<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934.
_______________________
For Quarter Ended June 30, 1995 Commission File No. 0-17349
VENTURA ENTERTAINMENT GROUP LTD.
(Exact name of registrant as specified in its charter)
Delaware 95-4165135
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11466 San Vicente Boulevard, Los Angeles, California 90049
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (310) 820-0607
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock - August 8, 1995 12,928,805
Class C Warrants - August 8, 1995 699,957
Class D Warrants - August 8, 1995 699,957
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VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
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(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 880,989 $ 3,439,459
Accounts and Notes Receivable 1,215,609 1,369,786
Expenditures billable to clients 0 780,008
Advances to employees 0 94,178
Prepaid expenses and other 335,742 327,174
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Total current assets 2,432,340 6,010,605
Television advertising time 471,605 474,705
Broadcast assets, including equipment 9,188,839 0
Greenwich theater investment 538,523 0
Other property and equipment, net 1,109,662 391,722
Cost of broadcast acquisitions in process 931,046 497,403
Deferred financing costs, net of amortization 33,000 741,884
Other assets, net 853,703 224,848
Goodwill, net of amortization 3,468,652 5,989,877
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Total Assets $19,027,370 $14,331,044
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $2,193,732 $2,113,520
Notes payable 435,316 935,000
Current portion of long-term debt 393,181 212,690
Advances from clients 0 1,311,092
Deferred revenues 2,680,696 2,440,013
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Total current liabilities 5,702,925 7,012,315
Long-term debt 8,745,384 1,792,688
Unamortized portion of rent abatement 0 403,666
Redeemable preferred stock of subsidiaries 2,450,000 950,000
Convertible debentures due 2001 0 2,750,000
Minority interest 193,882 (17,862)
Shareholders' Equity:
Preferred stock, Series B 1
Common stock 12,929 7,708
Additional paid-in capital 6,544,009 3,881,957
Accumulated deficit since July 25, 1994 (4,621,759) (2,449,429)
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Total shareholders' equity 1,935,179 1,440,237
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Total Liabilities and Shareholders' Equity $19,027,370 $14,331,044
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</TABLE>
See Notes to Condensed Consolidated Financial Statements
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VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months ended June 30
---------------------------
1995 1994
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<S> <C> <C>
Revenues:
Broadcast $ 805,586
Corporate Marketing Services 7,630,543 $ 1,103,787
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8,436,129 1,103,787
Operating expenses 10,469,135 3,426,685
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Operating (loss) (2,033,006) (2,322,898)
Other income (expense):
Interest expense, net (95,264) (27,132)
Loss on return of television advertising
time
(75,000)
Minority interest in losses
of subsidiaries 121,590
Amortization of Goodwill (165,650)
------------ ------------
(139,324) (102,132)
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(Loss) from continuing operations (2,172,330) (2,425,030)
(Loss) from discontinued operations 0 (1,804,151)
------------ ------------
Net (loss) (2,172,330) (4,229,181)
Dividend requirement of
Preferred Stock (8,000) (132,000)
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Net (loss) applicable to common
shareholders $ (2,180,330) $ (4,361,181)
------------ ------------
------------ ------------
Net (loss) per share $ (.24) $ (1.84)
------------ ------------
------------ ------------
Weighted average number
of shares outstanding 8,954,718 2,364,375*
------------ ------------
------------ ------------
</TABLE>
*Restated to reflect the July 25, 1994 Recapitalization
See Notes to Condensed Consolidated Financial Statements
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<PAGE>
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months ended June 30
---------------------------
1995 1994
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<S> <C> <C>
Revenues
Broadcast $ 805,586
Corporate Marketing Services 3,090,001 $ 473,223
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3,895,587 473,223
Operating expenses 5,306,565 2,217,644
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Operating (loss) (1,410,978) (1,744,421)
Other income (expense):
Interest income (expense), net (52,511) 16,203
Minority interest in losses
of subsidiaries 25,144
Amortization of Goodwill (86,231)
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(113,598) 16,203
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(Loss) from continuing operations (1,524,576) (1,728,218)
(Loss) from discontinued operations 0 (1,512,961)
----------- -----------
Net (loss) (1,524,576) (3,241,179)
Dividend requirement of
Preferred Stock 0 (66,000)
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Net (loss) applicable to common
shareholders $(1,524,576) $(3,307,179)
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----------- -----------
Net (loss) per share $ (.16) $ (1.35)
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Weighted average number
of shares outstanding 9,447,936 2,450,000*
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----------- -----------
</TABLE>
*Restated to reflect the July 25, 1994 Recapitalization
See Notes to Condensed Consolidated Financial Statements
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<PAGE>
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Six Months Ended June 30, 1995
------------------------------
(Unaudited)
Additional Accumulated
Preferred Common Paid-in Deficit since
Stock Stock Capital July 25, 1994 Net
----- ----- ------- ------------- ---
<S> <C> <C> <C> <C> <C>
Balance,
December 31, 1994 $1 $7,708 $3,881,957 $(2,449,429) $1,440,237
Convertible Debentures
due 2001 1,290 2,035,989 2,037,279
Sale of common shares 4,420 2,172,113 2,176,533
Conversion of Series B
Preferred Stock (1) 769 (768)
Issuance of shares for
acquisitions 115 149,885 150,000
Return of shares relating to
Kaleidoscope acquisition (1,408) (1,739,132) (1,740,540)
Issuance of shares for
service 35 43,965 44,000
Net (loss) (2,172,330) (2,172,330)
--- ------- ----------- ----------- ----------
Balance June 30, 1995 0 $12,929 $6,544,009 $(4,621,759) $1,935,179
--- ------- ----------- ----------- ----------
--- ------- ----------- ----------- ----------
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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<PAGE>
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended June 30
--------------------------
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net (loss) $(2,172,330) $(4,229,181)
Adjustments to reconcile net loss to cash
(used) by operating activities:
Depreciation and amortization 274,534 194,019
Discontinued Operations 0 1,551,867
Loss on return on television advertising time 0 75,000
Minority interest in loss of subsidiaries (121,589)
Rent abatement 1,104
Issuance of shares for contracts & services 550,000
Changes in assets and liabilities:
Accounts receivable (476,972) (95,591)
Expenditures billable to clients (374,110)
Prepaid expenses 100,506 (91,633)
Other Assets 140,525
Accounts payable and accrued expenses 612,023 1,054,925
Advances from clients 170,575
Deferred revenues 233,749 2,550,662
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Net cash (used) by operating activities (1,761,677) 1,700,593
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Cash flows used in investing activities:
Cash received in acquisition 58,210
Greenwich Theater investment (538,543)
Purchase of broadcast assets (789,480)
Purchase of other property and equipment (661,658) (155,160)
Other assets (759,397) (360,000)
Cash effect of acquisitions & disposition (840,325)
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Net cash (used) in investing activities (3,531,193) (515,160)
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Cash flows provided by financing activities:
Proceeds from net borrowing 360,000 447,110
Payment on notes payable (53,940)
Payment on long term debt (81,526)
Investment in subsidiary by third party 333,333
Sale of subsidiaries' shares 248,482
Net proceeds from sale of common shares 2,176,533
----------- -----------
Net cash provided by (used in) financing activities 2,734,400 1,823,092
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Net increase (decrease) in cash (2,558,470) 2,208,525
Cash at beginning of period 3,439,459 514,872
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Cash at end of period $ 880,989 $ 2,723,397
----------- -----------
----------- -----------
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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<PAGE>
VENTURA ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
June 30, 1995
(1) Basis of Presentation
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
accruals) which are, in the opinion of management, necessary to present fairly
the results of operations for the periods presented. The information contained
in this Form 10-Q should be read in conjunction with the audited financial
statements as of December 31, 1994, filed as part of the Company's Annual Report
on Form 10-K.
(2) Acquisitions
The Company's subsidiary, Soundview Media Investments, Inc. ('Soundview'),
completed the purchase of WHOA-TV the ABC affiliate in Montgomery, Alabama, on
April 11, 1995. The purchase price included the assumption of $7,000,000 of debt
and the issuance of $1,500,000 of preferred shares by a subsidiary. The debt may
be reduced to $4,000,000 if paid by December 31, 1995 or $5,000,000 if paid by
December 31, 1996. In addition, the Company was required to make $500,000
available for working capital for the station. The lender has declared a default
under the debt agreement and a forebearance agreement has been negotiated which
is scheduled to take effect August 25, 1995. Revenues and broadcast cash flow
for the year ended December 31, 1994 were $2,680,000 and $186,000 respectively.
Soundview also received FCC approval to acquire WTWC-TV, the NBC affiliate in
Tallahassee, Florida. The closing is scheduled for October 31, 1995 subject to
several contractual items of compliance in addition to the Company's ability to
provide the required financing. The Company has no assurance it will be able to
provide the necessary financing to complete this transaction.
During the quarter ended March 31, 1995, the Company issued 115,117 shares of
its common stock, paid $100,000 in cash and assumed $400,000 in debt in
conjunction with the acquisition of two privately held companies in an effort to
expand its management and business base in motor sports and media consulting.
These acquisitions have been treated as purchases and operations for the six
months ended June 30, include the activity of each for the period since the
respective acquisition.
The Company also completed due diligence and negotiated acquisition agreement to
acquire an additional privately held company for a combination of the issuance
of 100,000 shares of common stock and $350,000 convertible debentures due 1998.
This acquisition is expected to be completed within 30 days and is expected to
complete the Company's base business expansion plans for 1995.
- 7 -
<PAGE>
In November, 1994, the Company signed a letter of intent to acquire all of the
issued and outstanding shares of American Communications and Television
Corporation (ACTV) subject to the execution of a definitive acquisition
agreement. ACTV was the owner of the WTGS-TV Channel 28 in Savannah, Georgia and
other broadcast interests. On March 10, 1995, the Company entered into a
definitive acquisition agreement which provided, among other terms and
conditions, for the issuance of 2,875,000 shares of the Company's common stock
at a predetermined value of $4.00 per share, the assumption of $4,000,000 of
debt, the approval of the FCC and the Company's ability to provide financing for
the Company's future operations, exclusive of this proposed acquisition,
satisfactory to the Seller on or before April 1. On May 4, 1995, the Seller
notified the Company that the Company had not provided financing satisfactory to
the Seller and terminated the purchase agreement. The Company had paid the
Seller $387,000 as a refundable deposit which was returned in June 1995 as
negotiations to restructure the acquisition were terminated.
In March, 1995, Soundview signed letters of intent to acquire three Fox
affiliates located in the Northwest. The letters of intent were subject to the
negotiation and execution of a definitive agreement. The Company did not reach
an agreement as to the terms and conditions related to each of the acquisitions.
The letters of intent have expired and the Company is not currently negotiating
for these properties.
Effective June 8, 1995, a subsidiary of the Company, Modern Education Services,
Inc. ('Modern'), acquired substantially all of the assets of Modern Talking
Pictures, Inc. ('MTP Inc.') by forgiveness of $507,500 of previous advances and
by assuming certain liabilities amounting to approximately $950,000. The Company
is negotiating with the sellers regarding the repurchase of a substantial
portion of the acquired assets. Modern is a national company serving the
information awareness and educational outreach agendas of corporations,
associations, and government primarily through the distribution of video media.
Sales for the twelve months ended June 30, 1995 were approximately $2,700,000
and a gross profit of approximately $900,000. MTP, Inc. sustained net losses
exceeding $1 million on an unaudited basis as a result of major restructing and
certain activites that are not related to current operations.
(3) Additional Equity Invested by Trivest Financial Services Corp.
On June 7, 1995, the Board of Directors accepted a proposal from Trivest to
provide the Company with additional working capital. Trivest agreed to purchase
from the Company 13,000,000 shares of Common Stock at a purchase price of $.50
per share and to provide the Company a two year, 11%, $1,160,000 loan. In
return, the Company agreed to pay a financing fee of $500,000 to Trivest. To
date, Trivest has purchased 4,000,000 shares and funded the $1,160,000 loan. In
agreement with the Company, the remaining shares will be acquired on or before
September 15, 1995. Coy Eklund, the Chairman and Chief Executive Officer of
Trivest is also a director of the Company, and Carleton Burtt, the President of
Trivest, is also the Chief Operating Officer and a nominee for director of the
Company and is President of Soundview. Messrs. Eklund and Burtt were affiliates
of the Company at the time the transaction occurred.
When this financing is completed, Trivest will own in excess of 50% of the
common shares outstanding.
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<PAGE>
(4) Disposition of Kaleidoscope
On June 7, 1995, the Company entered into an agreement with Ray Volpe to
exchange all of the common stock of Kaleidoscope Acquisition Corp.
('Kaleidoscope') for 1,408,696 shares of common Stock and a $225,000 one year,
8% promissory note effective as of June 1, 1995. At the time of the transaction,
Mr. Volpe was the President, Co-Chief Executive Officer and a director of the
Company. In connection with this transaction, the employment agreements of Ray
Volpe, Tony Andrea, Don Dixon, Bruce Albert and Mark Rothenberg were terminated,
and the Company was released from all direct or contingent liabilities it had
undertaken with respect to the acquisition of Kaleidoscope.
Assets relating to the Kaleidoscope operations as of June 1, 1995 amounted to
$3,237,000, excluding goodwill of $4,249,337, and liabilities amounted to
$5,687,000. Sales of Kaleidoscope in the six months ended June 30, 1995 were
$5,940,000 and the net earnings were $68,000. The transaction had no effect on
earnings for the period as the returned shares were charged to paid in capital
at the same basis as originally recorded at the purchase date.
(5) Conversion of Debentures due 2001
The Convertible Debentures due 2001 related to borrowings from a foreign bank.
The entire amount was converted to 1,100,000 shares of common in March 1995. The
Company transferred 294,000 shares of Harmony Holdings Inc. to the bank and
issued 190,000 shares of the Company's common stock as a result of the
conversion and the penalty payment required by the agreement. At the same time
deferred financing costs of $711,721 were charged against paid in capital.
(6) Related Party Transactions (See Note 3)
In March 1995, the Company paid Media One, Inc. a $100,000 brokerage fee related
to the acquisition of Soundview. Frank Woods, a Director, is also Chairman of
the Board of Media One, Inc.
In connection with the proposed acquisition of WTGS-TV Savannah, Georgia (see
Note 2) the Company advanced the seller $387,000 as a refundable deposit which
was returned in June 1995. Mr. Coy Eklund, a director and Mr. Carleton Burtt,
the COO are Chairman and President, respectively of the Seller, Trivest
Financial Services Inc.
Mr. Donald Lifton, the Corporate Secretary is a principal shareholder of Modern
Talking Pictures Services Inc. the privately held company from which the Company
acquired certain assets (see Note 2).
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<PAGE>
(7) Cost of Broadcast Acquisitions in Process
Comprised of legal, consulting, engineering and deposits incurred in connection
with broadcast properties to be acquired under contracts to purchase. Upon
closing of each purchase, such costs are allocated to the cost of the individual
properties and depreciated. At June 30, 1995 the total of $931,046 related to
the acquisition of WTWC-TV in Tallahassee, Florida, which is to close in October
1995 (See Note 2).
(8) Supplemental Non-cash Disclosures
In addition to transactions included in the statement of cash flow serveral
transactions during the period involved significant non-cash items as follows:
Assumption of notes payable of $489,256 and recording of goodwill of
$518,763 related to the two acquisitions in the quarter ended March 31,
1995.
Assumption of long-term debt of $7,287,307 and preferred stock of
$1,500,000 in the acquisition of WHOA-TV.
Assumption of debt of $350,000 and recording goodwill of $1,075,000 in
acquisiton of certain assets by Modern.
Disposition of Kaleidoscope - see Note 4.
(9) Subsequent Events
Under the terms of a Settlement, Release and Stock Purchase Agreement dated July
20, 1995, the Company acquired the minority 20% interest in Soundview, as well
as the 1,000,000 shares of Common Stock held by the former minority shareholders
of Soundview. In exchange for all of such stock, the Company paid $1,115,555 in
cash and a $264,445 promissory note payable in 17 equal monthly installments of
principal without interest. In connection with the acquisition, Bennett Smith
and Brian Brady resigned as President and Executive Vice President of Soundview
and their employment agreements were canceled. Carleton Burtt, Chief Operating
Officer of the Company was appointed interim President of Soundview and was
replaced on July 24, 1995 by Steven M. Friedheim, who was also elected a
director of Soundview. Also, in connection therewith, Bennett Smith, Brian Brady
and Richard Incandela resigned as directors of Soundview and Bennett Smith
resigned as director of the Company. The current directors of Soundview are
Floyd Kephart, Coy Eklund, Carleton Burtt, William Eberle, Frank Woods and
Steven Friedheim.
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<PAGE>
PART I. ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
Ventura Entertainment Group Ltd. ('Ventura' or the 'Company') is a diversified
broadcast, marketing and corporate communications services company. As of
December 30, 1994, the Company acquired 80% of Soundview Media Investment, Inc.,
('Soundview'), a development stage company established for the purpose of
acquiring broadcast properties. In November 1994 the Company acquired a 51%
interest in Greenwich Entertainment Group, Inc., a development stage company in
the out-of-home motion simulation entertainment business. In April 1995,
Soundview acquired WHOA TV, the ABC affiliate, in Montgomery, Alabama. As of
June 1, 1995, the Company sold Kaleidoscope back to its previous shareholders.
The Company is engaged in the business of marketing corporate services, owning
broadcasting properties and marketing events. The Company provides related
corporate services including creating and managing corporate sponsorships,
specialty video productions, corporate promotions including product placement,
facilities and production design, and the distribution of television programs.
Results of Operations
Three months ended June 30, 1995, compared to three months ended June 30, 1994.
Revenues for the three months ended June 30, 1995 were $3,895,587 compared to
$473,223 for the similar period in 1994. Included in the revenues for 1995 are
$2,155,640 from Kaleidoscope, acquired as of August 1, 1994. Also included in
1995 revenues are $805,586 from the operation of WHOA TV purchased in April
1995. Operating expenses for the three months ended June 30, 1995 were
$5,306,565 compared with $2,217,644 in the similar period in 1994.
Kaleidoscope's operations account for $2,198,934 and WHOA TV's operation account
for $817,507 of the operating expenses for the three months ended June 30, 1995.
In addition, in 1995, Soundview had operating expenses of $212,529 and no
revenue.
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<PAGE>
Six months ended June 30, 1995, compared to six months ended June 30, 1994.
Revenues for the six months ended June 30, 1995 were $8,436,129 compared to
$1,103,787 for the similar period in 1994. Included in the revenues for 1995 are
$5,940,874 from Kaleidoscope, acquired as of August 1, 1994. Also included in
1995 revenues are $805,586 from the operation of WHOA TV purchased in April
1995. Operating expenses for the six months ended June 30, 1995 were $10,469,135
compared with $3,426,685 in the similar period in 1994. Kaleidoscope's
operations account for $5,720,974 and WHOA TV's operation account for $817,507
of the operating expenses for the three months ended June 30, 1995.
In addition, in 1995, Soundview had operating expenses of $520,200 and no
revenue
Liquidity and Capital Resources
As of June 30, 1995, the Company had cash of $880,989, total current assets of
$2,432,740 and current liabilities of $5,702,924, or a working capital
deficiency of $3,270,184. Included in current liabilities is $2,680,696 of
deferred revenue of which $2,413,000 will be recognized upon the utilization of
media time to be acquired by the Company in connection with a barter advertising
agreement.
The Company's barter agreement with a vehicle manufacturer obligates it to
acquire certain media time to be used by this manufacturer. Upon its utilization
of this advertising time, this vehicle manufacturer has agreed to pay the
Company an additional $2,000,000. To the extent that these future payments are
less than the cost of the media time to be acquired, the Company will be
required to utilize its resources.
At December 31, 1994, the Company had outstanding 60 shares of Series B Stock
which were entitled to an aggregate annual dividend of $48,000. Subsequent to
December 31, 1994, the 60 shares of Series B Stock (including accumulated
dividends thereon) were converted into an aggregate of 768,881 shares of Common
Stock.
As a result of the acquisitions described in Note 2 to the condensed financial
statements assumed debt which is still outstanding at June 30, 1995 was as
follows:
<TABLE>
<S> <C>
Notes Payable $435,316
Long-term debt:
Bank note payable by WHOA $ 6,977,950
Other notes payable by WHOA 73,170
Long -term film contracts payable 191,645
Note payable by Moderm 350,000
------------
$ 7,592,765
Less amount due in one year (393,181)
------------
$ 7,199,584
============
</TABLE>
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<PAGE>
The bank note payable related to WHOA can be reduced to $4,000,000 including all
accrued interest if paid by December 31, 1994, otherwise payments of principal
begin on April 1,1997 and interest on January 1, 1997. The bank has declared a
default under the debt agreement and a forebearance agreement has been
negotiated which is scheduled to take effect August 25, 1995.
On June 7, 1995, the Board of Directors accepted a proposal from Trivest to
provide the Company with additional working capital. Trivest agreed to purchase
from the Company 13,000,000 shares of Common Stock at a purchase price of $.50
per share and to provide the Company a two year, 11%, $1,160,000 loan. In
return, the Company agreed to pay a financing fee of $500,000 to Trivest. To
date, Trivest has purchased 4,000,000 shares, and funded the $1,160,000 loan. In
agreement with the Company the remaining shares will be acquired on or before
September 15, 1995.
The Company has not made any other arrangements for sources of external
financing, such as bank lines of credit. The Company has no commitments for
capital expenditures.
Pursuant to employment agreements, certain of the executive officers and other
key employees of the Company are entitled to minimum base compensation
aggregating approximately $1,442,000 on an annualized basis. The Company's
leases provide for minimum annual payments of approximately $500,000.
For the quarter ended June 30, 1995 the Company used $1,144,940 of cash in its
operations. The Company's investments in broadcast assets, acquisitions,
building and equipment and other assets amounted to $1,584,882 for the quarter.
Payments on notes and long term debt were $101,448. All of the above was
financed with $2,176,533 of net proceeds from the sale of common shares,
$333,333 from additional third party investment in Greenwich and $360,000 from a
mortgage on the office building in North Carolina.
The Company has experienced substantial growth in its revenues, operations and
employee base, and has undergone substantial changes in its business that have
placed significant demands on the Company's management, working capital and
financial resources. The Company's continued revenue growth and current
expansion plans are expected to place a significant strain on the Company's
financial and management operations. The ability of the Company to successfully
meet its obligations, revenue growth and complete its expansion plans will
depend in part upon the Company's ability to continue to improve and expand its
management and financial control systems, to attract, retain and motivate key
employees, and to raise additional capital. There can be no assurance that the
Company will be successful in these regards.
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<PAGE>
If the Company does not operate on a positive cash flow basis and its present
resources are not sufficient to absorb any cash losses, the Company will need to
obtain financing through the debt or equity markets. In order to fulfill its
overall plan and its financial obligations, the Company is pursuing several
financing alternatives. However, there can be no assurance that any financing
will occur.
Inflation
Inflation has not had a significant effect on the Company.
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<PAGE>
PART II -- OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
None
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<PAGE>
PART II -- OTHER INFORMATION
ITEM 5. Other Information
On July 24, 1995 Mr. Steven Friedheim became President of Soundview Media
Investment, Inc. the Company's broadcast subsidiary. In this capacity, Mr.
Friedheim will have responsibility for all of the Company's broadcast operations
and report directly to Mr. Kephart the Company's CEO. The Company, Soundview and
Mr. Friedheim agreed to a five year employment contract which specifies a base
compensation and incentives based on the success of Soundview and its
subsidiaries.
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PART II -- OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits
Bill of Sale and Assignment Agreement regarding purchase of
certain assets of Modern Talking Pictures Servcies, Inc.
(Exhibit 10.51)
Assumption Agreement regarding debt assumption relating to
transaction with Modern Talking Pictures Services, Inc.
(Exhibit 10.52)
Memorandum of Agreement regarding disposition of Kaleidoscope
Acquistion Corp. (Exhibit 10.53)
Settlement, Release and Stock Purchase Agreement dated July
20, 1995 regarding Soundview Minority Investors. (Exhibit
10.54)
Employment Agreement dated July 24, 1995 between Ventura
Entertainment Group Ltd., Soundview Media Investments, Inc.
and Steven M. Friedheim. (Exhibit 10.55)
b. Reports on Form 8-K
June 21, 1995 regarding change in control of Registrant
resulting from an agreement with Trivest Financial Services
Inc. to provide the Company with a $7.5 million financing
package.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VENTURA ENTERTAINMENT GROUP LTD.
s/b Floyd Kephart______________________________________
Floyd W. Kephart
Chairman of the Board & Chief Executive Officer
s/b David Ward_________________________________________
David H. Ward
Chief Financial Officer
Date: August 14, 1995
- 17-
<PAGE>
BILL OF SALE AND ASSIGNMENT
THIS BILL OF SALE AND ASSIGNMENT is made as of the 8th day of June, 1995,
by MODERN TALKING PICTURE SERVICE, INC., a Michigan corporation ('Seller'), in
favor of MTP ACQUISITION CORP., a Delaware corporation ('Buyer').
1. Transfer of Acquired Assets. Seller hereby sells, transfers, conveys,
assigns, sets over and confirms unto Buyer and its successors and assigns, TO
HAVE AND TO HOLD, for its and their own use, forever, free and clear of all
liens, pledges, charges and encumbrances of any nature whatsoever, except that
certain security interest in favor of Anthony Barclae, as evidenced by a UCC-1
filed with the Secretary of State of Florida on July 25, 1994, all of Seller's
right, title and interest, in and to all assets and properties owned or used by
Seller in the operation of Seller's business, tangible and intangible, wherever
situated, and including the following assets (except as otherwise provided in
Section 2 to this Agreement) (collectively, the 'Acquired Assets'):
(a) all assets and properties set forth or reflected in the
Seller's Balance Sheet, dated as of May 31, 1995, (the 'Acquisition Balance
Sheet'), a copy of which is attached hereto as Exhibit A, and all assets and
properties acquired since the date thereof, except those assets that have been
disposed of in the ordinary course of business between the date of the
Acquisition Balance Sheet and the date hereof;
(b) all of Seller's accounts receivable, notes and notes
receivables, and all cash and cash equivalents on hand and in banks as of the
date hereof;
(c) all machinery, equipment, tools, accessories, maintenance
equipment, spare parts, furnishings and fixtures owned by Seller, including
those identified on the equipment list of Seller, a copy of which is attached
hereto as Exhibit B (the 'Equipment');
(d) all of Seller's right, title and interest under, in and to
those leases, options to lease, unfilled purchase orders, bids, contracts,
commitments and other agreements related to the business of Seller and its
operations;
(e) all of Seller's right, title and interest under, in and to
all permits, licenses, concessions, authorizations, franchises and similar
rights granted to or held by it, which are necessary or related to the current
operation of the business of Seller and its operations, all of which are
identified on Exhibit C attached hereto (the 'Permits'), to the extent such
Permits are transferable to Buyer;
(f) all inventories and supplies of Seller (the 'Inventory');
(g) all trade names, trademarks, service marks, trade dress,
copyrights and all other registrations or applications for registration thereof,
and all other intangible assets and goodwill associated therewith, owned or used
by Seller, which are necessary or related to the operation of the business of
Seller including those identified on Exhibit D attached hereto (the 'Trademarks
and Copyrights'); and
<PAGE>
(h) all other assets and properties of any nature whatsoever
held or used by Seller in connection with the operation of the business of
Seller, including all records of every kind and type related to the Acquired
Assets.
2. Excluded Assets. The only assets of Seller located at or used in
connection with the operation of the business of Seller not included in the
Acquired Assets and which are not being purchased and sold hereby are the
following:
(a) the real property and improvements described in Exhibit E
attached hereto, together with all buildings, structures, improvements and
fixtures located thereon; and
(b) Seller's minute books, stock record books and corporate
seal and any other records of Seller relating to its corporate organization.
3. Further Assurances. Seller hereby covenants and agrees that it will
from time to time, at the request of Buyer and without further consideration,
take such additional actions and duly execute and deliver to Buyer and its
successors such additional instruments and documents, as may be reasonably
required in order to assign, transfer, vest title to any of the Acquired Assets
in or to Buyer and its successors and assigns.
4. Miscellaneous.
(a) Benefit. This Bill of Sale and Assignment shall inure to
Buyer, its successors and assigns and shall be binding upon Seller and its
successors and assigns.
(b) Capitalized Terms. Any word whose initial letter is
capitalized is a defined term. Unless such term is defined herein, it shall have
the same meaning as that attributed to such term in the Purchase Agreement.
(c) Governing Law. This Bill of Sale and Assignment shall be
governed by, and construed in accordance with, the laws of the State of New
York.
IN WITNESS WHEREOF, Seller has caused this Bill of Sale and Assignment
to be executed on its behalf by their respective duly authorized officer, as of
the date and time first written above.
MODERN TALKING PICTURE
SERVICE, INC.
By: DAVID CONWAY
---------------------------
Title: President
-------------------------
('Seller')
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<PAGE>
ASSUMPTION AGREEMENT
THIS AGREEMENT is entered into this 7th day of June, 1995, by and among
MTPS Acquisition Corp., a Delaware corporation now known as Modern Talking
Picture Service, Inc. ('MTPS'), Ventura Entertainment Group Ltd., a Delaware
corporation ('Ventura'), MTP Acquisition Corp., a Delaware corporation
('Subsidiary'), Anthony L. Barclae ('Barclae') and Donald B. Lifton ('Lifton').
RECITALS
A. By Agreement dated June 23, 1994, Lifton, Barclae and Victor Oleson
entered into an agreement ('Original Agreement') which provided for, among other
things, a loan by Barclae to MTPS of the sum of Three Hundred Fifty Thousand
($350,000.00) Dollars.
B. Barclae proceeded to lend the sum of Three Hundred Fifty Thousand
($350,000.00) Dollars to MTPS (the 'Loan') and MTPS issued its Promissory Note
date June 30, 1994 to Barclae to evidence the indebtedness (the 'Note').
C. MTPS granted a security interest in all of the assets of MTPS to
secure the Note pursuant to the terms of a Security Agreement dated June 30,
1994 (the 'Security Agreement').
D. Pursuant to the terms of the Original Agreement, Lifton
unconditionally guaranteed that he would purchase the Note from Barclae, without
recourse, for the sum of its face amount plus interest at the rate of eleven
(11%) percent per annum. This constitutes an absolute obligation of Lifton
personally and is not affected by the status of MTPS or the Note at any time.
<PAGE>
E. Barclae has demanded that Lifton purchase the Note for its face
amount plus accrued interest.
F. In consideration of Barclae forebearing from enforcing his rights
against MTPS and/or Lifton, the parties agree to the terms and conditions of
this Agreement.
FOR AND IN CONSIDERATION of the mutual undertakings and obligations of
the parties, the parties hereby agree as follows:
1. Assumption of Payables. Effective as of the date as of this
Agreement, Ventura assumes and agrees to pay or discharge all of the liabilities
of MTPS which are listed on attached Exhibit 'A'. Ventura shall not be liable
for any other liabilities of MTPS except those listed on Exhibit 'A' or as
otherwise specifically provided for in this Agreement.
2. Assumption of Note. Effective as of the date of this Agreement,
Ventura agrees to assume and to pay in full all of the obligations of MTPS to
Barclae under the Note, including all accrued interest from June 30, 1994.
By execution of this Agreement, Ventura, Subsidiary, Lifton and MTPS
each hereby acknowledge and agree that the Note is in full force and effect,
that it is binding and enforceable against MTPS and, following the execution of
this Agreement, against Ventura, jointly and severally with MTPS, and that
neither Ventura, MTPS nor Lifton have any defenses to the enforcement of said
Note or the validity of the Original Agreement.
It is acknowledged and agreed that the Note is currently in default
and that nothing in this Agreement shall be deemed to waive
-2-
<PAGE>
the default of MTPS nor be deemed to relinquish or diminish any rights that
Barclae has against MTPS or Lifton pursuant to the terms of the Note and the
Original Agreement.
3. Forbearance by Barclae. Notwithstanding anything in this Agreement
to the contrary, Barclae agrees to forebear from taking action to enforce the
Note through the close of business on July 25, 1995, provided, however,
Barclae's obligation to forebear from collection shall be null and void in the
event of the following:
(a) The dissolution, insolvency or inability of either MTPS or
Ventura to meet their obligations as they become due;
(b) Filing by or on behalf of MTPS or Ventura of a petition
for relief in bankruptcy or the filing of an involuntary petition in bankruptcy;
(c) Sale of assignment of a substantial portion of the assets
of MTPS or Ventura except as specifically permitted by this Agreement;
(d) Appointment of a trustee, custodian or receiver for MTPS
or Ventura; or
(e) Entry of any judgment or issuance of an injunction, writ
of attachment or execution against MTPS or Ventura.
4. Consent to Sale. By execution of this Agreement, Barclae hereby
consents to the sale and transfer of the assets of MTPS to Ventura and/or
Subsidiary subject to the condition that Ventura and Subsidiary each acknowledge
and agree that the assets being transferred to Ventura and/or Subsidiary from
MTPS shall be and remain subject to the security interest and lien of Barclae
and
-3-
<PAGE>
that Ventura and Subsidiary shall each be subject to all of the terms and
conditions of the Security Agreement. Simultaneous with the execution of this
Agreement, Ventura and Subsidiary shall each execute Financing Statements in
favor of Barclae which shall cover all of the assets of Ventura in a form
acceptable to Barclae's counsel.
5. Satisfaction of Note. When the Note is fully paid and satisfied,
including all accrued interest due thereon through the date of satisfaction and
payment, Barclae shall assign, transfer and convey all of his right, title and
interest in and to the Security Agreement to Ventura and Subsidiary. Upon the
request of Ventura or Subsidiary, Barclae shall execute a Termination Statement
thereby terminating any currently filed Financing Statements covering the assets
of MTPS where Barclae is the secured party.
6. Counterparts. This Agreement may be signed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
'MTPS':
MTPS Acquisition Corp., a Delaware corporation,
now known as Modern Talking Picture Service,
Inc.
By: DAVID CONWAY
----------------------------------
David Conway
Its: President
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<PAGE>
'Subsidiary':
MTP Acquisition Corp., a Delaware
corporation
By: FLOYD KEPHART
----------------------------------
Floyd Kephart
Its: Chairman
'Ventura':
Ventura Entertainment Group Ltd.,
a Delaware corporation
By: FLOYD KEPHART
----------------------------------
Floyd Kephart
Its: Chairman and CEO
'Barclae':
ANTHONY L. BARCLAE
------------------------------------
Anthony L. Barclae
'Lifton':
DONALD B. LIFTON
-------------------------------------
Donald B. Lifton
k:mtps.001-pmc
File No.--------
6-7-95
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<PAGE>
MEMORANDUM OF AGREEMENT
It is the intention of the parties to this agreement, Ray Volpe acting on behalf
of himself, Peter Chapman, Tony Andrea, Bruce Albert, Don Dixon, Mark Rothenberg
and Kaleidoscope Acquisition Corporation, and Ventura Entertainment Group, Ltd.,
to effect a sale of Kaleidoscope Acquisition Corporation to Ray Volpe and/or his
assigns. The transaction shall take place as follows and shall be effective as
of June 1, 1995:
1. Ray Volpe shall take all necessary action so as to effect the transfer
of 1,428,796 Ventura Entertainment Group shares previously issued to be
and all or some of all of the aforementioned individuals to Ventura
Entertainment Group.
2. All of the capital stock of Kaleidoscope Acquisition Corporation now
owned by Ventura Entertainment Group (which is all the issued and
outstanding stock of said corporation) will be transferred to Ray Volpe
and/or his assigns.
3. Kaleidoscope will issue its negotiable promissory note to Ventura
Entertainment Group in the amount of $225,000. Said note shall be for a
one-year term, payable in equal monthly installments with interest at
8%. Payments to commence on July 31, 1995.
4. The Ray Volpe, Tony Andrea, Don Dixon, Bruce Albert, Mark Rothenberg
employment contracts and any indemnification or guarantee obligation of
Ventura with respect to same shall be cancelled.
5. Peter Chapman will release Ventura from any and all liabilities,
obligations, indemnities and undertakings.
6. Modern Talking Pictures and David Ward shall be provided office space
as presently being utilized, or in the case of Modern, as designated
for a period of six months from the date of execution of this
agreement. In addition, David Ward shall have access to Kaleidoscope
personnel and its books and accounting records to the extent and for
the period of time he deems necessary so as to allow Ventura to prepare
tax returns, financial statements, SEC filings and the like.
<PAGE>
7. Ray Volpe will remain on the Ventura Entertainment Board of Directors
at least until the next regularly scheduled shareholders meeting which
is anticipated to take place in late June 1995.
8. Any third party contracts or opportunities that Ray Volpe develops or
desires that Kaleidoscope undertake prior to the completion of this
transaction, will be the property of Kaleidoscope. However, he will
advise the Chairman of Ventura, Floyd W. Kephart, of the details of
same, prior to the execution of any such contracts or undertakings.
9. The parties will exchange mutual releases so that they shall have no
liabilities one to the other except pursuant to this agreement.
The parties hereto agree to execute such additional agreements, conveyances,
instruments, etc. which are reasonably necessary to carry out the intent of the
transaction herein described.
It is understood that this agreement is subject to approval of the Ventura
Entertainment Group Board of Directors and the receipt by Ventura of an
appropriate investment bankers fairness opinion.
Agreed:
FLOYD W. KEPHART RAY VOLPE
------------------------------------- ----------------------------------------
Floyd W. Kephart Ray Volpe
PETER CHAPMAN
----------------------------------------
Peter Chapman
BRUCE ALBERT
----------------------------------------
Bruce Albert
TONY ANDREA
----------------------------------------
Tony Andrea
DON DIXON
----------------------------------------
Don Dixon
MARK ROTHENBERG
----------------------------------------
Mark Rothenberg
<PAGE>
SETTLEMENT, RELEASE AND STOCK PURCHASE AGREEMENT
This Settlement, Release and Stock Purchase Agreement ('Agreement') is
entered into as of the 20th day of July, 1995, by and among (i) VENTURA
ENTERTAINMENT GROUP LTD., a Delaware corporation ('VEG'), (ii) SOUNDVIEW MEDIA
INVESTMENTS, INC., a Florida corporation ('Soundview'), (iii) Richard S.
Incandela and Sharon Sue Incandela, Co-Trustees of the RICHARD S. INCANDELA
TRUST, dated September 15, 1991 (the 'Trust'), (iv) BENNETT S. SMITH ('Smith'),
(v) BRIAN W. BRADY ('Brady'), (vi) LANCE JUDD ('Judd') (Trust, Smith, Brady and
Judd are sometimes hereinafter collectively referred to as the 'Founders'), and
(vii) RICHARD S. INCANDELA ('Incandela').
RECITALS:
A. Pursuant to that certain Stock Exchange Agreement dated November 9,
1994, as amended and restated effective as of the closing date of the Stock
Exchange Agreement (the 'Stock Exchange Agreement'), between Soundview, VEG, and
the Founders, VEG exchanged 1,000,000 shares of the common capital stock of VEG,
representing 13% of the issued and outstanding shares of common capital stock of
VEG, for 800,000 shares of the issued and outstanding shares of common capital
stock of Soundview, and 800,000 shares of the issued and outstanding shares of
preferred capital stock of Soundview, all of which was owned by the Founders. As
a result of such Stock Exchange, the Founders have among themselves retained 20%
ownership of the issued and outstanding common stock of Soundview, 19% ownership
of the issued and outstanding preferred stock of Soundview, and 13% of the
issued and outstanding common stock of VEG.
B. VEG now desires to acquire from the Founders, and the Founders
desire to sell to VEG, the 1,000,000 shares of common capital stock of VEG owned
or held by the Founders on the date hereof, and all of the issued and
outstanding shares of capital stock, common and preferred, of Soundview owned or
held by the Founders on the date hereof, upon the terms and conditions set forth
in this Agreement.
<PAGE>
C. In connection with the redemption of the preferred stock of
Soundview and the sale of the common stock of VEG and Soundview, the parties
hereto have each agreed to settle any and all claims that they have against the
other parties to this Agreement and any and all disputes, known or unknown, that
might otherwise exist or might be claimed to exist between the parties hereto as
of the date of this Agreement, including, but not limited to, any and all claims
arising out of the Stock Exchange Agreement, the terms and conditions of a
Founder's employment by Soundview or a Founder's resignation and termination of
such employment, or arising out of any other agreements or arrangements between
the parties hereto in connection with the foregoing, upon the terms and
conditions of this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereby agree as follows:
1. Purchase and Sale of Capital Stock of VEG and Soundview. All
purchases and sales of capital stock of VEG and Soundview set forth in this
Section 1 and the payments set forth in Section 5.1 shall occur and take effect
simultaneously on the 'Closing Date,' as hereinafter defined. It is a condition
to the obligations of the parties hereunder, including, but not limited to, the
obligation of VEG to pay the respective purchase prices to the Founders and to
release the Founders as provided in this Agreement, that each of the Founders
and VEG shall have duly executed and delivered this Agreement and that the
Founders shall have delivered to VEG on the Closing Date, subject to the
provisions of Section 5.5, the certificates evidencing the capital stock in VEG
and Soundview to be sold to VEG hereunder, together with stock powers duly
endorsed by the Founders for transfer to VEG. The Closing Date shall take place
five business days following the execution of this Agreement by all parties
hereto (the 'Closing Date'). The failure of any party to satisfy all of its
obligations hereunder on the Closing Date shall terminate this Agreement and
each of the parties hereto shall be released from their respective obligations
under this Agreement. This Agreement must be executed by all parties hereto on
or prior to July 20,
-2-
<PAGE>
1995, or this Agreement shall terminate and each of the parties shall be
released from their respective obligations and commitments, including
termination of the Employment Agreements under Section 5.1 hereof and the
resignations under Section 2 hereof.
1.1. Purchase and Sale of Trust Shares.
a. VEG hereby purchases and acquires from the
Trust on the Closing Date, and the Trust hereby sells and conveys to VEG, all of
the shares of common capital stock of VEG, and all the shares of capital stock,
common and preferred, of Soundview, owned or held by the Trust on the date
hereof, for an aggregate purchase price of $500,000 and upon the other terms and
conditions of this Agreement.
b. On the Closing Date, VEG shall pay and
deliver immediately available funds in an amount equal to $500,000 to an account
designated by the Trust for receipt thereof.
1.2. Purchase and Sale of Smith Shares.
a. VEG hereby purchases and acquires from Smith
on the Closing Date, and Smith hereby sells and conveys to VEG, all of the
shares of common capital stock of VEG, and all of the shares of capital stock,
common and preferred, of Soundview, owned or held by Smith on the date hereof,
for an aggregate purchase price of $600,000 and the satisfaction and
cancellation of a $50,000 promissory note in favor of Soundview and upon the
other terms and conditions of this Agreement.
b. On the Closing Date, VEG shall pay and
deliver in immediately available funds and in an amount equal to $600,000 to an
account designated by Smith.
-3-
<PAGE>
1.3. Purchase and Sale of Brady Shares.
a. VEG hereby purchases and acquires from Brady
on the Closing Date, and Brady hereby sells and conveys to VEG, all of the
shares of common capital stock of VEG, and all of the shares of capital stock,
common and preferred, of Soundview, owned or held by Brady on the date hereof,
for an aggregate purchase price of $330,000 (the 'Brady Purchase Price') and
upon the other terms and conditions of this Agreement.
b. On the Closing Date, VEG shall pay and
deliver the Brady Purchase Price to Brady as follows: (i) by delivery of a
17-month, non-interest bearing promissory note in the form of Exhibit A attached
hereto, with an original principal balance of $264,445; (ii) immediately
available funds in the amount of $15,555 to an account designated by Brady for
receipt thereof; and (iii) the satisfaction and discharge of the $50,000
promissory note made by Brady to Soundview and unpaid as of the date hereof. The
VEG promissory note delivered to Brady shall be secured by VEG's pledge to Brady
of the common capital stock of VEG acquired from Brady, pursuant to the terms of
a Stock Pledge Agreement, in the form of Exhibit B attached hereto, to be
executed and delivered by VEG and Brady concurrently herewith.
1.4. Purchase and Sale of Judd's Shares.
a. VEG hereby purchases and acquires from Judd
on the Closing Date, and Judd hereby sells and conveys to VEG, all of the shares
of capital stock, common and preferred, of Soundview and VEG owned or held by
Judd on the date hereof, for a purchase price equal to the sum of $12,000,
representing an accrued payable due Judd by Soundview, and assumption by VEG of
all debts, notes and other sums that Soundview owes Judd on the date hereof (the
'Judd Note'), which aggregates the sum of $24,000.00.
b. On the Closing Date, VEG shall pay and
deliver the Judd Purchase Price to Judd as follows: (i) VEG shall deliver
immediately available funds in the amount of $12,000 to an account designated by
Judd for receipt thereof; and (ii) VEG shall
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<PAGE>
execute and deliver an Assumption Agreement to Judd, pursuant to which VEG shall
assume the Judd Note. As security for the Judd Note assumed by VEG, VEG shall
pledge all shares of common capital stock of VEG that VEG acquired from Judd on
the date hereof, upon the terms and conditions of a Stock Pledge Agreement in
the form of Exhibit C attached hereto, to be executed and delivered by VEG and
Judd concurrently herewith.
2. Confirmation of Effectiveness of Resignations. Smith, Brady and
Incandela each hereby confirms that, effective as of Friday, June 16, 1995, he
resigned from all positions held with Ventura, Soundview and their subsidiaries
and affiliates as an employee, officer and/or director.
3. Mutual General Release of Claims. It is the intention of the
parties hereto to terminate all business relationships between and among them
and, to that end, the releases hereinafter set forth shall be interpreted in the
broadest possible sense.
3.1. Release of VEG and Soundview. Incandela, individually and
as a Co-Trustee of the Trust, the Trust, Smith, Brady and Judd, each for
himself or itself and his or its heirs and personal representatives or
successors and assigns, in consideration of the purchase by VEG of the common
and preferred capital stock of VEG and Soundview owned or held by him or it, the
mutual releases set forth in this Section 3, and the mutual covenants and the
transactions contemplated by this Agreement, the sufficiency and adequacy of
which is hereby acknowledged by him or it, do each hereby fully and forever
remise, release and discharge VEG and Soundview, and the shareholders, officers,
directors, employees, agents, attorneys, representatives, subsidiaries,
affiliates, successors and assigns of VEG and Soundview (collectively, the 'VEG
Released Parties'), and each of them, of and from any and all claims, demands,
accounts, proceedings, liabilities, suits, actions, causes of action, debts,
rights, agreements, promises, losses, damages, costs, expenses, sums of money
and controversies of every kind and description, or of any nature, whether in
law or in equity and whether known or unknown, accrued or unaccrued, matured or
unmatured, liquidated or unliquidated, contingent or otherwise (hereinafter
collectively referred to as
-5-
<PAGE>
'Claims'), which he or it now has, may now have, has had, or may acquire in the
future, against the VEG Released Parties, or any of them, that arises out of his
or its affiliation with VEG or Soundview on or prior to the date hereof. The
Claims released hereby shall include, but not be limited to, claims connected
with or arising out of, directly or indirectly, (i) any alleged breach,
non-fulfillment or non-performance by any of the VEG Released Parties of any
representations, warranties, covenants or conditions set forth in the Stock
Exchange Agreement or any agreement, instrument or document executed in
connection with such transaction; (ii) any alleged violation of the Securities
Act of 1933, as amended ('Securities Act') or applicable state securities laws
in connection with the sale or exchange of VEG Capital Stock pursuant to the
Stock Exchange Agreement; (iii) any alleged breach or violation of the
Securities Exchange Act of 1934, as amended ('Exchange Act'); (iv) any
statements or representations made by VEG, Soundview, or any of the other VEG
Released Parties in connection with the sale of his or its capital stock, common
or preferred, of VEG or Soundview as provided in this Agreement; (v) any alleged
breach of fiduciary duty owed to him or it, whether as an officer, director,
majority shareholder, or otherwise by any of the VEG Released Parties; (vi) as
it relates specifically to Smith and Brady, any Claims arising from his
employment by Soundview or any of the other VEG Released Parties, the terms and
conditions of such employment, or the termination of his employment by virtue of
his resignation, including, without limitation, the release of any and all
charges or claims of discrimination, and any and all claims of employment
discrimination, retaliation, infliction of emotional distress, defamation,
outrage, interference with contractual or prospective business relations,
invasion of privacy, wrongful termination, promissory estoppel, claims or
demands arising under either express or implied contract, breach of contract,
tort, public policy, the common law, or any federal, state or local statute,
ordinance, regulation or constitutional provision, or other liabilities, suits,
debts, claims for back pay, front pay, compensatory or punitive damages, costs,
reinstatement, attorneys' fees, commissions, bonuses, vacation pay, payment or
reimbursement under any health insurance, or insurance premiums; or (vii) any
other claim, demand, action or right of action, of whatever kind or nature,
which in any way pertains to his or its affiliation with VEG or Soundview on or
prior to the date hereof. Notwithstanding the foregoing, nothing herein shall be
construed to release any claim any of the Founders may have against the law firm
of Clark, Partington,
-6-
<PAGE>
Hart, Larry, Bond, Stackhouse & Stone, Pensacola, Florida. Further, nothing
herein shall be construed to release any of the VEG Released Parties from any
obligations such party may have under this Agreement or any of the agreements,
instruments or other documents entered into pursuant to this Agreement, nor
shall the foregoing apply to the rights of any of the Founders under this
Agreement.
3.2. Release of Founders by VEG and Soundview. VEG and
Soundview, each for itself and for its shareholders, officers, directors,
employees, agents, attorneys, representatives, subsidiaries, affiliates,
successors and assigns, and in consideration of the sale of the capital stock,
common and preferred, of VEG or Soundview owned or held by the Founders, the
mutual releases set forth in this Section 3, and in consideration of the other
covenants and transactions contemplated hereby, the sufficiency and adequacy of
which is hereby acknowledged by VEG and Soundview, do each hereby fully and
forever remise, release and discharge the Founders, and each of their respective
heirs and personal representatives, successors, assigns, agents and attorneys
(the 'Released Founders'), and each of them, of and from any and all Claims
which it now has, may now have, has had, or may acquire in the future, against
the Released Founders, or any of them, that arises out of the affiliation of the
Founders with Soundview or VEG on or prior to the date hereof. The Claims
released hereby shall include, but not be limited to, claims connected with or
arising out of, directly or indirectly, (i) any alleged breach, non-fulfillment
or non-performance by the Founders, or any of them, of any representations,
warranties, covenants or conditions set forth in the Stock Exchange Agreement or
any agreement, instrument or document executed in connection therewith, except
for the representations and warranties of the Founders set forth in Section 7.2
of the Stock Exchange Agreement (Stock of Soundview) and the rights VEG has
pursuant to Sections 7.8 and 11.1 of the Stock Exchange Agreement for the sole
purpose of pursuing any claim VEG may have by virtue of Section 7.2 of the Stock
Exchange Agreement; (ii) any alleged violation of the Securities Act, applicable
state securities laws in connection with the sale of exchange of VEG capital
stock pursuant to the Stock Exchange Agreement, or the Securities Exchange Act
by the Founder, or any of them; (iii) actions taken by the Founders, or any of
them, while an officer, director or employee of VEG or Soundview; (iv) any
alleged breach of fiduciary duty by a Founder
-7-
<PAGE>
that was owed to VEG or Soundview whether as an officer, director, majority
shareholder or otherwise; (v) any statements or representations made by the
Founders, or any of them, in connection with the sale of his or its capital
stock, common or preferred, of VEG or Soundview as provided in this Agreement;
(vi) as it relates specifically to Smith and Brady, any Claims arising from the
employment of Smith and Brady by VEG or Soundview, the terms and conditions of
such employment, including the terms and conditions contained in their
respective Employment Agreements, or the termination of his employment by virtue
of his resignation, including, without limitation, the release of any and all
charges or claims or demands arising under either express or implied contract,
breach of contract, tort, public policy, the common law, or any federal, state
or local statute, ordinance, regulation or constitutional provision, or other
liabilities, suits, debts, claims for reimbursement, compensatory or punitive
damages, costs or attorneys' fees; or (vii) any other claim, demand, action or
right of action of whatever kind or nature, which in any way pertains to the
affiliation of the Founder with VEG or Soundview on or prior to the date hereof.
Notwithstanding the foregoing, nothing herein shall be construed to release any
of the Founders from any obligations such party may have under this Agreement or
any of the agreements, instruments or other documents entered into pursuant to
this Agreement, nor shall the foregoing apply to the rights of VEG or Soundview
under this Agreement.
3.3. Release Among Founders. Each of the Founders, for himself
or itself and for his or its heirs and personal representatives or successors
and assigns, in consideration of the mutual releases set forth in this Section 3
and the mutual covenants and transactions contemplated by this Agreement, the
sufficiency and adequacy of which is hereby acknowledged by him or it, does
hereby fully and forever remise, release and discharge each of the other
Founders, their agents and attorneys, and the heirs, personal representatives,
successors and assigns of the other Founders, and each of them, of and from any
and all Claims which he or it now has, may now have, has had, or may acquire in
the future, against the other Founders, their agents and attorneys, and their
respective heirs and personal representatives, successors and assigns, or any of
them, that arises out of any affiliation he or it has with the other Founder
prior to the date hereof. The Claims released hereby shall include, but not be
limited to, (i) any alleged breach of a fiduciary duty owed
-8-
<PAGE>
to him or it by any of the other Founders, whether as an officer, director or
shareholder of VEG or Soundview, or otherwise, or (ii) any other claim, demand,
action or right of action, of whatever kind or nature, which in any way pertains
to any affiliation he or it has with any other Founder prior to the date hereof.
Notwithstanding the foregoing, nothing herein shall be construed to release any
claim any of the Founders may have against the law firm of Clark, Partington,
Hart, Larry, Bond, Stackhouse & Stone, Pensacola, Florida.
4. Several Representations and Warranties of Founders. Each
Founder hereby severally represents and warrants to VEG and Soundview as
follows:
4.1. Title to Shares; Authority. Except as set forth in
Section 4.3 below, Founder is the record, lawful and beneficial owner of the
shares of common capital stock of VEG and capital stock, common and preferred,
of Soundview set forth opposite his or its name on Exhibit D hereto, all of
which is transferred and sold by Founder to VEG pursuant to this Agreement.
Except as set forth in Section 4.3 below, Founder has transferred to VEG good
and marketable title to the shares of capital stock of VEG and Soundview set
forth opposite his or its name on Exhibit D, free and clear of all liens,
pledges, encumbrances, equities, calls, assessments, proxies and charges of any
nature whatsoever. Except as set forth in Section 4.3 below, Founder has the
sole right to transfer all of his or its shares of capital stock in VEG and
Soundview and to receive the consideration paid by VEG to Founder therefor. The
capital stock of VEG set forth opposite his or its name on Exhibit D constitutes
all of the capital stock of VEG received by Founder pursuant to the Stock
Exchange Agreement and the capital stock of Soundview set forth opposite his or
its name on Exhibit D constitutes all of the capital stock of Soundview owned by
Founder as of the consummation of the transactions described in the Stock
Exchange Agreement.
4.2. Stock Restrictions. None of the shares of capital
stock of VEG or Soundview owned or held by Founder and sold or transferred to
VEG pursuant to this Agreement is subject to any proxy, voting trust, stock
restriction, stock purchase, stock redemption agreement or the like, except for
those restrictions set forth in the Stock
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<PAGE>
Exchange Agreement, the Shareholders' Voting Agreement, dated November 4, 1994,
between Smith and Brady, the Shareholders' Voting Agreement, dated November 4,
1994, by and among the Founders and Floyd W. Kephart, the Right of First Refusal
Agreement, dated November 4, 1994, between Smith and Brady, and the Stock
Purchase Agreements entered into by each of the Founders for the purchase of
their Soundview capital stock, which restrictions are cancelled and declared
null and void as of the date hereof.
4.3. Stock Pledges. VEG and Soundview hereby acknowledge that
the shares of common capital stock of Soundview owned by Smith and Brady are
subject to stock pledges, each dated January 1, 1994 (the 'Soundview Stock
Pledges') in favor of Soundview, which holds each such pledge to secure the
obligations of Smith and Brady under the terms of a $50,000 promissory note,
given by each of them, in payment for such shares. Further, VEG and Soundview
hereby acknowledge that the shares of capital stock of VEG owned by Smith and
Brady are subject to a stock pledge in favor of Thomas M. Duddy, Receiver, who
holds such pledge to secure the obligations of Soundview pursuant to an Asset
Purchase Agreement dated July 29, 1994 (the 'Duddy Stock Pledges').
4.4. Authorization. Except as disclosed in Sections 4.2 and
4.3, Founder has full right, power, authority and capacity to execute, deliver
and perform this Agreement in accordance with its terms. This Agreement and all
other documents executed by the Founder, either individually or collectively
with the Founders, in connection herewith have been duly executed and delivered
by the Founder, and constitutes the legal, valid and binding obligation of the
Founder enforceable against the Founder in accordance with their respective
terms. Except as set forth in Section 5.5, all consents, approvals,
authorizations, actions or orders, including, without limitation, those which
must be obtained from governmental agencies or authorities, required of the
Founder for the authorization, execution and delivery of, and for the
consummation of the sale of Founder's capital stock in VEG and Soundview and the
other transactions contemplated by this Agreement, have been obtained prior to
the date hereof. Except as set forth in Section 5.5, no authorization or
approval of, or exemption of or filing or registration with, any court,
governmental agency, private regulatory body, or any party to any contract,
agreement, lease, or other
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<PAGE>
agreement or instrument to which Founder or VEG or Soundview is bound or
effected is necessary to authorize the execution or consummation of this
Agreement by Founder.
4.5. Survival. Each representation and warranty of the
Founder set forth in this Agreement shall survive this Agreement and any audit
or investigation by VEG or Soundview, and shall not expire.
B. Representations and Warranties of VEG and Soundview. VEG and
Soundview each represent and warrant to each of the Founders as follows:
4.6. Authorization. Upon execution, this Agreement shall
constitute a legal and valid obligation of Soundview and VEG, respectively,
enforceable against Soundview and VEG in accordance with its terms except
insofar as enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally. All
corporate or other acts and proceedings required for the authorization,
execution and delivery of this Agreement by VEG and Soundview, respectively,
have been lawfully and validly taken or will have been so taken prior to the
Closing Date.
4.7. Survival. Each representation and warranty of VEG and
Soundview set forth in this Agreement shall survive this Agreement and shall not
expire.
5. Additional Covenants of the Parties.
5.1. Termination of Employment Agreements. Effective as of the
respective resignations of Smith and Brady, Smith and Brady's respective
Employment Agreements with Soundview, each dated November 4, 1994, terminated
and were of no further force or effect. Smith and Brady each hereby acknowledge
that Soundview paid all wages, bonuses and accrued vacation pay through the date
of their respective resignations, and that Soundview does not owe either Smith
or Brady any wages, bonuses, vacation pay, employee benefits, severance pay or
other compensation or payments of any kind or nature, other than as provided in
this Agreement; provided, however, that VEG hereby agrees to pay to Brady
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<PAGE>
and Smith on the Closing Date, and in immediately available funds to an account
designated by Smith or Brady, as the case may be, all documented and unpaid,
outstanding business expenses incurred by Brady or Smith on behalf of Soundview
through the date of their respective resignations, which, in the case of Smith,
total (i) $3,079.67 as documented and unpaid, outstanding business expenses and
(ii) $2,679.00 as earned insurance premiums for the period November, 1994
through March, 1995. Soundview acknowledges that it has reinstated insurance
coverage for Smith and Smith's family for the period March, 1995 through the
Closing Date, which will allow Smith to file insurance claims under such
coverage. Smith will also be entitled to insurance coverage under COBRA, at his
sole expense and effective immediately, so as to avoid any lapse in coverage.
5.2. Termination of Shareholders Voting Agreement. The parties
hereby acknowledge that, effective as of the respective resignations of Smith
and Brady, both the Shareholders' Voting Agreement dated November 9, 1994, among
Floyd W. Kephart and each of the Founders, and the Shareholders' Voting
Agreement dated November 4, 1994, between Smith and Brady, terminated and shall
be of no further force or effect. In addition, the Founders further agree to
forever relinquish and waive any and all other agreements or rights any of them
may have to cause any person to be nominated to the Board of Directors of VEG or
Soundview, or any of their respective subsidiaries.
5.3. Filing of Schedule 13-D. The Trust, Smith and Brady shall
file a Schedule 13-D with the Securities and Exchange Commission as soon as
possible after the date hereof, but in no event beyond the date required by Rule
13-D of the Exchange Act, reflecting that such individuals no longer own more
than 5% of the outstanding securities of VEG and no longer are pursing a plan to
effect a change of control of VEG.
5.4. Delivery of Stock Certificates. Upon execution and
delivery of this Agreement, but subject to the provisions of Section 5.5, each
of the Founders shall deliver to VEG the certificates representing the shares of
capital stock of VEG and Soundview sold to VEG pursuant to this Agreement,
together with stock powers, duly executed in blank, for transfer on the books
and records of VEG and Soundview.
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<PAGE>
5.5. Pledged Shares. As stated in Section 4.3 above, Smith and
Brady have pledged their shares of Soundview and VEG common stock pursuant to
the Soundview Stock Pledges and the Duddy Stock Pledges. VEG hereby agrees and
covenants with Smith and Brady that it will (a) use its best efforts to obtain
the consent of the Receiver under the Duddy Stock Pledges to transfer such
shares of common stock to VEG on or prior to the Closing Date; (b) accept a
stock transfer power from Smith and Brady transferring their shares of VEG
common stock even if the consent referenced in subparagraph (a) has not been
obtained; (c) remit the purchase price for such shares of common stock pursuant
to Sections 1.2 and 1.3 hereof, even if the consent referenced in subparagraph
(a) has not been obtained; and (d) indemnify Smith and Brady from any and all
Claims, as such term is defined in Section 3.1, arising or resulting from the
transfer of such VEG shares. Soundview hereby agrees and covenants with Smith
and Brady that it will release the shares of Soundview capital stock subject to
the Soundview Stock Pledges on or before the Closing Date and will remit on the
Closing Date, as Agent for Smith and Brady, all of such shares to VEG.
6. Indemnities.
6.1. Founders' Indemnity. The Founders each hereby agree to
severally indemnify, hold harmless, reimburse and defend VEG and Soundview, and
their respective officers, directors and shareholders, at all times against any
and all claims, expenses, liabilities, losses or damages (including reasonable
attorney's fees) of any nature, incurred by or imposed upon VEG or Soundview
which results, arises out of or is based upon (A) any misrepresentation or
breach of any warranty by the Founder in this Agreement or in any Exhibit
attached hereto; or (B) any breach or default in the performance by the Founder
of any covenant to be performed by him or it hereunder.
6.2. VEG's Indemnity. VEG hereby agrees to indemnify, hold
harmless, reimburse and defend each of the Founders at all times against any and
all claims, expenses, liabilities, losses or damages (including reasonable
attorney's fees) of any nature, incurred by or imposed upon the Founders which
results from, arises out of or is based upon (A) any
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<PAGE>
misrepresentation or breach of any warranty by VEG in this Agreement or in any
Exhibit attached hereto; or (B) any breach or default in performance by VEG of
any covenant to be performed by VEG pursuant to this Agreement.
6.3. Soundview's Indemnity. Soundview hereby agrees to
indemnify, hold harmless, reimburse and defend each of the Founders at all times
against any and all claims, expenses, liabilities, losses or damages (including
reasonable attorneys' fees) of any nature, incurred by or imposed upon the
Founders which results from, arises out of or is based upon any
misrepresentation by Soundview or breach of any warranty by Soundview in this
Agreement.
7. Miscellaneous.
7.1. Notices. Any and all notices, demands or other
communications required or desired to be given hereunder by any party shall be
in writing and shall be validly given or made to another party if given by
personal delivery, messenger, overnight courier (such as Federal Express) telex,
facsimile, telegram or if deposited in the United States mail, certified or
registered, postage prepaid, return receipt requested. If such notice, demand or
other communication be given by personal delivery, messenger, overnight courier,
telex, facsimile, telegram, service shall be conclusively deemed made at the
time of receipt. If such notice, demand or other communication be given by mail,
such notice shall be conclusively deemed given forty-eight (48) hours after the
deposit thereof in the United States mail addressed to the party to whom such
notice, demand or other communication is to be given as hereinafter set forth:
If to:
<TABLE>
<S> <C>
Trust or Incandela: Richard S. Incandela
President
Tenexco Incorporated
414 Clinton Avenue
Suite 106
River Forest, Illinois 60305
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Smith: Bennett S. Smith
208 Pine Tree Drive
Gulf Breeze, Florida 32561
With a copy to: Herbert J. Short, Jr.
Sutherland, Asbill & Brennan
999 Peachtree Street, NE
Atlanta, Georgia 30309-3996
Brady: Brian W. Brady
2161 White Owl Way
Okemos, Michigan 48864
With a copy to: Kenneth T. Brooks
Dickinson, Wright, Moon,
VanDusen & Freeman
215 South Washington Square
Lansing, Michigan 48933
Judd: Lance Judd
Aspen Financial Inc.
7098 Villa Drive
Waterford, Michigan 48327
If to VEG or Soundview: Ventura Entertainment Group Ltd.
11466 San Vicente Blvd.
Los Angeles, California 90049
Attn: Floyd W. Kephart
With a copy to: Mark S. Ament
Greenebaum Doll & McDonald PLLC
3300 National City Tower
Louisville, Kentucky 40202
</TABLE>
Any party hereto may change its address for the purpose of receiving notices,
demands and other communications as herein provided by a written notice given in
the manner aforesaid to the other party or parties hereto.
7.2. Modifications or Amendments. No amendment, change or
modification of this document shall be valid unless in writing and signed by all
of the parties hereto.
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<PAGE>
7.3. Waiver. No reliance upon or waiver of one or more
provisions of this Agreement shall constitute a waiver of any other provisions
hereof.
7.4. Successors and Assigns. All of the terms and
provisions contained herein shall inure to the benefit of and shall be binding
upon the parties hereto and their respective heirs, personal representatives,
successors and assigns.
7.5. Further Assurances. Each of the parties shall execute and
deliver such additional instruments and documents, and shall take such
additional actions, as may reasonably be required from time to time after the
date hereof to effectuate the transactions contemplated by this Agreement, and
to effect an orderly transition of management of Soundview from the Founders to
VEG, including but not limited to execution of any documents which may be
required by any regulatory agencies, lending institutions, or pending
agreements.
7.6. Separate Counterparts. This document may be executed
in one or more separate counterparts, each of which, when so executed, shall be
deemed to be an original. Such counterparts shall, together, constitute and
shall be one and the same instrument.
7.7. Enforceability. It is agreed that the rights granted
to the parties hereunder are of a special and unique kind and character and
that, if there is a breach by any party of any material provision of this
document, the other party or parties would not
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<PAGE>
have any adequate remedy at law. It is expressly agreed, therefore, that the
rights of the parties hereunder may be enforced by an action for specific
performance and such other equitable relief as is provided under the applicable
laws.
7.8. Attorneys' Fees and Costs. In the event any action is
instituted by a party hereto to enforce any of the terms or provisions hereof,
the prevailing party in such action shall be entitled to such reasonable
attorneys' fees, costs and expenses as may be fixed by the Court.
7.9. Other Expenses. The parties hereto shall each bear their
own costs and expenses incurred in connection with the transactions described
herein. Each of the parties hereto represents and warrants that such party has
not engaged any agent or representative or other person or entity so as to
entitle such agent, representative or other person or entity to any commission
or broker's of finder's fee or similar payment in connection with this Agreement
or the consummation of the transactions contemplated by this Agreement.
7.10. Applicable Law and Severability. This document shall, in
all respects, be governed by the laws of the State of New York applicable to
agreements executed and to be wholly performed within the State of New York.
Nothing contained herein shall be construed so as to require the commission of
any act contrary to law, and wherever there is any conflict between any
provision contained herein and any present or future statute, law, ordinance or
regulation contrary to which the parties have no legal right to contract, the
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<PAGE>
latter shall prevail but the provision of this document which is affected shall
be curtailed and limited only to the extent necessary to bring it within the
requirements of the law.
7.11. Entire Agreement. This document, together with any
related documents referred to in this Agreement, constitutes the entire
understanding and agreement of the parties with respect to the subject matter of
this Agreement, and any and all prior agreements, understandings or
representations between any of the parties to this Agreement are hereby
terminated and canceled in their entirety.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first written above.
VENTURA ENTERTAINMENT GROUP LTD.
By: FLOYD W. KEPHART
---------------------------------------
Title: CEO
---------------------------------------
('VEG')
SOUNDVIEW MEDIA INVESTMENTS, INC.
By: FLOYD W. KEPHART
---------------------------------------
Title: CHAIRMAN OF THE BOARD
---------------------------------------
('Soundview')
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<PAGE>
RICHARD S. INCANDELA TRUST
By:
---------------------------------------
Richard S. Incandela, Co-Trustee
By:
---------------------------------------
Sharon Sue Incandela, Co-Trustee
('Trust')
---------------------------------------
Bennett F. Smith
('Smith')
BRIAN W. BRADY
---------------------------------------
Brian W. Brady
('Brady')
---------------------------------------
Lance Judd
('Judd')
(collectively 'Founders')
---------------------------------------
Richard S. Incandela
('Incandela')
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<PAGE>
RICHARD S. INCANDELA TRUST
By:
---------------------------------------
Richard S. Incandela, Co-Trustee
By:
---------------------------------------
Sharon Sue Incandela, Co-Trustee
('Trust')
---------------------------------------
Bennett F. Smith
('Smith')
---------------------------------------
Brian W. Brady
('Brady')
LANCE JUDD
---------------------------------------
Lance Judd
('Judd')
(collectively 'Founders')
---------------------------------------
Richard S. Incandela
('Incandela')
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<PAGE>
BENNETT F. SMITH
---------------------------------------
Bennett F. Smith
('Smith')
---------------------------------------
Brian W. Brady
('Brady')
---------------------------------------
Lance Judd
('Judd')
(collectively 'Founders')
---------------------------------------
Richard S. Incandela
('Incandela')
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<PAGE>
BENNETT F. SMITH
---------------------------------------
Bennett F. Smith
('Smith')
---------------------------------------
Brian W. Brady
('Brady')
---------------------------------------
Lance Judd
('Judd')
(collectively 'Founders')
---------------------------------------
Richard S. Incandela
('Incandela')
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<PAGE>
RICHARD S. INCANDELA TRUST
By: RICHARD S. INCANDELA
---------------------------------------
Richard S. Incandela, Co-Trustee
By: SHARON SUE INCANDELA
---------------------------------------
Sharon Sue Incandela, Co-Trustee
('Trust')
---------------------------------------
Bennett F. Smith
('Smith')
---------------------------------------
Brian W. Brady
('Brady')
---------------------------------------
Lance Judd
('Judd')
(collectively 'Founders')
RICHARD S. INCANDELA
---------------------------------------
Richard S. Incandela
('Incandela')
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<PAGE>
LIST OF EXHIBITS
<TABLE>
<S> <C>
Exhibit A Form of Promissory Note
Exhibit B Form of Stock Pledge Agreement -- Brady
Exhibit C Form of Stock Pledge Agreement -- Judd
Exhibit D Stock Ownership
</TABLE>
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<PAGE>
EXHIBIT A
PROMISSORY NOTE
$264,445.00 Los Angeles, California
______________, 1995
FOR VALUE RECEIVED, the undersigned, VENTURA ENTERTAINMENT GROUP LTD., a
Delaware corporation with principal office and place of business at 11466 San
Vicente Boulevard, Los Angeles, California 90049 (the 'Maker'), hereby promises
and agrees to pay to BRIAN BRADY, an individual with a mailing address at 2178
Commons Parkway, Okemos, Michigan 48864 (the 'Payee'), the principal sum of TWO
HUNDRED SIXTY FOUR THOUSAND FOUR HUNDRED FORTY-FIVE DOLLARS ($264,445.00).
This Note shall be payable, without interest, in seventeen (17) equal,
consecutive monthly installments of principal in the amount of Fifteen Thousand
Five Hundred Fifty-Five Dollars ($15,555.00) each, which shall be due and
payable on the first day of each and every calendar month, commencing August 1,
1995 and continuing through December 1, 1996, which date is the final maturity
date of this Note.
All installments of principal on this Note shall be paid to the escrow
account of Dickinson, Wright, Moon, Van Dusen & Freeman, 215 S. Washington
Square, Suite 200, Lansing, Michigan 48933-1816 in immediately available funds
in legal tender of the United States of America or at such other place as may be
designated in writing by the Payee.
This Note is secured by that certain Stock Pledge Agreement of even date
herewith made by Maker in favor of Payee.
Each of the following shall constitute an 'Event of Default' hereunder:
(i) If any installment of principal shall not be paid when due or within
ten (10) days thereafter; or
(ii) The Maker shall default in the performance of any of its other
obligations under this Note and/or the Stock Pledge Agreement, and such default
shall continue uncured for a period of thirty (30) days following written notice
thereof given by Payee to Maker.
Upon the occurrence of an 'Event of Default,' the Payee may, at its sole option
and without notice to the Maker, declare the entire unpaid principal balance of
this Note to be, whereupon the same shall be, immediately due and payable in
full to the Payee.
The failure of the Payee to exercise any of his rights, powers or remedies
shall not constitute a waiver of the right to exercise the same at that or any
other time. All rights and remedies of the
<PAGE>
Payee upon default hereunder shall be cumulative to the greatest extent
permitted by law. Time shall be of the essence in (a) the payments of all
installments of principal on this Note in accordance with the terms hereof, and
(b) the performance of the Maker's other obligations hereunder.
If an Event of Default occurs under this Note, and this Note is placed in
the hands of an attorney for collection, or if collected through any court,
including any bankruptcy court, the Maker promises and agrees to pay to the
Payee his reasonable attorneys' fees, court costs, and other expenses incurred
in collecting or attempting to collect or securing or attempting to secure this
Note.
This Note may be prepaid by Maker, in whole or in part, at any time
without premium or penalty.
This Note shall be governed by and construed in accordance with the laws
of the State of New York.
The Maker hereof hereby waives presentment, demand, notice of dishonor,
protest, notice of protest and nonpayment, and further waives all exemptions to
which he may now or hereafter be entitled under the laws of this or any other
state or of the United States, and further agrees that the holder hereof shall
have the right without notice, to deal in any way, at any time, with the Maker
hereof.
WITNESS the signature of the Maker as of the day, month and year first
above written.
VENTURA ENTERTAINMENT GROUP LTD.
By: ___________________________
Title: ________________________
('Maker')
<PAGE>
EXHIBIT B
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT ('Stock Pledge Agreement') is made and entered
into as of the ____ day of July, 1995, by and among: (i) BRIAN W. BRADY, an
individual resident with mailing address at 2178 Commons Parkway, Okemos,
Michigan 44864 ('Brady'), (ii) VENTURA ENTERTAINMENT GROUP LTD., a Delaware
corporation ('Ventura'), and (iii) DICKINSON, WRIGHT, MOON, VAN DUSEN & FREEMAN,
a Michigan partnership ('Escrow Agent').
R E C I T A L S:
A. Ventura is indebted to Brady in the principal sum of Two Hundred
Sixty-Four Thousand Four Hundred Forty-Five Dollars ($264,445.00), as evidenced
by that certain Promissory Note (the 'Note') of even date herewith, made by
Ventura payable to the order of Brady in the face principal amount of Two
Hundred Sixty-Four Thousand Four Hundred Forty-Five Dollars ($264,445.00).
B. Ventura has agreed to pledge certain stock as hereinafter described to
Brady, to secure the payment of the Note.
NOW, THEREFORE, for and in consideration of the Recitals, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby covenant, agree, represent and warrant
as follows:
1. Pledge and Deposit of Shares. Ventura hereby pledges and assigns to
Brady, and grants to Brady a security interest in, three hundred two thousand
two hundred twenty-three (302,223) shares of common stock (collectively, the
'Stock') of Ventura as represented by those certain stock certificates
transferred by Brady to Ventura
<PAGE>
of even date herewith, or such other certificates as may be issued in
replacement thereof, and now standing in Ventura's name, all as collateral
security for the full and punctual payment and due performance by Ventura of the
Note. Brady acknowledges that the Stock is currently pledged to Thomas M. Duddy,
Receiver (the 'Receiver') as collateral security for certain obligations of
Soundview Media Investments, Inc. to the Receiver. The pledge made herein is
junior to and inferior to the pledge of the Stock to the Receiver.
The certificates or other instruments evidencing all new shares of capital
stock and all other securities, rights, warrants, options and the like hereafter
created in respect of the Stock, whether by stock split, stock dividend, merger,
consolidation or otherwise, shall be delivered by Ventura to, and shall be held
by, the Receiver under the terms and conditions of the pledge in favor of the
Receiver. The parties hereto shall deliver a letter to the Receiver instructing
him to also hold the Stock as agent for Brady hereunder, and upon release of the
pledge in favor of the Receiver, the Receiver should deliver the Stock to
Dickinson, Wright, Moon, Van Dusen & Freeman, 215 S. Washington Square South,
Lansing, Michigan 48933-1816, to hold on behalf of Brady as escrow agent (the
'Escrow Agent'). As used herein, the term 'Stock' shall be deemed to include all
such new shares, securities, rights, warrants, options and the like.
2. Voting Rights; Dividends, Etc. Ventura shall be entitled to exercise
all voting rights and privileges whatsoever with respect to the Stock, unless
and until an uncured Event of Default occurs and Brady exercises his remedies
hereunder pursuant to the Uniform Commercial Code as enacted in the State of New
York.
2
<PAGE>
3. Status of the Stock. Ventura hereby represents and warrants to Brady
that (a) the Stock is validly issued and outstanding, fully paid and
non-assessable, (b) Ventura is the registered and absolute beneficial owner of
the Stock, (c) all of the Stock is free and clear of liens, charges and
encumbrances in favor of persons other than the Receiver and Brady, and (d)
Ventura has the full power and authority to pledge the Stock to Brady pursuant
to this Stock Pledge Agreement. No part of the Stock shall be sold, transferred
or assigned by Ventura without the prior written consent of Brady, such consent
not to be unreasonably withheld.
4. Maintenance of Priority of Pledge. Ventura shall be liable for and
shall from time to time pay and discharge all taxes, assessments and
governmental charges imposed upon the Stock by any federal, state or local
authority, the liens of which would or might be held prior to the right of Brady
in and to the Stock or which are imposed on the holders and/or registered owners
of the Stock. Ventura shall not, at any time while this Stock Pledge Agreement
is in effect, do or suffer any act or thing whereby the rights of Brady in the
Stock would or might be materially impaired or diminished. Ventura shall execute
and deliver such further documents and take such further actions as may be
required to confirm the rights of Brady in and to the Stock or otherwise to
effectuate the intention of this Stock Pledge Agreement.
5. Substitution of Collateral. In the event that the Receiver, for any
reason, forecloses its lien on the Stock and such Stock no longer stands in the
name of Ventura, then, within five (5) days following receipt of actual notice
of the foreclosure in any form, written or otherwise, Ventura will deliver to
the Escrow Agent and cause to be pledged
3
<PAGE>
to Brady, pursuant to the terms of this Stock Pledge Agreement, shares of common
stock of Ventura in an amount equal to the Stock which, at the time of such
substitution, had not been released pursuant to Section 6 of this Stock Pledge
Agreement. Notwithstanding anything to the contrary contained herein or in the
Note, the failure of Ventura to deliver such substitute stock to the Escrow
Agent within five (5) days of receipt of notice from the Receiver shall
constitute an immediate Event of Default hereunder and under the Note, without
the necessity of any further notice to Ventura.
6. Partial Releases. The Note provides that Ventura shall make seventeen
(17) monthly installments of principal to Brady in the amount of Fifteen
Thousand Five Hundred Fifty-Five Dollars ($15,555.00) each payable on the dates
set forth in the Note, which payments shall be made to the Escrow Agent for
disbursement to Brady. Brady agrees that upon receipt by the Escrow Agent of
each such monthly payment, the Escrow Agent shall release a portion of the Stock
to Ventura equal to seventeen thousand seven hundred seventy-seven (17,777)
shares. Such release shall be accomplished by delivery to Ventura of
certificates evidencing 17,777 shares of the Stock, unless the Receiver is still
holding the Stock, in which case such release shall be accomplished by delivery
of a letter of instruction to the Receiver releasing the pledge in favor of
Brady on such shares of Stock and instructing the Receiver to deliver such
shares of Stock to Ventura upon release from the pledge to the Receiver.
7. Events of Default. Each of the following shall be deemed an 'Event of
Default' hereunder:
4
<PAGE>
i) The occurrence of any default under the Note not cured within the
time period stated therein; or
ii) The occurrence of any default of any kind whatsoever under the
terms, covenants and conditions of this Stock Pledge Agreement not cured within
thirty days following written notice thereof from Brady.
8. Remedies Upon Default. Upon the occurrence of any Event of Default
referred to in Section 7 above, Brady shall have the right to take possession of
such portion of the Stock as has not been released to Ventura pursuant to
Section 6, subject to the rights of the Receiver, and to exercise all rights and
remedies available to a secured party pursuant to the Uniform Commercial Code as
enacted in the State of New York.
9. Notices. All notices required or permitted to be given hereunder shall
be given in writing and personally delivered or sent by registered or certified
U. S. mail, return receipt requested, postage prepaid, and deemed given when
received, addressed as follows (or to such other address as to which any party
hereof shall have given the other written notice):
If to Brady: Brian W. Brady
2178 Commons Parkway
Okemos, MI 48864
cc: Kenneth T. Brooks
Dickinson, Wright, Moon, Van Dusen &
Freeman
215 South Washington Square, Suite 200
Lansing, MI 48933
If to Ventura: Ventura Entertainment Group Ltd.
5
<PAGE>
11466 San Vicente Boulevard
Los Angeles, CA 90049
cc: Mark S. Ament, Esq.
Greenebaum Doll & McDonald PLLC
3300 National City Tower
Louisville, KY 40202
10. Miscellaneous.
i) Governing Law. The laws of the State of New York shall govern the
construction of this Stock Pledge Agreement and the rights, remedies and duties
of the parties hereunder.
ii) Successors and Assigns. This Stock Pledge Agreement shall bind and
benefit Ventura and its successors and assigns, and Brady and his heirs,
personal representatives, successors and assigns.
iii) Time of Essence. Time shall be of the essence in the performance
of Ventura's obligations hereunder.
iv) Captions. The several captions, headings, sections and subsections
of this Stock Pledge Agreement are inserted for convenience only and shall be
ignored in interpreting the provisions of this Stock Pledge Agreement.
v) Modifications. This Stock Pledge Agreement may be modified or
amended only by written agreement executed by all of the parties hereto.
11. Termination.
This Stock Pledge Agreement shall terminate when the principal balance
of the Note has been paid in full, at which time the Escrow Agent shall cause to
be reassigned and redelivered to Ventura or to such person or persons as Ventura
shall
6
<PAGE>
designate, such of the Stock (if any) as shall not have been previously released
by the Escrow Agent, together with appropriate instruments of reassignment and
release.
IN TESTIMONY WHEREOF, the parties hereto have executed this Stock Pledge
Agreement the day, month and year first above written.
VENTURA ENTERTAINMENT GROUP LTD.
By:____________________________
Title:_________________________
('Ventura')
_______________________________
BRIAN W. BRADY
('Brady')
DICKINSON, WRIGHT, MOON, VAN DUSEN
& FREEMAN
By:_______________________________
Title:____________________________
(the 'Escrow Agent')
7
<PAGE>
EXHIBIT C
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT ('Stock Pledge Agreement') is made and entered
into as of the ____ day of July, 1995, by and between: (i) LANCE JUDD, an
individual resident with mailing address at 7098 Villa Drive, Waterford,
Michigan 48327 ('Judd'), and (ii) VENTURA ENTERTAINMENT GROUP LTD., a Delaware
corporation ('Ventura').
R E C I T A L S:
A. Ventura is indebted to Judd in the principal sum of Twenty-Four
Thousand Dollars ($24,000.00), pursuant to indebtedness of Soundview Media
Investments, Inc. to Judd assumed by Ventura on the date hereof (the
'Indebtedness').
B. Ventura has agreed to pledge certain stock as hereinafter described to
Judd, to secure the payment of the Indebtedness.
NOW, THEREFORE, for and in consideration of the Recitals, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby covenant, agree, represent and warrant
as follows:
1. Pledge and Deposit of Shares. Ventura hereby pledges and assigns to
Judd, and grants to Judd a security interest in, all shares of common stock
(collectively, the 'Stock') of Ventura as represented by those certain stock
certificates transferred by Judd to Ventura of even date herewith, or such other
certificates as may be issued in replacement thereof, and now standing in
Ventura's name, all as collateral security for the full and punctual payment and
due performance by Ventura of the Indebtedness.
<PAGE>
The certificates or other instruments evidencing all new shares of capital
stock and all other securities, rights, warrants, options and the like hereafter
created in respect of the Stock, whether by stock split, stock dividend, merger,
consolidation or otherwise, shall be delivered by Ventura to, and shall be held
by, Judd under the terms and conditions of this Stock Pledge Agreement. As used
herein, the term 'Stock' shall be deemed to include all such new shares,
securities, rights, warrants, options and the like.
2. Voting Rights; Dividends, Etc. Ventura shall be entitled to exercise
all voting rights and privileges whatsoever with respect to the Stock, unless
and until an uncured Event of Default occurs and Judd exercises his remedies
hereunder pursuant to the Uniform Commercial Code as enacted in the State of New
York.
3. Status of the Stock. Ventura hereby represents and warrants to Judd
that (a) the Stock is validly issued and outstanding, fully paid and
non-assessable, (b) Ventura is the registered and absolute beneficial owner of
the Stock, (c) all of the Stock is free and clear of liens, charges and
encumbrances, and (d) Ventura has the full power and authority to pledge the
Stock to Judd pursuant to this Stock Pledge Agreement. No part of the Stock
shall be sold, transferred or assigned by Ventura without the prior written
consent of Judd, such consent not to be unreasonably withheld.
4. Maintenance of Priority of Pledge. Ventura shall be liable for and
shall from time to time pay and discharge all taxes, assessments and
governmental charges imposed upon the Stock by any federal, state or local
authority, the liens of which would or might be held prior to the right of Judd
in and to the Stock or which are imposed on
2
<PAGE>
the holders and/or registered owners of the Stock. Ventura shall not, at any
time while this Stock Pledge Agreement is in effect, do or suffer any act or
thing whereby the rights of Judd in the Stock would or might be materially
impaired or diminished. Ventura shall execute and deliver such further documents
and take such further actions as may be required to confirm the rights of Judd
in and to the Stock or otherwise to effectuate the intention of this Stock
Pledge Agreement.
5. Events of Default. Each of the following shall be deemed an 'Event of
Default' hereunder:
i) The occurrence of any default in payment of the Indebtedness not
cured within the time period stated in any document or instrument relating
thereto, or, if none is so stated, within ten (10) days following written notice
thereof from Judd; or
ii) The occurrence of any default of any kind whatsoever under the
terms, covenants and conditions of this Stock Pledge Agreement not cured within
thirty days following written notice thereof from Judd.
6. Remedies Upon Default. Upon the occurrence of any Event of Default
referred to in Section 5 above, Judd shall have the right to exercise all rights
and remedies available to a secured party pursuant to the Uniform Commercial
Code as enacted in the State of New York.
7. Notices. All notices required or permitted to be given hereunder shall
be given in writing and personally delivered or sent by registered or certified
U. S. mail, return receipt requested, postage prepaid, and deemed given when
received, addressed
3
<PAGE>
as follows (or to such other address as to which any party hereof shall have
given the other written notice):
If to Judd: Lance Judd
7098 Villa Drive
Waterford, Michigan 48327
If to Ventura: Ventura Entertainment Group Ltd.
11466 San Vicente Boulevard
Los Angeles, CA 90049
cc: Mark S. Ament, Esq.
Greenebaum Doll & McDonald PLLC
3300 National City Tower
Louisville, KY 40202
8. Miscellaneous.
i) Governing Law. The laws of the State of New York shall govern the
construction of this Stock Pledge Agreement and the rights, remedies and duties
of the parties hereunder.
ii) Successors and Assigns. This Stock Pledge Agreement shall bind and
benefit Ventura and its successors and assigns, and Judd and his heirs, personal
representatives, successors and assigns.
iii) Time of Essence. Time shall be of the essence in the performance
of Ventura's obligations hereunder.
iv) Captions. The several captions, headings, sections and subsections
of this Stock Pledge Agreement are inserted for convenience only and shall be
ignored in interpreting the provisions of this Stock Pledge Agreement.
4
<PAGE>
v) Modifications. This Stock Pledge Agreement may be modified or
amended only by written agreement executed by all of the parties hereto.
9. Termination.
This Stock Pledge Agreement shall terminate when the principal balance
of the Indebtedness has been paid in full, at which time Judd shall cause to be
reassigned and redelivered to Ventura or to such person or persons as Ventura
shall designate, the Stock, together with appropriate instruments of
reassignment and release.
IN TESTIMONY WHEREOF, the parties hereto have executed this Stock Pledge
Agreement the day, month and year first above written.
VENTURA ENTERTAINMENT GROUP LTD.
By:____________________________
Title:_________________________
('Ventura')
______________________________
LANCE JUDD
('Judd')
5
<PAGE>
EXHIBIT D
Soundview Media Investments, Inc.
Common Stock
<TABLE>
<CAPTION>
Name Number of Shares
---- ----------------
<S> <C>
Bennett Smith 101,000
Brian Brady 64,000
Richard S. Incandela and Sharon Sue 33,000
Incandela, Co-Trustees of the
Richard S. Incandela Trust,
Dated September 15, 1991 ('Trust')
Lance Judd 2,000
Preferred Stock
Bennett Smith 95,000
Trust 95,000
</TABLE>
Ventura Entertainment Group Ltd.
Common Stock
<TABLE>
<CAPTION>
Name Number of Shares
---- ----------------
<S> <C>
Brian Brady 320,000
Trust 165,000
Lance Judd 10,000
Bennett Smith 505,000
</TABLE>
<PAGE>
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ('Agreement') is entered into as of the 24th day
of July, 1995, by and between VENTURA ENTERTAINMENT GROUP LTD., a Delaware
corporation (the 'Company') and its wholly-owned subsidiary, SOUNDVIEW MEDIA
INVESTMENTS, INC. (the 'Broadcast Subsidiary'), on the one hand, and STEVEN M.
FRIEDHEIM ('Executive'), on the other hand.
W I T N E S S E T H:
WHEREAS, the Company and Broadcast Subsidiary desire to employ Executive
as the President and Chief Executive Officer of the Broadcast Subsidiary, and
Executive hereby accepts such employment, all on the terms and conditions set
forth below.
NOW, THEREFORE, in consideration of the employment of Executive, and
the promises and mutual covenants and agreements herein contained, the
parties agree as follows:
1. Definitions.
(a) The term 'Acceleration Event' shall mean (i) a significant change (as
specifically expressed or implemented by the Board of Directors of the Broadcast
Subsidiary) in the nature or scope of Executive's authorities, powers, functions
or duties from those normally applicable for a comparable broadcast executive
(President/CEO) in the industry, or (ii) that there is imposed upon Executive a
requirement that Executive move his principal office out of the Nashville,
Tennessee area.
(b) The term Base Cash Flow' shall mean the cash flow of WHOA-TV,
Montgomery, Alabama for the twelve-month period immediately preceding the date
of this Agreement and the cash
<PAGE>
flow of any Station(s) (as defined below) hereinafter acquired for the
twelve-month period preceding such acquisition(s), in each case calculated as
provided in Section 1(c) immediately below. The increase in Base Cash Flow for
acquired Station(s) shall be effective beginning in the Contract Year of the
acquisitions(s). If any Station(s) are sold or otherwise disposed of, Base Cash
Flow shall be reduced by the amount attributable to such Station(s) (prorated to
the date of sale or disposition).
(c) The term 'Cash Flow' shall mean during any Contract Year or part
thereof, the combined broadcast cash flow of all Stations for such period
determined in accordance with broadcast industry standards, as follows:
operating income after cash program costs and interest payments on debt, but
before principal payments on debt, depreciation, amortization and taxes.
(d) The term 'Cause' means embezzlement; the commission of a felony;
intentionally furnishing information to the Board of Directors of the Company or
the Board of Directors of the Broadcast Subsidiary (the 'Company Board' and
'Subsidiary Board' respectively) which is material in respective matters being
considered by such Boards and is known by Executive to be false or incorrect
without disclosing such falseness or incorrectness; the failure to follow the
written instructions of the Chairman/Chief Executive Officer of the Company
(provided that such instructions shall not create any performance standard for
purposes of 'Cause' hereunder); the material breach of this
-2-
<PAGE>
Agreement or written rules, regulations or policies of the Company or Broadcast
Subsidiary which are uniformly applied to all employees of the Company or
Broadcast Subsidiary, or which written rules, regulations and policies are
promulgated for general application to officers or directors of the Company or
Broadcast Subsidiary; or the repeated or habitual intoxication or drug use while
on the Company's or Broadcast Subsidiary's premises or while performing duties
hereunder after the Company or Broadcast Subsidiary has provided, at its cost,
reasonable rehabilitation services for Executive such that the Broadcast
Subsidiary determines in good faith that Executive is impaired from performing
his duties as required hereunder.
(e) The term 'Competing Business' means any person, concern or entity
which is engaged in or conducts a television broadcast property other than a
corporation listed on a national stock exchange in which the employee owns a
less than 5 interest.
(f) For purposes hereof a 'Change of Control' shall occur if at any time
during the term of this Agreement either the Company or Broadcast Subsidiary
shall (i) consolidate with or merge into another corporation and the Company or
Broadcast Subsidiary, or a subsidiary of the Company or Broadcast Subsidiary,
shall not be the surviving corporation and, following such merger or
consolidation, the executive officers of the Company or of the Broadcast
Subsidiary are comprised of persons, a majority of whom were not officers of the
Company or Broadcast Subsidiary, respectively, prior to such merger or
- 3 -
<PAGE>
consolidation; (ii) in the case of the Company, have a majority of its stock
sold in a single transaction or in a series of transactions, the result of which
is to consolidate the ownership of such stock in a single person or group of
persons acting in concert, and in the case of the Broadcast Subsidiary, have a
majority of its stock held by a person or entity other than the Company;
provided, however, that the acquisition of a majority of the Company's stock by
Trivest Financial Services Corp. ('Trivest') shall not, for purposes of this
clause (ii), be a 'Change of Control'; (iii) convey all, or substantially all,
of its assets to another corporation, entity, or person, the ownership of which
is not substantially similar to that of the Company or Broadcast Subsidiary,
respectively, prior to such conveyance; provided, however, this clause (iii)
shall not be applicable if one or more Stations are sold as long as the
Broadcast Subsidiary owns and operates at least one Station; or (iv) have
executive officers of the Company and directors on the Subsidiary Board, as a
group, comprised of persons, a majority of whom are not members of such group on
the date hereof.
(g) 'Confidential Information' means any material data or information
relating to the Company or Broadcast Subsidiary and not generally known to the
public or, prior to the date hereof, known by Executive. To the extent
consistent with the foregoing, Confidential Information includes, without
limitation, the Company's and Broadcast Subsidiary's: (i) cost data; (ii)
programming decisions; (iii) advertising and customer lists; (iv) financial
information that has not been released to
-4-
<PAGE>
the public by the Company or Broadcast Subsidiary; and (v) future business
plans, marketing strategies and advertising and promotional campaigns.
(h) The term 'Contract Year' shall mean each calendar year. For 1995,
'Contract Year' shall mean the period from the date of this Agreement until
December 31, 1995.
(i) The term 'Disability' means the inability of Executive to perform his
duties under this Agreement in a manner consistent with what is normally
required of an employee holding a similar position in similarly situated
companies as a result of Executive's suffering from an illness or physical or
mental impairment with such inability expected to continue, based upon the
independent advice of a physician selected by the Subsidiary Board, for a period
of at least one year.
(j) The term 'Equity Appreciation' of the Broadcast Subsidiary shall mean
the increased value (determined pursuant to Exhibit A hereto and the provisions
herein) of all television stations owned, operated or managed by the Company or
the Broadcast Subsidiary or any of their divisions, affiliates (except Trivest)
or subsidiaries ('Stations') and any and all other assets (except those excluded
on Exhibit B hereto) of the Broadcast Subsidiary from the date of this Agreement
and, with respect to Stations acquired after the date hereof, from the date of
such acquisitions, until the date of expiration hereof or termination of
Executive's employment by any party for any reason other than by the Broadcast
Subsidiary for Cause.
-5-
<PAGE>
The increased value of the Stations and other assets of the Broadcast
Subsidiary as of the date of expiration hereof or termination of Executive's
employment shall be the value as agreed upon by the Subsidiary Board and
Executive. The Broadcast Subsidiary and Executive shall use their best efforts
to reach an agreement as to such value. If, however, they cannot agree upon such
value, then such value shall be determined by three (3) independent appraisers
paid for by the Company, with one appraiser to be selected by the Company, one
appraiser to be selected by Executive, and the third appraiser to be selected by
the other two appraisers. The Subsidiary Board and Executive shall either agree
on a value or designate appraisers within ninety (90) days of the expiration
hereof or termination of employment. The appraisers, if applicable, shall choose
a third appraiser within thirty (30) days of their designation. The three
appraisers shall render their decision within thirty (30) days after the date of
selection of the third appraiser. The increased value of the Stations and other
assets of the Broadcast Subsidiary as of the date of expiration or termination
of employment shall be the appraised value determined by the appraiser whose
appraisal is neither the highest nor the lowest; provided that, in the event
that two appraisers determine the same value which is higher than the value
determined by the remaining appraiser, the value determined by the two
appraisers who are in agreement shall be the appraised value.
-6-
<PAGE>
In determining the increased value of the Stations and other assets of the
Broadcast Subsidiary as of the date of expiration or termination, the Executive
and the Subsidiary Board or the appraisers, as the case may be, shall use the
formula attached hereto as Exhibit A and consider any other financial benefits
and burdens of the Broadcast Subsidiary and Stations to the Company and such
other factors considered relevant in the industry, all in a fair and equitable
manner as they shall reasonably determine. All properties and other assets of
the Stations or otherwise relating to the business of the Broadcast Subsidiary
shall be considered assets of the Broadcast Subsidiary for purposes of making
the foregoing determinations, whether or not such assets are held in the name of
the Broadcast Subsidiary (provided that such assets shall not include the assets
listed on Exhibit B). Executive and the appraisers shall, during normal business
hours including during the period after this Agreement expires or terminates,
have access to all books and records necessary to fix the value of the Stations
and other assets of the Broadcast Subsidiary as aforesaid; provided, however, in
no event shall Executive or the appraisers disclose such information to any
third party other than the Executive's representatives and the court in any
action regarding the terms of this Agreement without the written consent of the
Company or Broadcast Subsidiary, and said information shall be treated in all
respects as confidential.
(k) The term 'Incentive Compensation' as used herein shall mean the amount
to be paid by the to Executive equal to
-7-
<PAGE>
the following percentages of the Cash Flow in each Contract Year in excess of
Base Cash Flow in each Contract Year determined as provided in this Agreement
(no Incentive Compensation shall be paid for any Contract Year in which Cash
Flow does not exceed Base Cash Flow):
<TABLE>
<CAPTION>
Cash Flow in
Excess of Base Cash Flow Percent
------------------------- -------
<S> <C>
First $1,000,000 7.5%
$1,000,000 to $2,000,000 10%
amount over $2,000,000 12.5%
</TABLE>
(1) The term 'Stations' shall have the meaning ascribed in Section 1(j)
above.
(m) The term 'Territory' as used herein means the ADI of each Station
during the term hereof, and for the period after the termination or expiration
hereof, each licensed television station as of the date of termination or
expiration, provided, however, that if at the time of termination or expiration
hereof the Company, the Broadcast Subsidiary or their divisions, affiliates or
subsidiaries own, operate or manage more than eight (8) Stations in the
aggregate, only the ADI of eight (8) Stations (designated by the Company at the
time of termination or expiration) shall constitute the Territory.
2. Term and Duties.
(a) Executive shall serve the Company and Broadcast Subsidiary as the
President and Chief Executive Officer of the Broadcast Subsidiary, but
regardless of Executive's title, he shall not be required to report to any
person or entity other
-8-
<PAGE>
than the Chairman/Chief Executive Officer of the Company, the Chief Operating
Officer of the Company, and the Subsidiary Board. All employees of the Broadcast
Subsidiary (and of the Company and its divisions, affiliates and other
subsidiaries when working on matters relating to the Broadcast Subsidiary or the
Stations, in addition to and not in lieu of any other reporting channels for
such other employees) shall report to Executive. The financial personnel of the
Broadcast Subsidiary shall also be responsible to the Chief Financial Officer of
the Company, in addition to their direct and primary reporting responsibilities
to Executive. This Agreement shall be for a term of four (4) Contract Years
commencing on the date hereof and thereafter shall automatically renew for
successive periods of two (2) Contract Years unless the Broadcast Subsidiary or
Executive shall give notice of non-renewal to the other not later than one
hundred eighty (180) days prior to the expiration of the then current term.
(b) During the term hereof, Executive shall, without additional
compensation other than travel expense reimbursement: (i) serve as a full
voting director on the Subsidiary Board, and (ii) receive notice of and
have the right (and if reasonably available, the obligation) to attend,
without the right to vote, the meetings of the Company Board. Executive shall
have the duties of leadership and responsibility normally associated with his
office. The Broadcast Subsidiary shall handle all matters relating to the
Stations and the Broadcast Subsidiary's other business, and Executive shall be
responsible for all decisions
-9-
<PAGE>
relating to the Stations and such other business. Executive and the other
members of the Subsidiary Board shall jointly set the strategic direction of the
Broadcast Subsidiary. Executive shall, at the beginning of each year, provide a
budget and plan for the Broadcast Subsidiary and shall submit such budget and
plan to the Subsidiary Board for approval. Executive's prerogatives shall
include the negotiation and execution of contracts on behalf of the Company and
Broadcast Subsidiary in the ordinary course of business of the Stations and
Broadcast Subsidiary; provided, however, that any contract not within the budget
or plan approved by the Subsidiary Board and which would require approval under
the Company's written financial policies shall require the approval of the
Chairman/Chief Executive Officer or Chief Operating Officer of the Company or
the Subsidiary Board. Notwithstanding the foregoing, programming agreements not
involving a change in network affiliation or the routine pre-emption of a
network show shall not require such approval. Executive's prerogatives shall
also include the employment, supervision and termination of personnel required
for the operation and management of the Stations and Broadcast Subsidiary.
Executive shall also have such other reasonable duties consistent with his
position as may from time to time be reasonably assigned to him by the
Subsidiary Board. The Company or Broadcast Subsidiary shall provide Executive
with a full-time secretary (both before and after the relocation referred to
below) to assist him in the performance of his duties.
-10-
<PAGE>
(c) For so long as Executive is employed hereunder, Executive agrees to
devote his time, energy and skill to the performance of the duties of his
employment, and not to engage directly or indirectly in any other active work,
but time for vacations, holidays, sick time and time spent for civic and
charitable activities is excepted.
(d) The Company and Broadcast Subsidiary shall indemnify Executive (and
advance any and all expenses) to the full extent permitted by Section 145 of the
Delaware General Corporation Law (if the Broadcast Subsidiary is organized in
another jurisdiction, then the corresponding provision in such jurisdiction) and
any successor provision. Such indemnification and advancement shall survive the
termination or expiration hereof. To the extent maintained for any executive
officer of the Company or Broadcast Subsidiary, the Company or Broadcast
Subsidiary shall maintain errors and omissions insurance covering Executive with
respect to the discharge of his duties hereunder.
3. Compensation and Benefits.
(a) Effective as of the date hereof Executive shall receive a base salary
('Base Salary') in the amount of $207,200 per year, provided, however, that,
during the term hereof, the Base Salary then in effect shall be increased by
$25,000 for the first additional Station other than WTWC-TV in Tallahassee
(i.e., the first Station in addition to WHOA-TV other than WTWC-TV), and by
$25,000 for each subsequent additional Station (up to five such additional
Stations in the aggregate) acquired, owned, operated or managed by the Company,
the
-11-
<PAGE>
Broadcast Subsidiary or any of their divisions, affiliates (except Trivest) or
subsidiaries to compensate Executive for the increased responsibilities he will
assume with respect to such additional Stations. The increase will become
effective upon the date of such acquisition or commencement of ownership,
operation or management. The Base Salary will not be decreased if additional
Station(s) are sold. If more than five additional Stations are acquired during
the term hereof, the Subsidiary Board shall determine an equitable increase to
the Base Salary, if necessary, so that it is consistent with salaries prevailing
in the market for executives with similar responsibilities. Notwithstanding the
foregoing the Base Salary shall be increased to a minimum of $232,200 effective
July 1, 1996 and $282,200 effective July 1, 1997 if it has not otherwise been
increased to at least such levels through the acquisition, ownership, operation
or management of additional Stations. The Company or Broadcast Subsidiary shall
pay the Base Salary bi-weekly in accordance with its personnel practices. Any
increases to the Base Salary not provided for in this Section shall be at the
sole discretion of the Subsidiary Board.
(b) Within thirty (30) days from the date hereof the Company or Broadcast
Subsidiary will reimburse Executive for his reasonable legal fees and other
costs associated with negotiating, drafting and entering into this Agreement.
(c) Executive shall also be entitled to Incentive Compensation, if Cash
Flow exceeds Base Cash Flow in a Contract Year. Executive's Incentive
Compensation, if any, shall be paid
-12-
<PAGE>
by either the Company or Broadcast Subsidiary between January 1 and March 15 of
the year following the Contract Year to which it relates. Notwithstanding any
other provision hereof, after the expiration hereof or termination of
Executive's employment by any party for any reason other than by the Broadcast
Subsidiary for Cause, Executive shall be entitled to receive his proportionate
share of Incentive Compensation (i.e., calculated through the date of
termination or expiration for the Contract Year in which the termination or
expiration of employment occurs). For any partial Contract Year, including 1995,
or Contract Year in which a Station is acquired, Cash Flow shall be annualized.
Incentive Compensation for any partial Contract Year (e.g., 1995), if any is
payable, shall be prorated.
(d) Executive shall be entitled to two (2) weeks of vacation following
each six (6) months of service hereunder.
(e) During the term hereof Executive shall, except to the extent not
available (at a reasonable cost) due to Executive's noninsurability or to
nondiscrimination provisions under applicable law, be entitled to participate in
any and all benefits from time to time afforded to senior management employees
of the Company, including, by way of example and not limitation, health,
accident, hospitalization, disability and life insurance programs, pension plan
and other similar employee fringe benefit plans. Executive shall participate in
such benefits, plans and programs to the same level and extent as the Company's
most senior officer.
-13-
<PAGE>
(f) The Company prefers to establish the headquarters of the Broadcast
Subsidiary in Nashville, Tennessee and Executive is willing to relocate to
Nashville prior to August 15, 1995 (beginning of his daughter's school year).
The Company or Broadcast Subsidiary shall provide a customary executive
relocation package which shall include reimbursement of all direct and indirect
costs associated with the relocation, such as moving expenses for Executive's
family and household belongings (Executive shall obtain a reasonable number of
estimates and submit them to the Company for approval), a housing allowance of
$3,000/month until Executive's current residence is sold or the first
anniversary of this Agreement, whichever occurs first, start up fees and
payments (estimated at $10,000), house hunting trips and other items covered in
customary executive relocation packages. If desired by Executive or the Company,
the Company shall hire an independent consultant to assist in determining the
relocation package. During the period prior to any relocation, the Company or
Broadcast Subsidiary shall reimburse Executive (up to $2,000 per month) for the
lease and related expenses of the office in Augusta, Georgia. Executive shall
submit documentation for such expenses to the Company.
(g) Executive shall have a twenty percent (20%) interest in the Equity
Appreciation of the Stations and Broadcast Subsidiary the 'Interest'). Upon the
expiration of this Agreement or in the event of the termination of Executive's
employment by any party for any reason other than by the
-14-
<PAGE>
Broadcast Subsidiary for Cause, Executive shall be paid an amount equal to the
Interest (20% times the Equity Appreciation of the Stations and Broadcast
Subsidiary as of the date of such termination or expiration). Such payment shall
be made within one hundred fifty (150) days of the termination or expiration
provided, however, that fifty percent (50%) of the amount, if any, over $250,000
(the 'Deferred Portion') may, at the Company's option, be paid on the first
anniversary of the first payment (i.e., not later than 515 days from the
termination or expiration) provided, further, that the Deferred Portion shall be
evidenced by a negotiable promissory note bearing interest at the prime rate as
announced by Citibank, NA and secured by a letter of credit each in form
reasonably acceptable to Executive. In the event that payments are due on
account of the Executive's death, payment shall be made to the Executive's
surviving spouse to whom he was married at his date of death or, if none, to his
estate.
(j) Executive shall receive options to purchase a not less than 200,000
shares of stock of the Company which shall be on the terms and vest pursuant to
the schedule attached as Exhibit C. The Company Board may, in its discretion,
increase the number of options issued to Executive. The exercise price per share
of all options shall be equal to the greater of $2.50 and the fair market value
on the date the options vest.
-15-
<PAGE>
4. Expenses.
Executive shall be reimbursed by either the Company or Broadcast
Subsidiary for travel, entertainment and other expenses reasonably incurred in
connection with the performance of his duties hereunder within 30 days of
submission of supporting documentation therefor.
Executive and the Subsidiary Board shall establish a budget or estimates
for travel and other expenses which they anticipate will be incurred in
connection with identifying, negotiating and acquiring Stations and arranging
for the financing of such acquisitions.
5. Confidential Information.
During the term of this Agreement and for the one year period following
the termination or expiration of this Agreement for any reason whatsoever,
Executive will not disclose to anyone, and will not use, modify or adapt (except
in the course of performing Executive's duties hereunder any Confidential
Information of the Company or Broadcast Subsidiary, without first obtaining the
Company's or Broadcast Subsidiary;s written consent.
6. Records. All records of the Company and Broadcast Subsidiary and their
divisions, affiliates and subsidiaries, files, reports, price lists, lists,
documents and like items, and all copies thereof, relating to their business or
Confidential Information, which shall be prepared by Executive or which shall be
disclosed to or which shall come into the possession of Executive, shall be and
remain the sole
-16-
<PAGE>
and exclusive property of the Company and Broadcast Subsidiary. Executive agrees
that upon the termination or expiration of his employment hereunder, or at any
other prior time, he will upon request promptly deliver to the Company or
Broadcast Subsidiary the originals and all copies of any of the foregoing that
are in his possession, custody or control, and any other property belonging to
the Company or Broadcast Subsidiary.
7. Cooperation. Executive agrees to cooperate both during this Agreement
and for up to three (3) years following the termination or expiration of this
Agreement for any reason whatsoever, to the extent and in the manner reasonably
requested by the Company or Broadcast Subsidiary, in the prosecution or defense
of any claims, litigation (other than litigation brought by the Company or
Broadcast Subsidiary against Executive or by Executive against the Company or
Broadcast Subsidiary) or other proceeding involving property of the Company or
Broadcast Subsidiary or Confidential Information provided that such cooperation
is not adverse to Executive's interest, does not require a significant amount of
time or travel, and does not interfere with the performance of Executive's
obligations to his then current employer or business. The Company shall
reimburse Executive for all expenses and other costs incurred by Executive in
performing under this Section 7.
8. Noncompetition. Executive covenants and agrees that during the
Restricted Period he will not, within the Territory, without the prior written
consent of the Company or Broadcast Subsidiary, for himself, or as a consultant,
or as a
-17-
<PAGE>
management, supervisory or executive employee, or as the owner of any company or
interest therein (other than an interest of less than 5% in a public company),
partnership or business concern, engage in a Competing Business. For purposes
hereof the 'Restricted Period' shall mean the period of Executive's employment
hereunder and, if Section 10(b) below is applicable, then also during the period
provided therein, and if Section 10(b) is not applicable, then during the one
(1) year period after the termination of employment.
9. Nonsolicitation of Employees. Executive covenants and agrees that
during his employment hereunder and for a period of one (1) year following the
termination of employment for any reason whatsoever, he will not, on his own
behalf or in the service or on behalf of others, recruit to hire any person
employed by the Broadcast Subsidiary.
10. Termination.
(a) The employment of Executive under this Agreement may be terminated
prior to the end of the regular term hereof by the Broadcast Subsidiary (i) in
the event of Executive's Disability by written notice from the Broadcast
Subsidiary or (ii) for Cause after giving Executive thirty (30) days' written
notice and opportunity to cure, such notice to be served personally or in
accordance with Section 12 hereof, and with such Cause being specified in the
notice.
(b) In the event of the termination of Executive's employment either by
the Company or Broadcast Subsidiary for any reason other than by the Broadcast
Subsidiary for Cause, or by
- 18 -
<PAGE>
Executive following a Change of Control or an Acceleration Event, Executive
shall be entitled, without any obligation to mitigate and in addition to any and
all other amounts owed to him, to receive his Base Salary following the
termination of his employment for the period equal to the greater of (i) twelve
(12) months and (ii) the remainder of the initial term of this Agreement (with
payment of said Base Salary to be made as if such employment had not been
terminated).
(c) The obligation of the Company and Broadcast Subsidiary to indemnify or
pay amounts to Executive or his estate pursuant to this Agreement, and the
covenants of the Executive contained in Sections 5, 6, 7, 8, and 9, shall
survive the termination of this Agreement.
11. Remedies.
Executive acknowledges and agrees that, by virtue of the duties and
responsibilities attendant to his employment hereunder and the special knowledge
of the Company's and Broadcast Subsidiary's affairs, business,
clients and operations that he will have as a consequence of such employment,
irreparable loss and damage will be suffered by the Company and Broadcast
Subsidiary if Executive should breach or violate any of the covenants and
agreements contained in Sections 5, 6, 7, 8, and 9; and Executive further
acknowledges and agrees that each of such covenants are reasonably necessary to
protect and preserve the Business of the Company and Broadcast Subsidiary.
Executive, therefore, agrees and consents that, in addition to any other
remedies available to it, the Company and Broadcast
-19-
<PAGE>
Subsidiary shall be entitled to an injunction to prevent a breach by the
Executive of any of the covenants or agreements contained in such Sections.
12. Notices. Any notice required or permitted to be given to a party by
another party hereto pursuant to this Agreement shall be in writing and shall be
personally delivered, delivered by commercial delivery service such as FedEx, or
sent by United States mail, certified, or registered, return receipt requested,
first class postage and charges prepaid, in envelopes addressed to the parties
as follows:
Executive: Steven M. Friedheim
c/o Friedheim Communications, Inc.
2918 Professional Parkway
Augusta, Georgia 30907
Company: Ventura Entertainment Group Ltd.
11466 San Vicente Boulevard
Los Angeles, California 90049
Broadcast
Subsidiary: Soundview Media Investments, Inc.
631 2nd Avenue South
Nashville, Tennessee
or at such other addresses as shall be designated in writing as aforesaid by a
party to the other parties thereto. Notices delivered in person or by commercial
delivery service shall be effective on the date of delivery. Notices sent by
United States mail shall be effective one day after mailing as provided above.
13. Assignment: Exhibits. This Agreement may not be assigned by any
of the parties hereto. All exhibits attached to this Agreement and referred to
herein are hereby incorporated into this Agreement as if set forth herein.
-20-
<PAGE>
14. Amendment. No amendment or modification of this Agreement shall be
valid or binding unless made in writing and signed by the parties hereto.
15. Waiver. The waiver by either the Company or Broadcast Subsidiary, on
the one hand, or Executive, on the other hand, of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of the same or any other provision.
16. Severability: Obligations. If any provision is determined to be
unenforceable by court of competent jurisdiction, it shall be modified by the
minimum amount necessary to render it valid, and the other provisions of this
Agreement shall not be affected thereby. The Company's and Broadcast
Subsidiary's obligations hereunder shall be joint and several.
17. Governing Law; Costs. This Agreement shall be governed by and
construed in accordance with the laws of the State of California. In the event
of a breach of this Agreement by either party, the prevailing party, as
determined by a court of competent jurisdiction, shall, in addition to his or
its other damages and remedies, be entitled to reimbursement of his/its costs,
including reasonable attorneys' fees from the non-prevailing party.
18. Counterparts. This Agreement may be executed in counterparts, and each
executed counterpart shall be treated as a complete Agreement.
-21-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
have affixed their seals as of the date first above written.
SOUNDVIEW MEDIA INVESTMENTS, INC. VENTURA ENTERTAINMENT GROUP LTD.
By: By:
____________________________ ____________________________
Title: Floyd W. Kephart, Chairman
_________________________ and Chief Executive Officer
STEVEN M. FRIEDHEIM
STEVEN M. FRIEDHEIM
__________________________
-22-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
have affixed their seals as of the date first above written.
SOUNDVIEW MEDIA INVESTMENTS, INC. VENTURA ENTERTAINMENT GROUP LTD.
By: FLOYD W. KEPHART By: FLOYD W. KEPHART
____________________________ ____________________________
Title: CEO Floyd W. Kephart, Chairman
_________________________ and Chief Executive Officer
STEVEN M. FRIEDHEIM
__________________________
-22-
<PAGE>
Exhibit A
Equity Appreciation
Formula for Increased Value of
Stations and Broadcast Subsidiary
1. The increased value for purposes of the Equity Appreciation shall be
the 'value of the Stations and other assets of the Broadcast Subsidiary as of
the date of determination' (as described in paragraph 2 below):
(a) less (i) the actual purchase price paid for any Station or other assets
inclusive of debt and liabilities assumed; (ii) all interest paid or accrued
on any debt relating to the purchase of any Station which has not been paid
by the Broadcast Subsidiary; (iii) all cash amounts contributed by the
Company to fund the operations of the Broadcast Subsidiary or any Station
provided such cash has not been previously repaid to the Company; (iv) the
fair market value of any common stock or other securities of the Company
which were issued to make an equity contribution to the Broadcast
Subsidiary, as of the date of such contribution, including but not limited
to stock or securities issued to sellers of stations or assets, investment
bankers, investors or the public (except to the extent already included in
the purchase price in clause (a)(i) above); and (v) all capital expenditures
made by any person or entity except the Broadcast Subsidiary on behalf of
the Broadcast Subsidiary less accumulated depreciation,
(b) plus (i) all net working capital (current assets minus current
liabilities) of the Broadcast Subsidiary and Stations as of the date of
determination; (ii) all distributions and payments, direct or indirect,
including cash and the fair market value of property, whether by dividend or
otherwise, made from the Broadcast Subsidiary and/or the Stations (owned by
the Company, Broadcast Subsidiary or their divisions, affiliates (other than
Trivest) or subsidiaries) to the Company or any of its divisions, affiliates
or other subsidiaries at any time during the period the Company, Broadcast
Subsidiary or any of their divisions, affiliates (other than Trivest) or
subsidiaries owned the Stations through the date of determination, except to
the extent, if any, that such distributions and payments are repayments of
cash contributions under clause (a)(iii) above; and (iii) the actual sale
price paid for any and all Stations or other assets sold by the Company,
Broadcast Subsidiary or any of their divisions, affiliates (other than
Trivest) or subsidiaries, whether in cash, stock or otherwise, inclusive of
debt and liabilities assumed (if, in connection with any such sale(s), net
working capital is not transferred to the buyer and is not retained by the
Broadcast Subsidiary, e.g. if it is transferred to the Company, then such
net working capital shall also be added to the foregoing); provided,
however, that to the extent all cash flow from the Stations
<PAGE>
is not used to reduce any debt related to the purchase of Stations, the
foregoing shall be calculated as if such cash flow was used to reduce such
debt
2. The 'value of the Stations and other assets of the Broadcast Subsidiary
as of the date of determination' shall be the aggregate broadcast cash flow of
all the Stations for the twelve-month period prior to such determination times
the multiple. The multiple shall be the average of the multiples of broadcast
cash flow (calculated in the same manner) to arrive at the purchase price for
the last ten (10) comparable transactions (similar market size, audience share,
affiliation) announced either in the six-month period prior to the determination
date or, if there are less than ten (10) comparable transactions for such
period, then in the twelve-month period prior to the determination date.
3. Based on the Company's records the net amount of the actual purchase
price paid for WHOA-TV and, as of the date hereof, the other assets of the
Broadcast Subsidiary and the other amounts and adjustments under subparagraph
1(a) above minus the amounts and adjustments under subparagraph 1(b) above, also
as of the date hereof, is $8,800,000 (to be reduced prior to December 31, 1995
following the exchange with the former limited partners of Frey Communications
and the repayment of debt to Marine Midland Bank). If requested by Executive or
the Broadcast Subsidiary on or prior to April 1 of any Contract Year the
Broadcast Subsidiary and Executive shall promptly discuss in good faith and
agree, tentatively, to the estimated amount of increased value of the Stations
and other assets of the Broadcast Subsidiary as of December 31 of the prior
Contract Year. Such amount shall be an estimate only, subject to receipt of
additional information and future events, and such tentative estimate shall not
be paid to Executive.
4. Upon termination of Executive's employment by any party for any reason
other than by the Broadcast Subsidiary for Cause, the actual amount of the
Interest shall be determined and paid to Executive in accordance with the above
formula and the procedures and provisions set forth in the Agreement. The
provisions set forth in this Exhibit A shall be subject to the provisions of the
Agreement including Exhibit B.
Note: The parties intend that Executive shall have a 20% interest in the equity
appreciation of the Stations and other assets of the Broadcast Subsidiary.
Promptly after the date hereof the parties will discuss the formula and its
application in good faith, including whether 'net working capital' referred to
in subparagraph 1(b)(i) above should be defined to be 'cash minus current
liabilities' instead of 'current assets minus current liabilities'. The parties
may, subject to mutual agreement on or before September 1, 1995, revise the
above provisions (including subparagraph 1(b)(i)) if necessary to better or
further reflect their intent.
<PAGE>
Exhibit B
Excluded Assets
A11 proceeds of sale or income from WHHY am and WHHY fm.
<PAGE>
Exhibit C
Options to be Issued to Executive
<TABLE>
<CAPTION>
Number of
Shares which
may be Acquired
upon Exercise
of Options
Issued to
Executive in
Contract Year Contract Year
<S> <C>
First Contract Year 100,000
(1995)
Second Contract Year 33,000
(1996)
Third Contract Year 33,000
(1997)
Fourth Contract Year 34,000
(1998)
</TABLE>
Notes: Options for the First Contract Year shall vest monthly on the last day
of each month, beginning with August, at the rate of 20,000 shares per
month.
Options for the Second Contract Year shall vest monthly on the last
day of each month, beginning with January, at the rate of 2,750 shares
per month.
Options for subsequent Contract Years shall vest on January 1 of the
Contract Year.
Amounts shown are minimums; the Company Board may increase the amounts
in its discretion.
Terms of options
1. Executive shall have the option to purchase from the Company a maximum
of 200,000 shares of Common Stock, .001 par value per share ('Shares') for a
total purchase price equal to the Exercise Price per share, payable as provided
in subsection (iv) below. Options covering the Shares shall vest pursuant to the
schedule set forth above. Executive may exercise vested options from time to
time but before July 24, 2005 or the fifth anniversary of the termination of
Executive's employment, whichever occurs first, by delivering written notices of
Executive's exercise of the
<PAGE>
option to the Company, to the attention of the Chairman of the Compensation
Committee, which notices shall include the number of Shares for which Executive
is then exercising his option.
2. Notwithstanding the foregoing, if (a) the Broadcast Subsidiary
terminates the employment of Executive for Cause or (b) the Executive terminates
his employment hereunder (except for a termination by Executive following a
Change of Control or Acceleration Event), the options shall immediately become
null and void, except with respect to that portion of the options granted
hereunder which have already been properly exercised. If Executive dies or
suffers a Disability all unvested options shall vest. If Executive's employment
hereunder is terminated by the Company or Broadcast Subsidiary other than by the
Broadcast Subsidiary for Cause, or by Executive following a Change or Control or
Acceleration Event, then all options shall immediately vest and Executive shall
continue to be entitled to exercise the options as provided herein.
3. Executive's written notice of exercise of an option shall be
accompanied by a check for the total purchase price. If Executive is no longer
employed by the Broadcast Subsidiary or the Company, Executive's written notice
of exercise of an option shall be accompanied by either a check for the total
purchase price, by Executive's written instruction to deduct from the Shares
then otherwise purchased the least number of Shares needed to meet or exceed the
total purchase price or by a stock certificate representing Shares already in
Executive's possession. If payment is in whole or in part by Shares, such Shares
shall be valued at the closing bid price on the last business day before the
written notice of exercise is given as reported in the Wall Street Journal on
NASDAQ or any public stock exchange wherever Shares are currently listed (the
'Per Share Trading Price').
4. Executive may transfer an option granted hereunder to Executive's
spouse or children, or to a trust for the benefit of Executive, Executive's
spouse and/or Executive's children; provided, however, that such transferee
shall be able to exercise such option only if and when Executive could have
exercised such option and any Shares acquired upon exercise of such transferred
option shall be subject to the same limitations or restrictions that would have
applied had Executive exercised such option. The payment provisions of the
foregoing paragraph shall also apply to such transfers.
Subject to the foregoing, the options granted hereunder shall be
non-transferable by Executive, either voluntarily or by operation of law,
otherwise than by will or the laws of descent and distribution, and shall be
exercisable during the option holder's lifetime only by the option holder,
regardless of any community property interest therein of the spouse of the
option holder, or
<PAGE>
such spouse's successors in interest. If the spouse of the option holder shall
have acquired a community property interest in such option, the option holder,
or the option holder's permitted successors in interest, may exercise the option
on behalf of the spouse of the option holder or such spouse's successors in
interest.
5. The Company shall have the right to require Executive to pay to the
Company, in addition to the full purchase price of Shares acquired by exercise
of any option, an amount sufficient to satisfy any federal, state or local tax
withholding requirements prior to the delivery of any Shares hereunder, or to
retain an appropriate number of Shares, valued at the Per Share Trading Price,
necessary to satisfy such withholding obligation.
6. In the event of any change in the Shares of the Company by reason of
any stock dividend, recapitalization, reorganization, merger, consolidation,
split-up, combination or exchange of Shares or of any similar change affecting
Shares, the number of Shares subject to the options provided herein and their
purchase price per share shall be appropriately adjusted consistent with such
change in such manner as the Company Board may deem equitable to prevent
dilution or enlargement of the option rights granted to Executive. Any
adjustment so made shall be final and binding upon Executive.
7. Executive hereby represents and warrants that if and when Executive
purchases all or any portion of the Shares, such purchase will be for
Executive's own account and solely for investment and not with a view toward
resale or other distribution. Executive acknowledges and agrees that some or all
of the Shares have not been and will not be registered under the Securities Act
of 1933, as amended (the 'Act'), or under the securities laws of any state, and
may not be sold, assigned, transferred or otherwise disposed of (except, to the
extent permitted by applicable securities laws, to any trust in which Executive
is the grantor and sole beneficiary during his lifetime and/or to any direct
family members and/or to Executive's spouse) unless the Shares have been
registered and qualified under the Act and any applicable state's securities
law, or unless an exemption from such registration or qualification is
available.
Executive further acknowledges that some or all of the Shares may
constitute 'restricted securities' within the meaning of Rule 144 promulgated by
the Securities and Exchange Commission and the Shares may not be sold, assigned,
transferred or otherwise disposed of except and unless all applicable conditions
set forth in Rule 144 are satisfied or unless an exemption from registration
under the Act is otherwise available.
<PAGE>
The certificates representing some or all of the Shares may contain the
following legend:
'The shares evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended (the 'Act'), or under
the laws of any state and may not be sold, assigned, transferred or
otherwise disposed of unless such shares have been registered or
qualified under the Act and any applicable state's securities law,
or unless an exemption from such registration or qualification is
available.'
After endorsement, the certificates representing the Shares shall be
delivered to Executive, who shall, subject to the terms of this Agreement, be
entitled to exercise all rights of ownership of such Shares. Certificates
representing Shares not bearing a legend shall be delivered to Executive in
exchange for the certificates bearing legends as and when, from time to time the
Company receives an opinion of its or Executive's counsel to the effect that
such legends may be removed, which opinion the Company agrees to seek in good
faith if so requested by Executive.
8. The Exercise Price per Share for each option granted hereunder shall
equal the greater of $2.50 per Share and the fair market value on the date the
options vest.
9. If Executive's employment is terminated either by the Company or
Broadcast Subsidiary other than for Cause, or by Executive following a Change of
Control or Acceleration Event, Executive will have the right exercisable at any
time and upon 10-day's notice to the Company, to require the Company to
repurchase all outstanding vested and unvested options by paying to Executive
the Spread Amount. For purposes of this Agreement, the Spread Amount shall mean
the difference between the Exercise Price per Share and the Per Share Trading
Price on the date notice is given by Executive multiplied by the number of
outstanding options.
<PAGE>
Steven M. Friedheim
President and Chief Executive Officer
Friedheim Communications, Inc.
2918 Professional Parkway
Augusta, Georgia 30907
July 24, 1995
Mr. Floyd Kephart
Chairman and Chief Executive Officer
Ventura Entertainment Group Ltd.
11466 San Vicente Boulevard
Los Angeles, California 90049
Re: My Representation and Company's Agreement Regarding
Non-Compete and Non-Solicitation Covenants
Dear Floyd:
As we discussed I am subject to certain non-compete and non-solicitation
covenants contained in my prior agreement. Naturally we have to be sure that we
do not to violate them. Accordingly I have had Jerry describe them on the
attached and would appreciate your returning a signed copy to me.
Also, as you know I have an agreement with Oppenheimer & Co. for the
arrangement of financing.
Very truly yours,
STEVEN M. FRIEDHEIM
Steven M. Friedheim
<PAGE>
Executive's Representation and Warranty
and Company's Agreement Regarding Restrictions
Steven M. Friedheim ('Executive') represents and warrants to Ventura
Entertainment Group Ltd. and Soundvlew Media Investments, Inc. (collectively
'Company') that he is not a party to any agreement, contract or understanding,
whether of employment or otherwise, which would in any way restrict or prohibit
him from entering into or undertaking his obligations under the Employment
Agreement dated the date hereof between Executive and the Company except that
pursuant to an Agreement dated February 23, 1995 among Executive, Augusta Family
Broadcasting, Inc. ('AFBI'), Columbus Family Broadcasting, Inc. ('CFBI') and
John D. Pezold, (collectively the 'Pezold Group'), Executive may not engage in
the operation of a television station within forty-five (45) miles of the
Richmond County, Georgia Courthouse or the Government Center of Columbus,
Georgia and neither Executive nor any entity employing him (e.g., the Company),
may solicit, attempt to solicit, divert or hire away any employee of AFBI or
CFBI to work for Executive or any entity (the Company) employing him. A breach
of the foregoing could, among other things, cause Executive to forfeit a second
payment of $856,000 due him. These restrictions apply until March 15, 1997.
Executive makes the foregoing representation and warranty regarding the
scope of applicable restrictions on the one hand, and the Company agrees with
Executive not to acquire a station within the aforesaid areas, solicit, attempt
to solicit, divert or hire any AFBI or CFBI employee or otherwise cause a
claimed or actual violation of the foregoing restrictions on the other hand.
Executive has provided the Company with a list of the employees of AFBI and
CFBI.
Executive agrees to indemnify, defend and hold harmless the Company from
any claim, alleged claim, loss, liability, damage or expense resulting from
Executive's breach of the foregoing representation and warranty, including any
claim by a third party based on a restriction or obligation not described above,
and the Company agrees to indemnify, defend and hold harmless Executive from any
claim, alleged claim, loss, liability, damage or expense resulting from the
Company's breach of its agreement set forth above, including any claim or setoff
by the Pezold Group based on the Company's acquisition of a station within the
aforesaid areas or the Company's solicitation or hiring of a restricted
employee. In the event of any breach of this agreement by either party the
prevailing party, as determined by a court of competent jurisdiction, shall be
entitled to reimbursement of his/its costs, including reasonable attorneys'
fees, from the non-prevailing party.
Date: July 24, 1995
VENTURA ENTERTAINMENT GROUP LTD. SOUNDVIEW MEDIA INVESTMENTS, INC.
By: ____________________________ By: _____________________________
Floyd W. Kephart, Chairman Title: __________________________
and Chief Executive Officer
STEVEN M. FRIEDHEIM
STEVEN M. FRIEDHEIM
________________________________
<PAGE>
Executive's Representation and Warranty
and Company's Agreement Regarding Restrictions
Steven M. Friedheim ('Executive') represents and warrants to Ventura
Entertainment Group Ltd. and Soundvlew Media Investments, Inc. (collectively
'Company') that he is not a party to any agreement, contract or understanding,
whether of employment or otherwise, which would in any way restrict or prohibit
him from entering into or undertaking his obligations under the Employment
Agreement dated the date hereof between Executive and the Company except that
pursuant to an Agreement dated February 23, 1995 among Executive, Augusta Family
Broadcasting, Inc. ('AFBI'), Columbus Family Broadcasting, Inc. ('CFBI') and
John D. Pezold, (collectively the 'Pezold Group'), Executive may not engage in
the operation of a television station within forty-five (45) miles of the
Richmond County, Georgia Courthouse or the Government Center of Columbus,
Georgia and neither Executive nor any entity employing him (e.g., the Company),
may solicit, attempt to solicit, divert or hire away any employee of AFBI or
CFBI to work for Executive or any entity (the Company) employing him. A breach
of the foregoing could, among other things, cause Executive to forfeit a second
payment of $856,000 due him. These restrictions apply until March 15, 1997.
Executive makes the foregoing representation and warranty regarding the
scope of applicable restrictions on the one hand, and the Company agrees with
Executive not to acquire a station within the aforesaid areas, solicit, attempt
to solicit, divert or hire any AFBI or CFBI employee or otherwise cause a
claimed or actual violation of the foregoing restrictions on the other hand.
Executive has provided the Company with a list of the employees of AFBI and
CFBI.
Executive agrees to indemnify, defend and hold harmless the Company from
any claim, alleged claim, loss, liability, damage or expense resulting from
Executive's breach of the foregoing representation and warranty, including any
claim by a third party based on a restriction or obligation not described above,
and the Company agrees to indemnify, defend and hold harmless Executive from any
claim, alleged claim, loss, liability, damage or expense resulting from the
Company's breach of its agreement set forth above, including any claim or setoff
by the Pezold Group based on the Company's acquisition of a station within the
aforesaid areas or the Company's solicitation or hiring of a restricted
employee. In the event of any breach of this agreement by either party the
prevailing party, as determined by a court of competent jurisdiction, shall be
entitled to reimbursement of his/its costs, including reasonable attorneys'
fees, from the non-prevailing party.
Date: July 24, 1995
VENTURA ENTERTAINMENT GROUP LTD. SOUNDVIEW MEDIA INVESTMENTS, INC.
By: FLOYD W. KEPHART By: TED W. KAPLAN
Floyd W. Kephart, Chairman Title: CHAIRMAN
and Chief Executive Officer
STEVEN M. FRIEDHEIM
________________________________
<PAGE>
[LOGO]
VENTURA
------------------------
ENTERTAINMENT GROUP LTD.
------------------------
July 24, 1995
Mr. Steven M. Friedheim
c/o Friedheim Communications, Inc.
2918 Professional Parkway
Augusta, Georgia 30907
Dear Steve:
As we discussed, if after the September 1995 meeting of the board of directors
(the 'Board') of Ventura Entertainment Group Ltd. (the 'Company') you desire to
become a member of the Board, please let me know, and, anything contained in
your Employment Agreement to the contrary notwithstanding, the Company will
promptly cause you to be elected as a full voting member of the Board. Other
than normal travel expense reimbursement, indemnification and any D&O insurance
we maintain for our Board members, such service will be without additional
compensation.
Warmest personal regards,
FLOYD W. KEPHART
Floyd W. Kephart
FWK:sg
11466 San Vicente Boulevard, Los Angeles, California 90049 Phone: (310) 820-0607
Fax: (310) 820-0692
________________________________________________________________________________
Charlotte - Detroit - Los Angeles - Naples - New York - San Diego
<PAGE>
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