Exhibit 10.1

 

EXECUTION VERSION

 

GUARANTEE

 

This GUARANTEE (this “Guarantee”), dated as of October 15, 2012, is made by
L.F.P., Inc., a California corporation (“Guarantor”) in favor of New Frontier
Media, Inc., a Colorado corporation (the “Company”).

 

WITNESSETH:

 

WHEREAS, LFP Broadcast, Inc., a Colorado corporation (the “Merger Sub”), LFP
Broadcasting, LLC, ,a Delaware limit liability company (“Parent”), and the
Company have entered into an Agreement and Plan of Merger dated the date hereof
(as the same may be amended from time to time, the “Merger Agreement”) pursuant
to which, subject to the terms and conditions contained in the Merger Agreement,
Merger Sub shall commence a cash tender offer to purchase all outstanding shares
of Common Stock of the Company and, following the consummation of the Offer,
merge with and into the Company with the Company as the Surviving Corporation;
and

 

WHEREAS, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Guarantor is providing this Guarantee as a
condition and inducement to the Company’s willingness to enter into the Merger
Agreement;

 

NOW THEREFORE, the Guarantor agrees, for the benefit of the Company, as follows.

 

1.             Merger Agreement Definitions.  Unless otherwise defined herein or
the context otherwise requires, terms used in this Guarantee, including its
preamble and recitals, have the meanings provided in the Merger Agreement.

 

2.             Guarantee.

 

a.       As a material inducement to the Company’s willingness to enter into the
Merger Agreement and perform its obligations thereunder, Guarantor, intending to
be legally bound as primary obligor and not merely as surety, hereby,
absolutely, irrevocably and unconditionally guarantees to the Company the due
and punctual payment of any and all liabilities and obligations of Parent and
Merger Sub under or pursuant to the Merger Agreement, including, without
limitation, the Merger Sub’s obligations to pay (i) at the Offer Closing, the
Offer Price for each Share validly tendered pursuant to the Offer, (ii) at the
Effective Time, the Merger Consideration, any other payment pursuant to Articles
I, II and III of the Merger Agreement and any and all other amounts payable
pursuant to any other Section thereof, and (iii) any and all damages, losses,
costs and expenses arising out of or related to any breach of the Merger
Agreement by Parent or Merger Sub (collectively, together with the non-payment
obligations of Parent or Merger Sub pursuant to the Merger Agreement, the
“Guaranteed Obligations”), in each case regardless of any automatic stay under
bankruptcy law or similar concept that prevents the Company from pursuing any
remedies against Parent or Merger Sub.  Notwithstanding the foregoing sentence,
the Guarantor also agrees to cause Parent and Merger Sub to perform all of their
respective non-payment obligations pursuant to the Merger Agreement.  If the
Parent or Merger Sub fails to discharge its Guaranteed Obligations when due in
accordance with the applicable terms of the Merger Agreement, then the Company
may at any time and from time to time, in its sole discretion, and so long as
Parent or Merger Sub has failed to discharge the Guaranteed Obligations, take
any and all actions available hereunder or under applicable law to collect any
of the Guarantor’s liabilities hereunder in respect of the Guaranteed
Obligations.  The Guarantor shall pay, or cause to be paid, the Company not
later than the third day following

 

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receipt of a written notice by the Company of the failure of the Parent or
Merger Sub to pay any or all of the Guaranteed Obligations in accordance with
the Merger Agreement, the full amount then due and payable by Parent or Merger
Sub under the Merger Agreement in cash by wire transfer to the account set forth
in such notice.

 

b.       Subject always to the last sentence of Section 3 below, this Guarantee
is an absolute, unconditional, irrevocable and continuing guarantee of payment
and performance and not of collection and shall (i) remain in full force and
effect for so long as there are any Guaranteed Obligations outstanding pursuant
to the Merger Agreement, (ii) be binding upon Guarantor, its successors and
assigns, and (iii) inure to the benefit of and be enforceable by, the Company
and its successors and permitted assigns.  All obligations to which this
Guarantee applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon.  Any and all payments made
pursuant to this Guarantee shall be made in immediately available funds in
lawful money of the United States of America.

 

c.       Guarantor waives promptness, diligence, notice of the acceptance of
this Guarantee and of the obligations hereunder, presentment, demand for
payment, notice of non-performance, notice of default, notice of dishonor and
protest, notice of any obligations incurred and all other notices of any kind,
all defenses which may be available by virtue of any valuation, stay, moratorium
law or other similar law now or hereafter in effect, any right to require the
marshaling of assets of Merger Sub, Parent or any other Person interested in the
transactions contemplated by the Merger Agreement, and all surety-ship defenses
generally (other than defenses that are available to Merger Sub or Parent under
or in connection with the Merger Agreement (other than a Merger Sub or Parent
bankruptcy)); provided, however, that nothing contained herein shall constitute
a waiver of any notice required to be given to Parent or Merger Sub under the
Merger Agreement.

 

d.       Guarantor agrees that its obligations hereunder (i) shall be
enforceable against Guarantor without any party having to proceed first against
Merger Sub, Parent, or any other Person and (ii) shall not be released or
discharged, in whole or in part, or otherwise affected by the failure or delay
on the part of any other party hereto to assert any claim or demand or to
enforce any right or remedy against Merger Sub or Parent.

 

e.       Without expanding the obligations of the Guarantor hereunder, the
Guaranteed Obligations, and any of them, shall conclusively be deemed to have
been created, contracted or incurred in reliance upon this Guarantee, and all
dealings between Parent, Merger Sub or Guarantor, on the one hand, and the
Company, on the other, shall likewise be conclusively presumed to have been had
or consummated in reliance upon this Guarantee.

 

f.        Guarantor acknowledges that it will receive substantial direct and
indirect benefits from the transactions contemplated by the Merger Agreement and
that the waivers set forth in this Guarantee are knowingly made in contemplation
of such benefits.

 

3.             No Discharge.  The liability of the Guarantor under this
Guarantee shall not be limited or discharged by: (a) any release or discharge of
any obligation of Merger Sub or Parent contained in the Merger Agreement
resulting from any change in the corporate or other company existence, structure
or ownership of Merger Sub or Parent, or any insolvency, bankruptcy,
reorganization, liquidation or other similar proceeding affecting Merger Sub or
Parent or any of their respective assets; (b) any amendment or modification of
the Merger Agreement (or any document entered into in connection therewith), or
change in the manner, place or terms of payment or performance, or any change or
extension of the time of payment or performance of, renewal or alteration of,
any Guaranteed Obligation, any escrow arrangement or other security therefor,
any liability incurred directly or indirectly in respect thereof, or any
amendment or waiver of or any consent to any departure from the terms of the
Merger Agreement or the documents

 

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entered into in connection therewith, or the settlement of any dispute of any of
the terms thereof; (c) any lack of validity, legality or enforceability of the
Merger Agreement or any other agreement or instrument referred to herein,
including this Guarantee; (d) the failure of the Company (i) to assert any claim
or demand or to enforce any right or remedy (including any right of setoff)
against Merger Sub or Parent under the provisions of the Merger Agreement, this
Guarantee or pursuant to any applicable Law or otherwise, or (ii) to exercise
any right or remedy against any other guarantor of any Guaranteed Obligation;
(e)  the existence of any claim, set-off or other right that the Guarantor may
have at any time against Parent, Merger Sub or the Company, whether in
connection with any Guaranteed Obligation or otherwise; (f) the adequacy of any
means the Company may have of obtaining payment or performance of any Guaranteed
Obligations; (g) the addition, substitution or release of any Person now or
hereafter liable with respect to the Guaranteed Obligations or otherwise
interested in the transactions contemplated by the Merger Agreement; or (h) any
other act or omission that may or might in any manner or to any extent vary the
risk of the Guarantor or otherwise operate as a discharge of the Guarantor as a
matter of law or equity (other than payment of the Guaranteed Obligations);
provided that, notwithstanding any other provision of this Guarantee to the
contrary, the Company hereby agrees that the Guarantor may assert, as a defense
to, or release or discharge of, any payment or performance by the Guarantor
under this Guarantee, any claim, set-off, deduction, defense or release that
Parent or Merger Sub could assert against the Company under the terms of, or
with respect to, the Merger Agreement that would relieve each of Parent and Sub
of its obligations under the Merger Agreement.

 

4.             Postponement of Subrogation, etc.  Guarantor agrees that it will
not exercise against Parent or Merger Sub any rights of subrogation or
contribution, whether arising by contract or operation of law (including,
without limitation, any such right arising under bankruptcy or insolvency laws)
or otherwise in respect of any payment made or performance hereunder, under the
Merger Agreement or otherwise, until following the termination of this
Guarantee.  From time to time, any amount paid to the Guarantor on account of
any such subrogation rights prior to the termination of this Guarantee shall be
held in trust for the benefit of the Company and shall immediately be paid and
turned over to the Company in the form received by the Guarantor (duly endorsed
in favor of the Company, if required), to be applied against any portion of any
Guaranteed Obligation that is then due and payable, in accordance with the terms
hereof.  In furtherance of the foregoing, at all times prior to the termination
of this Guarantee, Guarantor shall refrain from taking any action or commencing
any proceeding against Merger Sub or Parent (or their respective successors or
assigns, whether in connection with a bankruptcy proceeding or otherwise) to
recover any amounts in the respect of payments made under this Guarantee to the
Company.

 

5.             Reinstatement, etc.  In the event that any payment in respect of
any Guaranteed Obligation is rescinded or is otherwise required to be returned,
this Guarantee shall continue to be effective and Guarantor shall remain liable
hereunder as if such payment had not been made.  The Company shall not be
obligated to file any claim relating to the Guaranteed Obligations in the event
that Merger Sub or Parent becomes subject to a bankruptcy, reorganization or
similar proceeding, and the failure of the Company to so file shall not affect
Guarantor’s obligations hereunder.

 

6.             Representations and Warranties of the Guarantor.  The Guarantor
hereby represents and warrants to the Company as follows:

 

a.       Organization.  Guarantor is duly organized and validly existing under
the laws of California and has all requisite power and authority to carry on its
business as now being conducted.

 

b.       Authorization.  (i) Guarantor has all requisite power and authority to
enter into this Guarantee and to consummate the transactions contemplated by
this Guarantee; (ii) the execution, delivery and performance of this Guarantee
by Guarantor and the consummation by Guarantor of the transactions contemplated
by this Guarantee have been duly authorized by all necessary

 

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action on the part of Guarantor; and (iii) this Guarantee has been duly executed
and delivered by Guarantor and constitutes a valid and binding agreement of the
Guarantor enforceable against Guarantor in accordance with its terms.

 

c.       No Violation; Consents.  The execution, delivery and performance of
this Guarantee by Guarantor does not, and the consummation by the Guarantor of
the transactions contemplated by this Guarantee will not, (i) conflict with, or
result in any violation or breach of, Guarantor’s organizational documents,
(ii) result in any violation or breach of, or constitute (with or without notice
or lapse of time, or both) a default (or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any material benefit)
under, or require a consent or waiver under, any contract to which Guarantor is
a party or by which Guarantor may be bound, in any case, for which the
violation, default or right would be reasonably likely to prevent or materially
impede, interfere with, hinder or delay the consummation by Guarantor of the
transactions contemplated by this Guarantee on a timely basis, or
(iii) contravene, conflict with, or result in a violation of any applicable Law
or Order.  No consent or filing with any Governmental Entity which has not been
obtained or made by the Guarantor is required for or in connection with the
execution and delivery of this Guarantee by the Guarantor, and the consummation
by Guarantor of the transactions contemplated hereby.

 

d.       Financial Capacity. Guarantor represents that it has the financial
capacity to pay and perform all of its obligations under this Guarantee, and all
funds necessary to fulfill the Guaranteed Obligations under this Guarantee shall
be available to the Guarantor for as long as this Guarantee shall remain in
effect.

 

e.       Reliance.  Guarantor acknowledges that the Company has specifically
relied on the accuracy of the representations and warranties contained in this
Section 6 and in the event of any breach hereof, the Company shall have a right
to seek appropriate damages and any such damages shall be a “Guaranteed
Obligation” for purposes of this Guarantee.

 

7.             Acknowledgment and Non-Contravention of Specific Performance.  
Guarantor acknowledges the terms and provisions of Section 9.13 of the Merger
Agreement, and hereby covenants and agrees that it will not object to, or take
any position inconsistent with respect to, whether in a court of law or
otherwise, the appropriateness of specific performance as a remedy for a breach
of the Merger Agreement; provided, however, that nothing in this Section 7 shall
limit the ability of the Guarantor to assert any defense or take any other
position available to Merger Sub or Parent with respect to any obligation or
alleged obligation of Merger Sub or Parent under the Merger Agreement, this
Guarantee or any other agreement.

 

8.             No Assertion of Invalidity.  Guarantor covenants and agrees that
it shall not institute, and shall cause each of its Affiliates not to institute,
any proceedings asserting that this Guarantee is illegal, invalid or
unenforceable in accordance with its terms.

 

9.             Further Assurances.  Guarantor covenants and agrees that at any
time prior to the Effective Time, upon the Company’s reasonable request, the
Guarantor shall execute and deliver such other instruments and take such other
actions as the Company may reasonably deem necessary or desirable in order to
make this Guarantee enforceable in all applicable jurisdictions in which the
Guarantor is located or organized or in which Guarantor has any assets,
including additional copies of this Guarantee, in English or translated in any
applicable foreign language, duly executed by Guarantor, with any necessary
formalities (such as notarization) properly complied with in accordance with the
requirements of any applicable jurisdiction.

 

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10.           Assignment.  Neither this Guarantee nor any rights, interests and
obligations hereunder will be assigned by operation of law or otherwise without
the prior written consent of each of the other parties, and any attempted
assignment without such consent shall be void and of no effect.

 

11.           Amendments, etc.  No amendment to or waiver of any provision of
this Guarantee, nor consent to any departure by the Guarantor herefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Company, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. This Guarantee may not be
amended except by an instrument in writing signed by each of the parties hereto.

 

12.           Notices. All notices, requests, consents, claims, demands, waivers
and other communications hereunder shall be in writing and shall be deemed to
have been given (i) when delivered by hand (with written confirmation of
receipt), (ii) when received by the addressee if sent by a nationally recognized
overnight courier (receipt requested), (iii) on the date sent by facsimile (with
confirmation of transmission) if sent during normal business hours of the
recipient, and on the next Business Day if sent after normal business hours of
the recipient, or (iv) on the third Business Day after the date mailed, by
certified or registered mail, return receipt requested, postage prepaid.  Such
communications must be sent to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 12):

 

if to the Guarantor:

 

L. F. P., Inc.

8484 Wilshire Blvd., Suite 900

Beverly Hills, CA 90211

Facsimile: (323) 651-2936

Attention: Michael H. Klein, President

with additional copies (which will not constitute notice) to:

 

Lipsitz Green Scime Cambria LLP

42 Delaware Avenue, Suite 120

Buffalo, New York 14202-3924

Facsimile: (716) 849-1315

Attention: Paul J. Cambria, Jr., Esq.

 

if to the Company:

 

New Frontier Media, Inc.

6000 Spine Road, Suite 100

Boulder, CO 80301

Facsimile: (303) 381-2369

Attention: General Counsel

 

with additional copies (which will not constitute notice) to:

 

Alston & Bird LLP

950 F Street, N.W.

Washington, DC 20004-1404

Facsimile: (202) 654-4879

Attention: Keith E. Gottfried, Esq.

 

and

 

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Holland & Hart LLP

One Boulder Plaza

1800 Broadway, Suite 300

Boulder, CO 80302-5234

Facsimile: (303) 957-5549

Attention: Scott A. Berdan, Esq.

 

13.           No Waiver; Remedies.  No failure on the part of the Company to
exercise any power, right, privilege or remedy under this Guarantee, and no
delay on the part of the Company in exercising any power, right, privilege or
remedy under this Guarantee, shall operate as a waiver of such power, right,
privilege or remedy; and no single or partial exercise of any such power, right,
privilege or remedy shall preclude any other or further exercise thereof or of
any other power, right, privilege or remedy.  The Company shall not be deemed to
have waived any claim arising out of this Guarantee, or any power, right,
privilege or remedy under this Guarantee, unless the waiver of such claim,
power, right, privilege or remedy is expressly set forth in a written instrument
duly executed and delivered on behalf of the Company; and any such waiver shall
not be applicable or have any effect except in the specific instance in which it
is given.  The Company shall not have any obligation to proceed at any time or
in any manner against, or exhaust any or all of the Company’s rights against,
Parent, Merger Sub or any other Person eligible for any portion of the
Guaranteed Obligations or interested in the Transactions contemplated by the
Merger Agreement prior to proceeding against the Guarantor.

 

14.           Entire Agreement.  This Guarantee (together with the Merger
Agreement and the annexes and exhibits thereto, the Company Disclosure Letter
and the Confidentiality Agreement) constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and undertakings, both written and oral, among the parties to this
Guarantee with respect to the subject matter hereof.  In determining to enter
into this Guarantee, no party has relied upon, and each party expressly
disclaims any reliance upon, any representation, warranty, covenant or agreement
except as expressly set forth herein.  All parties acknowledge and agree that
each party and its counsel have carefully reviewed this Guarantee, and that it
shall not be construed more strictly against any party.

 

15.           Captions.  Section captions used in this Guarantee are for
convenience of reference only, and shall not affect the construction of this
Guarantee.

 

16.           Severability.  If any term or provision of this Guarantee is
invalid, illegal or unenforceable in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other term or provision of
this Guarantee or invalidate or render unenforceable such term or provision in
any other jurisdiction.  Upon such determination that any term or other
provision is invalid, illegal or unenforceable, the parties hereto shall
negotiate in good faith to modify this Guarantee so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.

 

17.           Governing Law.  This Guarantee, and any claim arising out of or
relating to this Guarantee, its negotiation, terms or performance, or the
transactions contemplated hereby, shall be governed by and construed and
enforced in accordance with the laws of the State of Colorado, without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Colorado or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Colorado.

 

18.           Submission to Jurisdiction.  Each of the parties hereto
irrevocably agrees that any legal action or proceeding with respect to this
Guarantee and the rights and obligations arising hereunder, or for recognition
and enforcement of any judgment in respect of this Guarantee and the rights and
obligations

 

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arising hereunder brought by any other party hereto or its successors or assigns
shall be brought exclusively and determined in any state court in the State of
Colorado, or in the event (but only in the event) that such court does not have
subject matter jurisdiction over such action or proceeding, in the federal
district court in the District of Colorado.  Each of the parties hereto agrees
that mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 12 or in such other manner as may
be permitted by applicable Laws, will be valid and sufficient service thereof. 
Each of the parties hereto hereby irrevocably submits with regard to any such
action or proceeding for itself and in respect of its property, generally and
unconditionally, to the personal jurisdiction of the aforesaid courts and agrees
that it will not bring any action relating to this Guarantee or any of the
transactions contemplated by this Guarantee in any court or tribunal other than
the aforesaid courts.  Each of the parties hereto hereby irrevocably waives, and
agrees not to assert, by way of motion, as a defense, counterclaim or otherwise,
in any action or proceeding with respect to this Guarantee and the rights and
obligations arising hereunder, or for recognition and enforcement of any
judgment in respect of this Guarantee and the rights and obligations arising
hereunder (i) any claim that it is not personally subject to the jurisdiction of
the above named courts for any reason other than the failure to serve process in
accordance with this Section 18, (ii) any claim that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise), and (iii) to the fullest extent permitted by the applicable Law, any
claim that (x) the suit, action or proceeding in such court is brought in an
inconvenient forum, (y) the venue of such suit, action or proceeding is
improper, or (z) this Guarantee, or the subject matter hereof, may not be
enforced in or by such courts.

 

19.           Counterparts, etc.  This Guarantee may be executed and delivered
(including by facsimile or electronic transmission) in two (2) or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed and delivered shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement. In the
event that any signature to this Guarantee is delivered by facsimile
transmission or by e-mail delivery of a portable document format (.pdf or
similar format) data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.

 

20.           Waiver of Jury Trial.  EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS GUARANTEE IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS GUARANTEE OR THE
TRANSACTIONS CONTEMPLATED BY THIS GUARANTEE.  EACH PARTY TO THIS GUARANTEE
CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO
ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS
CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER
VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS GUARANTEE
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 20.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be duly
executed as of the day and year first written above.

 

 

L. F. P., INC.

 

 

 

By:

/s/ Michael H. Klein

 

Name:

Michael H. Klein

 

Title:

President

 

 

ACCEPTED AND AGREED:

 

 

 

NEW FRONTIER MEDIA, INC.

 

 

 

By:

/s/ Grant H. Williams

 

Name:

Grant H. Williams

 

Title:

Chief Financial Officer

 

 

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