller, with respect to the Shares, and each of the Other
- - - ------------
Selling Shareholders, with respect to the Additional Shares set forth in Exhibit
-------
A in relation to each, represent and warrant to the Buyer that:
- - - -
(1) Good Title to Shares. Each of the Seller and the Other
-----------------------
Selling Shareholders has good and valid title to the Shares and the
Additional Shares, as the case may be, free and clear of all claims,
liens and encumbrances; and upon delivery of the Shares and Additional
Shares and payment therefor pursuant hereto, good and valid title to
the Shares and Additional Shares, free and clear of all claims, liens
and encumbrances, will pass to the Buyer.
(2) Due Authorization. Each of the Seller and Other Selling
------------------
Shareholders has full right, power and authority to sell the Shares
and the Additional Shares, as the case may be, on the terms set forth
herein, to enter into this Agreement and to perform all of its
obligations hereunder as contemplated hereby. All necessary actions,
including estate and other proceedings of the Seller, and each Other
Selling Shareholder, have been duly taken to authorize the execution,
delivery, and performance by each of them of this Agreement. This
Agreement has been duly authorized, executed and delivered by the
Seller and each Other Selling Shareholder, is the legal, valid, and
binding obligation of each of them, and is enforceable as to each of
them in accordance with its terms (subject to applicable bankruptcy,
insolvency, and other laws affecting the enforceability of creditors'
rights generally and to general equitable principles). No consent,
authorization, approval, order, license, certificate or permit of or
from, or registration, qualification, declaration or filing with, any
federal, state, local, foreign, or other governmental authority or any
court or other tribunal is required by the Seller or Other Selling
Shareholder for the execution, delivery, or performance by each of
them of this Agreement. No consent of any party to any contract,
agreement, instrument, lease, license, arrangement, or understanding
to which the Seller or the Other Selling Shareholders is a party, or
to which any of their properties or assets are subject, is required
for the execution, delivery, or performance of this Agreement, or the
consummation of the transactions contemplated hereby and the
execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, will not
violate, result in breach of, conflict with, or (with or without the
-4-
<PAGE>
giving of notice or the passage of time or both) entitle any party to
terminate or call a default under any such contract, agreement,
instrument, lease, license, arrangement, or understanding, (except for
any such violation, breach or conflict which has been properly waived
thereunder) or violate, result in a breach of, or conflict with any
law, rule, regulation, order, judgment or decree binding on the Seller
or each of the Other Selling Shareholders, as the case may be, or to
which any of their properties, or assets are subject.
(3) Finder's Fees; Other Arrangements. Each of the Seller and the
---------------------------------
Other Selling Shareholders is not obligated to pay a finder's fee to
anyone in connection with the introduction of the Seller or the Other
Selling Shareholders to the Buyer or to pay for any other
arrangements, agreements or understanding relating to the Seller or
the Other Selling Shareholders.
b. Representations and Warranties by the Buyer. Contemporaneously
----------------------------------------------
herewith, each RAS Client, if any, shall deliver a letter, the form of which is
attached hereto as Exhibit G. The Buyer represents and warrants to the Seller,
the Other Selling Shareholders and the Company as follows:
(1) Due Authorization. Each of RAS and the RAS Clients has full right,
-----------------
power and authority to purchase the Shares and the Additional Shares
on the terms set forth herein. RAS has full right, power and authority
to enter into this Agreement and to perform all of its obligations
hereunder as contemplated hereby.
(2) Finder's Fees; Other Arrangements. Each of RAS and the RAS Clients
---------------------------------
is not obligated to pay a finder's fee to any third party in
connection with the introduction of the Company, the Seller or the
Other Selling Shareholders to RAS or the RAS Clients or to pay any
third party for any other arrangements, agreements or understanding
relating to the Company, the Seller or the Other Selling Shareholders.
(3) Investment. The Shares are being acquired for the accounts of RAS
----------
and/or the RAS Clients and not with a view to distribution of all or
any part thereof.
(4) Not Registered. Each of RAS and the RAS Clients understands that
--------------
the Shares are neither registered under the Securities Act of 1933 nor
qualified under any applicable state laws.
(5) Sophistication of Buyer. Each of RAS and the RAS Clients has the
------------------------
requisite knowledge and experience to assess the relative merits and
risks of an acquisition of the Shares.
-5-
<PAGE>
(6) Legends. Each of RAS and the RAS Clients understands that each
-------
certificate for the Shares will bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED, SOLD, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
WITH RESPECT TO THE TRANSACTION OR AN OPINION OF THE COMPANY'S COUNSEL THAT
REGISTRATION IS NOT REQUIRED.
c. Representations and Warranties by the Company and the Seller.
-----------------------------------------------------------------
Except as otherwise contemplated by this Agreement, each of the Seller and the
Company jointly and severally represents and warrants to the Buyer as follows
(provided that each of the following representations and warranties are to the
knowledge of the Seller):
(1) Due Incorporation and Qualification. The Company has been
--------------------------------------
duly incorporated, is validly existing and is in good standing under
the laws of the State of Delaware and is duly qualified (except where
the failure to so qualify would not reasonably be expected to have a
material adverse effect on the business of the Company) for the
transaction of business and is in good standing in each jurisdiction
in which the ownership or leasing of its properties or the conduct of
its business requires such qualification. The Company has all
requisite corporate power and authority and all necessary consents,
authorizations, approvals, orders, licenses and permits of and from
any governmental authority or agency or any court or other tribunal
necessary (collectively, the "Permits") to own or hold its properties
and conduct its business as described in its Annual Report on Form
10-KSB for the fiscal year ended April 30, 1998 and its Quarterly
Report on Form 10-QSB for the quarter ended July 31, 1998
(collectively, the "Disclosure Documents") (except where the failure
to have any of such Permits would not reasonably be expected to have a
material adverse effect on the business of the Company).
(2) Authorized and Outstanding Capital Stock. The Company has an
-----------------------------------------
authorized and outstanding capitalization as follows: 1,911,748 shares
of Common Stock, and no other shares of capital stock, outstanding;
12,000,000 shares of Common Stock, and no other class of capital
stock, authorized under the Company's certificate of incorporation;
and no shares of capital stock subject to issuance upon exercise of
options, warrants or other securities or instruments convertible or
exchangeable into capital stock of the Company. All of the issued and
outstanding shares of capital stock have been duly and validly
authorized and issued and are fully paid and non- assessable. None of
-6-
<PAGE>
the holders of such outstanding shares of capital stock is subject to
personal liability solely by reason of being such a holder. The offers
and sales of all the Company's outstanding securities were at all
relevant times either registered under the Securities Act of 1933, as
amended, and the applicable state securities or Blue Sky laws, or
exempt from such registration.
(3) No Preemptive Rights; Plans for Issuance. There is no
---------------------------------------------
commitment, plan, or arrangement to issue any share of capital stock
of the Company or any security or other instrument which by its terms
is convertible into, exercisable for, or exchangeable for capital
stock of the Company, except as may be set forth in Schedule 6.c.(3)
-----------------
attached hereto. Except as described in the Disclosure Documents no
holder of any of the Company's securities has any rights, "demand,"
"piggyback" or otherwise, to have such securities registered or to
demand the filing of a registration statement. The Company has
reserved for issuance a sufficient number of shares of capital stock
to be issued under its stock option plan.
(4) No Material Adverse Changes. Except as set forth in Schedule
--------------------------- --------
6.c.(4) attached hereto, since the date of the Company's Quarterly
-------
Report on Form 10-QSB for the quarter ended July 31, 1998, there has
not been any change in the condition, financial or otherwise, of the
Company which would reasonably be expected to have a material adverse
effect upon the operations, business, properties or assets of the
Company.
(5) Finder's Fees; Other Arrangements. The Company is not
------------------------------------
obligated to pay a finder's fee to anyone in connection with the
introduction of the Company to the Buyer or to pay for any other
arrangements, agreements or understanding relating to the Buyer.
(6) No Pending Actions. Except as set forth in the Disclosure
--------------------
Documents, there are no actions, suits, proceedings, filed claims or
hearings of any kind or nature or, to the knowledge of the Company,
any investigations or inquiries, before or by any court, governmental
authority, tribunal or instrumentality (or to the knowledge of the
Company, any state of facts which would reasonably be expected to give
rise thereto), pending or threatened against the Company, or involving
the properties of the Company, which would reasonably be expected to
have a material adverse effect upon the operations, business,
properties, or assets of the Company. The Company is not in violation
of, or in default with respect to, any law, rule, regulation, order,
judgment, or decree, except as may be described in the Disclosure
-7-
<PAGE>
Documents or such as in the aggregate do not have a material adverse
effect upon the operations, business, properties, or assets of the
Company.
(7) Disclosure Documents. The Disclosure Documents, as of their
--------------------
respective dates, did not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statement therein, in the light of the circumstances under which they
were made, not misleading. During the twelve month period ending on
the date hereof, the Company has timely made all disclosure filings
required by the federal securities laws.
(8) Due Authorization. The Company has full right, power and
------------------
authority to enter into this Agreement and to perform all of its
obligations hereunder as contemplated hereby. All necessary corporate
proceedings of the Company have been duly taken to authorize the
execution, delivery, and performance by the Company of this Agreement.
This Agreement has been duly authorized, executed and delivered by the
Company, is the legal, valid, and binding obligation of the Company,
and is enforceable as to the Company in accordance with its terms
(subject to applicable bankruptcy, insolvency, and other laws
affecting the enforceability of creditors' rights generally and to
general equitable principles). No consent, authorization, approval,
order, license, certificate or permit of or from, or registration,
qualification, declaration or filing with, any federal, state, local,
foreign, or other governmental authority or any court or other
tribunal is required by the Company for the execution, delivery, or
performance by the Company of this Agreement. No consent of any party
to any material contract, agreement, instrument, lease, license,
arrangement, or understanding to which the Company is a party, or to
which any of its properties or assets are subject, is required for the
execution, delivery, or performance of this Agreement, or the
consummation of the transactions contemplated hereby and the
execution, delivery, and performance of this Agreement, and the
consummation of the transactions contemplated hereby, will not
violate, result in breach of, conflict with, or (with or without the
giving of notice or the passage of time or both) entitle any party to
terminate or call a default under any such contract, agreement,
instrument, lease, license, arrangement, or understanding, (except for
any such violation, breach or conflict which has been properly waived
thereunder or would not reasonably be expected to have a material
adverse effect on the Company) or violate or result in breach of any
term of the certificate of incorporation or by-laws of the Company, or
violate, result in a breach of, or conflict with any material law,
-8-
<PAGE>
rule, regulation, order, judgment, or decree binding on the Company or
to which any of its operations, businesses, properties, or assets are
subject (except where such violation, breach or conflict would not
reasonably be expected to have a material adverse effect on the
Company).
(9) No Subsequent Actions. Subsequent to the dates as of which
-----------------------
information is given in the Disclosure Documents, except as set forth
in Schedule 6.c.(9) hereto, the Company has not (A) issued any
-----------------
securities or incurred any liability or obligation, primary or
contingent, for borrowed money, (B) entered into any material
transaction not in the ordinary course of business, or (C) declared or
paid any dividend on its capital stock.
(10) No Defaults; Violations. Except as described in the
--------------------------
Disclosure Documents, no default exists in the due performance and
observance by the Company of any term, covenant or condition of any
material license, contract, indenture, mortgage, deed of trust, note,
loan or credit agreement, or any other material agreement or
instrument evidencing an obligation for borrowed money, or any other
material agreement or instrument to which the Company is a party or by
which the Company may be bound or to which any of properties or assets
of the Company is subject, except where such default is not reasonably
expected to have a material adverse effect on the Company. The Company
is not in violation of any term or provision of its Certificate of
Incorporation or By-Laws or, to the Company's knowledge, in violation
of any material franchise, license, permit, applicable law, rule,
regulation, judgment or decree or any governmental agency or court,
domestic or foreign, having jurisdiction over the Company or any of
its properties or business, except as described in the Disclosure
Documents or where such violation has no material adverse effect on
the business, operations, financial condition and assets of the
Company.
(11) Conduct of Business. The Company has all requisite corporate
-------------------
power and authority, and has all material authorizations, approvals,
orders, licenses, certificates and permits of and from all
governmental regulatory officials and bodies required by the Company
to own or lease properties and conduct its business as described in
the Disclosure Documents, and the Company is and has been doing
business in compliance with all such material authorizations,
approvals, orders, licenses, certificates and permits and all federal,
state and local laws, rules and regulations (except for matters which
are not reasonably expected to have a material adverse effect on the
Company).
-9-
<PAGE>
(12) Title to Property; Insurance. The Company has good title to,
----------------------------
or valid and enforceable leasehold estates in, all items of real and
personal property (tangible and intangible) owned or leased by it,
free and clear of all liens, encumbrances, claims, security interests,
defects and restrictions of any material nature whatsoever, other than
those set forth in the Disclosure Documents, and liens for taxes not
yet due and payable (except for matters which are not reasonably
expected to have a material adverse effect on the Company). The
Company has adequately insured its properties against loss or damage
by fire or other reasonably foreseeable casualty.
(13) Intangibles. Except for matters which are not reasonably
-----------
expected to have a material adverse effect on the Company or as set
forth in the Disclosure Documents, to the Company's knowledge, (i) the
Company owns or possesses the requisite licenses or rights to use all
trademarks, service marks, service names, trade names, patents, patent
applications, copyrights and other rights (collectively,
"Intangibles") described as used or owned by it in the Disclosure
Documents, (ii) there is no pending or threatened claim or action by
any person pertaining to, or which challenges the exclusive right of
the Company with respect to any Intangibles used in the conduct of the
Company's business, (iii) the Intangibles and the Company's current,
products, services and processes do not infringe on any intangibles
rights held by any third party, and (iv) no others have infringed upon
the Intangibles of the Company.
(14) Nasdaq Listing. Except as set forth on Schedule 6.c.(14)
---------------
hereto and other than the direct results of the transactions
contemplated herein, the Company is not aware of any circumstances
which would result in the Common Stock being de-listed from The Nasdaq
SmallCap Market and the Company meets all of the maintenance criteria
for maintaining the listing of the Common Stock on such market. The
other representations and warranties contained in this Section 6.c.
are qualified to the extent affected by the matters set forth in
Schedule 6.c.(14) hereto.
(15) Hart-Scott-Rodino. Each of the Company and the Seller is not
-----------------
a $10 million person under the Hart-Scott- Rodino Antitrust
Improvements Act of 1976.
(16) Resignation of the Board. Simultaneously with the execution
------------------------
of this Agreement, the directors of the Company shall have submitted
their resignations to the Company and shall have elected new members
to the Board, as contemplated in Section 2 hereof.
-10-
<PAGE>
7. Beneficiaries of the Seller. Upon the execution of this Agreement, each
---------------------------
of the beneficiaries of the Seller shall have duly executed and delivered the
letter, the form of which is attached hereto as Exhibit E, pursuant to which
---------
each represents and warrants to the Buyer that, with respect to Seller and the
Shares (but not as to the Other Selling Shareholders and the Additional Shares),
the representations set forth in Section 6.a.(1) and 6.a.(2) herein are true and
the Seller confirms that there are no beneficiaries of the Seller who have any
claim to the Shares other than the signatories to such Exhibit E.
---------
8. Survival; Indemnification
-------------------------
a. Survival. The representations and warranties of the parties hereto
--------
contained in this Agreement shall survive until the first anniversary of the
date hereof and a party seeking indemnity under this Agreement must commence a
claim for indemnification pursuant to Section 8.e. prior to the first
anniversary of the date hereof, in which case, with respect to such claim, the
representation or warranty in respect of which indemnity is sought under this
Agreement shall survive the time at which it would otherwise terminate until
such time as the claim for which indemnification is sought has been finally
resolved and indemnified.
b. Indemnification of Buyer. The Seller, at its sole expense, hereby
------------------------
agrees to indemnify the Buyer and its affiliates against and agree to hold each
of them harmless from any and all damage, loss, liability and expense
(including, without limitation, reasonable expenses of investigation and
reasonable attorneys' fees and expenses in connection with any action, suit or
proceeding) (collectively, "Loss") incurred or suffered by the Buyer or any of
its affiliates arising out of any misrepresentation or breach of warranty,
covenant or agreement made or to be performed by the Seller pursuant to this
Agreement.
The Company, at its sole expense, hereby agrees to indemnify the Buyer
and its affiliates against and agree to hold each of them harmless from any and
all Loss incurred or suffered by the Buyer or any of its affiliates arising out
of any misrepresentation or breach of warranty, covenant or agreement made or to
be performed by the Company pursuant to this Agreement.
Each of the Other Selling Shareholders, at its sole expense, hereby
agrees to indemnify the Buyer and its affiliates against and agrees to hold each
of them harmless from any and all Loss incurred or suffered by the Buyer or any
of its affiliates arising out of any misrepresentation or breach of warranty,
covenant or agreement made or to be performed by the respective Other Selling
Shareholder pursuant to this Agreement.
-11-
<PAGE>
c. Indemnification of Seller and Other Selling Shareholders. Buyer, at
--------------------------------------------------------
its sole expense, hereby agrees to indemnify the Seller, the Other Selling
Shareholders and their affiliates against and agrees to hold each of them
harmless from any and all Loss incurred or suffered by any of them arising out
of any misrepresentation or breach of warranty, covenant or agreement made or to
be performed by Buyer pursuant to this Agreement.
d. Minimum Loss. Notwithstanding anything to the contrary in this
-------------
Agreement, (i) neither the Seller, the Other Selling Shareholders or the
Company, on the one hand, nor the Buyer, on the other hand, shall be required to
indemnify the other under the terms of this Agreement unless and until the
aggregate amount of Loss of the other (which, in the case of the Buyer, includes
the collective Losses of RAS and the RAS Clients) exceeds $100,000, in which
case such indemnification obligations shall apply to all Loss in excess of such
threshold, and (ii), with respect to each of the Seller and the Other Selling
Shareholders, the Buyer may not recover more than the amount of money paid by
the Buyer to such party in consideration for such party's transfer to the Buyer
of the Shares or the Additional Shares, as applicable, pursuant to this
Agreement.
e. Procedures; Exclusivity of Remedies. The party seeking
-----------------------------------------
indemnification (the "Indemnified Party") agrees to give prompt notice to the
party against whom indemnity is sought (the "Indemnifying Party") of the
assertion of any claim, or the commencement of any suit, action or proceeding in
respect of which indemnity may be sought under such Section. The Indemnifying
Party shall have the right to, and at the request of the Indemnified Party
shall, participate in and control the defense of any such suit, action or
proceeding at its own expense; provided, however, that the failure by the
-------- -------
Indemnified Party to give prompt notice shall not release the Indemnifying Party
of its indemnification obligations hereunder, except to the extent such failure
actually prejudices the Indemnifying Party. If the Indemnifying Party does not
so assume control of the defense, the Indemnified Party shall have the right to
defend, contest, settle or compromise such Claim or defend in the exercise of
its exclusive discretion and the Indemnifying Party shall, upon request from any
Indemnified Party, promptly pay to such Indemnified Party the amount of any Loss
as incurred. If the Indemnifying Party does assume control of the defense, the
Indemnifying Party shall have the right to undertake, conduct and control,
through counsel of its own choosing and at its sole expense, the conduct and
settlement of such Claim or demand, and the Indemnified Party shall cooperate
with the Indemnifying Party in connection therewith. The Indemnifying Party may
contest or settle any third-party Claim on such terms as the Indemnifying Party
may choose; however, the Indemnifying Party will not have the right, without the
Indemnified Party's written consent, to settle any such Claim if such settlement
(i) arises from or is part of any criminal action, suit or proceeding, (ii)
contains an admission of wrongdoing on the part of the Indemnified Party, (iii)
provides for injunctive relief which is binding on the Indemnified Party, or
-12-
<PAGE>
(iv) does not fully and unconditionally release the Indemnified Party with
respect to such Claim. For the purposes of this Agreement, "Claim" means any
claim, lawsuit, demand, suit, hearing, governmental investigation, notice of a
violation, litigation, proceeding, arbitration or other dispute, whether civil,
criminal, administrative or otherwise. The Indemnifying Party and the
Indemnified Party shall cooperate in determining the validity of any Claim for
any Loss for which a Claim of indemnification may be made hereunder. Each party
shall also use all reasonable efforts to minimize all Loss. In any case, the
Indemnifying Party and the Indemnified Party shall cooperate and assist each
other in such defense, and shall make available to the other all records,
documents and information (written or otherwise) relevant to such defense.
9. Miscellaneous
-------------
a. Notices. Any notices or other communications required or permitted
-------
hereunder shall be in writing and shall be deemed to have been duly given or
made as of the date of receipt and shall be delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested), sent
by overnight courier or sent by telecopy, in the case of the Seller and the
Beneficiaries of the Estate of Stephen Friedman, to c/o William Immerman,
Executor, 1999 Avenue of the Stars, Suite 1250, Los Angeles, CA 90067,
attention: William Immerman, facsimile: 310-277- 0653, in the case of the Buyer,
to RAS Securities Corp., 50 Broadway, New York, New York, attention: Fredrick
Schulman, Executive Vice President, facsimile: 212-785-3331 with a copy to
Fischbein Badillo Wagner Harding, 909 Third Avenue, New York, NY 10022,
Attention: Joseph L. Cannella, Esq., facsimile: (212) 644- 3603, in the case of
the Company, to Guth Rothman & Christopher LLP, 10866 Wilshire Boulevard, Suite
1250, Los Angeles, CA 90024, Attn: Theodore E. Guth, Esq., facsimile: (310)
470-8354, in the case of FAB Capital Corporation, 1461 First Avenue, Suite 293,
New York, New York 10021, attention: Phillip Cook, President, facsimile
212-785-3232, with a copy to c/o RAS Securities Corp., 50 Broadway, New York,
New York, facsimile: 212-785-3331 and with a copy to Fischbein Badillo Wagner
Harding, 909 Third Avenue, New York, NY 10022, Attention: Joseph L. Cannella,
Esq., facsimile: (212) 644-3603, and in the case of the Other Selling
Shareholders, to the addresses set forth with respect to each in Exhibit A
---------
hereto.
b. Amendment. This Agreement may not be amended or modified except by
---------
an instrument in writing signed by the parties or third party beneficiaries
hereto who are affected by such amendment or modification.
c. Governing Law. This Agreement shall be governed by the laws of the
-------------
State of New York without regard to conflicts of law principles.
-13-
<PAGE>
d. Submission to Jurisdiction. Each party hereby consents to the
----------------------------
jurisdiction of the United States District Court for the Central District of
California and any of the courts of the State of California in Los Angeles
County in connection with any dispute arising under this Agreement; provided,
however, that, in connection with any claim or dispute brought by or against the
RAS Clients under this Agreement, each party hereby consents to the jurisdiction
of the United States District Court for the Southern District of New York and
any of the courts of the State of New York in New York County.
e. Entire Agreement. This Agreement sets forth the entire agreement
-----------------
and understanding of the parties hereto in respect of the subject matter
contained herein, and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by the parties hereto or their representatives.
f. Singular/Plural Tense. In the event there is only one Other Selling
---------------------
Shareholder listed on Exhibit A hereto, reference to more than one Other Selling
---------
Shareholder in this Agreement should be construed in the singular and, in the
event no Other Selling Shareholder is listed in Exhibit A hereto, reference to
---------
Other Selling Shareholders in this Agreement shall have no effect.
g. Third Party Benefits. RAS and each of the RAS Clients shall be
----------------------
beneficiaries of the representations, warranties and covenants made to the Buyer
herein and the rights of indemnification accruing to the Buyer hereunder. Except
as provided by this Section 9.g., by Section 3 and by Exhibits C and F to this
----------------
Agreement, none of the provisions of this Agreement shall be for the benefit of,
or enforceable by, any third party beneficiary.
h. No Assignment. Except as may otherwise be contemplated herein, none
-------------
of the parties may assign any of his or its rights under this Agreement without
the prior written consent of the other parties, which shall not be unreasonably
withheld; provided, however, that any assignment of rights will not relieve the
assigning party of any liabilities or obligations under this Agreement.
i. Successors and Assigns. Except as provided herein to the contrary,
----------------------
this Agreement shall be binding upon and inure to the benefit of the parties,
their respective successors and permitted assigns.
j. Attorneys' Fees. In any dispute between the parties hereto or their
---------------
representatives concerning any provision of this Agreement or the rights and
duties of any person or entity hereunder, the party or parties prevailing in
such dispute shall be entitled, in addition to such other relief as may be
-14-
<PAGE>
granted, to the attorneys' fees and court costs incurred by reason of such
dispute.
k. Waivers Strictly Construed. With regard to any power, remedy or
----------------------------
right provided herein or otherwise available to any party hereunder (i) no
waiver or extension of time will be effective unless expressly contained in a
writing signed by the waiving party; and (ii) no alteration, modification or
impairment will be implied by reason of any previous waiver, extension of lime,
delay or omission in exercise, or other indulgence,
l. Severability. The validity, legality or enforceability of the
------------
remainder of this Agreement will not be affected even if one or more of the
provisions of this Agreement will be held to be invalid, illegal or
unenforceable in any respect.
m. Counterparts; Facsimile Signatures. This Agreement may be executed
-----------------------------------
simultaneously in two or more counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same instrument,
and delivery of executed copies hereof shall be deemed made upon delivery of
signatures by facsimile transmission.
-15-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
THE SELLER: ESTATE OF STEPHEN FRIEDMAN
/s/
By: __________________________
Name: William Immerman
Title: Executor of the Will of
Stephen J. Friedman
THE BUYER: RAS SECURITIES CORP.
/s/
By: ____________________________
Name: Fredrick Schulman
Title: Executive Vice President
THE COMPANY: KINGS ROAD ENTERTAINMENT, INC.
/s/
By: ________________________________
Name: Kenneth Aguado
Title: Chief Executive Officer
AGREED ONLY AS TO SECTION 3: FAB CAPITAL CORPORATION
/s/
By: ______________________________
Name: Phillip G. Cook
Title: President
-16-
<PAGE>
OTHER SELLING SHAREHOLDERS:
/s/
______________________________
CHRISTOPHER TRUNKEY
-17-
<PAGE>
EXHIBIT A
OTHER SELLING SHAREHOLDERS
Total Shares to be
Shares Purchased Address
Name Owned by Buyer (90%) for Notice
- - - ---------------------- ----------- ---------------- -------------------------
Christopher Trunkey 8,333 7,500 c/o Kings
Road,
Entertainment,
Inc. (same as
address for
the Company)
Totals 8,333 7,500
<PAGE>
EXHIBIT B
Professional Biographies of New Directors
[Biographies of Phillip Cook and James Leaderer have been excluded from
filing.}
<PAGE>
EXHIBIT C
MUSIC ACTION LTD.
Paul-Ehrlich-Str. 16-20/A2
63322 Rodermark, Germany
[ ], 1998
Kings Road Entertainment, Inc.
1901 Avenue of the Stars, Suite 1545
Los Angeles, California 90067
Dear Sirs:
In connection with the Stock Acquisition Agreement (the "Acquisition
Agreement"), dated the date hereof, by and among the Estate of Stephen Friedman,
RAS Securities Corp. (acting for itself and the RAS Clients), Kings Road
Entertainment, Inc., certain of its shareholders and FAB Capital Corporation, we
hereby agree, on our own behalf and on behalf of the MAC Fund (the "Fund") for
which we serve as exclusive manager with discretionary authority to commit and
invest Fund assets, that we, or the Fund will make or cause to be made a bona
fide offer to purchase (the "Purchase Offer") from each shareholder of record of
the Company other than the Seller, and the Additional Selling Shareholders, RAS,
the RAS Clients and any shareholder who directly or indirectly obtains any
shares from RAS or the RAS Clients (except to the extent such shareholder holds
shares acquired from a person other than RAS or the RAS Clients) (the "Record
Shareholders") up to 90% of each Record Shareholder's shares of Common Stock at
a per share price equal to the Purchase Price, or an aggregate purchase price
(assuming that all such shareholders elect to sell 90% of their shares of Common
Stock) equal to approximately $1,800,000. The purchase of the Record
Shareholder's shares as contemplated hereunder is referred to as the "Share
Purchase."
The Purchase Offer will be made as soon as practicable but in any event
within the 120-day period immediately following the date hereof provided that
the Purchase Offer is conditioned on (i) the absence of an injunction from a
court of competent jurisdiction enjoining the Share Purchase and (ii) there
being no breaches of representations and warranties of the Seller, the Other
Selling Shareholders or the Company which, in the aggregate, are reasonably
likely to result in collective damages or losses to the Company in excess of
$500,000. Notwithstanding anything to the contrary in this letter, in the event
that the Purchase Offer cannot be made within ninety (90) days of the date
hereof, we will immediately cause a deposit of not less than $1,800,000 to be
made into an escrow account to be established by the Company, the proceeds of
which will be reserved for and applied to consummate the Share Purchase, upon
the making of which deposit we will be released from all obligations under this
letter.
<PAGE>
Music Action Ltd., on its own behalf and on behalf of the Fund,
represents, warrants and covenants to you that Music Action Ltd. has a net worth
of at least $2,000,000 and the Fund has the ability to invest up to $40 million
of irrevocably committed funds and Music Action Ltd. has, and will have for at
least 120 days, cash, cash equivalents and/or credit lines equal to $1,800,000
and will use such $1,800,000 for the Share Purchase unless other funds become
available to us to pay for the Share Purchase.
We intend that the Record Shareholders will be third party
beneficiaries of our obligations set forth in this letter.
This letter shall be governed by the laws of the State of New York
without regard to conflicts of law principles.
We consent to the jurisdiction of any federal or state court located in
the State of California in connection with any dispute arising under this
letter.
Capitalized terms used and not defined herein have the meanings
ascribed to them in the Acquisition Agreement.
Very truly yours,
MUSIC ACTION LTD.
By:
Name: Bernd Schmidt
Title: Managing Director
<PAGE>
EXHIBIT D
CONSULTING AGREEMENT WITH KENNETH AGUADO
CONSULTING AGREEMENT
CONSULTING AGREEMENT, dated as of November ___, 1998, by and between
Kings Road Entertainment, Inc., a Delaware corporation having offices at 1901
Avenue of the Stars, Los Angeles. CA 90067 (the "Company"), and Kenneth Aguado,
having an address at
("Consultant").
WHEREAS, Consultant has previously served as Chief Executive
Officer of Company;
and
WHEREAS, Company wishes Consultant to provide certain services to
Company, and Consultant wishes to provide such services to Company;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto covenant and
agree as follows:
1. Purpose.
Company hereby retains Consultant and Consultant hereby agrees
to be retained by Company to render non-exclusive consulting services
("Services") in connection with the acquisition and development by Company of
new literary properties for development as theatrical and/or television motion
pictures ("Projects"), upon the terms and conditions set forth hereinbelow.
2. Term.
The term of this Agreement shall be effective for the period
of one year commencing on the date hereof and ending on the first anniversary of
such date and shall thereafter be extended for successive one-year periods upon
the mutual consent of the parties hereto, evidenced in writing, (the "Term").
3. Duties of Consultant.
a. During the Term, Consultant shall provide Company with the
Services and agrees to perform the Services to the best of his ability and in
accordance with the reasonable directions of Company, and shall report directly
to the President, or if the President so directs, to Company's Board of
Directors. Services shall include Consultant submitting in writing proposals
("Proposals") to Company for its review, involving literary properties which
<PAGE>
Consultant wishes to develop as theatrical and/or television motion pictures and
which Consultant believes in good faith are freely available for acquisition by
Company. Consultant shall submit all such Proposals to Company in writing and
shall not present such Proposals to third parties except as set forth herein.
Each such proposal shall be a bonafide submission made in good faith as to
Consultant's intent to develop the Project and set forth the manner (as of the
date of such Submission) that Consultant would like to develop such project
(i-e., as opposed to Consultant just submitting a list of such Projects).
b. It is understood and acknowledged by the parties hereto
that Consultant shall be obligated to render the Services in good faith,
provided, however, that nothing contained herein shall be deemed to bar
Consultant from submitting Proposals concerning Projects to third parties in
compliance with the terms of Sections 4.c, and 4.d hereof. However, all
Proposals concerning Projects shall first be submitted to the Company as
provided herein.
c. Consultant shall not have any authority to bind Company by
any promise or representation or otherwise.
4. Compensation; Benefits; Expenses.
a. As compensation for all of the Services required to be
rendered to Company by Consultant during the Term, Company shall pay Consultant
a fee of Ten Thousand Dollars ($10,000.00) per month (the "Consulting Fee"). The
Consulting Fee shall be paid by Company to Consultant on the first business day
of each month in arrears throughout the Term or, at the option of Company, may
be prepaid for any number of months. In connection with any Project Proposed by
Consultant pursuant to Paragraph 4.c. and 4.d. hereof, and developed by the
Company pursuant to such Proposal, including, without limitation, Projects (i)
currently owned and/or controlled by Company and listed on Schedule "A" and (ii)
to be acquired (to the extent not already owned and/or controlled by Company)
and/or accepted for development by Company, Consultant shall be engaged as a
producer (if a theatrical or direct-to-video motion picture) or an executive
producer (if a television motion picture or series) with respect to each such
Project in accordance with terms and conditions (other than terms and conditions
related to Consultant's compensation and credit which are addressed below)
customary in the motion picture industry for a person of Consultant's stature
(e.g., taking into account Consultant's then current deals), Consultant shall be
accorded on-screen and paid ad credit as a producer of each such Project
developed as a theatrical or direct-to-video motion picture and as an executive
producer of each such Project developed as a television motion picture or series
and Company shall pay to Consultant such additional compensation as may be
agreed upon by the parties after good faith negotiation, but, except for (i)
Projects currently owned and/or controlled by the Company and listed on Schedule
"A" (the "Schedule A Projects") and (ii) the Projects referred to in Paragraph
4.e., in no event less than the following:
2
<PAGE>
i. A fixed producer fee equal to the amount that
is 4% of the final budget for the applicable motion picture (but in no event
shall such fixed fee be less than $25,000); and
ii. A contingent fee as follows:
A. 2 1/2% of 100% of all gross receipts
after initial breakeven, initial breakeven to be determined based on a
20% distribution fee notwithstanding that a higher fee applies;
B. Escalating to 5% of 100% of all gross
receipts after initial breakeven, breakeven to be based on a 25%
distribution fee notwithstanding that a higher fee applies; and
C. Applicable against 50% of 100% of all net
profits reduced by all gross and net profit participations payable to third
parties providing services or rights in connection with the applicable motion
picture to a "soft floor" of 20% and a "hard floor" of 10%.
b. At the option and upon request of Consultant, Company shall
provide Consultant with a private office at the Company's headquarters,
telephone and other general office support services. Such office, telephone and
office support services shall be at a level consistent with those currently
being provided to Consultant as Chief Executive Officer of Company.
c. Company shall have a period of ten (10) business days
(reducible to not less than two (2) business days for so-called "hot properties"
(e.g., properties submitted by multiple third-party producers simultaneously,
etc.)) following Consultant's submission to Company of a Proposal with respect
to any Project not currently owned and/or controlled by Company to commit in
writing to pursue the acquisition of such Project and the development of such
Project as a theatrical, direct-to-video and/or television motion picture or
television series. If Company does not elect in writing to pursue such Project
in any of such mediums by the close of business on the last day of such period
(or if after pursuing such Project in good faith Company is unable to acquire
such Project after a reasonable time), such Project shall be deemed rejected by
Company and Consultant shall have no further obligations to Company with respect
to such Project, except that if Consultant introduces a substantial change to
such project (for example, change of director, budget or cast, but excluding
changes to Consultant's compensation with respect to such Project, unless the
fixed portion of such Consultant's compensation with respect to such Project is
computed as a percentage of the final budget and such percentage is a lesser
percentage than as set forth in Paragraph 4.a. hereof before such Project is
optioned or acquired by a third party, Consultant shall resubmit such project to
Company with such substantial change in accordance with this Paragraph 4.c.
except that the period of Company's review for such resubmission shall be
reduced to no more than five (5) business days.
3
<PAGE>
d. Consultant may also submit to Company Proposals with
respect to one or more of the Schedule A Projects which are currently owned
and/or controlled by Company. Notwithstanding anything to the contrary herein
contained, Consultant shall not submit any such Schedule A Projects to Company
earlier than thirty (30) days after the date hereof and Consultant shall not
submit to Company more than three (3) such Projects in each month of the Terms
thereafter. Company shall have a period of thirty (30) days following
Consultant's submission to Company of a Proposal with respect to a Schedule A
Project to commit in writing to pursue the active development of such Project as
a theatrical, direct-to-video and/or television motion picture and/or as a
television series. If Company does not elect in writing to so commit to such
Project in any of such mediums by the close of business on the last day of such
period, Consultant shall have an irrevocable, exclusive option for a period
equal to the earlier of (i) two (2) years from the last day of such period; or
(ii) the expiration of the six (6) month period referenced in Paragraph 15
hereof to acquire all of Company' s fights to such Project or to convey to a
third party production company, distributor, financier, etc. ("Third Party
Buyer") an exclusive and irrevocable option for a period of up to one (1) year
(extendable by an additional period of up to one (1) year) to acquire Company's
rights to such Project with such options, whether to Consultant or such Third
Patty Buyer, being exercisable upon repayment to Company of an amount not less
than all of its actual unrecouped out-of-pocket expenses with respect to such
Project and upon such repayment to Company Consultant shall have no further
obligations to Company with respect to the applicable Project except as set
forth in Paragraph 4.e. hereof.
e. All monies and other items of value actually received by
Company and/or Consultant from a Third Patty Buyer with respect to the rights to
a Project referenced in Paragraph 4.d. above (and from Regal Productions and/or
its successors and assigns with respect to the "Kickboxer" project currently in
development with Regal Productions and from PolyGram and/or its successors and
assigns with respect to the "Winesburg, Ohio" project currently in development
with PolyGram) and including with respect to the provision by Consultant of
producing Services or for any other reason, excluding amounts paid to Consultant
as reimbursement of out-of-pocket expenses paid to third parties in connection
with such Project, shall as between Company and Consultant be allocated, paid
and accounted for as follows:
(i) The first $50,000 shall be paid 1/2 to
Consultant and 1/2 to Company;
(ii) Such monies thereafter received shall be paid
to Company until it has recouped its theretofore unrecouped, actual, direct,
out-of-pocket expenses with respect to the acquisition and/or development of
such Project excluding interest, overhead, or other non-direct charges;
4
<PAGE>
(iii) Such monies thereafter received shall be
paid to Consultant until Consultant has actually received pursuant to this
Paragraph 4.e.(iii) an aggregate amount equal to the aggregate amount
theretofore paid to Company pursuant to Paragraphs 4.e.(ii) above; and
(iv) The balance of such monies thereafter received
shall be paid 1/2 to Consultant and 1/2 to Company.
f. In addition to the Consulting Fee, Company shall reimburse
Consultant for all out-of-pocket expenses incurred in performing Services
pursuant to this Agreement ("Monthly Expenses"), subject, however, to Company's
prior written authorization with respect to travel expenses and for any expenses
exceeding an aggregate of $1,000 in any one-month period.
g. At the end of each month, Consultant shall submit a report
detailing his Monthly Expenses, together with the receipts therefor, to Company
and Company shall thereafter provide reimbursement by the thirtieth (30th)] day
of the immediately following month.
h. Consultant shall be responsible for the payment of all
federal, state and local taxes, including F.I.C.A. and income taxes, payable on
any fees paid by Company to Consultant hereunder.
i. Company shall pay or, at Consultant's election, reimburse
Consultant for the cost of medical insurance for Consultant and his family
during the Term. Such medical insurance shall be on terms at least as favorable
to Consultant and his family as the medical insurance currently being provided
to Consultant by Company.
j. Notwithstanding anything to the contrary herein contained,
Consultant may submit written proposals to Company with respect to Projects
owned and/or controlled by Company but not listed on Schedule "A," including for
the development of Projects based upon the ancillary and subsidiary rights
(e.g., remake, sequel and series rights) to motion pictures currently owned
and/or controlled by the Company. In such case, if the Company decides to
proceed with any such Project, the Company will pay to Consultant such
additional compensation and accord Consultant such credit as agreed upon. If
Company elects not to pursue the active development of any such Projects,
Consultant shall not obtain any right to option or acquire and/or convey to a
Third Party Buyer the right to option or acquire Company's rights to such
project.
5. Confidential Information.
Consultant acknowledges that he has had access to and has
become acquainted with, and during the Term will have access to and become
acquainted with, Company's confidential records, secrets and other proprietary
information not readily available to the public,
5
<PAGE>
including, without limitation, business plans, Projects in which Company has
rights, is developing or licensing (whether alone or in conjunction with others)
or which are or have been under consideration by Company, names of Company's
employees, customer and supplier lists and other matters. Except as set forth
herein to the contrary, Consultant hereby agrees that all such information is
the sole and exclusive property of Company, regardless of whether or not
Consultant developed such information for Company before or during the Term and
that Consultant will not use any such confidential information other than in the
course of providing the Services to Company pursuant to this Agreement.
Consultant further agrees that upon expiration or termination of this Agreement,
Consultant shall not take or use ally such confidential information, records or
files of Company, and Consultant will return to Company all such records and
files that it may have previously removed to assist in providing the Services
pursuant to this Agreement. Anything contained herein to the contrary
notwithstanding, Consultant shall have the right to present or recommend
Projects, including without limitation Projects currently owned and/or
controlled by Company and listed on Schedule "A," to others as provided in
Sections 4.c. and, 4.d. hereof and to advise third parties as to the amount of
monies expended by Company in connection with such Projects, and to provide
third parties with copies of all agreements, including without limitation,
chain-of- title agreements, pertaining or relating to such Projects, and with
copies of all literary materials, budgets, location information, and other
materials and information concerning such Projects in order to enable such third
parties to acquire, finance, develop, produce, produce, market and exploit such
Projects.
6. Restrictive Covenants.
a. Except as otherwise specified herein, during the Term and
at all times thereafter, Consultant agrees not to (i) disclose or divulge to any
person or entity any trade secret or know-how relating to the business or
operations of Company (the "Business"), or any of Company's confidential or
proprietary information, including, without limitation, the information referred
to in Section 5 hereof, or (ii) engage in any willful act which is materially
adverse to the business interests of Company.
b. Consultant hereby specifically acknowledges and agrees that
the restrictive covenants set forth in Section 5 hereof and this Section 6 are
material provisions relied upon by Company in entering into this Agreement.
c. Consultant specifically acknowledges that it has been
advised by Company to review this Agreement with its counsel, and that
Consultant has satisfied itself that the restrictive covenants set forth in this
Agreement are reasonable in all respects.
6
<PAGE>
d. Consultant acknowledges and agrees that a violation of any
covenant contained in this Agreement shall cause irreparable harm to Company,
and that Company shall be entitled to specific performance of this Agreement or
an injunction without proof of special damages, together with the costs and
reasonable attorney's fees incurred by Company in enforcing its rights and to
prevent or halt a violation of Consultant's obligations under this Agreement. It
is expressly understood and agreed by the parties hereto that nothing contained
herein shall be construed as prohibiting Company from pursuing any other
remedies available for a breach or threatened breach of this Agreement,
including without limitation, the recovery of damages by Company.
7. Notices.
Any notice or other communication given under this Agreement
shall be in writing and shall be deemed given to a party three (3) days
following the deposit thereof in the U.S. mail if sent from the Continental
United States by certified or registered mail, return receipt requested, postage
prepaid, or the next following business day after being sent by a nationally
recognized overnight courier service, if addressed to such party at the address
of such party set forth below, or such other address which such party may
Specify by notice given pursuant to this Section 7:
If to Company:
Kings Road Entertainment 1901 Avenue
of the Stars Los Angeles, CA 90067
Attention:
With a copy to:
Fischbein Badillo Wagner Harding
909 Third Avenue
New York, NY 10022
Attention: Joseph L. Cannella, Esq.
If to Consultant:
Kenneth Aguado
With a copy to:
Manart, Phelps & Phillips, LLP
11355 West Olympic Boulevard
Los Angeles, CA 90064
Attention: Laurence M. Marks, Esq.
7
<PAGE>
8. Independent Contractor.
It is expressly understood and agreed by the parties hereto
that Consultant's relationship to Company is that of an independent contractor
and that neither this Agreement nor the Services to be rendered hereunder shall,
for any purpose whatsoever, or in any way or manner or for any purpose
constitute "wages" or create an employer-employee relationship between Company
and Consultant.
9. Non-Waiver.
The failure or refusal of any party hereto to insist upon the
strict performance of any provision of this Agreement, or to exercise any right
in any one or more instances or circumstances shall not be construed as a waiver
or relinquishment of such provision or right, nor shall such failure or refusal
be deemed a custom or practice contrary to such provision or right.
10. Severability.
If any section, term or provision of this Agreement shall be
held or determined to be unenforceable, the balance of this Agreement shall
nevertheless continue in full force and effect unaffected by such holding or
determination. In addition, in any such event, the parties hereto agree that it
is their intention and agreement that any such section, term or provision which
is held or determined to be unenforceable as written, shall nonetheless be
enforced and binding to the fullest extent permitted by law as though such
section, term or provision had been written in such a manner and to such an
extent as to be enforceable under the circumstances. Without limitation of the
foregoing, with respect to any restrictive covenant contained herein, if it is
determined that any such provision is excessive as to duration or scope, it is
intended that it nonetheless be enforced for such shorter duration or with such
narrower scope as will render it enforceable.
11. Assignability.
No party hereto may assign this Agreement, but as contemplated
hereunder Consultant may exercise or permit third parties to exercise
Consultant's option to acquire the Schedule A Projects and/or convey to Third
Party Buyer(s) exclusive options to acquire Company's fights in such Projects,
provided that in such case such Third Party Buyer assumes Consultants obligation
with respect to such Project hereunder. Consultant may not delegate the
performance of any of its duties hereunder. Any such purported delegation or
assignment shall be null and void and of no force or effect.
8
<PAGE>
12. Public Disclosure: Statements.
Consultant agrees that it shall make no statement which
detracts from the reputation or is otherwise critical of, or is in any manner
harmful to, Company, any of its affiliates or any director, officer, consultant,
employee or other agent of Company or any of its affiliates. As used in the
Agreement, the term "affiliate" shall mean any person, corporation, partnership,
trust or other entity controlling, controlled by, or under common control with,
Company.
13. Governing Law.
This Agreement has been prepared and negotiated in the State
of California and shall be governed by and construed in accordance with the laws
of the State of California, without giving effect to the principles thereof
relating to the conflict of laws. Each party hereto consents to the service of
process in any action or legal proceeding on such party by means of registered
or certified mail, return receipt requested, in care of the address for such
party set forth in Section 9 hereof or such other address as such party may
designate for notice pursuant to the terms of said Section 9.
14. Headings.
The headings herein are for reference purposes only and shall
not affect in any way the meaning and interpretation of this Agreement.
15. Termination; Survival.
a. If Consultant actually renders exclusive services to a
third party other than with respect to Projects referenced in Paragraph 4.d.
hereof Company shall have the right, but not the obligation, to terminate the
agreement within five (5) business days of being advised or made aware that
Consultant is rendering such exclusive services.
b. The provisions of Sections 4.h., 5 through 10, and 12
through 17 and Consultant's options to acquire Company's Projects pursuant to
the terms hereof shall survive the termination of this Agreement, in whatever
manner it may occur, for a period of six (6) months. Notwithstanding anything
herein to the contrary including, without limitation the preceding sentence,
(i) If Consultant is in active negotiations with a
Third Party Buyer for the acquisition and/or option by such Third Party Buyer of
a Schedule A Project at the end of such six month period then Consultant shall
have a period of up to 60 days to complete such negotiations and enter into an
agreement with such Third Patty Buyer for such acquisition and/or option; and
9
<PAGE>
(ii) Consultant's rights with respect to Projects
"set-up" (e.g., placed in development) with Company prior to the termination of
this Agreement shall survive the termination of this Agreement (e.g., the right
to be employed as a producer (or executive producer) and be compensated and
accorded credit it in accordance with this Agreement; and
(iii) Third Party Buyer's rights to Company's
Projects as provided in this Agreement shall not be changed, modified and/or
affected in any way by the termination of this Agreement, including without
limitation, Consultant's rights to be employed as producer (or executive
producer), and be compensated and accorded credit in accordance with this
Agreement.
16. INTENTIONALLY DELETED.
17. Entire Agreement.
This Agreement sets forth the entire agreement among the
parties hereto with respect to the matters set forth herein. This Agreement, and
any provisions hereof, may not be changed, altered, waived, modified or amended
except in a writing signed by both parties.
This Agreement may be executed in counterparts, which together
shall constitute one and the same document.
(SIGNATURES ON NEXT PAGE)
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
COMPANY:
KINGS ROAD ENTERTAINMENT, INC.
By:/s/ James Leaderer
Name: James Leaderer
Title:
CONSULTANT:
/s/
------------------------------
KENNETH AGUADO
<PAGE>
EXHIBIT E
[ ], 1998
RAS Securities Corp.
50 Broadway
New York, NY 10004
The RAS Clients
Dear Sirs:
In connection with the Stock Acquisition Agreement (the "Acquisition
Agreement"), dated the date hereof, by and among the Estate of Stephen Friedman,
RAS Securities Corp. (acting for itself and the RAS Clients), Kings Road
Entertainment, Inc., certain of its shareholders and FAB Capital Corporation,
each of the undersigned, being all of the beneficiaries of the Seller having any
rights to the Shares, jointly and severally represent and warrant to each of RAS
and the RAS Clients that, with respect to the Seller and the Shares (but not as
to the Other Selling Shareholders and the Additional Shares), the
representations set forth in Section 6.a.(1) and 6.a.(2) of the Acquisition
Agreement are true correct as of the date hereof and there are no residual
beneficiaries with regard to the Shares.
This letter shall be governed by the laws of the State of New York without
regard to conflicts of law principles.
We consent to the jurisdiction of any federal or state court located in the
State of California in connection with any dispute arising under this letter.
Capitalized terms used and not defined herein have the meanings ascribed to
them in the Acquisition Agreement.
Very truly yours,
THE BENEFICIARIES: --------------------------
KENNETH AGUADO
--------------------------
SUSAN AGUADO
---------------------------
JOAN SHAPIRO
<PAGE>
EXHIBIT F
LIST OF RAS CLIENTS
Western Union Leasing Ltd.
FAB Capital Corp.
MBO Music Verlag GmbH
<PAGE>
EXHIBIT G
[ ], 1998
Kings Road Entertainment, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
The Estate of Stephen Friedman
The Other Selling Shareholders
Dear Sirs:
In connection with the Stock Acquisition Agreement (the "Acquisition
Agreement"), dated the date hereof, by and among the Estate of Stephen Friedman,
RAS Securities Corp. (acting for itself and the RAS Clients), Kings Road
Entertainment, Inc., certain of its shareholders and FAB Capital Corporation,
each of the undersigned, being the RAS Clients, represents and warrants to the
Company, the Seller and each of the Other Selling Shareholders, with respect to
the Shares being purchased by each under the Acquisition Agreement, the
representations set forth in Section 6.b. of the Acquisition Agreement are true
correct as of the date hereof.
This letter shall be governed by the laws of the State of New York without
regard to conflicts of law principles.
We consent to the jurisdiction of any federal or state court located in the
State of New York in connection with any dispute arising under this letter.
Capitalized terms used and not defined herein have the meanings ascribed to
them in the Acquisition Agreement.
Very truly yours,
-------------------------
--------------------------
<PAGE>
Schedule 6.c.(3)
The Company's 1998 Stock Option Plan authorizes 400,000 shares of
Common Stock to be issued pursuant to such plan. Contemporaneously with the
execution of this Agreement, the Company is making an aggregate cash payment of
$113,754 to the holders of options to purchase 100,667 shares of Common Stock
and such cash payment shall be in complete satisfaction of such options. No
other options are outstanding.
<PAGE>
Schedule 6.c.(4)
----------------
None.
<PAGE>
Schedule 6.c.(9)
----------------
See Schedule 6.c.(3)
<PAGE>
Schedule 6.c.(14)
-----------------
The matters described in the attached letter from the Nasdaq Stock Market to the
Company, dated October 9, 1998.
[The text of the letter from Nasdaq to the Company has been excluded from
filing.]
EXHIBIT 10(b)
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated November 9, 1998, by and among
WESTERN UNION LEASING LTD., an Irish corporation, having an address at 10
Greycoat Place, 1 Premier House, London SW1 England ("Western"), FAB CAPITAL
CORP., an Iowa corporation, having an address at 1461 First Avenue, Suite 293,
New York, NY 10021 ("FAB"), MBO MUSIC VERLAG GmbH, a German company organized
under the laws of the Federal Republic of Germany, having an address at Gerauer
Street 58, Moerfelden-Waldorf, Germany 64546 ("MBO"), KINGS ROAD ENTERTAINMENT,
INC., a Delaware corporation, having an address at 1901 Avenue of the Stars, Los
Angeles, CA 90067 ("Buyer"), and IMMEDIATE ENTERTAINMENT GROUP, INC., a Nevada
corporation, having an address at Paul- Erlich-Str. 16-20/AZ D-63322 Rodermak,
Germany (the "Company").
WHEREAS, Buyer wishes to purchase from each of Western, FAB
and MBO (each, a "Seller," and collectively, "Sellers"), and each Seller wishes
to sell to Buyer, the number of shares of common stock of the Company, par value
$.001 per share ("Common Stock"), set forth opposite such Seller's name on
Exhibit A, attached hereto and made a part hereof, (collectively, the "Shares");
NOW, THEREFORE, the in consideration of the premises and the
mutual covenants and agreements contained herein, the parties hereto do hereby
agree as follows:
1. Purchase of Shares.
a. Subject to the terms and conditions set forth herein, and
in reliance upon the representations, warranties and agreements of the Company
and each Seller contained herein, Buyer agrees to purchase from each Seller, and
each Seller, in reliance upon the representations, warranties and agreements of
Buyer and the Company contained herein, agrees to sell to Buyer, at a closing
(the "Closing") to take place on the date hereof (the "Closing Date"), the
number of Shares owned by such Seller (such "Seller's Shares") for the Purchase
Price, as defined below.
b. Purchase Price. Simultaneously with the execution and
delivery hereof, as consideration for the Shares, Buyer shall pay to Sellers, an
aggregate of Two Million Five Hundred Ten Thousand Eight Hundred and Two and
67/100 Dollars ($2,510,802.67), to be paid to each Seller as set forth the under
the heading "Seller's Cash Price" on Exhibit A hereto, and an aggregate of
1,477,567 shares of common stock of Buyer, par value $.01 per share
(collectively, "Buyer's Shares"), to be issued to each Seller as set forth under
the heading "No. of Buyer's Shares" on Exhibit A hereto. For this purpose, the
Buyer and the Sellers have valued the Buyer's Shares at an aggregate of Three
Million Four Hundred Seventy-Two Thousand Two Hundred Eighty-Four and 90/100
Dollars ($3,472,284.90). At the Closing, the cash portion of the Purchase Price
shall be paid by Buyer to each Seller in the amount set forth under the heading
"Seller's Cash Price" opposite each Seller's name (such "Seller's Cash Price")
<PAGE>
on Exhibit A hereto. At the Closing, each Seller shall transfer to Buyer the
number of Seller's Shares set forth opposite such Seller's name under the
heading "No. of Seller's Shares" on Exhibit A hereto.
c. Deliveries at Closing. At Closing or as soon as practicable
thereafter, Buyer shall pay to each Seller such Seller's Cash Price by delivery
to such Seller, at such Seller's option, either a certified or bank check or by
wire transfer to an account designated by such Seller in the amount of such
Seller's Cash Price. At Closing or as soon as practicable thereafter, Buyer
shall issue such number of Buyer's shares to each Seller as set forth under the
heading "No. of Seller's Shares" set forth opposite each Seller's name on
Exhibit A hereto by delivering to each Seller the stock certificate(s)
representing number of Buyer's Shares to be issued to such Seller hereunder. At
Closing, each Seller shall deliver to Buyer the stock certificate(s)
representing such Seller's Shares, with stock power(s) duly endorsed in blank,
for transfer with all necessary stock transfer stamps affixed.
2. Board Approvals. At or prior to the Closing, the Board of Directors
of the Company shall approve the sale of the Shares by Sellers to Buyer pursuant
to the terms of this Agreement, and at or promptly after the Closing, the
Company shall deliver to Buyer resolutions of the Company's Board of Directors
evidencing such authorization, which resolutions shall be certified to be true
and correct by the Secretary of the Company. At or prior to the Closing, the
Board of Directors of Buyer shall approve the issuance of Buyer's Shares to
Sellers pursuant to the terms of this Agreement, and at or promptly after the
Closing, Buyer shall deliver to the Company resolutions of Buyer's Board of
Directors evidencing such authorization, which resolutions shall be certified to
be true and correct by the Secretary of Buyer.
3. Representations and Warranties
a. Representations and Warranties of Each Seller. Each Seller
hereby represents and warrants to Buyer that:
(i) Title to Shares. Immediately prior to the
transfer of such Sellers Shares pursuant hereto, such Seller
will have good and valid title to such Seller's Shares, free
and clear of all liens, claims and encumbrances of any nature,
and upon delivery of certificates representing such Seller's
Shares and payment therefor pursuant to the terms of this
Agreement, good and valid title to such Sellers' Shares will
be transferred to Buyer free and clear of all liens, claims
and encumbrances.
(ii) Due Authorization. Each Seller has full right,
power and authority to sell such Seller's Shares on the terms
set forth herein, to execute and deliver this Agreement and to
enter into the transactions contemplated hereby and to perform
all of its obligations hereunder. This Agreement has been duly
authorized, executed and delivered by such Seller and
constitutes the legal, valid, and binding obligation of such
Seller, enforceable against such Seller in accordance with the
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<PAGE>
termshereof (subject only to applicable bankruptcy,
insolvency, and other laws affecting the enforceability of
creditors' rights generally and to general equitable
principles). No consent, authorization, approval, order,
license, certificate or permit of or from, or registration,
qualification, declaration or filing with, any federal,
state, local, foreign, or other governmental authority or
any court or other tribunal is required to be obtained by
such Seller for its execution and delivery hereof or the
performance by such Seller of such Seller's obligations
under this Agreement. No consent of any party to any
contract, agreement, instrument, lease, license, arrangement
and no or understanding to which such Seller is a party or
to which any of such Seller's properties or assets is or may
be subject, is required for the execution, delivery or
performance by such Seller of this Agreement or the
consummation of the transactions contemplated hereby which
has not been or will not be obtained prior to the Closing,
and the execution, delivery and performance of this
Agreement and the consummation of the transactions
contemplated hereby by such Seller will not violate, result
in breach of, conflict with, or (with or without the giving
of notice or the passage of time or both) entitle any party
to terminate or call a default under any such contract,
agreement, instrument, lease, license, arrangement, or
understanding to which such Seller is a party or by which it
may be bound (except for any such violation, breach or
conflict which has been duly waived thereunder) or violate,
result in a breach of, or conflict with any law, rule,
regulation, order, judgment or decree binding on such Seller
or to which Seller or any of such Sellers' properties or
assets is or may be subject.
(iii) Restricted Securities; Investment Intent. Each
Seller hereby acknowledges that Buyer's Shares are "restricted
securities" under the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder (the
"Securities Act"), and is purchasing the such Buyer's Shares
for investment purposes only and not with a view to the
distribution thereof.
(iv) Such Seller has access to copies of Buyer's
public filings with the SEC, has had an opportunity to review
the same, has been afforded an opportunity to speak with
executive officers of Buyer and to review its files, and such
Seller has otherwise conducted and is relying solely upon its
own due diligence with respect to Buyer's Shares and Buyer.
b. Representations and Warranties of Buyer. Buyer represents
and warrants to each Seller and the Company, as follows:
(i) Title to Shares. Upon delivery of stock
certificate(s) representing Buyer's Shares pursuant to the
terms of this Agreement, such Buyer's Shares will be duly
authorized, validly issued, fully paid and non-assessable.
(ii) Due Authorization. Buyer has full right, power
and authority to issue Buyer's Shares on the terms set forth
herein, to execute and deliver this Agreement, to enter into
the transactions contemplated hereby and to perform all of its
obligations
-3-
<PAGE>
hereunder. This Agreement has been duly authorized, executed
and delivered by Buyer and constitutes the legal, valid, and
binding obligation of Buyer enforceable against Buyer in
accordance with the terms hereof (subject only to applicable
bankruptcy, insolvency, and other laws affecting the
enforceability of creditors' rights generally and to general
equitable principles). No consent, authorization, approval,
order, license, certificate or permit of or from, or
registration, qualification, declaration or filing with, any
federal, state, local, foreign, or other governmental
authority or any court or other tribunal is required to be
obtained by Buyer for its execution and delivery of this
Agreement or the performance by Buyer of its obligations
hereunder. No consent of any party to any contract, agreement,
instrument, lease, license, arrangement and no or
understanding to which Buyer is a party or to which its
properties or assets is or may be subject is required for the
execution, delivery or performance by Buyer of this Agreement
or the consummation of the transactions contemplated hereby
which has not been or will not be obtained prior to the
Closing, and the execution, delivery and performance of this
Agreement and the consummation of the transactions
contemplated hereby by Buyer, will not violate, result in
breach of, conflict with, or (with or without the giving of
notice or the passage of time or both) entitle any party to
terminate or call a default under any such contract,
agreement, instrument, lease, license, arrangement, or
understanding to which such Seller is a party or by which it
may be bound (except for any such violation, breach or
conflict which has been duly waived thereunder) or violate,
result in a breach of, or conflict with any law, rule,
regulation, order, judgment or decree binding on Buyer or to
which its or any of its properties or assets is or may be
subject.
(iii) Buyer is relying on its own due diligence with
respect to the Company and Buyer's purchase of the Sellers'
Shares.
c. Representations and Warranties of the Company. The Company
represents and warrants to Buyer, as follows:
(i) Due Authorization. The Company has full right,
power and authority to execute and deliver this Agreement, to
perform all of its obligations hereunder and to consummate the
transactions contemplated hereby. All necessary corporate
proceedings of the Company have been duly taken to authorize
the execution, delivery and performance by the Company of its
obligations hereunder and its consummation of the transactions
contemplated hereby. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company,
enforceable as to the Company in accordance with its terms
(subject only to applicable bankruptcy, insolvency, and other
laws affecting the enforceability of creditors' rights
generally and to general equitable principles). No consent,
authorization, approval, order, license, certificate or permit
of or from, or registration, qualification, declaration or
filing with, any federal, state, local, foreign, or other
governmental authority or any court or other tribunal is
required to be obtained or delivered by the Company for the
-4-
<PAGE>
execution or delivery of this Agreement, or performance by
the Company of its obligations hereunder or consummation by
the Company of the transactions contemplated hereby. No
consent of any party to any contract, agreement, instrument,
lease, license, arrangement, or understanding to which the
Company is a party or to which the Company or any of its
properties or assets is or may be subject, is required for
the execution and delivery of this Agreement or the
consummation by the Company of the transactions contemplated
hereby which has not been or will not be obtained prior to
the Closing, and the execution, delivery and performance of
this Agreement and the consummation of the transactions
contemplated hereby by the Company will not violate, result
in breach of, conflict with, or (with or without the giving
of notice or the passage of time or both) entitle any party
to terminate or call a default under any such contract,
agreement, instrument, lease, license, arrangement, or
understanding (except for any such violation, breach or
conflict which has been properly waived thereunder) or
violate or result in breach of any term of the certificate
of incorporation or by-laws of the Company, or violate,
result in a breach of, or conflict with any law, rule,
regulation, order, judgment, or decree binding on the
Company or to which any of its operations, businesses,
properties, or assets is or may be subject.
(ii) As soon as practicable, after the purchase of
the Sellers' Shares by the Buyer, the Company will record said
transaction on its books and records.
4. Conditions to Closing.
a. Conditions to Obligations of Buyer. The obligations of
Buyer to purchase the Shares and pay the Purchase Price to Sellers on the date
hereof are subject to the fulfillment, prior to or on the Closing Date, of each
of the following conditions:
(i) Representations, Warranties and Covenants. The
representations and warranties of each Seller and the Company
contained in this Agreement shall be true and correct in all
material respects on the Closing Date, and each of the Company
and each Seller shall have performed or complied in all
material respects with all agreements and covenants required
by this Agreement to be performed or complied with by the
Company and each Seller, respectively, on or prior to the
Closing Date.
(ii) No Proceeding or Litigation. No action, suit or
proceeding shall have been commenced in a court of competent
jurisdiction or by or before any governmental authority
against any of the Company, any other Seller or Buyer seeking
to restrain or materially and adversely alter the transactions
contemplated by this Agreement which, in the reasonable, good
faith determination of Buyer, is likely to prevent Buyer from
consummating, or make it unlawful for Buyer to consummate,
such transactions.
b. Conditions to Obligations of Each Seller. The obligation of
each Seller to sell such Seller's Shares to Buyer on the Closing Date is subject
to the fulfillment, prior to or on the Closing Date, of each of the following
conditions:
-5-
<PAGE>
(i) Representations, Warranties and Covenants. The
representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects
at the Closing Date hereof and Buyer and the Company shall
each have performed or complied in all material respects with
all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing
Date.
(ii) No Proceeding or Litigation. No action, suit or
proceeding shall have been commenced in a court of competent
jurisdiction or by or before any governmental authority
against the Company, any other Seller or Buyer seeking to
restrain or materially and adversely alter the transactions
contemplated by this Agreement which, in the reasonably, good
faith determination of such Seller is likely to prevent such
Seller from consummating or make it unlawful for such Seller
to consummate such transactions.
c. Conditions to Obligations of the Company. The obligations
of the Company to record or cause to be recorded the transfer of the Shares on
its books and records and perform its other obligations hereunder on the Closing
Date are subject to the fulfillment, prior to or on the Closing Date, of each of
the following conditions:
(i) Representations, Warranties and Covenants. The
representations and warranties of Buyer and the Seller each
contained in this Agreement shall be true and correct in all
material respects on the Closing Date and Buyer and each
Seller shall each have performed or complied in all material
respects with all agreements and covenants required to be
performed by this Agreement or complied with by it on or prior
to the Closing Date.
(ii) No Proceeding or Litigation. No action, suit or
proceeding shall have been commenced in a court of competent
jurisdiction or by or before any governmental authority
against the Company, any Seller or Buyer seeking to restrain
or materially and adversely alter the transactions
contemplated by this Agreement which, in the reasonably, good
faith determination of the Company is likely to prevent the
Company from consummating or make it unlawful for the Company
to consummate such transactions.
5. Survival; Indemnification
a. Survival. The representations and warranties of the parties
contained in this Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith shall survive until the third
anniversary of the Closing Date. Notwithstanding the preceding sentence, any
representation or warranty in respect of which indemnity may be sought under
this Agreement shall survive the time at which it would otherwise terminate
pursuant to the preceding sentence, if notice of the inaccuracy thereof giving
rise to such right to indemnity shall have been given to the party against whom
such indemnity may be sought prior to such time.
b. Indemnification of Buyer. Each Seller, at its sole expense,
hereby agrees to indemnify Buyer and its affiliates against and agrees to hold
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<PAGE>
each of them harmless from any and all damage, loss, liability and expense
(including, without limitation, reasonable expenses of investigation and
reasonable attorneys' fees and expenses in connection with any action, suit or
proceeding) (collectively, "Loss") incurred or suffered by Buyer or any of its
affiliates arising out of any misrepresentation or breach of any warranty,
covenant or agreement made or to be performed by such Seller pursuant to this
Agreement.
The Company, at its sole expense, hereby agrees to indemnify
Buyer and its affiliates against and agrees to hold each of them harmless from
any and all Loss incurred or suffered by Buyer or any of its affiliates arising
out of any misrepresentation or breach of warranty, covenant or agreement made
or to be performed by the Company pursuant to this Agreement.
c. Indemnification of Sellers. Buyer, at its sole expense,
hereby agrees to indemnify each Seller and such Seller's affiliates against and
agrees to hold each of them harmless from any and all Loss incurred or suffered
by any of them, respectively, arising out of any misrepresentation or breach of
warranty, covenant or agreement made or to be performed by Buyer pursuant to
this Agreement.
The Company, at its sole expense, hereby agrees to indemnify
each Seller and such Seller's affiliates against and agrees to hold each of them
harmless from any and all Loss incurred or suffered by any of them,
respectively, arising out of any misrepresentation or breach of warranty,
covenant or agreement made or to be performed by Company pursuant to this
Agreement.
d. Indemnification of the Company. Buyer, at its sole expense,
hereby agrees to indemnify the Company and its affiliates and agrees to hold
each of them harmless from any and all Loss incurred or suffered by them arising
out of any misrepresentation or breach of warranty, covenant or agreement made
or to be performed by Buyer pursuant to this Agreement.
Each Seller, at its sole expense, hereby agrees to indemnify
the Company and its affiliates and agrees to hold each of them harmless from any
and all Loss incurred or suffered by them arising out of any misrepresentation
or breach of warranty, covenant or agreement made or to be performed by such
Seller pursuant to this Agreement.
e. Procedures; Exclusivity of Remedies. The party seeking
indemnification hereunder (the "Indemnified Party") agrees to give prompt notice
to the party against whom indemnity is sought (the "Indemnifying Party") of the
assertion of any claim or the commencement of any suit, action or proceeding in
respect of which indemnity may be sought under this Section 5. The Indemnifying
Party shall have the right to, and at the request of the Indemnified Party
shall, participate in and control the defense of any such suit, action or
proceeding at its own expense; provided, however, that the failure by the
Indemnified Party to give prompt notice shall not release the Indemnifying Party
of its indemnification obligations hereunder, except to the extent such failure
actually prejudices the Indemnifying Party. If the Indemnifying Party does not
so assume control of the defense, the Indemnified Party shall have the right to
defend, contest, settle or compromise such claim or defend in the exercise of
its exclusive discretion and the Indemnifying Party shall, upon request from any
Indemnified Party, promptly pay to such Indemnified Party the amount of any Loss
as incurred. If the Indemnifying Party does assume control of the defense, the
Indemnifying Party
-7-
<PAGE>
shall have the right to undertake, conduct and control, through counsel of its
own choosing and at its sole expense, the conduct and settlement of such claim
or demand, and the Indemnified Party shall cooperate with the Indemnifying Party
in connection therewith.
6. Miscellaneous
a. Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be deemed given to a party on
the date delivered personally to such party, on the third day following the
sending thereof by registered or certified mail (postage prepaid, return receipt
requested), on the next business day following the sending thereof by overnight
courier, or on the day on which it is sent by telecopy with confirmation of
delivery and addressed to such party at the address set forth in the prologue of
this Agreement.
b. Amendment. This Agreement may not be amended or modified
except by an instrument in writing signed by the parties hereto that are
affected by such amendment or modification.
c. Governing Law. This Agreement has been prepared, negotiated
and delivered in the State of New York, and shall be governed by, and construed
in accordance with, the laws of the State of New York without giving effect to
the principles thereof relating to the conflict of laws.
d. Submission to Jurisdiction. Each party hereby (i) consents
to the jurisdiction of the United States District Court for the Southern
District of New York and any of the courts of the State of New York located in
New York County in connection with any dispute arising under this Agreement and
(ii) waives objection to venue.
e. Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto in respect of the subject
matter hereof, and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by the parties hereto or their representatives.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
SELLERS: WESTERN UNION LEASING LTD.
By: /s/
-------------------------------
Name: Phillip Cook
Title:
FAB CAPITAL CORP.
By: /s/
-------------------------------
Name: Phillip Cook
Title:
MBO MUSIC VERLAG GmbH
By: /s/
-------------------------------
Name: Michael Berresheim
Title: Managing Director
BUYER: KINGS ROAD ENTERTAINMENT, INC.
By: /s/
-------------------------------
Name: James Leaderer
Title:
THE COMPANY: IMMEDIATE ENTERTAINMENT GROUP, INC.
By: /s/
-------------------------------
Name: Michael Berresheim
Title: Chairman
-9-
<PAGE>
EXHIBIT A
SELLERS AND SELLERS' SHARES
<TABLE>
<CAPTION>
Percentage of Seller's Cash No. of Seller's No. of Buyer's
Name of Seller Seller's Shares Price Shares Shares
- - - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Western 16.7% $419,650.00 400,000 246,957
FAB 44.2% $1,109,853.60 1,057,885 653,131
MBO 39.1% $981,299.07 935,350 577,479
- - - ----------------------------------------------------------------------------------------------------
TOTALS: 100% $2,510,802.67 2,393,235 1,477,567
====================================================================================================
</TABLE>
-10-
EXHIBIT 10(c)
DEMAND PROMISSORY NOTE AND PLEDGE AGREEMENT
[ ]
November 9, 1998
FOR VALUE RECEIVED [ ] (hereinafter called the ("Borrower"), hereby promises to
pay to [ ], with an address at [ ] (the "Holder"), the principal amount of [
($[ ])], together with interest on the unpaid principal balance at an annual
rate of two percent above the prime rate of Citibank, N.A. on the date of this
Note, promptly after demand is made therefor by the Holder.
The Borrower, at its election may prepay this Note at any time
or from time to time, in whole or in part, at the principal amount hereof,
together with accrued interest thereon to the date of such prepayment, and
without premium.
Defaults: Remedies. Each of the following shall constitute an
event of default hereunder (an "Event of Default"): (a) the failure by the
Borrower to pay in full any sum when due under this Note ; (b) any
representations or warranties made herein by the Borrower shall prove to have
been false or misleading as of the time made in any material respect; (c) the
material breach of any covenant of the Borrower contained herein; (d) the
Borrower makes an assignment for the benefit of creditors; (e) the Borrower
commences any proceeding for, or suffers, the appointment of a custodian,
receiver, liquidator or trustee for itself or all or a substantial portion of
its assets; or (f) the Borrower petitions or otherwise seeks relief under or
otherwise takes advantage of or becomes the subject of any proceeding under any
bankruptcy, reorganization, insolvency, arrangement, readjustment of debt,
dissolution, winding up or liquidation or any similar law or statute of any
jurisdiction, whether now or hereafter in effect.
Upon the occurrence of an Event of Default: (i) all sums due
hereunder shall become immediately due and payable; (ii) the Borrower shall be
obligated to reimburse the Holder for all costs, including reasonable attorneys'
fees, incurred to collect any payment due hereunder and not paid when due; and
(iii) the Holder shall have all of the remedies available under applicable law
to the holder of a note and/or a secured party.
Pledge of Securities. As security for each and every
obligation of the Borrower hereunder, the Borrower herewith deposits and pledges
and with the Holder, in form transferable for delivery, and grants to the Holder
a security interest in the [ ] shares of common stock, $.01 par value, of Kings
Road Entertainment, Inc., owned by the Borrower, and the certificates or other
instruments or documents evidencing same and such additional property at any
time and from time to time receivable by the Holder or otherwise distributed to
the Holder in respect of or in exchange for any or all such shares or interests
(herein collectively called the "Pledged Securities").
The Borrower represents and warrants that the Pledged
Securities are, and will be on deposit hereunder, duly and validly issued and
duly and validly pledged to the Holder in accordance with law, and agrees to
defend the Holder's right, title lien and security interest in and to the
Pledged Securities against the claims and demands of all persons whomsoever. The
Borrower also represents and warrants to the Holder that it has, and will have
on deposit hereunder, good title to all of the Pledged Securities/ free and
clear of all claims, mortgages, pledges, liens, encumbrances and security
interests of every nature whatsoever except the pledge hereunder and that no
<PAGE>
consent or approval of any governmental or regulatory authority, or of any
securities exchange which has not been obtained, was or is necessary to the
validity of this pledge.
So long as there shall exist no condition, event or act which
constitutes, or with notice or lapse of time, or both, would constitute an Event
of Default, the Borrower shall be entitled to exercise, as it shall deem
necessary, the voting power with respect to the Pledged Securities, and for that
purpose the Holder shall execute or cause to be executed from time to time, at
the expense of the Borrower, such proxies or other instruments in favor of the
Borrower or its nominee, in such form and for such purposes as shall be
reasonably required by the Borrower to enable it to exercise such voting power
with respect to the Pledged Securities.
So long as there is any balance due to the Holder under this
Note, (a) the Holder may cause all or any of the Pledged Securities to be
transferred to or registered in its name or the name of its nominee or nominees,
and/or (b) the Holder shalt be entitled, to receive and retain, as additional
collateral hereunder, any and all dividends at any time and from time to time
declared or paid upon any of the Pledged Securities. Except as otherwise
provided for herein in the case of the occurrence of an Event of Default, the
Pledged Securities and/or any additional collateral shall be held by the Holder
as collateral securing the obligations of the Borrower under this Note and shall
be held by the Holder far the benefit of the Borrower which shall remain the
beneficial owner of the Pledged Securities and any such additional collateral.
If an Event of Default shall occur and be continuing the
Holder, without obligation to resort to other security, shalt have the right at
any time and from time to time to sell, resell, assign and deliver, in its
discretion, all or any of the pledged Securities, in one or more parcels at the
same or different times, the proceeds of which shall be credited toward the
repayment of this Note.
Upon repayment of this Note, the Borrower shalt be entitled to
the prompt return of all of the Pledged Securities to, or at the direction of,
the Borrower and of all other property and cash pledged hereunder which have not
been used or applied toward the payment of this Note.
Failure or Indulgency Not A Waiver. No failure or delay on the
part of the Borrower or the Holder hereof in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and
remedies existing hereunder are cumulative to, and not exclusive of, any rights
or remedies otherwise available.
Notices. All notices or other communications given or made
hereunder shall be in writing and shall be deemed delivered the day telecopied
(or, if telecopy is not available, mailed by overnight courier) to the party to
receive the same at its telecopy number, if available, and address set forth
below or to such other telecopy number, if available, and address as either
party shall hereafter give to the other by notice duly made under this
paragraph; (i) if to the Holder, to [
] and (ii) if to the Borrower, to the name,
address and telecopy number, if available, of the Borrower set forth in the
records of the Holder.
Assignability. This Note shall be binding upon the Borrower
and its successors and permitted assigns and shall inure to the benefit of the
Holder and the successors and permitted assigns of the Holder.
Governing Law. This Note has been executed in and shall be
governed by the internal laws of the State of New York, without regard to the
principles of conflict of laws.
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<PAGE>
IN WITNESS HEREOF, the Borrower has caused this Note and
Pledge Agreement to be executed in its corporate name by its duly authorized
officer as of the date first written above.
[ ]
By:
Name:
Title:
AGREED WITH RESPECT TO PROVISIONS CONCERNING PLEDGED SECURITIES:
THE HOLDER:
[ ]
By:
Name:
Title:
GUARANTY :
Payment of all amounts due under this Note is hereby
unconditionally guaranteed by FAB Capital Corporation, an Idaho corporation, as
co-obligor of this Note, as of the date first written above:
FAB CAPITAL CORPORATION
By:
-----------------------------
Name:
Title:
Witness:
- - - --------------------------
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<PAGE>
Schedule A to Exhibit 10 (c)
The foregoing Exhibit 10 (c) to the Schedule 13D is the form of Demand
Promissory Note and Pledge Agreement entered into by each of FAB Capital
Corporation, MBO Music Verlag GmbH and Western Union Leasing Ltd. (each as the
"Borrower") with each of Riverrock Ltd. and Long Valley Associates (each as the
"Holder"). FAB, as Borrower, also entered into such an Agreement with North
American International Capital, Inc., as Holder. In each of the Agreements, the
Borrower pledged to the Holder the number of shares of Kings Road Entertainment,
Inc. common stock equal to the amount of the Note divided by $2.35. The terms of
the Agreements are as follows:
(1) Riverrock to MBO: $586,500 principal
(2) Riverrock to FAB: $663,000 principal
(3) Riverrock to Western Union: $250,500 principal
(4) Long Valley to MBO: $ 78,200 principal
(5) Long Valley to FAB: $ 88,400 principal
(6) Long Valley to Western Union $ 33,400 principal
(7) North American to FAB: $543,921 principal
A portion of the amount loaned by North American to FAB was in
turned loaned by FAB to MBO ($212,673) and to Western Union ($90,835).
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