ASSET PURCHASE AGREEMENT
 
by and among
 
4KIDS ENTERTAINMENT, INC.
 
and
 

 
KIDSCO MEDIA VENTURES LLC,
 

 
Dated as of April 25, 2012
 

 
 

 
 
 

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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of April 25, 2012
(this “Agreement”), by and among 4Kids Entertainment, Inc., a New York
corporation, and its subsidiaries which are debtors in the Bankruptcy Case (as
defined below) (collectively, “Seller”), and Kidsco Media Ventures LLC, a
Delaware limited liability company (“Purchaser”).
 
RECITALS
A.  
On April 6, 2011, Seller filed voluntary petitions for relief under chapter 11
of title 11 of the United States Code, 11 U.S.C. § 101-1532 (“Bankruptcy Code”),
commencing cases pending in the United States Bankruptcy Court for the Southern
District of New York (the “Bankruptcy Court”), In re: 4Kids Entertainment, Inc.,
et al., 11-11607 (SCC) (collectively, the “Bankruptcy Case”).

B.  
Purchaser desires to purchase from Seller, and Seller desires to sell to
Purchaser, certain assets set forth hereunder in particular pertaining to the
Yu-Gi-Oh! Business (as defined below), as well as certain other assets
referenced herein, subject to and upon the terms and conditions in this
Agreement.

C.  
The Parties intend to effectuate the transactions contemplated by this Agreement
through a sale of substantially all of Seller’s assets pursuant to Section 363
of the Bankruptcy Code.

D.  
The execution and delivery of this Agreement and Seller’s ability to consummate
the transactions set forth in this Agreement are subject, among other things, to
the entry of an order of the Bankruptcy Court under, inter alia, Sections 363
and 365 of the Bankruptcy Code.

 
 
 
In consideration of the covenants and mutual agreements hereinafter set forth,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
 
ARTICLE 1
 
DEFINITIONS
 
1.1 Capitalized Terms.  In addition to the other defined terms appearing
elsewhere herein, the following capitalized terms shall have the meanings set
forth below.
 
(a) “Affiliate” means, as to any Person, any other Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with the first Person, where the term “control” means the
power to direct, or cause the direction of, the management or policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise.
 
 
 
 
 

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(b) “Alternative Transaction” shall mean the sale of substantially all of the
Purchased Assets other than to Purchaser or its Affiliates.
 
                                (c) “Assumed Liabilities” has the meaning set
forth in Section 2.3.
  
                               (d) “Auction” shall mean the auction conducted by
Seller pursuant to the Bidding Procedures Order for substantially all of the
Purchased Assets.
 
(e) “Bankruptcy Case” shall have the meaning ascribed to such term in the
Recitals.
 
(f) “Bankruptcy Code” shall have the meaning ascribed to such term in the
Recitals.
 
(g) “Bankruptcy Court” shall have the meaning ascribed to such term in the
Recitals.
 
(h) “Bankruptcy Rules” shall mean the Federal Rules of Bankruptcy Procedure.
 
(i) “Benefit Arrangement” means any employment, consulting, severance or other
similar contract, arrangement or policy (written or oral) and each plan,
arrangement, program, agreement or commitment (written or oral) providing for
insurance coverage (including any self-insured arrangements), workers’
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits, life, health or accident benefits (including any
“voluntary employees’ beneficiary association” as defined in Section 501(c)(9)
of the Code providing for the same or other benefits) or for deferred
compensation, profit-sharing, bonuses, stock options, stock appreciation rights,
stock purchases or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which (a) is not a Welfare Plan, Pension
Plan or Multiemployer Plan and (b) is entered into, maintained, contributed to
or required to be contributed to or has been entered into, maintained,
contributed to or required to be contributed to, by Seller or under which Seller
has or may have any Liability.
 
(j) “Bidding Procedures Order” means an order of the Bankruptcy Court, in
substantially the form attached hereto as Exhibit A or otherwise in a form
reasonably acceptable to Seller and Purchaser.
 
                                (k) “Block” has the meaning set forth in Section
3.4(a).
 
                                 (l) “Books and Records” shall have the meaning
as set forth in Section 2.1(j).
 
(m) “Breakup Fee” shall mean an amount equal to $300,000.
 
                                (n) “Business Day” means any day other than a
Saturday or Sunday or any other day in which banks in Los Angeles, California or
New York, New York are required or authorized by law to be closed.
 
 
 
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(o) “Chaotic Broadcast Agreement” means that Broadcast Agreement that is
executed concurrently herewith and that shall be effective as of the Closing
that provides the Purchaser with broadcast rights in the United States to the 79
Chaotic episodes listed on Schedule 2.1(p).
 
(p)  “Cherry Lane Current Agreement”  means the Music Acquisition and
Administration Agreement dated June 28, 2002 between the Seller and Cherry Lane
Publishing Company, Inc.
 
(q) “Cherry Lane New Agreement” means the new agreement which may be entered
into by Seller (for the benefit of Purchaser) with Cherry Lane Publishing
Company, Inc., prior to or after the Closing, which new agreement shall only
cover the administration of the existing music that comprises Purchased Assets
hereunder and shall specifically exclude (i) from its scope any music or other
material created by the Purchaser or its affiliates and shall only cover the
existing music being acquired by Purchaser as a Purchased Asset hereunder that
is administered under the Cherry Lane Current Agreement; and (ii) any recoupment
obligations for the benefit of Cherry Lane Publishing Company.
 
(r) [Intentionally Omitted].
 
(s) “Claim” shall have the meaning set forth in Section 101(5) of the Bankruptcy
Code.
 
(t) “Closing” has the meaning set forth in Section 3.1.
 
(u) “Closing Date” has the meaning set forth in Section 3.1.
 
(v) “Code” means the Internal Revenue Code of 1986, as amended.
 
(w) “Collateral Agreements” shall have the meaning as set forth in
Section 4.1(g)(ii).
 
(x) “Company” means 4Kids Entertainment, Inc., a New York corporation, and
debtor-in-possession in the Bankruptcy Case.
 
(y) “Contract” means any written or oral contract, agreement, instrument,
commitment, arrangement or undertaking that is legally binding (including
licenses, joint ventures, partnerships, engagements, guarantees, sublicenses,
subcontracts and purchase orders).
 
(z) “Copyrights” means all works of authorship, copyrights and similar rights in
protectable material, including rights to use, and all applications, renewals
and extensions thereof.
 
(aa) “Cure Costs” means all liabilities, obligations and commitments of Seller
for all cure, compensation and reinstatement costs or expenses of or relating to
the assumption and assignment of any Contracts to be assumed and assigned as
part of the Transferred Agreements that are payable or necessary to cure any
defaults pursuant to Section 365 of the Bankruptcy Code on account of any
obligation or default arising on or before the Closing Date.
 
 
 
 
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(bb) “CW Agreement” means the CW Network, LLC and 4Kids Entertainment, Inc.
Saturday Morning Programming Block Term Sheet dated as of October 1, 2007, as
amended October 2, 2008 and June 23, 2010, the Side Letter dated October 1,
2007.
 
(cc) “CW Deficit Amount” has the meaning set forth in Section 3.4(a).
 
(dd) “CW NAP” has the meaning set forth in Section 3.4(a).
 
(ee)  “CW NAP Period” has the meaning set forth in Section 3.4(a).
 
(ff) “CW NAP Received Amount” has the meaning set forth in Section 3.4(a).
 
(gg) “CW Release” means that letter agreement attached to this Agreement as
Exhibit B between the CW Network, LLC and Seller executed prior to the execution
of this Agreement but contingent upon the Closing, which agreement shall
provide, inter alia, that (i) The CW Network, LLC’s cure claims against Seller
shall not exceed an aggregate amount equal to $3,051,904, and (ii) The CW
Network, LLC is waiving any and all claims that it may have against any of the
debtors in the Bankruptcy Case or any of their respective bankruptcy estates
(other than those obligations set forth therein).  The Purchaser shall be a
third party beneficiary under the CW Release.
 
(hh) “Domain Names” has the meaning set forth in Section 2.1(d).
 
(ii) “Employee Plans” means all Benefit Arrangements, Multiemployer Plans,
Pension Plans and Welfare Plans.
 
(jj) “ERISA Affiliate” shall mean any corporation or other business entity that
is included in a controlled group of corporations within which the Seller is
also included, as provided in Section 414(b) of the Code; or which is a trade or
business under common control with the Seller, as provided in Section 414(c) of
the Code; or which constitutes a member of an affiliated service group within
which the Seller is also included, as provided in Section 414(m) of the Code; or
which is required to be aggregated with the Seller pursuant to regulations
issued under Section 414(o) of the Code; or which is treated as a single
employer with Seller under Section 4001 of the Employee Retirement Income
Security Act of 1974, as amended.
 
(kk) “Escrow Account” has the meaning set forth in Section 3.2(a).
 
(ll) “Escrow Agent” has the meaning set forth in Section 3.2(a).
 
(mm) “Escrow Agreement” has the meaning set forth in Section 3.2(a).
 
(nn) “Escrow Amount” has the meaning set forth in Section 3.2(a).
 
(oo) “Excluded Assets” shall mean the following items:
 
 
 
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i.  
Cash and cash equivalents (except, subject to Sections 2.1(n) and 3.3(a), cash
and cash equivalents from the Purchased Assets, including the Yu-Gi-Oh!
Business, that are generated from events or circumstances arising from or
occurring on or after May 1, 2012);

 
ii.  
All assets owned by the Company’s subsidiary in the United Kingdom, consisting
of agency representation agreements with rights holders and licensing and
merchandising licenses in each case that are not related to the Yu-Gi-Oh!
Business or any of the Purchased Assets;

 
iii.  
All existing contracts which are not Transferred Agreements;

 
iv.  
Any claims or counterclaims (including any damage reward or settlement paid or
to be paid in respect thereof) Seller may have in connection with the Settled
Action (as defined below);

 
v.  
All claims for refunds of taxes and other governmental charges of whatever
nature;

 
vi.  
All rights under insurance policies;

 
vii.  
All health and Benefit Arrangements maintained by Seller for its employees;

 
viii.  
All real property leases;

 
ix.  
All causes of action that do not relate to any of the Purchased Assets other
than the Settled Action and the claim against Upper Deck International B.V.
arising from license agreements with respect to the Yu-Gi-Oh! and Dinosaur King
properties, a 2010 settlement agreement and a 2011 settlement agreement.  For
the avoidance of doubt, all claims and causes of action against Lehman Brothers,
Inc. and all rights to recover damages in connection therewith shall be deemed
Excluded Assets;

 
x.  
All claims and causes of action under sections 544, 545, 547, 548, 549, 550, or
553 of the Bankruptcy Code, and any other claims or causes of action belonging
to Seller or its estate, and all of Seller’s rights and causes of action arising
under section 502 and 503 of the Bankruptcy Code and Rule 3007 thereunder
(“Chapter 5 Claims, Rights and Causes of Action”) not related in any way to the
Purchased Assets;

 
xi.  
The proceeds of any audit claims relating to periods prior to April 1, 2012 and
that do not relate to any of the Purchased Assets;

 
 
 
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xii.  
Seller’s corporate seals, stock record books, corporate record books containing
minutes of meeting of directors and stockholders, tax returns and records, books
of account and ledgers and such other record having to do solely with Seller’s
organization or stock capitalization or Excluded Assets or liabilities retained
by Seller;

 
xiii.  
All personal records and other records that Seller is required by law to retain
in its possession;

 
xiv.  
All music that is not part of or related to the Yu-Gi-Oh! Productions or the
Library Assets;

 
xv.  
All web assets solely related to properties which are not part of the Purchased
Assets and which are not used in connection with the Purchased Assets;

 
xvi.  
The 4Kids Entertainment Trademark and trade name; and

 
xvii.  
Navision accounting software and the Jaguar licensing software.

 
      (pp) “Expense Reimbursement Amount” shall mean the amount of all
reasonable documented out-of-pocket expenses (including reasonable attorneys’
fees and expenses) incurred by Purchaser in connection with the negotiation,
execution and delivery of this Agreement, up to a maximum of $150,000.
 
(qq) “Final Order” means an order of the Bankruptcy Court (i) that has not been
reversed, vacated or stayed, and the time to file an appeal or a motion to
reconsider has expired and is not stayed, or (ii) with respect to which any
appeal has been finally decided and no further appeal or petition for certiorari
can be taken or granted.
 
(rr) “Governmental Authority” means any governmental, regulatory or
administrative authority, agency or commission or any court, tribunal, judicial
or arbitral body, and any instrumentality of any of the foregoing.
 
(ss) “Governmental Order” means any order, ruling, writ, judgment, injunction,
decree, stipulation, determination, award or binding agreement issued,
promulgated or entered by or with any Governmental Authority.
 
(tt) “Hulu Current Agreements”  means the Content Deal Memorandum, dated as of
July 31, 2009, with Hulu, LLC, as amended, and the Distribution Deal Memorandum,
dated as of August 27, 2010, with Hulu, LLC.
 
(uu) “Hulu New Agreements” means the new agreements to be entered into by Seller
(for the benefit of Purchaser) with Hulu, LLC that shall be acquired by the
Purchaser, which new agreements shall contain the same terms as the Hulu Current
Agreements except that such agreements shall only cover content that is acquired
by Purchaser as a Purchased Asset. For the avoidance of doubt the Hulu New
Agreements shall include a license to the Purchaser for the Hulu video player.
 
 
 
 
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(vv) “Intellectual Property” means the following Intellectual Property Rights
(a) all inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto and all patents, patent
applications and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions and reexaminations
thereof, (b) all United States or foreign trademarks, service marks, trade
dress, logos, trade names and corporate names, together with all translations,
adaptations, derivations and combinations thereof and including all goodwill
associated therewith and all applications, registrations and renewals in
connection therewith, (c) all copyrightable works, all copyrights and all
applications, registrations and renewals in connection therewith, (d) all mask
works and all applications, registrations and renewals in connection therewith,
(e) all trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, techniques, designs, drawings,
specifications, customer and supplier lists and databases, sales literature,
promotional literature, lists of distributors, artwork, purchasing records,
pricing and cost information, business and marketing plans and proposals, and
related documentation), (f) all computer software (excluding software commonly
available through licenses on standard commercial terms, such as software
“shrink-wrap” or “click wrap” licenses, it being understood that such licenses
may nonetheless constitute Purchased Assets under Section 2.1 hereof), including
data and related documentation and all software necessary to maintain the
operation of the business of Seller, URLs, web sites, web portals, and other
forms of technology, (g) all other proprietary rights related to the business of
Seller or the Purchased Assets and (h) all copies and tangible embodiments
thereof (in whatever form or medium).
 
(ww) “Intellectual Property Rights” shall mean any and all Trademarks,
Copyrights and other Intellectual Property, proprietary rights, moral rights,
rights of publicity and likeness, and other analogous rights, that arise out of
or are associated with or may be created or exist under the Laws of any
jurisdiction throughout the world.
 
(xx) “Inventory” means all merchandise, video games, videotapes, DVDs,
publications or other consumer or digital products used in connection with the
Yu-Gi-Oh! Business in the possession or under the control of Seller or its
Affiliates.
 
(yy) “IRS” means the Internal Revenue Service.
 
(zz) “Knowledge” or “knowledge” means, with respect to Seller or Purchaser, the
actual knowledge of the persons identified on Schedule 1.1A, with a duty of
investigation that is reasonable for a person of that position.  With respect to
Seller parties set forth on Schedule 1.1A, notwithstanding the fact that such
parties include the general counsel of Seller, the Seller parties identified on
Schedule 1.1A are not waiving their attorney client privilege with respect to
any legal conclusions or advice given in connection with the matters required to
be disclosed by Seller pursuant to this Agreement; provided, however, that any
claim of attorney-client privilege does not in any way limit the obligations of
the parties set forth on Schedule 1.1A with respect to their factual disclosure
obligations as set forth herein.
 
 
 
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(aaa) “Konami Agreements” means the Agreement, dated as of August 1, 2001, with
Konami Corporation and the First Amendment dated September 12, 2007 to the 4Kids
– Konami Agreement.
 
(bbb) “Laws” shall mean any constitution, statute, law, ordinance, regulation,
rule, code, requirement or rule of law.
 
(ccc) “Liability” means any direct or indirect debt, liability, commitment or
obligation (whether known or unknown, matured or not matured, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, incurred or consequential and due or to become due), including any
liability for Taxes or arising out of or under any Law or Contract.
 
(ddd) “Library Assets” means (i) 26 episodes of Cubix; (ii) 52 episodes of Viva
Pinata; and (iii) 52 episodes of Dragon Ball Z, each episode of which is listed
on Schedule 2.1(p).
 
(eee) “License Agreements” shall mean Contracts under which Seller or one of its
Affiliates has granted third parties the right to (1) manufacture, market and
sell products bearing any Transferred IP or other protectable elements of the
Yu-Gi-Oh! Productions or Yu-Gi-Oh! Brand (“CP License Agreements”), (2) exhibit,
display, telecast and/or transmit Yu-Gi-Oh! Productions, episodes or any other
Transferred IP (“TV License Agreements”), or (3) produce, distribute and sell as
DVDs Yu-Gi-Oh! Productions, episodes or any other Transferred IP, including the
Yu-Gi-Oh! GX & Yu-GI-Oh! 5Ds Merchandise License Agreement dated August 25,
2009.
 
(fff) “Lien” means any mortgage, pledge, lien, security interest, charge, Claim,
encumbrance (including, collateral assignment, right of setoff, right of
recoupment, pledge, levy, charge, escrow, option, right of first refusal,
restriction (whether on transfer, disposition or otherwise), third party right,
right limited to Seller personally, other agreement or term tending to limit any
right or privilege of Seller under any Contract, conditional sale contract,
title retention contract, mortgage, lease, deed of trust, hypothecation,
indenture, security agreement, easement, license, servitude, proxy, voting
trust, transfer restriction under any shareholder or similar agreement, or any
other agreement, arrangement, contract, commitment, understanding or obligation
of any kind whatsoever, whether written or oral, or imposed by any Law, equity
or otherwise imposing any restriction on Seller or any of Seller’s right, title
or interest in any asset), limitation or restriction with respect to the
creation of any of the foregoing, whether relating to any property or right or
the income or profits thereof or therefrom.
 
(ggg) “Material Adverse Change” means any material adverse effect on or material
adverse change (i) with respect to the business, operations, assets,
Liabilities, Assumed Liabilities, financial condition, results of operations,
properties or prospects of the Yu-Gi-Oh! Business taken as a whole, or (ii) that
results in the inability of Seller to convey to Purchaser all of the material
elements of the Yu-Gi-Oh! Business and the Purchased Assets or (iii) that result
in an amendment, modification or termination of the material terms of the Yugioh
Grant Agreements and/or the Konami Agreements or the material addition of or
material increase in any Assumed  Liabilities relating to the Purchased Assets,
in each case that are not approved by the Purchaser. 
 
 
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(hhh) “Multiemployer Plan” means any “multiemployer plan,” as defined in Section
4001(a)(3) of ERISA, which any Seller or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to, or maintained,
administered, contributed to or was required to contribute to, or under which
any Seller or any ERISA Affiliate has or may have any Liability.
 
                                        (iii) “Music Rights” shall have meaning
set forth in Section 2.1(g).
 
(jjj) “Other Assets” shall have meaning set forth in Section 2.1.
 
(kkk) “Participations” shall mean right to profits or revenues, economic
interest, participations, royalties, fees or other similar payments arising from
ownership or use of the Purchased Assets.
 
(lll) “Pension Plan” means any “employee pension benefit plan” as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) which Seller or any
ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, or maintained, administered, contributed to or was required to
contribute to, or under which Seller or any ERISA Affiliate has or may have any
Liability.
 
(mmm) “Person” means an individual, partnership, firm, corporation, limited
liability company, association, joint venture, trust, unincorporated
organization or other entity (including any Governmental Entity or any
department, agency or political subdivision thereof).
 
(nnn) “Publishing Assets” means Copyrights in books, magazines and other print
publications published by Seller or its Affiliates or in which Seller or any of
its Affiliates have any rights and bearing any Trademarks or incorporating other
protectable elements (including Copyrights) of the Yu-Gi-Oh! Business and any
Inventory relating thereto.
 
(ooo) “Purchase Price” means Ten Million Dollars ($10,000,000).
 
     (ppp) “Purchased Assets” shall have the meaning set forth in Section 2.1.
 
(qqq) “Registered IP” means all Trademarks and Copyrights relating to the
Purchased Assets that are the subject of an application, certificate, filing,
registration or other document issued, filed with, or recorded by any
Governmental Authority and the Domain Names.
 
(rrr) “Registered IP Filings” shall have the meaning set forth in
Section 4.1(g)(iii).
 
(sss) “Registered Trademarks” shall mean Trademarks that constitute Registered
IP.
 
 
 
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(ttt)  “Retained Liabilities” shall have the meaning set forth in Section 2.4.
 
(uuu) “Rule” or “Rules” means the Federal Rules of Bankruptcy Procedure.
 
(vvv) “Sale Hearing” means the hearing of the Bankruptcy Court to approve this
Agreement and the transactions contemplated herein.
 
(www) “Sale Order” means the Final Order of the Bankruptcy Court in a form
acceptable to Seller and Purchaser in their sole discretion, to be entered by
the Bankruptcy Court pursuant to Sections 363 and 365 of the Bankruptcy Code,
the form of which will be filed with the Bankruptcy Court on or before five (5)
Business Days before the sale objection deadline as determined by the Bidding
Procedures Order.
 
(xxx) “Settled Action” shall have the meaning set forth in Section 2.1(l).
 
(yyy) “Tangible Assets” has the meaning set forth in Section 2.1(c).
 
(zzz) “Tax” or, collectively, “Taxes,” shall mean (i) any and all federal,
state, local and foreign taxes, assessments and other governmental charges,
duties, impositions and liabilities, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts; (ii) any liability for the payment of any
amounts of the type described in clause (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any period; and (iii)
any liability for taxes of a predecessor entity.
 
(aaaa) “Tax Returns” means any return, report, declaration, form, claim for
refund, information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
 
(bbbb) “Trademarks” means all trade names, logos, trademarks, trade dress and
service marks, common law trademark rights in characters’ names and other
protectable elements, and all registrations and applications for registration of
the foregoing, and equivalents of the foregoing throughout the world.
 
(cccc) “Transferred Agreements” shall mean (i) the CW Agreement and the CW
Release; (ii) the Hulu New Agreements and the Cherry Lane New Agreement;
(iii) the Yu-Gi-Oh! Grant Agreements; (iv) the Konami Agreements; (v) the
License Agreements listed on Schedule 5.8 and (vi) those other Contracts listed
on Schedule 5.8, as such Schedule may be amended in accordance with the Bidding
Procedures Order.
 
(dddd) “Transferred IP” shall mean all Intellectual Property Rights included
within the Purchased Assets.
 
(eeee) “Transition Services Agreement” shall have the meaning set forth in
Section 8.1.
 
 
 
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(ffff) “Use” means to use, reproduce, prepare derivative works based upon,
distribute, perform, exhibit, broadcast, , make, have made, sell, license,
sublicense. market and otherwise exploit.
 
(gggg)  “Website Assets” means the assets owned or controlled by Seller which
are listed on Schedule 2.1(h) and which are used in connection with or
pertaining to any websites used or operated by Seller or its Affiliates in
connection with the Yu-Gi-Oh! Business.
 
(hhhh)  “Welfare Plan” means any “employee welfare benefit plan” as defined in
Section 3(1) of ERISA, which Seller or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to, or maintained,
administered, contributed to or was required to contribute to, or under which
Seller or any ERISA Affiliate has or may have any Liability.
 
(iiii) “Yu-Gi-Oh!” means the Japanese manga (also known as cartoon or comic)
created by Kazuki Takahashi and the related brand, franchise and Intellectual
Property, including all related anime shows, television or video programming,
card games and video games, in each case, in all languages throughout the world,
and all characters related thereto or pictured therein, the Yu-Gi-Oh!
Productions and rights under the Yu-Gi-Oh! Grant Agreements.
 
(jjjj) “Yu-Gi-Oh! Business” means the business relating to and commercial Use of
Yu-Gi-Oh!, including the rights granted under the Yu-Gi-Oh! Grant Agreements,
all other Purchased Assets relating to Yu-Gi-Oh!, the CW Block and Seller’s
right to Use and profit from the foregoing and the Yu-Gi-Oh! Related
Intellectual Property, the Yu-Gi-Oh! brand, and Yu-Gi-Oh! Productions.
 
(kkkk) “Yu-Gi-Oh! Grant Agreements” means (i) the Yu-Gi-Oh! Distribution
Agreement, dated as of March 31, 2003, between the Company and Warner Bros.
Pictures, Inc., (ii) the 2003 Yu-Gi-Oh! Movie Deal Memo among the Company,
Television Tokyo Channel 12, Ltd., Nihon Ad Systems, Inc. and Shueisha, Inc.,
(iii) the Yu-Gi-Oh! Movie Deal Memo, dated December 15, 2010, between TV-Tokyo
and Nihon Ad Systems, Inc., as licensors, and 4Kids Entertainment, Inc.,
relating to the Yu-Gi-Oh! 3-D movie, (iv) the Amended and Restated Yu-Gi-Oh!
Agreement dated July 1, 2008 with Television Tokyo Channel 12, Ltd. and Nihon Ad
Systems, Inc., and (v) Side Letter for YU-Gi-Oh! 5D’s Season 2 and Season 3,
dated as of January 21, 2010 and the Side Letter dated as of February 28, 2012,
in each case amending the Amended and Restated Yu-Gi-Oh! Agreement dated as of
July 1, 2008.
 
(llll)  “Yu-Gi-Oh! Productions” means the episodes of the Yu-Gi-Oh! Series and
the Yu-Gi-Oh! movies, including all the music in the episodes of the Yu-Gi-Oh!
Series and the music composed by or under the authority of 4Kids that is
contained in the Yu-Gi-Oh! movies, and all other content and programming related
to Yu-Gi-Oh! including, without limitation episodes.  The episodes, movies and
other material content and programming are listed on Schedule 2.1(c).
 
 
 
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ARTICLE 2
 
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
 
2.1 Purchase and Sale of Assets.  Subject to the terms and conditions set forth
in this Agreement, at the Closing, Seller shall cause to be sold, assigned,
transferred, conveyed and delivered to Purchaser good and valid title to all of
Seller’s right, title and interest to the Purchased Assets, free of any Liens,
on the terms and subject to the conditions set forth in this Agreement and in
accordance with Sections 363 and 365 of the Bankruptcy Code, and Purchaser
hereby agrees to purchase, acquire and, solely in the case of the Transferred
Agreements, to assume from Seller, all of the following:
 
(a) the Yu-Gi-Oh! Business;
 
(b) all Intellectual Property related to or used in connection with the
Yu-Gi-Oh! Business, including the Trademarks, Copyrights and other items set
forth on Schedule 2.1(b) and all other intellectual property rights, proprietary
rights, moral rights, rights of publicity and likeness, and other analogous
rights, that arise out of or are associated with or may be created or exist
under the Laws of any jurisdiction throughout the world, trade secrets, business
methods, processes, know-how, patents, databases and data collections whether
owned by Seller or which Seller has the right to use, in each case, in
connection with the Yu-Gi-Oh! Business, including in connection with the
episodes, productions and exploitations;
 
(c) all masters, negatives and prints of the Yu-Gi-Oh! Productions, and all
promotional materials, artwork, style books, production stills, logos, scripts,
screeners, closed caption files, merchandise samples, costumes, and all live
event props and materials, music cue sheets and similar materials and documents
(in paper, digital or electronic format) relating to the episodes and
productions, owned by Seller or which Seller has the right to use and which are
in Seller’s care, custody or control (the “Tangible Assets”) and in particular
those masters set forth on Schedule 2.1(c);
 
(d) the Internet domain names owned by Seller or which Seller has the right to
use in connection with the Yu-Gi-Oh! Business, which are listed on Schedule
2.1(d) (the “Domain Names”);
 
(e) all Website Assets;
 
(f) all Publishing Assets;
 
(g) (i) all Copyrights in the music and sound recordings created by or on behalf
of Seller, its predecessor or an Affiliate of Seller and specifically for
inclusion in any episode of the Yu-Gi-Oh! Productions and (ii) all rights of
Seller or its Affiliates under synchronization and master use licenses for music
contained in the Yu-Gi-Oh! Productions (“Music Rights”);
 
(h) the Transferred Agreements;
 
(i) all goodwill associated with all the Transferred IP, and all other goodwill
related to all other Purchased Assets;
 
 
 
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(j) all documents and records (in paper or electronic format) in Seller’s or any
of Seller’s Affiliates’ care, custody or control relating exclusively to the
Yu-Gi-Oh! Business or the Other Assets and any other Purchased Asset
(collectively, “Books and Records”);
 
(k) All Chapter 5 Claims, Rights and Causes of Action in any way related to the
Purchased Assets or Transferred Agreements.
 
(l) causes of action and claims whether accruing or arising prior or subsequent
to the Closing Date with respect to any Purchased Assets, but excluding (i) any
causes of action or claims that were resolved pursuant to the proceeding
entitled TV Tokyo Corporation and Nihon Ad Systems, Inc. v. 4Kids Entertainment,
Inc., Adv. Pro. No. 11-02225 (SCC) that was formerly pending in the United
States Bankruptcy Court for the Southern District of New York and the settlement
entered into with respect to all claims in such matter and the dismissal of the
litigation with prejudice (the “Settled Action”) and (ii) all Chapter 5 Claims,
Rights and Causes of Action not in any way related to the Purchased Assets or
Transferred Agreements;
 
(m) the owned machinery, equipment, recording/editing equipment (for the
avoidance of doubt including the Avids/ProTools), computer and information
technology equipment and related data, and all software owned by Seller or which
Seller has the right to use (subject only to customary shrinkwrap licenses) in
connection with the Yu-Gi-Oh! Business, the Other Assets, CW Agreement and the
obligations and deliverables thereunder which are listed on Schedule 2.1(m);
provided, that the parties hereto acknowledge and agree that all tangible assets
included in this Section 2.1(m) shall be physically delivered to the Purchaser
at a date following the Closing Date pursuant to the terms of the Transition
Services Agreement, and that the Transition Services Agreement shall include the
right for Seller to use and operate the items included in this Section 2.1(m) to
the extent needed to provide services thereunder and a non-exclusive,
royalty-free license to Seller to continue to use the software included in this
Section 2.1(m) solely for purposes of operating the Excluded Assets following
the Closing;
 
(n) all cash and accounts receivable relating to the Purchased Assets arising
from events or circumstances occurring (1) on or after May 1, 2012 (for the
avoidance of doubt, including but not limited to, royalties and marketing fees
on the sale of Yu-Gi-Oh! merchandise and trading cards occurring on or after May
1, 2012, the Seller’s share of national advertising proceeds from the broadcast
of commercials on or after May 1, 2012 on the five hour Saturday morning block
of programs telecast on The CW Network and revenues from the Internet streaming
of Yu-Gi-Oh! episodes on Hulu on or after May 1, 2012 are part of the Yu-Gi-Oh!
Assets being transferred by Seller to Purchaser) and (2) between April 1, 2012
and June 30, 2012 in excess of the Seller Q2 Portion, except to the extent that
cash is deducted from the Purchase Price pursuant to Section 3.3;
 
(o) all income, royalties, fees, products, proceeds, damages and payments due or
payable to Seller as of the Closing or thereafter relating to the Purchased
Assets, including damages and payment for past, present or future infringements,
misappropriations or other causes of actions, the right to sue or recover for
past infringements and misappropriation of the Purchased Assets and all of
Seller’s rights to be indemnified with respect to the Purchased Assets;
 
 
 
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(p) the following rights to the Library Assets as more specifically described in
Schedule 2.1(p): (i) all rights of Seller under the Agreement dated as of
February 15, 2002 among Seller, Daiwon C & A Holdings Co., Ltd (“DWCA”),
Cinepix, Inc. (“Cinepix”) and East Japan Marketing & Communications, Inc.
(“Cubix Agreement”), relating to the Cubix television series, subject to the
Cubix license agreements set forth on Schedule 5.8; (ii) all rights of Seller
under (x) the Piñata Term Sheet, dated as of January 13, 2006, between 4Kids
Entertainment, Inc. and Microsoft, Inc., as amended, (“Piñata Term Sheet”) and
(y) the Viva Piñata Co-Venture Agreement, dated as of January 16, 2006, as
amended, between 4Kids Entertainment, Inc. and Bardel Entertainment Inc.
(“Bardel Agreement”), relating to the Viva Piñata property and television
series, subject to the Viva Piñata license agreements set forth on Schedule 5.8;
and (iii) all of Seller’s rights under the Dragon Ball Term Sheet dated March
15, 2010 between 4Kids Entertainment, Inc. and Toei Animation Inc., represented
by Funimation Productions, Ltd, as amended by a letter agreement dated February
16, 2011 (“DBZ Agreement”), relating to the Dragon Ball Z Kai series.  The
Piñata Term Sheet and Bardel Agreement and the DBZ Agreement are collectively
referred to as the “Library Agreements”.
 
(q) Cabbage Patch Kids residual royalty (2% royalty on Jakks Pacific sales as
provided under the Jakks Pacific – 4Kids Merchandising Deal Memo dated as of
August 18, 2010) to the extent relating to the events or circumstances occurring
on or after April 1, 2012;
 
(r) Pajanimals reimbursement of production expenses and share of net receipts
(reimbursement of certain remaining money advanced by the Company to The Jim
Henson Company in connection with the production of the original interstitial
episodes of Pajanimals and 10% of net receipts royalty, as provided under an
amendment to the Pajanimals Agreement dated as of February 14, 2011 between The
Jim Henson Company and the Company) to the extent received on or after April 1,
2012;
 
(s) Thundercats participation as set forth under an agreement dated June 15,
1984 between Leisure Concepts, Inc. (the predecessor of the Company) and
Telepictures (ultimately acquired by Warner Bros. as part of the Lorimar
acquisition) as modified by a March 6, 1992 settlement agreement between Leisure
Concepts, Inc. and Lorimar Telepictures to the extent relating to the events or
circumstances occurring on or after April 1, 2012; and
 
(t) All rights of Seller to the Charlie Chan property (“Charlie Chan”) (subject
to the Agreement for Purchase of Literary Material dated as of August 23, 2000
and between Twentieth Century Fox and the Company).
 
All of the assets referred to in Section 2.1(a) through (t), inclusive, are
collectively referred to herein as the “Purchased Assets.”  All assets referred
to in Section 2.1(o) through (t), inclusive, are collectively referred to herein
as the “Other Assets”.
 
2.2 Excluded Assets.  Anything herein to the contrary notwithstanding, the
Purchased Assets shall not include, and Seller shall retain ownership of, and
all Liabilities relating to, the Excluded Assets.  For purposes of clarity,
Purchaser shall have no obligation to employ any employee of Seller or any of
its Affiliates.
 
 
 
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2.3 Assumed Liabilities.  Except as provided in Section 3.3(c), in connection
with its acquisition of the Purchased Assets pursuant to this Agreement, at the
Closing, Purchaser shall assume and agree to pay, perform, satisfy and discharge
as and when due all Liabilities of Seller or its Affiliates under the
Transferred Agreements, in each case to the extent (but only to the extent) to
be performed (other than payments due after the Closing Date but arising as a
result of circumstances, events or transactions occurring before the Closing
Date, which are addressed in Section 2.4), or arising from circumstances, events
or transactions occurring, on or after the Closing Date (the “Assumed
Liabilities”).  For avoidance of doubt, the Assumed Liabilities shall not
include any Cure Costs related to the Purchased Assets, which shall be borne
exclusively by Seller.
 
2.4 Retained Liabilities.  Anything herein the contrary notwithstanding,
Purchaser is not assuming nor shall it be obligated to pay, perform or otherwise
discharge, and Seller shall retain and remain solely responsible for the payment
or satisfaction, without recourse to Purchaser, of any and all other Liabilities
of Seller or any Affiliates (i) arising from or in connection with
circumstances, events or transactions occurring before the Closing Date and/or
(ii) currently existing or hereafter arising with respect to (a) any employment
or contractor arrangements, Benefit Arrangement, Pension Plan, Multiemployer
Plan or Welfare Plan maintained or participated in by Seller or any Affiliate,
whether such Liability (or the claim related thereto) accrued or arose prior or
subsequent to the Closing Date, and (b) any Tax arising out of Seller’s or its
Affiliates’ ownership and operation of the Purchased Assets for the period prior
to the Closing Date, whether the filing of the applicable Tax Return occurs
prior or subsequent to the Closing Date, (c) any Liability of Seller or its
Affiliates relating to real property leases, (d) Liabilities for all Cure Costs,
(e) Liabilities relating to any assets not acquired by Purchaser and (f) any
transfer tax, recording tax, stamp tax, use tax, capital gains tax or any other
taxes (collectively, “Retained Liabilities”).
 
2.5 Rights of Sellers’ Affiliates.  In the event that any Affiliate of Seller
has any rights, title or interest, or otherwise owns or controls any
Intellectual Property Rights, contractual rights or other assets that would have
constituted Purchased Assets had that Person been a Seller under this Agreement,
then Seller agrees to cause such Affiliate to transfer all of its right, title
and interest in and to such Intellectual Property Rights, contractual rights or
other assets, to Purchaser; provided, that, if any such Affiliate is a
non-debtor, such transfer will not be made pursuant to Section 363 of the
Bankruptcy Code but shall be made by a separate transfer instrument.
 
2.6 Equipment.  Purchaser shall have the right to determine, prior to the
Closing, that it will not take some or all of the equipment that it is acquiring
under Section 2.1(m) above.
 
2.7 Cherry Lane Agreement.  The Parties acknowledge that effective for payments
made by Cherry Lane or its successors after June 30, 2012, Seller is
transferring to Purchaser all of Seller’s rights to receive moneys from Cherry
Lane or its successors insofar as such monies relate to the Purchased Assets
and/or Library Assets and arise under the Cherry Lane Current Agreement;
provided that Sellers are not assigning to Purchaser, and Purchaser is not
assuming, any of Seller’s obligations under or relating to the Cherry Lane
Current Agreement.  For the avoidance of doubt, Seller is not transferring or
assigning and Purchaser is not acquiring or assuming the Cherry Lane Current
Agreement.
 

 
 
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ARTICLE 3
 
CLOSING; PURCHASE PRICE
 
3.1 Closing.  The consummation of the transactions contemplated hereby (the
“Closing”) shall take place at 10:00 a.m. local time no later than June 30, 2012
at Latham & Watkins LLP offices located at  355 S. Grand Ave., Los Angeles,
California.  The date on which the Closing shall occur is referred to herein as
the “Closing Date.”
 
3.2 Payments at Closing.  At the Closing, in consideration of the sale,
transfer, conveyance and assignment of the Purchased Assets to Purchaser,
Purchaser will pay in cash to Seller (i) $10,000,000, less (ii) any Closing
Adjustments (the “Adjusted Purchase Price”).  The Adjusted Purchase Price will
be made by wire transfers of same day funds to the following accounts.
 
(a)           $1,000,000 (“Escrow Amount”) to the account of Wells Fargo Bank,
National Association (the “Escrow Account” and “Escrow Agent,”respectively)
pursuant to an Escrow Agreement to be entered into by and among Purchaser,
Seller and the Escrow Agent, such agreement to be in the form of Exhibit H
attached hereto (the “Escrow Agreement”), such Escrow Amount to be held in
escrow for purposes of satisfying any post-Closing adjustments to the Purchase
Price pursuant to Section 3.4 and indemnification obligations that Seller may
have to Purchaser pursuant to Section 9. The Escrow Amount shall be held in such
escrow account and Purchaser shall cause such amount to be paid to Seller,
together will all interest accrued thereon (net of any amounts disbursed to
Purchaser in respect of any post-Closing adjustments to the Purchase Price or
indemnification obligations under Section 9), on the six (6) month anniversary
of the Closing Date.  To the extent that any portion of the Escrow Amount is
subject to any claims of Purchaser pursuant to Section 9 and the terms of the
Escrow Agreement (the portion of the Escrow Amount subject to such claims, the
“Disputed Amount”), such Disputed Amount (or a portion of such Disputed Amount)
shall remain in the Escrow Account until such time as: (i) Seller and Purchaser
execute a joint written instruction to the Escrow Agent instructing the Escrow
Agent to disburse all or any portion of such Disputed Amount or (ii) the Escrow
Agent shall receive a final, non-appealable order authorizing the release of all
or any portion of such Disputed Amount. For the avoidance of doubt, any conflict
between this clause (a) and the Escrow Agreement, the Escrow Agreement shall
control;
 

 
(b)           $3,051,904 to an account designated by The CW Network, LLC as a
Cure Cost pursuant to the CW Agreements;
 
 
(c)           $368,000 to an account designated by Toei Animation as a Cure Cost
pursuant to the DBZ Agreement; and
 
 
(d)           an amount equal to any Cure Cost for the assumption and assignment
of any Transferred Agreement, which shall be paid to the applicable counterparty
to each such Transferred Agreement; and
 
 
 
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(e)           the remainder of the Adjusted Purchase Price to an account
designated by the Seller, subject to Section 2.5.
 
3.3 Closing Adjustments. The following items shall increase or decrease the
Purchase Price at the Closing, as applicable (“Closing Adjustments”):
 
(a) Immediately prior to Closing, Seller shall provide reasonable evidence to
Purchaser of the cash held by Seller or its Affiliates that was generated from
events or circumstances relating to the Purchased Assets on or after May 1,
2012. Purchaser shall reduce the Purchase Price at Closing by the amount of such
cash.
 
(b)           Immediately prior to Closing, Seller shall provide evidence
reasonably satisfactory to Purchaser of the outstanding balance of all unearned
or unrecouped advances Seller has received pursuant to those License Agreements
that are merchandise license agreements for the Yu-Gi-Oh Property as of Closing.
To the extent that the aggregate amount of any such unearned or unrecouped
advances which Seller has received as of Closing pursuant to License Agreements
that are merchandise license agreements for the Yu-Gi-Oh Property exceed $42,545
and have not been adjusted for pursuant to Section 3.3(a) above, then Purchaser
shall reduce the Purchase Price at Closing by an amount equal to the amount of
such excess over $42,545. Immediately prior to Closing, Seller shall provide
evidence reasonably satisfactory to Purchaser that the amount of license fees
received by Seller or its affiliates under TV License Agreements for the
Yu-Gi-Oh Property, which license fees have been paid for television episodes of
the Yu-Gi-Oh Zexal series not yet delivered by Seller to the broadcaster as of
the date hereof . To the extent that the aggregate amount of any such license
fees which have been received by Seller or its affiliates as of the Closing with
respect to television episodes of the Yu-Gi-Oh Zexal series not yet delivered by
Seller to the broadcaster exceed $5,000 and have not been adjusted for pursuant
to Section 3.3(a) above, then Purchaser shall reduce the Purchase Price at
Closing by an amount equal to the amount of such excess over $5,000.

(c) Immediately prior to Closing, Seller shall provide reasonable evidence to
Purchaser of any license fees paid to the Licensor under the Yu-Gi-Oh Grant
Agreements after the date of this Agreement for episodes in the Zexal season. In
the event that after the date of the Agreement, Seller has paid any license fees
for additional episodes beyond the first 41 episodes of the Zexal season that
were paid for prior to the Closing Date (“Additional Epsiodes”), then the
Purchaser shall reimburse Seller for such license fees paid by increasing the
Purchase Price by the amount of such license fees paid by Seller for such
Additional Episodes.
 
3.4 Post-Closing Adjustments.  (a)  On June 30, 2012, Seller shall provide
Purchaser with a statement setting forth the amount that The CW Network, LLC
shall have received as its share of national advertising proceeds (“CW NAP”)
arising from the sale by Seller of national advertising units on the five hour
block telecast by The CW Network, LLC on Saturday mornings (“Block”) for the
period from October 1, 2011 through March 31, 2012 (“CW NAP Period”).  If as of
June 30, 2012 the amount of CW NAP received by The CW Network, LLC arising from
the sale by Seller of national advertising on the Block during the CW NAP Period
(the “CW NAP Received Amount”) is less than $3,000,000,  then Seller shall pay
to the Purchaser on July 1, 2012 an amount equal to $3,000,000 minus the CW NAP
Received Amount (“CW Deficit Amount”); provided, that if the amount of the
guarantee relating to the 2011 – 2012 broadcast season is less than $5,000,000,
the CW Deficit Amount shall be reduced by the difference between $5,000,000 and
the amount of such guarantee.  If for any reason Seller does not pay the CW
Deficit Amount to the Purchaser by July 1, 2012, then Purchaser shall be
entitled to recover the CW Deficit Amount by offsetting any amounts due to
Seller as Seller Q2  Portion from Q2 PA Revenues (described below) and/or Escrow
Account, and in the event that the Purchaser recovers such amounts from the
Escrow Account, then until the Seller re-contributes to the Escrow Account the
CW Deficit Amount withdrawn by the Purchaser, such amount shall accrue interest
payable to Purchaser at a rate of 8% per annum.
 
 
 
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(b)           If the CW Deficit Amount has been fully paid to Purchaser, then on
or about August 31, 2012, Purchaser shall provide Seller with a statement
setting forth the revenues received by Purchaser pursuant to the Konami
Agreements, the Hulu New Agreements (relating only to content comprising
Purchased Assets) and Seller’s share of the national advertising proceeds from
CW ad sales for the quarter ended June 30, 2012 ("Q2 PA Revenues"). Such
statement shall be accompanied by a payment from Purchaser to Seller of an
amount equal to 33.33% of such Q2 PA Revenues capped at $500,000 (“Seller Q2
Portion”). In the event that Seller receives payment of any Q2 PA Revenues,
Seller shall notify Purchaser in writing of the same and such amount shall be
taken into account for purposes of calculating the Q2 PA Revenues subject to
this subparagraph. Seller shall promptly remit to Purchaser any such Q2 PA
Revenues and any other revenues received with respect to the Purchased Assets
received by Seller by no later than five business days after such Q2 PA Revenues
or other revenues have been received by Seller. In the event any Q2 PA Revenues
are not received by August 31, 2012, Purchaser shall promptly remit to Seller
33.33% of any such Q2 PA Revenues which are subsequently received by Purchaser
or not otherwise reflected in the statement and payment referred to above, but
not in excess of $500,000, as well as any other amounts received by Purchaser to
which Seller is entitled (solely relating to Excluded Assets), by no later than
ten business days after any such Q2 PA Revenues or other amounts have been
received by Purchaser.

3.5 Transfer Taxes.  Seller shall be responsible for any sales, use, excise, VAT
or other transfer taxes (“Transfer Taxes”) incurred or owed as a result of the
sale, purchase or transfer of the Purchased Assets.
 
3.6 Further Assurances; Post-Closing Cooperation.
 
(a) From time to time after the Closing, at Purchaser’s request, at no cost to
Purchaser and without further consideration, Seller shall execute and deliver to
Purchaser such other instruments of sale, transfer, conveyance, assignment and
confirmation, provide such materials and information and take such other actions
as may be reasonably necessary in order to transfer, convey and assign to
Purchaser, and to confirm Purchaser’s title to, all of the Purchased
Assets.  Seller will be responsible for all costs related to the delivery of the
Purchased Assets to the location designated by Purchaser provided that Purchaser
shall be responsible for 50% of the costs of removing and relocating the
equipment that constitutes the Purchased Assets.
 
 
 
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(b) Following the Closing, Seller will afford Purchaser, its counsel and its
accountants, during normal business hours and upon reasonable advance notice,
reasonable access to review (i) the books, records and other data relating to
the Purchased Assets in Seller’s possession with respect to periods prior to the
Closing and the right to make copies and extracts therefrom, at Purchaser’s cost
and expense, but only to the extent that such access may be reasonably required
by Purchaser in connection with (A) Purchaser’s compliance with the requirements
of any Governmental Authority with jurisdiction over the Purchased Assets prior
to the Closing, and/or (B) Purchaser’s attempt to enforce any of its rights or
interests against any Person other than Seller or its Affiliates; and (ii)
financial and tax records relating exclusively to the Purchased Assets.  Any
such review shall be conducted by Purchaser, its counsel and/or accountants in
such manner as to cause the least disruption to Seller’s business as reasonably
practicable, and Seller shall have the right to redact and not make available to
Purchaser any information contained in such books, records and other data that
is related to the Retained Liabilities or not exclusively related to the
Purchased Assets.
 
(c) Following the Closing, Purchaser will afford Seller, its counsel and its
accountants, during normal business hours and upon reasonable advance notice,
reasonable access to review (i) the books, records and other data which are
transferred to the Purchaser  pursuant to the terms of this Agreement and which
relate to the Purchased Assets prior to the Closing Date,  the right to make
copies and extracts therefrom, at Seller’s cost and expense, and access to
former employees of Seller but only to the extent that such access may be
reasonably required by Seller in connection with (A) Seller’s compliance with
the requirements of any Governmental Authority with jurisdiction over the
Purchased Assets, (B) Seller’s attempt to enforce any of its rights or interests
against any Person other than Purchaser or its Affiliates, and/or (C) estate
administration, the winding down of the Seller in connection with the Bankruptcy
Case, the provision of any information required for the defense and prosecution
of claims and any other legitimate purpose of Seller, and (ii) financial and tax
records relating exclusively to the Purchased Assets prior to the Closing
Date.  Any such review shall be conducted by Seller, its counsel and/or
accountants in such manner as to cause the least disruption to Purchaser’s
business as reasonably practicable, and Purchaser shall have the right to redact
and not make available to Seller any information contained in such books,
records and other data that is related to the Assumed Liabilities or not
exclusively related to the Excluded Assets.
 

 
           3.7     Cure Costs.  To the extent that any Transferred Agreement to
be assumed is subject to a cure pursuant to Section 365 of the Bankruptcy Code,
Seller shall be responsible for such cure and pay any Cure Costs related to such
cure obligation for any such Transferred Agreement, which amounts shall be paid
at the Closing pursuant to Section 3.2 hereof, unless previously satisfied.
 
 
 
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ARTICLE 4
 
CONDITIONS PRECEDENT AND DELIVERIES
 
4.1           Conditions Precedent to obligations of Purchaser. The obligations
of Purchaser under this Agreement are  subject to satisfaction of the following
conditions precedent on or before the Closing Date (and are waivable by
Purchaser in Purchaser’s sole discretion):
 
(a) Representations and Warranties True on the Closing Date; Covenants.
 
(i) All of the representations and warranties of Seller set forth in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date (except for representations and warranties made as of a specified
date, which shall be true and correct in all material respects as of that date)
with the same force and effect as though made on and as of the Closing Date; and
provided that if a representation or warranty is already qualified by
materiality or Material Adverse Change then such representation and warranty
must be true in all respects and shall not be subject to the materiality
qualifier herein.
 
(ii) Seller shall have performed and complied in all material respects with the
obligations and covenants required by this Agreement to be performed or complied
with by Seller on or prior to the Closing Date, provided that if an obligation
or covenant is already qualified by materiality or Material Adverse Change, then
such obligation or covenant must be true in all respects and shall not be
subject to the materiality qualifier herein.
 
(b) Bankruptcy Proceedings.
 
(i) The Bidding Procedures Order shall have been entered by the Bankruptcy Court
and shall have become a Final Order.  The Sale Order shall have been entered by
the Bankruptcy Court and shall have become a Final Order.  The Sale Order shall
provide that upon payment of any Cure Costs, the Transferred Agreements will
have been assigned to Purchaser, and shall approve all of the other transactions
contemplated herein.
 
(ii) Notwithstanding anything in Section 4.1(b)(i) to the contrary, nothing in
this Agreement shall preclude Purchaser or Seller from consummating the
transactions contemplated herein if Purchaser, in its sole discretion, waives
the requirement that the Sale Order shall have become a Final Order.  No notice
of such waiver of this or any other condition to Closing need be given except to
Seller, any official committee appointed in the Bankruptcy Case, and the United
States Trustee, it being the intention of the parties hereto that Purchaser
shall be entitled to, and is not waiving, the protection of Section 363(m) of
the Bankruptcy Code, the mootness doctrine and any similar statute or body of
Law if the Closing occurs in the absence of Final Orders.
 
(c) Material Adverse Change.  There shall not have occurred a Material Adverse
Change with respect to the Purchased Assets since March 26, 2012.
 
(d) Litigation.  No court order or Governmental Order shall have been entered
that restrains or prohibits the consummation of the transactions contemplated by
this Agreement.
 
 
 
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(e) Approvals.  Subject to the receipt of the approval of the Bankruptcy Court
pursuant to the Sale Order, all authorizations, consents, filings and approvals
necessary to permit Seller to perform the transactions contemplated hereby shall
have been duly obtained, made or given, shall not be subject to the satisfaction
of any condition that has not been satisfied or waived and shall be in full
force and effect.  All terminations or expirations of waiting periods (and any
extension thereof) imposed by any Governmental Authority necessary for the
transactions contemplated under this Agreement, if any, shall have occurred
 
(f) Material Agreements. The Yu-Gi-Oh Grant Agreements, the Konami Agreements
and the CW Agreements shall be transferred to the Purchaser without
modification, amendment or limitation, other than such modifications, amendments
and limitations to which Purchaser has consented to pursuant to Section 7.2.
 
(g) Closing Deliverables.
 
(i) Seller shall have delivered to Purchaser a certificate signed by either the
CFO or the General Counsel of Seller, dated the date of the Closing Date,
certifying that the conditions specified in Section 4.1(a) have been satisfied
as of the Closing.
 
(ii) Seller shall have delivered to Purchaser (1) a duly executed General
Assignment and Bill of Sale for the Purchased Assets in the form of Exhibit C
hereto (the “General Assignment”); (2) assignments of the Transferred IP (other
than the Transferred IP to be assigned via an Assignment and Assumption
Agreement described in Section 4.3(a) below) in the forms reflected in Exhibit D
hereto (“IP Assignments”); and (3) such other instruments of conveyance,
assignment and transfer as shall be required to vest in Purchaser good and
marketable title and interest in and to the Purchased Assets (the General
Assignment, IP Assignments, the Assignment and Assumption, the Transition
Services Agreement and the instruments referred to in clause (iii) being
collectively referred to herein as the “Collateral Agreements”).
 
(iii) Seller shall have delivered one or more assignments in form reasonably
acceptable to Purchaser and Seller to record the transfer of the Registered IP
included in the Purchased Assets to Purchaser in each place in which the
applicable Trademark, Copyright or Domain Name is registered (“Registered IP
Filings”); and all of Seller’s and its Affiliates’ rights in and under the
Transferred Agreements.
 
(iv) Seller shall have delivered to Purchaser all necessary forms and
certificates complying with applicable Legal Requirements, duly executed and
acknowledged by Seller, certifying that the transactions contemplated hereby are
exempt from withholding under Section 1445 of the Code.
 
(v) Seller shall have delivered to Purchaser those documents referred to in
Section 4.3 to which it is a party.
 
(vi) Seller shall have entered into the Hulu New Agreements with Hulu, LLC in a
form reasonably satisfactory to Purchaser.
 
 
 
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(vii) The CW Release shall be in form and substance reasonably satisfactory to
Purchaser and shall have been fully executed and delivered, and shall provide
that Purchaser is a third-party beneficiary thereunder and shall have been
approved by the Bankruptcy Court.
 
(viii) Any other Transferred Agreements covering Purchased Assets and assets
other than the Purchased Assets shall be amended or other reasonable measures
taken as reasonably approved by Purchaser to ensure the transfer of rights and
obligations thereunder relate only to the Purchased Assets.

4.2           Conditions Precedent to obligations of Seller. The obligations of
Seller under this Agreement are subject to satisfaction of the following
conditions precedent on or before the Closing Date (and are waivable by Seller
in Seller’s sole discretion):
 
(a) Representations and Warranties True on the Closing Date; Covenants.
 
(i) All of the representations and warranties of Purchaser shall be true and
correct in all material respects on and as of the Closing Date (except for
representations and warranties made as of a specified date, which shall be true
and correct in all material respects as of that date) with the same force and
effect as though made on and as of the Closing Date.
 
(ii) Purchaser shall have performed and complied in all material respects with
the obligations and covenants required by this Agreement to be performed or
complied with by Purchaser on or prior to the Closing Date
 
(b) Bankruptcy Court Approval.  The Sale Order shall have been entered by the
Bankruptcy Court.
 
(c) Litigation.  No court order or Governmental Order shall have been entered
that restrains or prohibits the consummation of the transactions contemplated by
this Agreement.
 
(d) Closing Deliverables.
 
(i) Purchaser shall have delivered to Seller a certificate signed by Chief
Executive Officer of Purchaser, dated the date of the Closing Date, certifying
that the conditions specified in Section 4.2(a) have been satisfied as of the
Closing.
 
(ii) Purchaser shall have delivered to Seller all necessary forms and
certificates complying with applicable Law, duly executed and acknowledged by
Purchaser, certifying that the transactions contemplated hereby are exempt from
withholding under Section 1445 of the Code.
 
(iii) Purchaser shall have delivered to Seller those documents referred to in
Section 4.3 to which it is a party.
 
 
 
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(iv) The CW Release shall be in form and substance reasonably satisfactory to
Seller, shall have been fully executed and delivered and shall have been
approved by the Bankruptcy Court.

4.3           Mutual Closing Deliverables.  At the Closing, Purchaser, Seller
and certain of Seller’s Affiliates shall mutually execute and deliver to the
other:
 
(a) one or more Assignment and Assumption Agreements with respect to (i) the
Transferred Agreements and (ii) the other Transferred IP for which there are
Assumed Liabilities, in the form(s) of Exhibit E hereto (the “Assignment and
Assumption Agreements”);
 
(b) the Transition Services Agreement; and
 
(c) such other agreements, instruments and documents which shall be necessary or
appropriate to effectuate and consummate the transactions contemplated hereby on
and as of the Closing Date.
 
4.4           Books and Records and Tangible Assets.  Purchaser and Seller shall
mutually agree upon the schedule for the delivery to Purchaser of the physical
Books and Records and the Tangible Assets; provided that Seller shall be
permitted to retain copies of the Books and Records (subject to a duty of
confidentiality to Purchaser), and such delivery shall (a) be made at Seller’s
expense and (b) take place no later than 90 days after Closing.
 
ARTICLE 5
 
REPRESENTATIONS AND WARRANTIES OF SELLER
 
Except as specifically disclosed in the disclosure schedule attached hereto (the
“Disclosure Schedule”) (referencing the appropriate section and paragraph
numbers), Seller hereby represents and warrants to Purchaser, as follows:
 
5.1           Organization; Good Standing; Qualification.  The Company is a
corporation duly organized, validly existing, and in good standing under the
Laws of the State of New York, and the other entities comprising Seller are
corporations duly organized, validly existing and in good standing under the
Laws of the State of their respective jurisdictions of incorporation.  Seller
has all necessary corporate powers to own its properties and to carry on its
business as now conducted and as currently contemplated to be conducted.  Seller
is duly qualified to transact business and is in good standing in all
jurisdictions in which the nature of its business or of its properties makes
such qualification necessary, except where the failure to be so qualified and in
good standing would not reasonably be expected to result in a Material Adverse
Change.
 
5.2           Authority.  Subject to the necessary authorization from the
Bankruptcy Court:
 
(a) Seller has all requisite corporate power and authority to enter into this
Agreement and the Collateral Agreements and to consummate the transactions
contemplated hereby and thereby;
 
 
 
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(b) the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Seller, and no further action is required on the
part of Seller or its shareholders to authorize the Agreement and the
transactions contemplated hereby;
 
(c) this Agreement has been duly executed and delivered by Seller and, assuming
the due authorization, execution and delivery by Purchaser, constitutes a valid
and binding obligation, enforceable against Seller in accordance with its terms;
and
 
(d) the execution and delivery of this Agreement does not nor will not, and the
consummation of the transactions contemplated hereby will not (a) conflict with,
or result in any violation under, any provision of the charter or bylaws of
Seller, as applicable, (b) result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation under, any
Transferred Agreement, or (c) result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation under, any
Governmental Order applicable to Seller or its Affiliates or the Purchased
Assets.
 
5.3           Consents.  No material consent, waiver, approval, order, action or
authorization of any other Person, or registration, declaration or filing with
any Governmental Authority with jurisdiction over the Purchased Assets, is
required by, or with respect to, Seller or any Affiliate of Seller, in
connection with the execution and delivery of this Agreement by Seller, or the
consummation by Seller or any Affiliate of Seller of the transactions
contemplated hereby, except for consents, approvals, actions or filings with or
notice to the Bankruptcy Court.
 
5.4           Restrictions on Transaction.  There is no Contract (not to compete
or otherwise), commitment or Governmental Order to which Seller or its
Affiliates is a party binding upon the Purchased Assets which prohibits the
consummation of the transactions contemplated hereby.
 
5.5           Certain Financial Information.  Schedule 5.5 contains the
following financial information with respect to the Purchased Assets: (i)
payments by Seller to ADK with respect to the episodes of Seasons 2 and 3 of the
Yu-Gi-Oh! 5D’s series and episodes 1 – 41 of the Yu-Gi-Oh! Zexal series; (ii)
Seller's receipts from Konami for calendar years 2009 – 2011; (iii) national
advertising proceeds (net of agency commissions) from the sale of television
commercials on the five hour block on Saturday mornings on The CW which is
programmed by Seller (“CW Ad Proceeds”) for 2009 – 2011; and (iv) an estimate of
the CW Ad Proceeds for sales of commercials during the first quarter of 2012
(collectively, ”Financial Information”).  The Financial Information contained in
(i)-(iii), taken as a whole, is true, correct and complete in all material
respects.
 
5.6           Title to Purchased Assets; Liens.  Subject to the receipt of the
approval of the Bankruptcy Court pursuant to the Sale Order, Seller has good and
marketable title to all of its right, title and interest in and to the Purchased
Assets free and clear of any and all Liens, other than Liens that will be
discharged by the Bankruptcy Court pursuant to the Sale Order.  There are no
Intellectual Property Rights other than those included in the Purchased Assets
that are necessary to enable Purchaser to Use the Purchased Assets in
substantially the same manner as Seller and its Affiliates were Using the
Purchased Assets as of the Closing Date and since December 31, 2010.  As of
Closing, except as provided in Schedule 5.6, none of 4Kids Entertainment
International's Ltd., TC Digital LLC or TC Websites LLC will own or have any
rights to use any asset which if Seller owned or had the right to use would be a
Purchased Asset.
 
 
 
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5.7 Intellectual Property Rights.
 
(a) Schedule 5.7(a) accurately lists all the Registered IP of Seller and the
details associated therewith with respect to each registration (including, as
applicable, (i) the jurisdiction in which it is registered, (ii) the applicable
registration number, (iii) the owner of the registration, (iv) the date of
registration and (v) the registration status.  Except as indicated on Schedule
5.7(a), all filing fees, examination fees and maintenance fees required to be
paid as of the Closing Date with respect to any material Registered IP of Seller
have been paid, except where the failure to pay such fees would not reasonably
expected to result in a lapse, expiration, termination or cancellation of any
such registration.  Except as indicated on Schedule 5.7(a), with respect to any
pending applications identified in Schedule 5.7(a) or as would not reasonably be
expected to have a Material Adverse Change, Seller has filed all necessary
documentation required to keep such applications active through the Closing Date
to the extent permitted by Law.  Except as provided in Schedule 5.7 (a), to the
Knowledge of Seller, Seller has the right and authority to file, prosecute and
maintain all Registered IP.
 
(b) Subject to the rights of Warner Bros. Pictures Inc., Television Tokyo
Channel 12, Ltd., Nihon Ad Systems, Inc., Shueisha, Inc. and Konami Corporation,
and further subject to the licenses listed on Schedule 5.7(b) and any rights of
any third Person licensed to Seller through licenses or other Contracts, each as
identified in Schedule 5.7(b), Seller owns all right, title and interest in and
to the material Transferred IP or has the valid right to use such Transferred
IP, including the trade names identified on Schedule 5.7(a) and, without
limiting the foregoing, none of Seller’s non-debtor Affiliates or third parties,
including production companies that produced adaptations of the Yu-Gi-Oh!
Productions own any rights in or to the Yu-Gi-Oh! Productions except as set
forth in the Yu-Gi-Oh! Grant Agreements.  To the Knowledge of Seller, none of
the Transferred IP is currently infringing on, in conflict with,
misappropriating or otherwise violating in any material respect the Intellectual
Property Rights of any Person.  Such Transferred IP will remain valid following
the execution, delivery and performance of this Agreement or any other
Transaction Documents or the consummation of the transactions contemplated
hereby or thereby.  Except as set forth on Schedule 5.7(b) all Transferred IP
will be fully transferable, alienable or licensable by Purchaser without
restriction or payment of any kind to any third party and Purchaser shall have
the unencumbered right to Use such Intellectual Property.  Seller has no
obligation to compensate or account to any person for the Use of the Transferred
IP except as set forth in the Transferred Agreements or as otherwise set forth
in Schedule 5.7(b).
 
(c) Seller has not received any unresolved written notice of any claim or
written allegation of infringement, misappropriation, unfair competition or
trade practices, or other violation of any Person’s Intellectual Property Rights
with respect to any Purchased Asset.  None of the Purchased Assets is subject to
any pending or, to the Knowledge of Seller, threatened litigation or other
adverse claim of infringement, unfair competition or trade practices or
misappropriation by any Person with respect to any Purchased Asset.  Neither
Seller nor any of its Affiliates have, since January 1, 2009, received notice of
(1) any opposition or cancellation actions pending with respect to the
Registered Trademarks or Domain Names or (2) any action to invalidate any Music
Rights, Copyrights related to the Yu-Gi-Oh! Business or in the Yu-Gi-Oh!
Productions or other protectable elements of the Yu-Gi-Oh! brand, nor, to the
Knowledge of Seller, have any such actions been threatened.
 
 
 
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(d) Except as set forth on Schedule 5.7 (d), since January 1, 2009, Seller has
not initiated any claim against any Person alleging that such Person is
infringing, misappropriating or otherwise violating any Purchased Assets that
has not been resolved.  Seller has taken reasonable and customary (based on
industry custom and practice) steps to protect, preserve and maintain all
Transferred IP.
 
(e) Schedule 5.7(e) sets forth a complete and accurate list of all  Intellectual
Property rights of any third Person that are Used as part of the Transferred IP
pursuant to a license, sublicense or other Contract, but excluding (i) standard
materials releases (e.g., property releases, background artwork releases) that
contain no material restriction on exploitation of the work into which the
released material was incorporated and (ii) synchronization and master use
licenses described in Section 5.7(h) below.  Seller has delivered complete and
accurate copies of the documents described on Schedule 5.7(e) and with respect
to each Contract identified thereon, and to the Knowledge of the Seller, such
Contract is valid, binding and enforceable and in full force and effect and no
material breach or material default has occurred with respect thereto.
 
(f) All former or current employees, consultants, advisors, agents and
independent contractors of Seller or its Affiliates who have contributed to or
participated in the conception or development of any Transferred IP (i) have
validly assigned to or vested ownership in Seller or its Affiliates all such
Transferred IP, whether through valid and binding proprietary rights agreements,
employment agreements, work-for-hire agreements, or other Contract or (ii) were
employees acting in the course of their duties.
 
(g) Except as otherwise specifically disclosed in Schedule 5.7(g), there are no
material restrictions on Purchaser’s Use of the Copyrights in the Yu-Gi-Oh!
Productions or the Use of the Transferred IP.
 
(h) The Transferred IP includes all rights to Use the Yu-Gi-Oh! Productions and
the Yu-Gi-Oh! brand pursuant and subject to the Yu-Gi-Oh! Grant Agreements, the
Yu-Gi-Oh! license agreements listed on Schedule 5.8 and the restrictions set
forth on Schedule 5.7(h).
 
(i) All cue sheets for the Yu-Gi-Oh! Productions are accurate in all material
respects and have been provided to Purchaser along with all synchronization and
master use licenses for the music contained in the Yu-Gi-Oh! Productions. The
rights conveyed by Seller to Purchaser hereunder with respect to the Yu-Gi-Oh!
Productions permit Purchaser to exploit said Yu-Gi-Oh! Productions after the
Closing subject to the limitations in the Yu-Gi-Oh! Grant Agreements and License
Agreements.
 
 
 
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5.8 Contracts.
 
(a) Schedule 5.8 (including all of its subparts) is a true and complete listing
of all Transferred Agreements.  The Schedule sets forth the title and date, and
the identity of the parties thereto for each such Contract.  True and correct
copies of each such written Transferred Agreement (including all material
written amendments, supplements and modifications, and all exhibits, schedules
and attachments thereof) have been provided to Purchaser prior to the date
hereof.
 
(b) With respect to each Transferred Agreement, (i) such Contract is a legal,
valid and binding obligation of Seller and, to the Knowledge of Seller, each
other party thereto, enforceable against Seller and, to the Knowledge of Seller,
each such other party in accordance with its terms, and (ii) neither Seller nor
any of its Affiliates nor, to the Knowledge of Seller, any other party thereto,
is in material default or has failed to perform any material obligation
thereunder or delivered written notice of such party’s intent to terminate such
Contract.  Subject to the receipt of the approval of the Bankruptcy Court
pursuant to the Sale Order, no such Contract will require any other party’s
consent in connection with the consummation of the transactions contemplated
hereby or if such Contract does require such consent, such consent has been
granted.  The consummation of the transactions contemplated herein will not
result in the breach of any material provision of or termination or voiding of
any such Contract.  Other than as set forth on Schedule 5.8, no such Contract
has a Liability that will be assumed by Purchaser that is in excess of $50,000
in the aggregate.
 
(c) There are no Contracts providing for the licensing of any Yu-Gi-Oh!
Productions or in relation to the Yugioh Business that are not included as
Transferred Agreements.  The Library Agreements include all Contracts granting
to Purchaser the right exercise its rights in the Library Assets.
 
(d) All Cure Costs relating to any Transferred Agreements and the Purchased
Assets will have been paid as of the Closing or will be paid at the Closing.

(e)           The amount of advances or guarantees pursuant to those License
Agreements that are merchandise license agreements for the Yu-Gi-Oh Property
that were unrecouped or unearned as of the date hereof is not greater than
$$42,545 and are set forth on Schedule 3.3 (a). The amount of license fees
received by Seller or its affiliates under TV License Agreements for the
Yu-Gi-Oh Property as of the date hereof, which license fees have been paid for
television episodes of the Yu-Gi-Oh Zexal series not yet delivered by Seller to
the broadcaster as of the date hereof do not exceed $5,000 and are set forth on
Schedule 5.8.
 
5.9 Yu-Gi-Oh! Grant Agreements. The Yu-Gi-Oh! Grant Agreements are in full force
and are legal, valid and binding obligation of Seller and, to the Knowledge of
Seller, each other party thereto, enforceable against Seller and, to the
Knowledge of Seller, each such other party in accordance with its terms, and
(ii) neither Seller nor any of its Affiliates nor, to the Knowledge of Seller,
any other party thereto, is in material default or has failed to perform any
material obligation thereunder or delivered written notice of such party’s
intent to terminate. Seller has made all payments which are required to have
been made under the Yu-Gi-Oh! Grant Agreements. Seller has licensed all the
episodes of the first five seasons of Yu-Gi-Oh!, the three seasons of Yu-Gi-Oh!
GX, the three seasons of Yu-Gi-Oh! 5D’s and the first season of Yu-Gi-Oh! Zexal
and timely paid for such productions. As of the date hereof, the expiration
dates of the Yu-Gi-Oh! Grant Agreements are August 31, 2018  for broadcast and
home video rights in the United States, August 31, 2019 for broadcast and home
video rights in the territory described therein outside of the United States,
and August 31, 2018 with respect to merchandising rights.   By April 15 and as
of Closing, Seller will have exercised its option for the next season of
Yu-Gi-Oh! and the expiration dates of the Yu-Gi-Oh! Grant
 
 
 
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Agreements shall be August 31, 2019  for broadcast and home video rights in the
United States, August 31, 2020 for broadcast and home video rights in the
territory described therein outside of the United States, and August 31, 2019
with respect to merchandising rights. Seller has all rights granted under the
the Yu-Gi-Oh Agreements and has not lost any categories thereunder. Seller has
paid the most recent $62,500 of the installment of the $250,000 license fee
applicable for the 2011 – 2012 broadcast season and an installment of  $62,500
remains to be paid for the 2011 – 2012 broadcast season.  The balance of
Seller’s unrecouped amounts pursuant to the Yu-Gi-Oh! Agreements as of December
31, 2011 was $1,151,989.
 
5.10 Konami Agreements. The Konami Agreements are in full force and are legal,
valid and binding obligation of Seller and, to the Knowledge of Seller, each
other party thereto, enforceable against Seller and, to the Knowledge of Seller,
each other party thereto, in accordance with its terms, and (ii) neither Seller
nor any of its Affiliates nor, to the Knowledge of Seller, any other party
thereto, is in material default or has failed to perform any material obligation
thereunder or delivered written notice of such party’s intent to
terminate.  Seller has made all payments which are required to have been made
under the Konami Agreements. The expiration date of the Konami Agreements with
respect to sales in the US of Yu-Gi-Oh! trading cards and videogames is August
31, 2018 and with respect to sales of Yu-Gi-Oh! trading cards and videogames in
the other countries within the territory granted to Seller in the Konami
Agreements is August 31, 2019.
 
5.11 Compliance with Laws; Litigation.  Seller and its Affiliates are currently
in compliance with, and since January 1, 2009, have complied in all material
respects with, all Laws applicable to their operation and Use of the Purchased
Assets, except for any noncompliance as would not reasonably be expected to
result in a Material Adverse Change.  Since January 1, 2009, neither Seller nor
any of its Affiliates has received any notice of any violation of any Laws
applicable to its operation or Use of the Purchased Assets.  There is no action,
suit, claim or proceeding of any nature pending or, to the Knowledge of Seller,
threatened against Seller or any of its Affiliates which (a) seeks to enjoin or
prevent the consummation of the transactions contemplated hereby, or (b) if
determined adversely to Seller, would reasonably be expected to materially
impair the ability of Purchaser to Use or operate the Purchased Assets in a
manner consistent with the Use or operation of such Purchased Assets by Seller.
 
5.12 Relationships with Related Persons.  None of the Assumed Liabilities will
include any payment, obligation or other Liability owed to Seller or any
Affiliate of Seller as a result of any events or transactions occurring prior to
the Closing Date.
 
 
 
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5.13 Masters.  Seller has made available to Purchaser a true, complete and
correct list of the locations of all original negatives (if any) and master
copies of the Yu-Gi-Oh! Productions, and to the extent such locations are owned
or controlled by a third Person, Seller is a party to agreements which provide
for reasonable access rights with respect to such master copies at such
locations.  An original negative (if any) or master copy of each episode of the
Yu-Gi-Oh! Productions has been properly stored in accordance with customary
standards in the media, motion picture, television and entertainment industries,
and each such copy is in commercially reasonable condition. The transfer to
Purchaser of such negatives (if any) and master copies of the Yu-Gi-Oh!
Productions and Library Assets shall be made at the location of Seller’s storage
locations in New Jersey.
 
5.14 Brokers or Finders.  Except for its arrangement with BDO Capital Advisors,
LLC (“BDO Capital”) (the cost of which shall be borne exclusively by Seller),
Seller has not dealt with any broker or finder in connection with the
transactions contemplated by this Agreement.  Except for Seller’s arrangement
with BDO Capital, who has been retained by the Seller and approved by the
Bankruptcy Court as the Seller’s investment banker, and any Claim that BDO
Capital may be entitled to based upon the transaction contemplated herein (the
cost of which shall be borne exclusively by Seller), Seller has not incurred,
and shall not incur, directly or indirectly, any Liability for any brokerage or
finders’ fees, agents’ commissions or any similar charges in connection with
this Agreement or any of the transactions contemplated hereby.
 
5.15 Library Assets. Except as set forth on Schedule 5.15, Seller is the sole
and exclusive owner of all right, title and interest in and to the Library
Assets and has all rights to Use the Library Assets.  To the Knowledge of
Seller, none of the Library Assets is currently infringing on, in conflict with,
misappropriating or otherwise violating the Intellectual Property Rights of any
Person.  The Library Assets may be exploited and exhibited as summarized in
Schedule 5.15.
 
5.16 Other Assets.  With respect to all of the Other Assets, except as provided
in Schedule 5.16, Seller has not granted to any third party, nor will Seller
grant or purport to grant to any third party, any rights to the Other Assets.
 
ARTICLE 6
 
REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
Purchaser hereby represents and warrants to Seller as of the date of this
Agreement as follows:
 
6.1           Organization, Good Standing and Qualification.  Purchaser is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware.  Purchaser has all necessary corporate powers to
own its properties and to carry on its business as now owned and
operated.  Purchaser is duly qualified to transact business and is in good
standing in all jurisdictions in which the nature of its business or of its
properties makes such qualification necessary, except where the failure to be so
qualified would not reasonably be expected to have a material adverse effect on
the ability of Purchaser to consummate the transactions contemplated by this
Agreement.
 
 
 
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6.2           Authority.  Purchaser has all requisite corporate power and
authority to enter into this Agreement and the Collateral Agreements and to
consummate the transactions contemplated hereby and thereby.  The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Purchaser, and no further action is required on the part of Purchaser or its
shareholders to authorize the Agreement and the transactions contemplated
hereby.  This Agreement has been duly executed and delivered by Purchaser and,
assuming the due authorization, execution and delivery by Seller and Bankruptcy
Court approval, constitutes a valid and binding obligation of Purchaser,
enforceable against it in accordance with its terms, subject to the effect of
applicable bankruptcy, insolvency, moratorium, reorganization or other similar
Laws affecting the rights of creditors, general principles of equity or the
effect or availability of rules of Law governing specific performance,
injunctive relief or other equitable remedies.  The execution and delivery of
this Agreement does not nor will not, and the consummation of the transactions
contemplated hereby will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation under,
(a) any provision of the charter or bylaws of Purchaser, as applicable, (b) any
mortgage, lease, indenture, contract or other agreement or instrument, permit,
concession, franchise or license to which Purchaser is a party, or (c) any
Governmental Order applicable to Purchaser, except in the cases of clauses (b)
and (c) above, where such conflict, violation, default or right of termination,
cancellation or acceleration would not reasonably be expected to result in a
material adverse effect on the ability of the Purchaser to contemplate the
transactions contemplated by this Agreement.
 
6.3           Consents.  No consent, waiver, approval, order, action or
authorization of any other Person, or registration, declaration or filing with
any Governmental Authority, is required by, or with respect to, Purchaser, in
connection with the execution and delivery of this Agreement by Purchaser, or
the consummation by Purchaser of the transactions contemplated hereby.
 
6.4           Brokers or Finders.  Purchaser has not dealt with any broker or
finder in connection with the transactions contemplated by this
Agreement.  Purchaser has not incurred, and shall not incur, directly or
indirectly, any Liability for any brokerage or finders’ fees, agent’s
commissions or any similar charges in connection with this Agreement or any of
the transactions contemplated hereby.
 
6.5.           Litigation.  There is no action, suit, claim or proceeding of any
nature pending or, to the Knowledge of Purchaser, threatened against Purchaser
or any of its Affiliates which seeks to enjoin or prevent the consummation of
the transactions contemplated hereby or, if determined adversely to Purchaser,
would reasonably be expected to impair the ability of Purchaser to consummate
the transactions contemplated hereby.
 
6.6 Restrictions on Transaction.  There is no agreement (not to compete or
otherwise), commitment or Governmental Order to which Purchaser is a party which
prohibits the consummation of the transactions contemplated hereby or would
otherwise reasonably be expected to impair the ability of the Purchaser to
consummate the transactions contemplated hereby.
 
 
 
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ARTICLE 7
 
COVENANTS AND AGREEMENTS
 
7.1           Notice of Transaction as Required by Bankruptcy Court; Seller Not
Party to Other Agreement.
 
(a) Purchaser and Seller acknowledge that under the Bankruptcy Code the sale of
Purchased Assets is subject to approval of the Bankruptcy Court.  Purchaser and
Seller acknowledge that to obtain such approval Seller must demonstrate that it
has taken reasonable steps to obtain the highest or best price possible for the
Purchased Assets, including giving notice of the transactions contemplated by
this Agreement to creditors and other interested parties as ordered by the
Bankruptcy Court, providing information about the Purchased Assets to
responsible bidders, entertaining higher or better offers from responsible
bidders and, if necessary, conducting an Auction.
 
(b) Seller represents that, other than the transactions contemplated by this
Agreement, Seller is not a party to or bound by any agreement with respect to a
possible merger, sale, restructuring, refinancing or other disposition of all or
any material part of the Yu-Gi-Oh! Business or the Purchased Assets.
 
(c) Seller covenants to provide timely, proper and sufficient notice of the
transactions contemplated by this Agreement to (i) the Office of the United
States Trustee, any official committee of unsecured creditors in the Bankruptcy
Case, and any other party requesting notice in the Bankruptcy Case, (ii) all
creditors in the Bankruptcy Case, (iii) all holders of Liens in or parties with
an interest in any of the Purchased Assets, (iv) all parties to or with any
interest in the Transferred Agreements or the assets or business relating
thereto, (v) any and all parties required by the Bankruptcy Code, the Bankruptcy
Rules, the Local Rules of Practice and Procedure of the Bankruptcy Court or the
Bankruptcy Court and (vi) any and all other parties reasonably requested by
Purchaser.
 
(d) Prior to the Closing, Purchaser and Seller shall cooperate in good faith and
make commercially reasonable efforts to demonstrate Purchaser’s satisfaction of
the conditions contained in sections 365(b)(1)(c) and (f) of the Bankruptcy Code
with respect to the  Transferred Agreements.

7.2           Interim Covenants.
 
(a) Except with the prior written consent of Purchaser (which consent shall not
be unreasonably withheld, delayed or conditioned), as otherwise contemplated or
permitted by this Agreement or as required by the Bankruptcy Code or other
applicable Law, during the period prior to and up to Closing, Seller shall
operate the Yu-Gi-Oh! Business in compliance in all material respects with all
Laws applicable to the operation of its business.  From the date hereof through
the Closing Date, or as otherwise required by applicable Law, Seller shall use
commercially reasonable efforts to:
 
 
 
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(i) maintain the Purchased Assets in a manner consistent with past practices,
reasonable wear and tear excepted and maintain the types and levels of insurance
currently in effect in respect of the Purchased Assets;
 
(ii) preserve intact the Yu-Gi-Oh! Business, to keep available the services of
its current employees and agents and to maintain its relations and goodwill with
its suppliers, customers, distributors and any others with whom or with which it
has business relations;
 
(iii) upon any damage, destruction or loss to any Purchased Asset, apply any
insurance proceeds received with respect thereto to the prompt repair,
replacement and restoration thereof to the condition of such Purchased Asset
before such event or, if required, to such other (better) condition as may be
required by applicable Law;
 
(iv) promptly advise Purchaser in writing of the occurrence of any event that
has had, or would reasonably be expected to have, a Material Adverse Change; and
 
(v) consult with Purchaser on all material aspects of the Yu-Gi-Oh! Business as
may be reasonably requested from time to time by Purchaser, including, but not
limited to, personnel, accounting and financial functions.
 
(b) Except as otherwise contemplated or permitted by this Agreement or by
applicable Law, during the period prior to and up to Closing, Seller shall not,
without the prior written consent of Purchaser:
 
(i) enter into, terminate or amend or reject any of the Transferred Agreements,
or cancel, modify or waive any material claims held in respect of the Purchased
Assets or waive any material rights of value;
 
(ii) do any act or fail to do any act that will cause a material breach or
default under any of the Transferred Agreements;
 
(iii) sell, transfer or otherwise dispose of any of the Purchased Assets;
 
(iv) modify any of its sales practices or receivables collections practices from
those in place on the date hereof, including offering any discounts, incentives
or other accommodations for early payment;
 
(v) conduct any “going out of business,” liquidation, bankruptcy, or similar
sales or take any action to fashion its business as going out of business,
liquidating or closing;
 
(vi) dispose of or fail to keep in effect any material rights in, to, or for the
use of any of the Intellectual Property, except for rights which expire or
terminate in accordance with their terms;
 
(vii) subject any Purchased Assets to any Liens;
 
 
 
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(viii) enter into, or negotiate any licenses or grant any party any rights or
license in any of the Purchased Assets; or
 
(ix) authorize any of the foregoing, or commit or agree to take actions, whether
in writing or otherwise, to do any of the foregoing.
 
(c) Seller take all action to properly and timely (i) exercise its option for
the next season of Yu-Gi-Oh! such that the expiration dates of the Yu-Gi-Oh!
Grant Agreements at Closing shall be August 31, 2019  for broadcast and home
video rights in the United States, August 31, 2020 for broadcast and home video
rights in the territory described therein outside of the United States, and
August 31, 2019 with respect to merchandising rights and (ii) make any required
payments under the Yu-Gi-Oh Grant Agreements.
 
7.3           Public Announcements.  Except as may be required by the Bankruptcy
Court, the Bankruptcy Code, the federal securities laws or any other applicable
Law, prior to the Closing, neither Purchaser nor Seller will issue any press
release or make any other public announcement relating to the transactions
contemplated by this Agreement without the prior consent of the other
party.  Except as may be required by the Bankruptcy Court, the Bankruptcy Code,
the federal securities laws or any other applicable Law, following the Closing,
(i) Seller shall not issue any public announcement regarding the transactions
contemplated hereby without Purchaser’s prior consent, and (ii) Purchaser shall
have the right to make a public announcement regarding the transactions
contemplated hereby.  Any party wishing to issue any such press release or make
any such other public announcement that references the other party other than to
state that the acquisition has occurred or other information contained in a
Final Order, will afford the other party a reasonable opportunity to review and
comment on such press release or public announcement relating to the
transactions contemplated by this Agreement.
 
7.4           Post Closing Tax Covenants.
 
(a) To the extent relevant to the Purchased Assets, each party shall (i) provide
the other with such assistance as may reasonably be required in connection with
the preparation of any Tax return and the conduct of any audit or other
examination by any Governmental Authority or in connection with judicial or
administrative proceedings relating to any Liability for Taxes and (ii) retain
and provide the other with reasonable access to all records or other information
that may be relevant to the preparation of any Tax Returns, or the conduct of
any audit, examination or other proceeding by a Governmental Authority relating
to Taxes.
 
(b) Purchaser and Seller agree that this Agreement is a technology transfer
agreement under Section 6012(c)(10) of the California Sales & Use Tax Law; and
that any Tangible Assets will be separately stated at a reasonable price to be
agreed upon mutually by Purchaser and Seller.
 
7.5           Termination of Certain Agreements.  All confidentiality agreements
between Purchaser and Seller with respect to the transactions contemplated
herein shall be terminated and be of no further force or effect following the
Closing Date.
 
 
 
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7.6           Trademark Docket Documentation.  Seller shall make available to
Purchaser prior to Closing, in an electronic form, all trademark docket data
contained in Seller’s trademark counsel's records relating to the Registered
Trademarks for transmission into Purchaser’s (or Purchaser’s representative’s)
trademark docketing system.  For purposes of this Section 7.6, Purchaser
acknowledges and agrees that such data may be incompatible with Purchaser’s
trademark docketing software and to the extent of any such incompatibility
Seller shall not be deemed to be in breach of this provision.
 
7.7 Confidentiality.  Subject to Section 7.3 above, Purchaser and Seller will
each not use and maintain strict confidentiality with respect to all the other
party’s Confidential Information (as hereinafter defined) furnished by or on
behalf of such other party except to the extent required by Law or Governmental
Order, provided, that following the Closing Date, all Confidential Information
relating to the Purchased Assets shall be deemed to be Confidential Information
of the Purchaser.  “Confidential Information” shall mean any and all non-public,
confidential or proprietary information that, with respect to Purchaser, is
related to the Purchased Assets or the operations of Purchaser and its
Affiliates, and with respect to Seller, is related to the operations of Seller
and its Affiliates, and that the disclosing party or its representatives have
made available to the receiving party or its representatives, other than
information that (i) is, at the time of disclosure to the receiving party,
already in the receiving party’s possession; (ii) is or becomes generally
available to the public other than as a result of a breach of this Agreement by
the receiving party or its representatives; (iii) becomes available to the
receiving party on a non-confidential basis from a source other than the
disclosing party or their representatives, provided that such source is not
bound by a confidentiality agreement or other legal or fiduciary obligation of
secrecy to the disclosing party; or (iv) is independently developed by the
receiving party.
 
7.8 Domain Names.  Seller shall take such actions as are reasonably necessary
pursuant to the procedures of the applicable registrar(s) to transfer the Domain
Names to Purchaser (e.g., forwarding “authorization codes”).
 
7.9 Cue Sheets.  Purchaser agrees to submit cue sheets in connection with its
distribution of the Yu-Gi-Oh! Productions after Closing to the extent required
under the synchronization and master use license agreements provided to
Purchaser pursuant to Section 5.7(h).
 
7.10 Brokers.  Seller shall be responsible for all amounts due to BDO Capital.
 
7.11 Saban Capital Guarantee.  As of the execution of this Agreement, Saban
Properties LLC shall execute and deliver a guarantee of all of Purchaser’s
obligations under this Agreement substantially in the form of the guarantee
attached hereto as Exhibit G.
 
7.12 Disclaimer of Additional Representations and Warranties; Schedules.
 
 
 
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(a) The Purchaser acknowledges that except as expressly set forth in this
Agreement and the Schedules hereto, the Seller makes no representations or
warranties whatsoever, express or implied, with respect to the Purchased Assets,
the Yu-Gi-Oh! Business or  the Assumed Liabilities.
 
(b) Notwithstanding anything to the contrary contained in this Agreement, no
matter exclusively related to any of the Excluded Assets or Retained Liabilities
is required to be disclosed on any Disclosure Schedule.
 
7.13 Chapter 5 Claims.  Following the Closing Date, Purchaser acknowledges and
agrees that it shall not pursue or transfer or threaten to pursue or transfer
any Chapter 5 Claims, Rights and Causes of Action acquired by Purchaser in
accordance with Section 2.1(k) hereof.
 
7.14 Privacy Policies Related to Personally Identifiable Information.  Following
the Closing Date, Purchaser acknowledges and agrees that it shall comply in all
material respects with any 4Kids privacy policy governing or related to
“personally identifiable information” as such term is defined in the Bankruptcy
Code.
 
ARTICLE 8
 
POST CLOSING OPERATION
 
8.1           Transition Services.  Purchaser and Seller shall enter into the
transition services agreement attached hereto as Exhibit F (the “Transition
Services Agreement”) whereby Seller shall provide certain operational and
transitional services to Purchaser for a period commencing on the Closing Date
and ending up to 120 days thereafter (“Transition Period”).
 
8.2           Hired Employees.  At any time during the Transition Period,
Purchaser may make offers of employment to certain employees of Seller that have
been providing transition services under the Transition Services Agreement to
become employees, consultants or independent contractors of Purchaser or its
Affiliates (“Designated Individuals”).  In the event that Purchaser makes such
offers to any Designated Individuals, Purchaser shall not take or assume any
Liabilities with respect to such Designated Individuals for their period of
service, engagement or employment to the Seller or its Affiliates.  In the event
that the Designated Individual accepts the terms proposed by Purchaser or its
Affiliates with respect to employment or engagement, then Seller shall terminate
the employment of such Designated Individuals. Seller shall cooperate with and
use commercially reasonable efforts to assist Purchaser and its Affiliates in
their respective efforts to secure satisfactory employment or other engagement
arrangements with the Designated Individuals, including providing Purchaser with
access to the Designated Individuals for purposes of negotiating terms of
employment or engagement. Nothing contained in this Agreement shall confer upon
any Designated Individuals any right with respect to employment, or continuance
thereof, or any other engagement with Purchaser or one of its Affiliates, nor
shall anything herein interfere with the right of Purchaser and its Affiliates
to terminate the employment or engagement of any of the Designated Individuals
at any time, with or without cause and with or without prior notice, or restrict
Purchaser or its Affiliates in the exercise of their independent business
judgment in modifying any of the terms and conditions applicable to the
Designated Individuals.  Purchaser shall have no obligation with respect to
claims by any employee of Seller, including any Designated Individuals, whether
under any Pension Plan or for severance, unpaid wages, unpaid accrued time off,
unpaid bonuses, credit for prior service, unpaid commissions or
otherwise.  Seller shall be responsible for any and all Liability under the WARN
Act or other Legal Requirements that arise out of or result from any termination
of employment by Seller.  Seller shall not be obligated to continue to employ
any individual, except to the extent provided in the Transition Services
Agreement during the Transition Period.
 
 
 
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ARTICLE 9
 
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION AND RIGHT
OF SET-OFF
 
9.1           Survival of Representations and Warranties.  The representations
and warranties of Seller contained in this Agreement and the Collateral
Agreements, and in any certificate or other instrument delivered pursuant to
this Agreement or such Collateral Agreements, shall survive the Closing for a
period of 6 months following the Closing Date (unless any Collateral Agreement
provides for a longer time).  No time limit shall be applicable for the survival
of the covenants in this Agreement, including without limitation Seller’s
obligations with respect to the Retained Liabilities and Purchaser’s obligations
with respect to the Assumed Liabilities. Seller shall not have any Liability
whatsoever for breaches of its representations and warranties under this Article
9 unless prior to the 6 month anniversary of the Closing Date, Purchaser
delivers a notification of claim for indemnification to Seller; provided, that
claims involving fraud or intentional breach may be made at any time and are not
subject to this time limitation and, provided, further, that claims relating to
the Seller being responsible for all covenants and Retained Liabilities shall
not be the subject of the 6 month limitation set forth above.
 
9.2.           Indemnification by Seller.  Seller agrees to indemnify and hold
Purchaser and its employees, officers, directors and Affiliates (collectively,
the “Purchaser Indemnified Parties”), harmless from and against all claims,
causes of action, losses, liabilities, damages, deficiencies, costs, payments
and expenses, including reasonable attorneys’ fees and expenses of investigation
and defense (hereinafter individually a “Loss” and collectively “Losses”;
provided, that Losses shall exclude any consequential, indirect, incidental,
punitive or special damages or other losses or expenses for lost profits) which
are paid, sustained or incurred by any Purchaser Indemnified Party to the extent
arising out of (a) any breach of any representation or warranty of Seller
contained in Article 5 of this Agreement, (b) any failure by Seller to perform
or comply with any covenant made by it in this Agreement, and/or (c) the
Retained Liabilities.
 
9.3           Sole Remedy; Source of Recovery for Indemnifiable Losses; Caps and
Thresholds.
 
(a) Purchaser’s sole source for recovery for indemnification based on breaches
of representations and warranties by Seller under this Agreement for
indemnification obligations pursuant to Section 9.2(a) shall be from the Escrow
Account. For the avoidance of doubt, Purchaser’s recovery for breaches of
Seller’s covenants shall not be limited to the Escrow Account.  Seller shall
have no obligation to make any payments to any Purchaser Indemnified Person for
indemnification obligations pursuant to Section 9.2(a) related to breaches of
representations and, warranties by Seller except for any payments that come from
the Escrow Account.
 
 
 
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(b) Purchaser’s right under this Article 9 with respect to breaches of
representations and warranties of the Seller shall be its sole and exclusive
remedy with respect to claims arising under this Agreement, other than for
claims involving fraud or intentional breach.
 
(c) The aggregate amount of indemnification obligations of Seller with respect
to any Losses otherwise payable under Section 9.2 with respect to breaches of
Seller’s representations and warranties  shall not exceed Escrow Amount (the
“Indemnity Cap”) (except that the foregoing limitation shall not apply with
respect to Seller’s indemnification obligations with respect to breaches of
covenants and the Retained Liabilities).No  amounts in respect of indemnifiable
Losses of Seller shall be payable until such time as all such indemnifiable
Losses shall aggregate to more than $50,000 (the “Basket”), after which time
Seller shall be liable in full (subject to the Indemnity Cap in the event of
breaches of representations and warranties) for all indemnifiable Losses from
the first dollar of Loss.
 
9.4           Third-Party Claims.
 
(a) In the event Purchaser or Seller becomes aware of a third-party claim which
it reasonably believes may result in indemnification pursuant to applicable
provisions of this Article 9, such Person shall promptly notify the other party
of such claim; provided that, the failure of any Purchaser Indemnified Party to
give prompt notice of such third-party claim (the “Claim Notice”) shall not
release or otherwise affect Seller’s obligations with respect to its
indemnification obligations except to the extent it is actually and materially
prejudiced thereby.  The Seller may elect to assume the defense of such
third-party claim at its sole expense by notifying the Indemnified Party of such
election promptly after receipt of the Claim Notice, but in no event later than
fifteen (15) Business Days of its receipt thereof.  The failure to give such
notice shall not affect Seller’s right to assume such defense, except to the
extent any Purchaser Indemnified Party is actually and materially prejudiced
thereby.  If Seller so elects to assume the defense of such third-party claim,
(i) the Purchaser Indemnifying Party shall proceed to defend such claim in a
diligent manner with counsel of its choice (which must be reasonably
satisfactory to the Purchaser Indemnified Party); (ii) the Purchaser Indemnified
Party shall make available to Seller any non-privileged documents and materials
in its possession that may be reasonably necessary to the defense of such claim;
(iii) Seller shall keep the Purchaser Indemnified Party reasonably informed of
all material developments and events relating to such claim; (iv) the Purchaser
Indemnified Party shall have the right to participate in the defense of such
claim, but at its sole cost and expense, unless (A) the engagement of counsel
shall have been specifically authorized in writing by Seller, or (B) the named
parties to the third-party complaint (including impleaded parties) include both
the Purchaser Indemnified Parties and Seller, and in the opinion of counsel to
the Purchaser Indemnified Party, there exists a conflict (or potential conflict)
of interest between such parties, in which case the reasonable expenses of the
Purchaser Indemnified Party’s counsel shall be paid or reimbursed by Seller
(provided that in no event shall Seller be liable for more than one counsel for
all Purchaser Indemnified Parties with respect to such third-party claim); and
(v) Seller shall not, without the consent of the Purchaser Indemnified Party
(which consent may not be unreasonably withheld or delayed), settle, compromise
or discharge such third-party claim or permit a default or consent to entry of
judgment, unless any such settlement, compromise, discharge or consent includes
a release of the Purchaser Indemnified Party from all liability arising out of
such third-party claim, provides solely for monetary relief and involves no
finding or admission of any violation of any Law by the Purchaser Indemnified
Party and involves no limitation on the Use by Purchaser or rights of Purchaser
in any Purchased Asset.
 
 
 
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(b) Subject to the overall limitations set forth in this Section 9.4, if Seller
fails to give notice of its election to assume the defense of a third-party
claim pursuant to Section 9.5(a), and the Purchaser Indemnified Party proceeds
with the defense of such claim or proceeding on its own: (i) all reasonable
expenses relating to the defense of such claim (with counsel not reasonably
objected to by Seller) shall be borne and paid exclusively by Seller (provided
that in no event shall Seller be liable for more than one counsel for all
Purchaser Indemnified Parties with respect to such third-party claim); (ii) the
Indemnifying Party shall make available to the Indemnified Party any
non-privileged documents and materials in its possession or control that may be
reasonably necessary to the defense of such claim or proceeding; (iii) the
Purchaser Indemnified Party shall keep Seller reasonably informed of all
material developments and events relating to such claim or proceeding; (iv)
Seller shall have the right to participate in the defense of such claim, but at
its sole cost and expense; and (v) the Purchaser Indemnified Party shall not,
without the consent of Seller (which consent may not be unreasonably withheld or
delayed), settle, compromise or discharge such third-party claim or permit a
default or consent to entry of judgment, unless any such settlement, compromise,
discharge or consent includes a release of Seller from all liability arising out
of such third-party claim, provides solely for monetary relief and involves no
finding or admission of any violation of any Law by the Purchaser (unless Seller
elects to waive any such requirement).  Notwithstanding the foregoing, at any
time upon five (5) business days notice, Seller shall have the right to assume
the defense of a third-party claim that is currently being defended by the
Purchaser Indemnified Party pursuant to this Section 9.4(b), except to the
extent that the Purchaser Indemnified Party would be actually and materially
prejudiced thereby.
 

 
9.5      Bankruptcy Court.  All claims for indemnification pursuant to this
Article 9 shall be submitted to and resolved by the Bankruptcy Court by motion
or commencement of a proceeding before the Bankruptcy Court, without prejudice
to any party’s right to appeal any decision of the Bankruptcy Court with respect
thereto.
 
9.6     One Recovery.   No Indemnified Party or parties hereunder shall be
entitled to double recovery for the same damage arising from the breach of more
than one of the representations, warranties, covenants or obligations of an
Indemnifying Party with respect to such damage.
 
ARTICLE 10
 
TERMINATION; TERMINATION PAYMENT
 
 
10.1           Termination.  This Agreement may be terminated prior to the
Closing as follows:
 
(a) by mutual written agreement of Purchaser and Seller;
 
 
 
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(b) by either Purchaser or Seller if any Governmental Authority shall have
issued a Governmental Order or taken any other action, in each case permanently
restraining, enjoining or otherwise prohibiting the consummation of any of the
transactions contemplated hereby;
 
(c) by either Purchaser or Seller (provided that the terminating party is not
then in material breach of any representation, warranty, covenant or other
agreement contained herein), if there shall have been a material breach or
misrepresentation of any of the representations or warranties or a material
breach of or failure to perform in any material respect any of the covenants or
obligations set forth in this Agreement on the part of Seller, on the one hand,
or Purchaser, on the other hand, which breach, misrepresentation or failure
would give rise to the failure of the conditions set forth in Section 4.1(a) or
Section 4.2(a), as the case may be, and such breach, misrepresentation or
failure cannot be cured prior to the Termination Date, unless such breach,
misrepresentation or failure, by its nature, cannot be cured prior to the
Closing;
 
(d) by either Purchaser or Seller (provided that the terminating party is not
then in material breach of any representation, warranty, covenant or other
agreement contained herein) if satisfaction of a material condition set forth in
Section 4.1 or Section 4.2, as the case may be, for the benefit of the
terminating party cannot be fulfilled or satisfied prior to the Termination Date
and has not been waived by the terminating party, provided that the terminating
party shall not be responsible for the failure of such condition to be
satisfied;
 
(e) by Purchaser if Seller (i) consummates an Alternative Transaction (other
than to or by Purchaser), (ii) files, seeks or supports Bankruptcy Court
Approval of a chapter 11 plan contemplating the sale or retention of the
Purchased Assets in a manner substantially inconsistent with the terms of this
Agreement or (iii) executes and delivers an agreement or understanding of any
kind with respect to an Alternative Transaction with any party other than
Purchaser;
 
(f) by Purchaser or Seller if the Bankruptcy Court enters an order approving any
Alternative Transaction (other than the sale of the Business and the Acquired
Assets to Purchaser);
 
(g) by either Purchaser or Seller on any day on or after June 30, 2012 (the
“Termination Date”) if the Closing shall not have been consummated by such date
(or by such later date as may be mutually agreed to by Purchaser and Seller in
writing), unless the Closing has not occurred due to a material failure of the
terminating party to perform or observe any of its covenants or obligations as
set forth in this Agreement required to be performed or observed by it on or
before the Closing Date; or
 
(h) by either Purchaser or Seller if the Bankruptcy Court fails to approve the
Bidding Procedures Order by May 31, 2012.
 
 
 
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10.2           Breakup Fee and Expense Reimbursement.
 
(a) If Purchaser terminates this Agreement pursuant to any of the provisions of
Section 10.1(c)-(f) hereof, then Purchaser shall be entitled to the Breakup Fee
and Expense Reimbursement Amount, which shall be deemed fully earned, due and
owing as of the date of such termination. The Breakup Fee and Expense
Reimbursement Amount payable pursuant to this Section 10.2(a) shall be paid
directly to Purchaser out of the purchase price paid as part of any Alternative
Transaction, upon and directly through the closing of the Alternative
Transaction, and such payments shall be a condition to the closing of any
Alternative Transaction. If Purchaser terminates this Agreement pursuant to any
of the provisions of Section 10.1(b), (g) or (h) hereof, then Purchaser shall be
entitled, in addition to all other remedies, to immediate payment of any and all
out-of-pocket costs incurred relating to this Agreement or the transactions
contemplated thereby, but in no event more than the aggregate amount of the
Expense Reimbursement Amount, which shall be deemed fully earned, due and owing
as of the date of such termination.
 
(b) In the event that an Alternative Transaction is not consummated or any
amount becomes payable pursuant to Section 10.2(a) hereof are not paid in full
directly out of proceeds of such Alternative Transaction for any reason, Seller
acknowledges and agrees that its obligation to pay the Breakup Fee and Expense
Reimbursement Amount (to the extent due hereunder) shall survive the termination
of this Agreement.  Seller’s obligation to pay the Breakup Fee and Expense
Reimbursement (to the extent due hereunder) shall have administrative
superpriority status against Seller and its estate under sections 503(b) and
507(a) of the Bankruptcy Code.
 
 
10.3           Effect of Termination or Breach.
 
If the transactions contemplated hereby are not consummated (a) this Agreement
shall become null and void and of no further force and effect, except for the
provisions of Sections 10.2, 10.3 and the provisions of Section 7.7, each of
which shall survive the termination of this Agreement; and (b) the receipt by
Purchaser of any amount payable in accordance with the provisions of
Section 10.2 shall be Purchaser’s sole and exclusive remedy (as liquidated
damages) other than for claims based on actual fraud, and Purchaser shall not be
entitled to any other damages, losses, or payment from Seller, and Seller shall
have no further obligation of Liability of any kind to Purchaser or its
Affiliates on account of this Agreement.
 
ARTICLE 11
 
GENERAL
 
11.1           No Third Party Beneficiaries.  Nothing contained in this
Agreement shall be construed to confer upon or give to any Person other than the
parties hereto and their successors and permitted assigns any rights or remedies
under or by reason of this Agreement.
 
11.2           Notices.  All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally or by commercial messenger or
courier service on the party to whom notice
 
 
is to be given; on the date of transmission (with hard copy confirmation to
follow) if sent by electronic mail or facsimile; or on the third day after
mailing if mailed to the party to whom notice is to be given, by first-class
mail registered or certified, postage prepaid, and properly addressed as
follows:
 
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If to Purchaser:
 
Kidsco Media Ventures LLC
10100 Santa Monica Blvd, Ste 2600
Los Angeles, CA 90067
Attention: Adam Chesnoff
    Copy by Email: achesnoff@saban.com
    Facsimile: 310-557-5115
Attention: Niveen Tadros
    Copy by Email: ntadros@saban.com
    Facsimile: 310-557-5132
with a copy to:
Latham & Watkins LLP
355 S. Grand Ave.
Los Angeles, CA 90071-1560
Attn: Peter M. Gilhuly, Esq.
    Copy by Email:  peter.gilhuly@lw.com
    Facsimile:  213-891-8763

 
If to Seller:
 
4Kids Entertainment, Inc.
53 West 23rd Street
New York, NY 10010
Attention:  Samuel R. Newborn
General Counsel
Copy by Email:snewborn@4kidsent.com
Facsimile: 212-754-5481
 
with copies to:
 
Kaye Scholer, LLP
425 Park Avenue
New York, New York  10022
Attn:  Rory Greiss
    Copy by Email:  rgreiss@kayescholer.com
    Facsimile:  212-836-8689
 
and

 
 
 
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Hahn & Hessen
488 Madison Avenue
New York, New York  10022
Attn:  Mark Indelicato and Janine Cerbone
    Copy by Email:  mindelicato@hahnhesseen.com and jcerbone@hahnhessen.com
    Facsimile:  212-478-7400
 
A party may change the address to which notices hereunder are to be sent to it
by giving notice of such change of address in the manner provided above.
 
11.3           Binding Effect.  This Agreement shall be binding upon and inure
to the benefit of the parties hereto, and their respective successors, permitted
assigns, heirs, executors and personal representatives (including any
liquidating trustee, responsible Person or similar representative for Seller or
Seller’s estate appointed in connection with the Bankruptcy Case).
 
11.4           Entire Agreement; Modification; Waiver.  This Agreement and the
schedules and exhibits attached to this Agreement (which are hereby incorporated
herein by this reference) set forth the entire agreement of the parties hereto
with respect to the subject matter hereof and supersede all prior and
contemporaneous written and oral negotiations, discussions, understandings and
agreements pertaining to such subject matter.  No supplement, modification or
amendment to this Agreement shall be binding unless executed in writing by all
of the parties.  No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, any waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver.  No waiver shall
be binding unless executed in writing by the party making the waiver.
 
11.5           Dispute Resolution; Bankruptcy Court Jurisdiction.
 
(a) Purchaser and Seller agree that the Bankruptcy Court shall retain
jurisdiction to resolve any controversy or claim arising out of or relating to
this Agreement, or the breach hereof.
 
(b) In the event the Bankruptcy Court reserves jurisdiction to consider disputes
arising under this Agreement post-confirmation, then all such disputes shall be
brought before the Bankruptcy Court.  The parties shall jointly request that the
Bankruptcy Court reserve such jurisdiction.
 
(c) In the event the Bankruptcy Court does not reserve such jurisdiction, then,
subject to the right of each party to seek specific performance, injunctive
relief and/or other non-monetary relief in any court, any controversy, dispute
or claim arising between Seller and Purchaser with respect to this Agreement or
the subject matter covered hereby may be submitted to any of the state or
federal courts located in the State of New York.  Seller and Purchaser hereby
consent and submit to the jurisdiction of the state and federal courts of the
State of New York for any such controversy, dispute or claim.
 
 
 
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11.6           Expenses.  Whether or not the transactions contemplated hereby
are consummated, each of the parties shall pay all costs and expenses incurred
or to be incurred by it in negotiating and preparing this Agreement and all
Collateral Agreements and in closing and carrying out the transactions
contemplated by this Agreement and such Collateral Agreements.
 
11.7 Construction.  This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without giving
effect to the conflict of laws principles thereof.
 
11.8 Assignment.  No party may assign this Agreement or any of its rights,
interests or obligations hereunder without the prior written consent of the
other party; provided, however, that Purchaser may (i) assign any or all of its
rights and interests hereunder to one or more of its Affiliates hereunder, and
(ii) designate one or more of its Affiliates to perform its obligations
hereunder; provided, that in any such case, Purchaser shall remain liable for
the performance of all of its obligations hereunder.
 
11.9 Relationship.  The relationship of the parties to this Agreement is
determined solely by the provisions of this Agreement.  This Agreement does not
create any agency, partnership, joint venture or trust.
 
11.10 Counterparts.  This Agreement may be executed in counterparts (and by
facsimile signatures), each of which shall be deemed an original but all of
which shall constitute one and the same agreement.
 
11.11 Severability.  If any provision of the Agreement is held to be invalid or
unenforceable at Law, that provision will be reformed as a valid provision to
reflect as closely as possible the original provision giving maximum effect to
the intent of the parties, or if that cannot be done, will be severed from the
Agreement without affecting the validity or enforceability of the remaining
provisions.
 
11.12 Interpretation.  The words “include,” “includes” and “including,” when
used herein, shall be deemed in each case to be followed by the words “without
limitation.”
 
- signatures on following page -
 

 
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IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of
the date first above written.
 

 
4Kids Entertainment, Inc. , for itself and on behalf of its debtor affiliates
(“Seller”)
 
 
 
By:____________________
 
 
 
 
 
 
Kidsco Media Ventures LLC, a Delaware limited liability company (“Purchaser”)
 
 
By:____________________
 
 
     

 
 
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                                                      Exhibit A

Bidding Procedures Order

 
4KidsAPA LP 3
 
46

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Exhibit B

CW Release

 
4KidsAPA LP 3
 
47

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Exhibit C

General Assignment and Bill of Sale for the Purchased Assets

 
4KidsAPA LP 3
 
48

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Exhibit D

IP Assignments

 
4KidsAPA LP 3
 
49

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Exhibit E
 

 
Assignment and Assumption Agreements
 

 
4KidsAPA LP 3
 
50

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Exhibit F
 

 
Transition Services Agreement
 

 
4KidsAPA LP 3
 
51

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Exhibit G
 

 
Saban Capital Group Guarantee
 

 

 
4KidsAPA LP 3
 
52

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Exhibit H
 

 
Escrow Agreement

 
4KidsAPA LP 3
 
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