Unassociated Document


    
      

      

    

     

    
      ASSET
        PURCHASE AGREEMENT

       

      between
        

       

      CENTERSTAGING
        MUSICAL PRODUCTIONS, INC.

      DEBTOR
        AND DEBTOR IN POSSESSION

       

      and

       

      MIX
        ENTERTAINMENT HOLDINGS, LLC

       

      DATED
        AS OF NOVEMBER __, 2008

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ASSET
      PURCHASE AGREEMENT

     

    THIS
      ASSET PURCHASE AGREEMENT (the “Agreement”)
      is
      made and entered into as of November __, 2008 (the “Execution
      Date”)
      by and
      between CENTERSTAGING MUSICAL PRODUCTIONS, INC., a California corporation,
      as
      debtor and debtor in possession (“Seller”)
      under
      Case No.2:08-bk-13019-VZ (the “Bankruptcy
      Case”)
      in the
      United States Bankruptcy Court for the Central District of California (the
      “Bankruptcy
      Court”),
      and
      MIX ENTERTAINMENT HOLDINGS, LLC, a Delaware limited liability company, or its
      assignee (“Purchaser”).
      Capitalized terms used herein but not otherwise defined shall have the meanings
      set forth in Section
      15.15
      of this
      Agreement.

     

    R
      E C I T A L S

     

    WHEREAS,
      on March 10, 2008 (the “Petition
      Date”),
      Seller commenced the Bankruptcy Case by filing a voluntary petition for relief
      under Chapter 11 of the Bankruptcy Code with the Bankruptcy Court;
      and

     

    WHEREAS,
      Seller is primarily engaged in the business of (i) providing production and
      support services for live musical performances for major television programs;
      (ii) renting its studio and soundstage facilities, and (iii) renting musical
      instruments and related equipment for use at its studios and other venues (such
      businesses as presently conducted by Seller, collectively, the “Business”)
      as
      debtor and debtor in possession pursuant to Sections 1107(a) and 1108 of the
      Bankruptcy Code; and

     

    WHEREAS,
      Seller wishes to sell, transfer, convey, assign and deliver to Purchaser, in
      accordance with Sections 363 and 365 and the other applicable provisions of
      the
      Bankruptcy Code, all of the Purchased Assets, together with the Assumed
      Liabilities of Seller upon the terms and subject to the conditions set forth
      in
      this Agreement (hereinafter collectively referred to as the “Transaction”);

     

    WHEREAS,
      Purchaser wishes to purchase and take delivery of such Purchased Assets and
      Assumed Liabilities upon such terms and subject to such conditions;


     

    WHEREAS,
      the Purchased Assets will be sold pursuant to a Sale Order of the Bankruptcy
      Court approving such sale under Section 363 of the Bankruptcy Code and such
      Sale
      Order will include the assumption and assignment of certain executory contracts,
      unexpired leases and liabilities thereunder under Section 365 of the Bankruptcy
      Code and the terms and conditions of this Agreement; and

     

    WHEREAS,
      all of the obligations of the parties under this Agreement are conditioned
      upon
      the approval of the Bankruptcy Court in accordance with Article 3
      hereof.

     

    NOW,
      THEREFORE, in consideration of the premises and mutual covenants and agreements
      herein set forth and for other good and valuable consideration, the receipt
      and
      adequacy of which are hereby acknowledged, the parties hereto hereby agree
      as
      follows:

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

       

    

    ARTICLE
      1

    PURCHASE
      AND SALE

     

    Except
      as
      otherwise provided and subject to the terms and conditions set forth in this
      Agreement and subject to Bankruptcy Court approval, Seller agrees to sell,
      convey, assign, transfer and deliver to Purchaser, and Purchaser agrees to
      purchase from Seller at the Closing, all of Seller’s right, title and interest
      in and to the Purchased Assets, free and clear of all Liens, claims or interests
      of any type or nature, whether known or unknown, of Seller or any other party,
      other than the Assumed Liabilities.

     

    ARTICLE
      2

    DESCRIPTION
      OF PURCHASED ASSETS; EXCLUDED ASSETS; ASSUMPTION OF
      LIABILITIES

     

    Section
      2.1. Purchased
      Assets.
      Upon the
      terms and subject to the conditions set forth in this Agreement, at the Closing,
      Seller shall sell, convey, transfer, assign and deliver to Purchaser, and
      Purchaser shall purchase, acquire and take assignment and delivery from Seller,
      all of Seller’s right and title to and interest in and to Seller’s business
      assets, properties, rights (contractual or otherwise) and its affirmative
      claims, but excluding the Excluded Assets (the assets so included, the
“Purchased Assets”). The Purchased Assets shall consist of all of Seller’s
      right, title and interest in and to the following:

     

    (a) All
      equipment, machinery or other tangible personal property owned by Seller
      including, without limitation, the equipment, machinery and personal property
      listed on Schedule
      2.1(a)
      hereto;

     

    (b) All
      of
      Seller’s right, title and interest in and to any and all intellectual property
      owned or utilized by the Seller, including, without limitation, patents, patent
      rights, patent applications, inventions, trade secrets, processes, formulas,
      customer lists, proprietary rights, proprietary knowledge, computer software,
      websites, URLs, domain names, trademarks, names, service marks, brand marks,
      brand names, trade names (including without limitation, the name CenterStaging
      Musical Productions and all goodwill associated therewith), source or object
      code, copyrights, trade secrets relating to or arising from any proprietary
      process, symbols and logos related to the Business and all applications
      therefor, registrations thereof and licenses and sublicenses or agreements
      in
      respect thereof, which Seller owns or has the right to use or to which Seller
      is
      a party and all filings, registrations or issuances of any of the foregoing
      with
      or by any federal, state, local or foreign regulatory, administrative or
      governmental office, as listed on Schedule
      2.1(b)
      (excluding the Retained Intellectual Property, collectively, the “Transferred
      Intellectual Property”);

     

    (c) All
      leases of equipment,
      machinery or other tangible personal property to which Seller is a
      party,
      as
      listed on Schedule
      2.1(c)
      hereto
      (the “Personal
      Property Leases”);

     

    (d) All
      contracts, agreements, contract rights, license agreements, customer contracts,
      distribution agreements, franchise rights and agreements, purchase and sales
      orders (if any), quotations and executory commitments, instruments, royalty
      agreements, third party guaranties, indemnifications, arrangements and
      understandings, whether oral or written, to which Seller is a party (whether
      or
      not legally bound thereby), as listed on Schedule
      2.1(d)
      hereto
      (the “Assumed
      Contracts”);

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    (e) All
      franchises, licenses, permits, consents, authorizations, approvals and
      certificates of any regulatory, administrative or other Governmental Authority,
      as listed on Schedule
      2.1(e)
      hereto
      (the “Permits”);

     

    (f) All
      of
      Seller’s rights under leases of real property set forth on Schedule
      2.1(f)
      hereto,
      together with all buildings, structures, installations, fixtures and all other
      leasehold improvements, appurtenant thereto or situated thereon and all other
      rights, interests and appurtenances of Seller pertaining thereto; provided,
      however, that such leases shall be subject to further negotiation and agreement
      by and between Purchaser and any lessor following execution of this Agreement
      but in any event prior to Closing (the “Assumed
      Leases”);

     

    (g) Seller’s
      marketing and sales materials relating to the Business; 

     

    (h) Seller’s
      backlog (i.e.,
      lease
      and sales (if any) orders, and orders for production and support services that
      have not been processed); 

     

    (i) All
      of
      Seller’s customer or client lists, files, documentation, records and related
      documentation related to the Business, including, without limitation, those
      listed on Schedule
      2.1(i)
      hereto,
      relating to the Purchased Assets; and

     

    (j) All
      of
      Seller’s other tangible and intangible assets, other than the Excluded
      Assets.

     

    Section
      2.2. Excluded
      Assets.
      Notwithstanding the provisions of Section
      2.1,
      the
      Purchased Assets shall not include any of the following assets, properties
      and/or rights of Seller, (collectively, the “Excluded
      Assets”)
      and
      liens, claims or encumbrances against such Excluded Assets shall not be altered
      by virtue of this Agreement:

     

    (a) Any
      Contracts that are not Assumed Contracts as reflected in Schedule 2.2(a) (the
      “Excluded
      Contracts”);

     

    (b) Any
      items
      excluded pursuant to the provisions of Section
      2.1
      above;

     

    (c) All
      cash,
      bank accounts, certificates of deposit, commercial paper, annuities, treasury
      notes and bills and other marketable securities;

     

    (d) All
      accounts receivable;

     

    (e) All
      of
      Seller’s security deposits, prepaid expenses and other miscellaneous assets, as
      listed on Schedule
      2.2(c)(d) and (e)
      hereto
      and all claims for refunds and/or credits by the Seller of any kind, including
      for Taxes; 

     

    (f) All
      Employee Plans, including, without limitation, all of Seller’s severance,
      pension, retirement and other employee benefit plans.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    (g) All
      of
      Seller’s insurance policies relating to the Business or the Purchased Assets,
      subject to any claims of co-insureds, including, without limitation, all
      credits, cash or surrender value, all rights to any refunds, all rights to
      receive proceeds of insurance policies, any outstanding claims thereunder and
      all rights of offset, counterclaims and insurance coverage thereunder
      (collectively, the “Insurance
      Policies”),
      which
      such Insurance Policies are as set forth in Schedule
      2.2(g)
      hereto
      (showing as to each policy or binder the carrier, policy or binder the carrier,
      policy number, coverage limits, expiration dates, annual premiums and a general
      description of the type of coverage provided).

     

    (h) All
      of
      Seller’s right, title and interests in and to high definition and other content,
      stored on digital video cassettes or other electronic mediums, available for
      multi-platform distribution as reflected in Schedule 2.2(h)(i) and (ii) (the
      “Content
      Library”),
      all
      copyrights, contract rights, content licenses or other general intangibles
      associated with the Content Library as reflected in Schedule 2.2(h)(iii) (the
      “Retained
      Intellectual Property”)
      and
      all web domain names and related logos as reflected in Schedule 2.2(h)(iv)
      and
      (v);
      provided
      however, it is contemplated and understood that Purchaser will be entering
      into
      a management contract with respect to the Content Library upon Closing, which
      contract will be subject to further negotiations by the Parties and which
      contract shall not preclude the sale of the Content Library at any time. It
      is
      understood that Seller has the right to refuse to enter into any management
      contract proposed by Purchaser.

     

    (i) Any
      and
      all tax refunds due to Seller prior to the effective date of the sale, and
      any
      and all NOLs in favor or Seller.

     

    (j) All
      known
      and unknown, liquidated or unliquidated, contingent or fixed, claims, rights
      or
      causes of action which Seller may have against any third party for avoidance
      and
      recovery of any preferential or fraudulent transfer.

     

    (k) All
      of
      Seller’s corporate minute books and organizational documents.

     

    (l) Any
      interest of the Seller in any affiliate.

     

    (m) Any
      claims which Seller or its bankruptcy estate may have against any of its
      directors, officers or employees.

     

    (n) Any
      claims which have been transferred or assigned to any examiner appointed in
      the
      Bankruptcy Case, or which have been otherwise placed under any examiner’s
      control or discretion.

     

    Section
      2.3. Assumed
      Liabilities; Non-Assumed Liabilities.
      

     

    (a) At
      the
      Closing, Purchaser shall assume and agree to perform and discharge the following
      Liabilities of Seller to the extent not previously performed or discharged,
      and
      no others: (i) all Liabilities of Seller under the Personal Property Leases
      in
      an aggregate amount not to exceed $1,300,000, (ii) all Liabilities of Seller
      which first accrue and are to be performed from and after the Closing under
      the
      Assumed Contracts, the Assumed Leases (excluding (A) the Two Bills, LLC lease
      since Purchaser is entering into a new lease with Two Bills, LLC, as
      contemplated in Section 10.10, and (B) the Jan & Johnny, Inc. lease if
      Purchaser purchases the Hollywood Way Property as contemplated in
      Section 10.11) and the Personal Property Leases, which relate to periods of
      time on or after the Closing Date, and (iii) liabilities and obligations
      relating to and arising from Purchaser’s operation of the Purchased Assets after
      the Closing (items (i), (ii) and (iii) are collectively referred to herein
      as
      the “Assumed
      Liabilities”).
      

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    (b) Other
      than the Assumed Liabilities, Purchaser shall not assume or be bound by or
      be
      obligated or responsible for any duties, responsibilities, commitments,
      expenses, obligations or liabilities of Seller or relating to the Purchased
      Assets or the Business (or which may be asserted against or imposed upon
      Purchaser as a successor or transferee of Seller as an acquirer of the Purchased
      Assets or the Business or otherwise as a matter of law) of any kind or nature,
      fixed or contingent, known or unknown, including, without limitation, the
      following (collectively, the “Non-Assumed
      Liabilities”):

     

    
      	 	
              (i)

            	
              any
                Liability of Seller in respect of any Taxes arising or accruing prior
                to
                the Closing Date;

            


    

     

    
      	 	
              (ii)

            	
              any
                Liability of Seller under any contract or lease that is not an Assumed
                Contract, Assumed Lease or Personal Property Lease, and with respect
                to
                Personal Property Leases, any Liability of Seller under the Personal
                Property Leases in excess of an aggregate
                $1,300,000;

            


    

     

    
      	 	
              (iii)

            	
              any
                Liability of Seller arising out of or resulting from its compliance
                or
                noncompliance with any Law;

            


    

     

    
      	 	
              (iv)

            	
              any
                Liability of Seller arising out of or related to any Legal Proceeding
                against it or any Legal Proceeding which has an adverse effect on
                the
                Purchased Assets or the Business and which was or could have been
                asserted
                on or prior to the Closing Date or to the extent the basis of which
                arose
                or accrued on or prior to the Closing
                Date

            


    

     

    
      	 	
              (v)

            	
              any
                Liability of Seller for any indemnification obligations pursuant
                to any
                claim or notice received or required to be received prior to the
                Closing
                Date with respect to any Transferred Intellectual
                Property;

            


    

     

    
      	 	
              (vi)

            	
              any
                Liabilities arising under or in connection with any Employee Plans
                of, or
                maintained or required to be maintained by, Seller;
                

            


    

     

    
      	 	
              (vii)

            	
              any
                Liability pursuant to any personal guaranty or indemnity provided
                by any
                officer, director, principal, owner or other party related to
                Seller;

            


    

     

    
      	 	
              (viii)

            	
              any
                Liability of Seller under the Assumed Contracts and the Assumed Leases
                which accrued and relate to periods prior to the Closing Date; and
                

            


    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ix)

            	
              any
                Liability that is not an Assumed
                Liability.

            


    

     

    ARTICLE
      3

    BANKRUPTCY
      COURT APPROVAL

     

    Section
      3.1. History
      of Sale Procedures.
      The
      parties hereto acknowledge that Seller filed a motion (the “Sales
      Procedures Motion”)
      with
      the Bankruptcy Court seeking entry of an order which includes all of the
      following provisions (the “Sale
      Procedures Order”):

    


    (a) Competing
      offers to acquire the Purchased Assets shall:

    


    
      	 	
              (i)

            	
              be
                submitted in writing to Seller and its counsel on or before 4:00
                p.m.
                (Pacific Time) on the business day that is no later than five days
                prior
                to the date of the Sale Hearing (as defined and set forth below);
                

            


    

     

    
      	 	
              (ii)

            	
              provide
                for total cash consideration that exceeds the Cash Payment and Tax
                Escrow
                Funds as defined herein by at least Two Hundred Fifty Thousand Dollars
                ($250,000.00); 

            


    

     

    
      	 	
              (iii)

            	
              be
                accompanied by a signed asset purchase agreement in form and substance
                substantially similar to this Agreement, except that such competing
                agreement does not have to allocate the payment on account of tax
                claims
                as set forth in Section 5.2 below and does not have to provide for
                entry
                into the Key Employment agreements set forth in Section 9.10 below
                (the
                “Competing
                Agreement”),
                together with a redlined, marked copy showing all changes to the
                asset
                purchase agreement between Point .360, a California corporation (the
                “Stalking Horse”) and Seller (the “Stalking Horse APA”);
                

            


    

     

    
      	 	
              (iv)

            	
              must
                not be subject to due diligence contingencies or other conditions
                beyond
                those imposed by the Stalking Horse; provided however, that any bidder
                other than the Stalking Horse shall have an opportunity to review
                the
                books and records of the Seller, provided that such bidder shall
                execute a
                non-disclosure agreement in form and substance acceptable to Seller
                in
                Seller’s sole discretion (notwithstanding the foregoing, all due diligence
                must be completed by all qualified bidders prior to Auction (as defined
                below); 

            


    

     

    
      	 	
              (v)

            	
              remain
                open until the conclusion of the Sale Hearing (as defined below);
                

            


    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (vi)

            	
              subject
                to Section 3.1(a)(iii) above, contain terms and conditions no less
                favorable to Seller than the terms and conditions of the Stalking
                Horse
                APA; 

            


    

     

    
      	 	
              (vii)

            	
              be
                accompanied by admissible evidence in the form of affidavits or
                declarations establishing the bidder’s good faith, within the meaning of
                Section 363(m) of the Bankruptcy Code;


            


    

     

    
      	 	
              (viii)

            	
              be
                accompanied by admissible evidence in the form of affidavits or
                declarations establishing that the bidder is capable and qualified,
                financially, legally, and otherwise, of unconditionally performing
                all
                obligations under the Competing Agreement;


            


    

     

    
      	 	
              (ix)

            	
              for
                no less than substantially all of the Purchased Assets; and
                

            


    

     

    
      	 	
              (x)

            	
              contain
                a proposed closing date that is not later than the Closing Date
                hereunder.

            


    

     

    (b) If
      any
      bidders have submitted a qualifying competing bid in accordance with Section
      3.1(a) hereof (each such bid, a “Qualified
      Bid”),
      then
      a public auction of the Purchased Assets (the “Auction”)
      shall
      be held at the Sale Hearing at the United States Bankruptcy Court for the
      Central District of California . The Auction shall be governed by the following
      procedures:

     

    
      	 	
              (i)

            	
              All
                bidders shall be deemed to have consented to the core jurisdiction
                of the
                Bankruptcy Court and to have waived any right to jury trial in connection
                with any disputes relating to the Auction or the sale of the Purchased
                Assets;

            


    

     

    
      	 	
              (ii)

            	
              Bidding
                will commence at the amount of the highest Qualified
                Bid;

            


    

     

    
      	 	
              (iii)

            	
              Each
                subsequent bid shall be in increments of no less than $100,000;
                and

            


    

     

    
      	 	
              (iv)

            	
              For
                the Stalking Horse, the Breakup Fee shall be taken into account in
                the
                bidding process, such that if the bid is $8,000,000 the Stalking
                Horse may
                bid such amount in cash ($7,950,000) plus the value of the Breakup
                Fee
                ($150,000) to match the $8,000,000 bid for a total bid of $8,100,000.
                

            


    

     

    (c) A
      hearing
      to approve the successful bid at the Auction shall be scheduled for no later
      than November 15, 2008, the parties hereby acknowledging satisfaction of this
      condition through the sale hearing set for November 13, 2008 at 10:00 a.m.(the
      “Sale
      Hearing Date”);
      

     

    (d) The
      Breakup Fee in the amount of reasonable costs and fees incurred by the Stalking
      Horse not to exceed $150,000 is approved and shall be paid to the Stalking
      Horse
      in the event that the Bankruptcy Court enters an order approving an offer to
      purchase the Purchased Assets submitted by a party other than the Stalking
      Horse
      or enters an order confirming a plan of reorganization of Seller (other than
      a
      plan under which the Stalking Horse acquires the Purchased Assets) no later
      than
      the closing of the sale of the Purchased Assets to a third party;

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

       

    

    (e) No
      other
      bidder for the Purchased Assets shall be entitled to payment of any breakup
      fee;


     

    (f) Any
      entity that fails to submit a timely, conforming Qualified Bid, as set forth
      above, shall be disqualified from bidding for the Purchased Assets at the
      Auction or the Sale Hearing; and

     

    (g) If
      no
      timely, conforming Qualified Bid is submitted, Seller shall request at the
      Sale
      Hearing that the Court approve the proposed sale of the Purchased Assets to
      the
      Stalking Horse under the Stalking Horse APA.

     

    Section
      3.2. Entry
      of Order Approving Sale.
      Subject
      to Section 3.1 above, Seller shall use its best efforts to obtain entry of
      an
      order of the Bankruptcy Court approving the terms of this Agreement (the
“Sale
      Order”)
      as
      soon as practicable following the mutual execution and delivery of this
      Agreement and approval of the Sale Procedures, but no later than November 15,
      2008 (“Sale
      Order Date”).
      The
      Sale Order shall be in accordance with the terms of this Agreement, shall be
      in
      a form reasonably satisfactory to Purchaser and Seller, and shall:

     

    
      	 	
              (i)

            	
              approve
                and direct the sale and assignment of the Purchased Assets to Purchaser
                and approve and direct the assumption and assignment of the Assumed
                Leases
                and Assumed Contracts to Purchaser, free and clear of all Liens,
                claims or
                interests, except those liens, claims or interests expressly assumed
                in
                this Agreement, based on appropriate findings and rulings pursuant
                to,
                inter
                alia,
                Sections 363(b), (f) and (m) and 365 of the Bankruptcy Code, including
                but
                not limited to Sections 365(h), (i), (l) and (n) and [the
                release of Purchaser to any rights otherwise associated with and
                which may
                otherwise be to the benefit of any third parties] [TO BE DELETED
                OR
                POSSIBLY RETAINED, AT PURCHASER’S OPTION, UPON SATISFACTORY EXPLANATION BY
                SELLER];
                

            


    

     

    
      	 	
              (ii)

            	
              include
                a direction that Seller allocate in any Chapter 11 plan of reorganization,
                including a plan of liquidation, the Consideration in the manner
                established by Section 5.2(b);

            


    

     

    
      	 	
              (iii)

            	
              include
                a direction that Seller and Purchaser consummate the transactions
                contemplated hereby in accordance with the terms hereof, including
                all
                payments required hereunder, on or before the Outside Date;
                

            


    

     

    
      	 	
              (iv)

            	
              include
                a finding that Purchaser is a good faith purchaser pursuant to Section
                363(m) of the Bankruptcy Code; 

            


    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (v)

            	
              include
                a finding that Purchaser is not deemed to be a successor to Seller,
                to
                have, de
                facto
                or
                otherwise, merged with or into Seller or to be a mere continuation
                of
                Seller;

            


    

     

    
      	 	
              (vi)

            	
              include
                a finding that the Consideration is a fair and reasonable price for
                the
                Purchased Assets; 

            


    

     

    
      	 	
              (vii)

            	
              include
                a finding confirming the adequacy of notice to all creditors and
                parties
                in interest and parties to any executory contract, unexpired lease
                or
                right of entry; 

            


    

     

    
      	 	
              (viii)

            	
              include
                a finding that all cure amounts are final and binding upon the applicable
                counterparty and Seller is authorized and directed to pay such cure
                amounts directly from the sale
                proceeds;

            


    

     

    
      	 	
              (ix)

            	
              include
                a direction that Purchaser shall be provided with each Qualified
                Bid and
                supporting documentation and evidence that each Qualified Bid satisfies
                the requirements of the Sale Order;
                and

            


    

     

    
      	 	
              (x)

            	
              include
                provisions for the retention of jurisdiction in the Bankruptcy Court
                over
                matters relating to the transactions contemplated in this Agreement
                including matters relating to title to the Purchased Assets and claims
                against the Purchased Assets which arose or were based on facts or
                occurrences prior to the Closing. Furthermore, the Sale Order shall
                not
                have been reversed, stayed, modified or
                amended.

            


    

     

    (b) Seller
      shall provide notice of any hearing on the motion to approve the Sale Order
      or
      any other matter before the Bankruptcy Court relating to this Agreement or
      the
      Transaction Documents, in each case as required by the Bankruptcy Code, the
      Federal Rules of Bankruptcy Procedure and the Local Bankruptcy Rules for the
      Central District of California or as otherwise ordered by the Bankruptcy
      Court.

     

    (c) Notwithstanding
      anything to the contrary in Section
      3.1
      or any
      other provision of this Agreement, in the event that a Qualified Bid of a third
      party or the Stalking Horse (either, an “Alternative
      Buyer,”
and
      the
      underlying agreement between the Alternative Buyer and Seller, the “Alternative
      APA”)
      is
      approved by the Bankruptcy Court at the hearing on the Sale Motion, this
      Agreement shall become an approved “back-up bid” which may, if exercised by
      written election by Purchaser and delivered to Seller with twenty four (24)
      hours of the completion of the Sale hearing, remain open for acceptance by
      Seller for a period of thirty (30) days following the date upon which such
      hearing is concluded, but subject and subordinate in all respects to the rights
      of the Alternative Buyer under the Alternative APA. 

     

    Section
      3.3. Certain
      Bankruptcy Undertakings by Seller.

     

    (a) Seller
      shall, in good faith, using its commercially reasonable efforts, seek entry
      of
      the Sale Order no later than November 15, 2008 and take such actions following
      the Execution Date as are necessary to consummate the Transactions contemplated
      by this Agreement in accordance with Sale Order and effectuate the Closing
      no
      later than December 31, 2008 (the “Outside
      Date.”).

     

    
      
        
        

      

      
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    (b) Recognizing
      that the transaction contemplated herein is subject to overbid, from and after
      the date hereof, except as ordered by the Bankruptcy Court and as is reasonably
      necessary to adequately market the Assets for overbid, Seller shall neither
      take
      any action, nor fail to take any action, which action or failure to act would
      reasonably be expected to (i) prevent or impede the consummation of the
      transactions contemplated by this Agreement in accordance with the terms of
      this
      Agreement; or (ii) result in (A) the reversal, avoidance, revocation, vacating
      or modification (in any manner that would reasonably be expected to materially
      and adversely affect Purchaser’s rights hereunder), or (B) the entry of a stay
      pending appeal.

     

    (c) Seller
      shall, in good faith, using its commercially reasonable efforts and with the
      cooperative efforts of Purchaser, attempt to obtain in the Sale Order an
      exemption from Transfer Taxes pursuant to Section 1146(c) of the Bankruptcy
      Code. 

     

    (d) If
      the
      Sale Procedures Order, the Sale Order or any other order of the Bankruptcy
      Court
      relating to this Agreement shall be appealed by any Person (or a petition for
      certiorari
      or
      motion for rehearing or reargument shall be filed with respect thereto), Seller,
      with the cooperation and support of Purchaser, shall take all steps as may
      be
      reasonable and appropriate to defend against such appeal, petition or motion,
      and shall endeavor to obtain an expedited resolution of such
      appeal.

     

    ARTICLE
      4

    INSTRUMENTS
      OF TRANSFER AND ASSUMPTION

     

    Section
      4.1. Transfer
      Documents.
      At the
      Closing, Seller will deliver to Purchaser (a) one or more Bills of Sale in
      substantially the form attached hereto as Exhibit
      B
      (the
“Bill
      of Sale”),
      and
      (b) all such other good and sufficient instruments of sale, transfer and
      conveyance consistent with the terms and provisions of this Agreement,
      including, without limitation, assignments of leases and the Transferred
      Intellectual Property, and any other assignments as shall be reasonably
      necessary to vest in Purchaser all of Seller’s right and title to, and interest
      in, the Purchased Assets.

     

    Section
      4.2. Assignment
      and Assumption Documents.
      At the
      Closing, Purchaser and Seller will execute and deliver an Assignment and
      Assumption Agreement in substantially the form attached hereto as Exhibit
      C
      (the
“Assumption
      Agreement”)
      in
      order to effect the assignment and assumption of the Assumed
      Liabilities.

     

    ARTICLE
      5

    CONSIDERATION;
      ALLOCATION

     

    Section
      5.1. Consideration.
      In
      exchange for the sale, assignment, transfer, conveyance and delivery from Seller
      of the Purchased Assets, at Closing Purchaser shall:

     

    (a) assume
      the Assumed Liabilities pursuant to this Agreement; and

     

    
      
        
        

      

      
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    (b) pay
      by
      wire transfer to an account designated by Seller (which account shall be
      designated at least three (3) business days prior to the Closing) the amount
      of
      Three Million Eight Hundred Thousand Dollars ($3,800,000) (the “Cash
      Payment”);

     

    (c) Items
      (a)
      and (b) of this Section
      5.1
      are
      referred to collectively as the “Consideration.”
      

     

    (d) The
      Cash
      Payment shall be paid to Seller at the Closing in immediately available, good
      funds of the United States of America (“Good
      Funds”).
      

     

    Section
      5.2. Allocation
      of Consideration.
      

     

    (a) INTENTIONALLY
      OMITTED

     

    (b) Prior
      to
      Closing, Purchaser shall deliver to Seller Purchaser’s proposed allocation (the
“Allocation
      Statement”)
      of the
      Consideration (including, without limitation, the Assumed Liabilities) among
      the
      Purchased Assets. The Allocation Statement shall allocate the Consideration
      and
      any item required to be treated as an adjustment to the Consideration among
      the
      various assets comprising the Purchased Assets in accordance with Treasury
      Regulation 1.1060-1 (or any comparable provisions of state or local tax law)
      or
      any successor provision. If Seller agrees with the Allocation Statement and
      the
      allocation among the Purchased Assets set forth therein, Purchaser and Seller
      shall report and file all tax returns (including any amended tax returns and
      claims for refund) consistent with such mutually agreed Consideration
      allocation, and shall take no position contrary thereto or inconsistent
      therewith (including in any audits or examinations by any taxing authority
      or
      any other proceedings). Purchaser and Seller shall file or cause to be filed
      any
      and all forms (including U.S. Internal Revenue Service Form 8594), statements
      and schedules with respect to such allocation, including any required amendments
      to such forms. If, on the other hand, Seller objects to, or otherwise disagrees
      with the Allocation Statement, Purchaser and Seller shall use their commercially
      reasonable efforts to agree upon the allocation of the Consideration among
      the
      Purchased Assets. In any event, Seller agrees to take no position in its tax
      returns, which are inconsistent with the Purchaser’s allocations of the
      Consideration for tax purposes. Seller shall be responsible for all fees
      associated with the preparation of tax returns. Notwithstanding any other
      provisions of this Agreement, Purchaser’s and Seller’s obligations under this
Section
      5.2
      shall
      survive Closing.

     

    Section
      5.3. Prorations.
      The
      following prorations relating to the Business and the Purchased Assets will
      be
      made as of the Closing Date, with Seller liable to the extent that such items
      can be determined to relate to any time period up to and including the Closing
      Date and Purchaser liable to the extent that such items can be determined to
      relate to periods subsequent to the Closing Date; provided,
      however,
      that
      for periods of time which straddle the Closing Date and for which the amounts
      attributable to any item cannot be readily allocable to a particular date,
      the
      obligations and liabilities shall be prorated between the Purchaser and the
      Seller based upon the total amount of days in any allocable period and the
      amount of days which precede the Closing (allocable to the Seller) and the
      amount of days during such period which are on or are on or after the Closing
      (allocable to the Purchaser):

     

    
      
        
        

      

      
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    (a) Real,
      sales, ad valorem, personal property and all similar taxes and assessments
      relating to the Purchased Assets, the Business and the real property subject
      to
      the Assumed Leases;

     

    (b) Water,
      sewer and other similar types of taxes, and installments on special benefit
      assessments;

     

    (c) Electric,
      gas, telephone and utility charges;

     

    (d) Charges
      under maintenance and service contracts and fees under licenses transferred
      to
      or assumed by Purchaser;

     

    (e) Any
      and
      all payments due under Assumed Contracts, Assumed Leases or Personal Property
      Leases, subject to any payment restructurings with Bankruptcy Court approvals,
      and

     

    (f) Prepaid
      expenses of Seller to the extent that the benefit thereof will be available
      to
      Purchaser after the Closing Date.

     

    Seller
      shall be responsible for all sales, transfer and documentary Taxes and recording
      fees and Taxes applicable to the transactions contemplated hereby or imposed
      by
      reason of the transfers of the Purchased Assets provided under this Agreement
      and any deficiency, interest or penalty asserted with respect thereto
      (collectively, the “Transfer
      Taxes”).
      Purchaser shall pay the fees and costs of recording or filing all applicable
      conveyance instruments contemplated hereunder. Purchaser shall pay all costs
      of
      applying for new Permits and obtaining the transfer of existing Permits which
      may be lawfully transferred.

     

    ARTICLE
      6

    CLOSING

     

    Section
      6.1. Closing
      Date.
      Subject
      to the terms and conditions hereof, the closing of the transactions contemplated
      by this Agreement (the “Closing”)
      shall
      take place at the offices of Greenberg Glusker Fields Claman & Machtinger,
      LLP or such other location as may be mutually agreed upon between the Parties
      on
      the date which is the third (3rd) business day following the date on which
      all
      conditions to Closing set forth in Articles 10 and 11 hereof have been satisfied
      or waived (the “Closing
      Date”).
      The
      Closing shall be effective as of 12:01 a.m. Pacific Time on the day after the
      Closing Date.

     

    ARTICLE
      7

    SELLER’S
      REPRESENTATIONS AND WARRANTIES

     

    Seller
      represents and warrants to Purchaser that the statements contained in this
      Article 7 are, to Seller’s Knowledge, true, correct and complete as of the date
      of this Agreement and will, to Seller’s Knowledge, be correct and complete as of
      the Closing Date (as though made then and as though the Closing Date were
      substituted for the date of this Agreement throughout this Article 7).


     

    
      
        
        

      

      
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    Section
      7.1. Organization,
      Qualification and Corporate Power.
      Seller
      is a corporation duly organized, validly existing and in good standing under
      the
      Laws of the state of California and has all necessary power and authority to
      own
      and operate its properties and to carry on its business as it is now being
      conducted and is in good standing under the Laws of each jurisdiction where
      such
      qualification is required, except where the lack of such qualification would
      not
      have a Material Adverse Effect and, subject to obtaining Bankruptcy Court
      approval of this Agreement as contemplated herein, to carry out the transactions
      contemplated by this Agreement and the other Transaction Documents. Seller
      has
      the power and authority to execute and deliver and, subject to entry of the
      Sale
      Order, perform its obligations under this Agreement and the other Transaction
      Documents, and to undertake the transactions contemplated hereby and thereby.
      As
      used herein, the term “Transaction
      Documents”
means
      this Agreement and all other agreements, documents and instruments executed
      in
      connection herewith or required to be executed and/or delivered by the parties
      or any one or more of them in accordance with the provisions of this
      Agreement.

     

    Section
      7.2. Authorization,
      Execution and Delivery of Agreement and Transaction Documents.
      The
      execution, delivery and performance of this Agreement and the other Transaction
      Documents by Seller and the transfer or assignment of the Purchased Assets
      to
      Purchaser have been duly and validly authorized and approved by all necessary
      corporate action. Subject to obtaining the Sale Order and pursuant thereto,
      Seller will have full power, right and authority to sell and convey to Purchaser
      the Purchased Assets owned by Seller. The Sale Order to be entered by the
      Bankruptcy Court shall provide that this Agreement is, and each of the other
      Transaction Documents when so executed and delivered will be, a valid and
      binding obligation of Seller, enforceable against such Seller in accordance
      with
      its terms.

     

    Section
      7.3. Title
      to and Condition of Assets.
      Except
      as set forth in Schedule
      7.3
      hereto,
      Seller has good and marketable title to, or a valid leasehold interest in,
      all
      of the properties and assets included in the Purchased Assets, and upon the
      consummation of the transactions contemplated hereby and by the Transaction
      Documents, Purchaser will acquire good and marketable title to all of the
      Purchased Assets, free and clear of all Liens other than the Assumed
      Liabilities. The Purchased Assets include, without limitation, all assets,
      tangible or intangible, of any nature whatsoever, necessary for the conduct
      of
      the Business and are sufficient for the continued conduct of the Business after
      the Closing in substantially the same manner as conducted prior to the
      Closing.

     

    Section
      7.4.  Liabilities.
      Other
      than the Non-Assumed Liabilities, Seller has no Liabilities relating to the
      Purchased Assets or the Business due or to become due except the Assumed
      Liabilities.

     

    Section
      7.5. Corporate
      Records.
      Seller
      has maintained the corporate records, which, in reasonable detail, accurately
      and fairly reflect the activities of Seller pertaining to the Business. Seller
      has not, in any manner that pertains to, or could affect, the Business or the
      Purchased Assets, engaged in any transaction, maintained any bank account or
      used any corporate funds except for transactions, bank accounts and funds which
      have been and are reflected in the normally maintained corporate
      records.

     

    
      
        
        

      

      
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    Section
      7.6. Legal
      Proceedings.
      Except
      as set forth on Schedule
      7.6
      hereto,
      there is no Legal Proceeding (a) pending or, to the Knowledge of Seller,
      threatened or anticipated against or affecting Seller, the Business or the
      Purchased Assets (or to the Knowledge of Seller, pending or threatened, against
      any of the officers, directors or employees of Seller with respect to their
      business activities related to or affecting the Business); (b) that challenges
      or that may have the effect of preventing, making illegal, delaying or otherwise
      interfering with any of the transactions contemplated by this Agreement; or
      (c)
      related to the Business or the Purchased Assets to which Seller is otherwise
      a
      party. To the Knowledge of Seller, there is no reasonable basis for any such
      Legal Proceeding. 

     

    Section
      7.7. Real
      Property.
      Seller
      does not own any real property. 

     

    Section
      7.8. No
      Violation of Laws or Agreements.
      The
      Sale Order shall contain findings by the Bankruptcy Court that the execution
      and
      delivery by Seller of this Agreement and the Transaction Documents contemplated
      hereby, the performance by Seller of its obligations hereunder and thereunder
      and the consummation by Seller of the transactions contemplated herein and
      therein will not violate in any material respect, (i) any statute or Law or
      any
      judgment, decree, order, regulation or rule of any court or Governmental
      Authority to which Seller is subject; (ii) result in any breach of, or
      constitute a default (or event which with the giving of notice or lapse of
      time,
      or both, would become a default) under, or give to any Person any rights of
      termination, amendment, acceleration or cancellation of, or result in the
      creation of any Lien on any of the Purchased Assets, any note, bond, mortgage,
      indenture, contract, agreement, lease, license, Permit, franchise or other
      instrument to which Seller is a party or by which any of the Purchased Assets
      are bound; and (iii) contravene, conflict with or result in a violation of
      any
      provision of any organizational documents of Seller. 

     

    Section
      7.9. Employee
      Benefits; ERISA Matters.
      

     

    (a) Schedule
      7.9
      hereto
      contains a complete list of all Employee Plans covering employees, directors
      or
      consultants or former employees, directors or consultants in, or related to,
      the
      Business (“Business
      Employee Plans”).
      Seller has made available to Purchaser true and complete copies of all Employee
      Plans, including written interpretations thereof and written descriptions
      thereof which have been distributed to Seller’s employees and for which Seller
      has copies, all annuity contracts or other funding instruments relating thereto,
      and a complete description of all Employee Plans which are not in
      writing.

     

    (b) Neither
      Seller nor any ERISA Affiliate sponsors, maintains, contributes to or has an
      obligation to contribute to, or has sponsored, maintained, contributed to or
      had
      an obligation to contribute to, any Pension Plan subject to Title IV of ERISA,
      any Multiemployer Plan.

     

    (c) Each
      Welfare Plan which covers or has covered employees or former employees of Seller
      or of its Affiliates in the Business and which is a “group health plan,” as
      defined in Section 607(1) of ERISA, has been operated in compliance with
      provisions of Part 6 of Title I, Subtitle B of ERISA and Section 4980B of the
      Code at all times.

     

    
      
        
        

      

      
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    (d) There
      is
      no Legal Proceeding outstanding, relating to or seeking benefits under any
      Business Employee Plan that is pending, threatened or anticipated against
      Seller, any ERISA Affiliate or any Employee Plan.

     

    (e) Neither
      Seller nor any ERISA Affiliate has any liability for unpaid contributions under
      Section 515 of ERISA with respect to any Welfare Plan (i) covering employees,
      directors or consultants or former employees, directors or consultants in,
      or
      related to, the Business and (ii) with respect to which Purchaser may incur
      any
      Liability.

     

    (f) There
      are
      no liens arising under the Code or ERISA with respect to the operation,
      termination, restoration or funding of any Business Employee Plan or arising
      in
      connection with any excise tax or penalty tax with respect to any Business
      Employee Plan.

     

    (g) Each
      Business Employee Plan has at all times been maintained in all material
      respects, by its terms and in operation, in accordance with all applicable
      laws,
      including, without limitation, ERISA and the Code.

     

    (h) Seller
      and its ERISA Affiliates have made full and timely payment of all amounts
      required to be contributed under the terms of each Business Employee Plan and
      applicable Law or required to be paid as expenses or as Taxes under applicable
      Laws, under such Employee Plan, and Seller and its ERISA Affiliates shall
      continue to do so through the Closing Date.

     

    (i) Seller
      has no Business Employee Plan intended to qualify under Section 401 of the
      Code.

     

    (j) Neither
      the execution and delivery of this Agreement or other related agreements by
      Seller nor the consummation of the transactions contemplated hereby or thereby
      will result in the acceleration or creation of any rights of any person to
      benefits under any Employee Plan (including, without limitation, the
      acceleration of the vesting or exercisability of any stock options, the
      acceleration of the vesting of any restricted stock, the acceleration of the
      accrual or vesting of any benefits under any Pension Plan or the acceleration
      or
      creation of any rights under any severance, parachute or change in control
      agreement).

     

    (k) Neither
      Seller nor any ERISA Affiliate has incurred any liability with respect to any
      Employee Plan, which may create, or result in any liability to
      Purchaser.

     

    (l) No
      amounts payable under the Business Employee Plans will fail to be deductible
      for
      federal income tax purposes by virtue of Section 280G of the Code. 

     

    Section
      7.10. Labor
      Matters.
      

     

    (a) Except
      as
      set forth on Schedule
      7.10
      hereto,
      there are no employment, consulting, severance or indemnification contracts
      between the Seller and any of its employees. Seller is not a party to any union
      contract or collective bargaining agreement.

     

    (b) Except
      as
      set forth on Schedule
      7.10
      hereto,
      (i) Seller is not party to or bound by any collective bargaining or similar
      agreement with any labor organization; (ii) no employees of Seller are
      represented by any labor organization; (iii) Seller has no Knowledge of any
      union organizing activities among the employees of the Seller; and (iv) during
      the past year, there has been no actual or, to the Knowledge of Seller,
      threatened strikes, slowdowns, work stoppages or lockouts affecting the
      Seller.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

       

    

    (c) Except
      as
      set forth on Schedule
      7.10
      hereto,
      Seller is and has been in compliance with all notice and other requirements
      under the WARN Act.

     

    (d) Except
      as
      set forth on Schedule
      7.10
      hereto, to
      Seller’s Knowledge (i) there are no material claims (i.e., claims not covered by
      insurance) by any or on behalf of any of the employees of the Business pending
      with respect to their employment or benefits incident thereto with respect
      to
      sexual harassment and discrimination claims and claims arising under workers’
compensation laws which are not ordinary course of business claims for a
      business such as the Business (collectively, “Employee
      Claims”),
      and
      (ii) there have been no organizational efforts known to Seller during the past
      five years involving any of such employees to organize into a collective
      bargaining unit. 

     

    Section
      7.11. Transferred
      Intellectual Property.
      Seller
      is the sole owner of the Transferred Intellectual Property. No claims have
      been
      asserted or threatened nor has any Seller received notice of any such claim
      that
      (i) the operations of Seller infringe upon or misappropriate the rights of
      any
      other person in respect of any Transferred Intellectual Property, or (ii) any
      Transferred Intellectual Property or the use by Seller of such Transferred
      Intellectual Property is invalid or unenforceable. To the Knowledge of Seller,
      (i) no third party is engaging in any activity that infringes or misappropriates
      the Transferred Intellectual Property. Seller has not granted any material
      license or other right to any third party with respect to the Transferred
      Intellectual Property.

     

    Section
      7.12. Defaults.
      Seller
      filed for Chapter 11 on March 10, 2008, and had numerous leases, contracts
      and
      agreements in default.

     

    Section
      7.13. Environmental
      Matters.
      (A)
      Seller is in compliance with all applicable Environmental Laws, except where
      failure to be in compliance would not have a Material Adverse Effect; (B) there
      is no Environmental Claim pending against Seller; (C) Seller has obtained all
      material permits, approvals, identification numbers, licenses or other
      authorizations required under any applicable Environmental Laws (the
“Environmental
      Permits”)
      and is
      and has been in compliance with their requirements; (D) to the Knowledge of
      the
      Seller there are no underground or aboveground storage tanks or any surface
      impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials
      are being or have been treated, stored or disposed of on any real property
      currently owned or leased by Seller other than in compliance with Environmental
      Laws; (E) Seller has not undertaken or completed any investigation or assessment
      or remedial or response action relating to any such release, discharge or
      disposal of or contamination with Hazardous Materials at any site, location
      or
      operation of the Business, either voluntarily or pursuant to the order of any
      Governmental Entity or the requirements of any Environmental Law; and (F) there
      have been no Environmental Claims against the Seller. 

     

    Section
      7.14. Brokers.
      Except
      for Tudor Management Group, Seller has not engaged any agent, broker or other
      Person acting pursuant to the express or implied authority of Seller which
      is or
      may be entitled to a commission or broker or finder’s fee in connection with the
      transactions contemplated by this Agreement or otherwise with respect to the
      sale of the Purchased Assets.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

       

    

    Section
      7.15. Permits.
      The
      Permits constitute all of the Permits necessary for Seller to lawfully conduct
      and operate the Business, as applicable, as they are presently conducted and
      to
      permit Seller to own and use the Purchased Assets to own and use its assets,
      in
      each case, in the manner in which they are presently owned and used. Except
      as
      set forth on Schedule
      7.15
      hereto,
      Seller is and at all times has been in compliance with all material Permits
      applicable to it or to the conduct and operations of the Business or relating
      to
      or affecting the Purchased Assets. Seller has not received any notice to the
      effect that, or otherwise been advised of (i) any actual, alleged, possible
      or
      potential violation of, or failure to comply with, any such Permits or (ii)
      any
      actual, alleged, possible or potential revocation, withdrawal, suspension,
      cancellation or termination of, or any modification to, any Permit. No event
      has
      occurred, and to Seller’s Knowledge no circumstance exists, that (with or
      without notice or lapse of time) (i) may constitute or result directly or
      indirectly in a violation by Seller of, or a failure on the part of Seller
      to
      comply with, any such Permits or (ii) result directly or indirectly in the
      revocation, withdrawal, suspension, cancellation or termination of, or any
      modification to, any Permit. All applications for or renewals of all Permits
      have been timely filed and made and no Permit will expire or be terminated
      as a
      result of the consummation of the transactions contemplated by this Agreement.
      No present or former shareholder, director, officer or employee of Seller or
      any
      Affiliate thereof, or any other Person, owns or has any proprietary, financial
      or other interest (direct or indirect) in any Permit that Seller owns, possesses
      or uses.

     

    Section
      7.16. Insurance.
      All of
      the Insurance Policies are in full force an effect. Seller is not in default
      under any of such policies or binders, and Seller has not failed to give any
      notice or to present any claim under any such policy or binder in a due and
      timely fashion.

     

    Section
      7.17. Taxes;
      Tax Returns.
      Except
      as set forth on Schedule
      7.17
      hereto,
      and Tax Returns for Transfer Taxes in connection with the transactions
      contemplated by this Agreement, which will be filed promptly after the Closing
      Date, Seller has (A) filed with the appropriate taxing authorities all Tax
      Returns relating to the Business required to be filed for any period ending
      on
      or before the Closing Date (or are properly on extension), and all such filed
      Tax Returns are true, correct and complete in all material respects, and (B)
      except as set forth on Schedule
      7.17,
      paid in
      full all Taxes shown to be due on such Tax Returns, together with any penalties
      or fines due in connection therewith. Except as set forth on Schedule
      7.17
      hereto,
      there are no Liens for Taxes upon the Business or the Purchased Assets except
      for statutory liens for current Taxes not yet due and payable. Seller will
      file
      appropriate Tax Returns for any period ending on or before the Closing Date,
      and
      pay any Taxes for such periods when due. Except as set forth on Schedule
      7.17
      hereto,
      Seller has not received any outstanding notice of audit, and is not undergoing
      any audit, of Tax Returns relating to the Business and has never received any
      notice of deficiency or assessment from any taxing authority with respect to
      liability for Taxes relating to the Business which has not been fully paid
      or
      finally settled. There have been no waivers of statutes of limitations by Seller
      with respect to any Tax Returns relating to the Business. Except as set forth
      on
Schedule
      7.17
      hereto,
      Seller has complied in all material respects with all applicable laws, rules
      and
      regulations relating to the payment and withholding of Taxes and has withheld
      all amounts required by law to be withheld from the wages or salaries of
      employees and independent contractors of the Business, and is not liable for
      any
      Taxes with respect to the employees and independent contractors of the Business
      for failure to comply with such laws, rules and regulations.

     

    
      
        
        

      

      
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    Section
      7.18. Financial
      Statements.

     

    (a) Attached
      hereto as Annex
      I
      are the
      unaudited and unreviewed, Year End Financial Statements, respectively. The
      Year
      End Financial Statements have been prepared from the Corporate Records and
      fairly and accurately present the financial condition and the results of
      operations, income, expenses, assets, Liabilities (including all reserves),
      and
      changes in shareholders’ equity and of Seller as of the respective dates of, and
      for the periods referred to in, such Year End Financial Statements

     

    (b) Except
      as
      set forth on Schedule
      7.18
      hereto,
      Seller maintains a standard system of accounting established and administered
      in
      accordance with GAAP. 

     

    Section
      7.19. Related
      Party Transactions.
      Except
      as set forth on Schedule
      7.19
      hereto,
      none of Seller, any Affiliate thereof, Seller’s shareholders or any Affiliate or
      Family Member thereof is presently or has, since the most recent Year End
      Financial Statements, and Interim Financial Statements, borrowed any moneys
      from
      or has any outstanding debt or other obligations to Seller or is presently
      a
      party to any transaction with Seller relating to the Business. Except as set
      forth on Schedule
      7.19
      hereto,
      none of Seller, any Affiliate thereof, or any director, officer or key employee
      of any such Persons (a) owns any direct or indirect interest of any kind in
      (except for ownership of less than 1% of any public company, provided, that
      such
      owner’s role is that solely of a passive investor), or controls or is a
      director, officer, employee or partner of, consultant to, lender to or borrower
      from, or has the right to participate in the profits of, any Person which is
      (i)
      a competitor, supplier, customer, landlord, tenant, creditor or debtor of
      Seller, (ii) engaged in a business related to the Business or (iii) a
      participant in any transaction to which Seller is a party or (b) is a party
      to
      any Contract with Seller. Except as set forth on Schedule
      7.19
      hereto,
      Seller has no Contract or understanding with any officer, director or key
      employee of Seller or any of Seller’s shareholders or any Affiliate or Family
      Member thereof with respect to the subject matter of this Agreement, the
      consideration payable hereunder or any other matter.

     

    Section
      7.20. Compliance
      with Law.
      

     

    (a) Except
      as
      set forth on Schedule
      7.20
      hereto,
      Seller, to its Knowledge, and the conduct of the Business are and at all times
      have been in compliance with all Laws applicable to them or to the conduct
      and
      operations of the Business or relating to or affecting the Purchased Assets.
      Seller has not received any notice to the effect that, or otherwise been advised
      of (i) any actual, alleged, possible or potential violation of, or failure
      to
      comply with, any such Laws, or (ii) any actual, alleged, possible or potential
      obligation on the part of Seller to undertake, or to bear all or any portion
      of
      the cost of, any remedial action of any nature. No event has occurred or
      circumstance exists that (with or without notice or lapse of time) (i) may
      constitute or result in a violation by Seller of, or a failure on the part
      of
      Seller, any such Laws or (ii) may give rise to any obligation on the part of
      Seller to undertake, or to bear all or any portion of the cost of, any remedial
      action of any nature, except, in either case separately or the cases together,
      where such violation or failure to comply could not reasonably be expected
      to
      have a Material Adverse Effect.

     

    
      
        
        

      

      
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    (b) Except
      as
      set forth on Schedule
      7.20
      hereto,
      none of Seller, or any of its directors, officers, or to the Knowledge of
      Seller, any employee or other Person affiliated with or acting for or on behalf
      of Seller, has, directly or indirectly, (i) made any contribution, bribe,
      rebate, payoff, influence payment, kickback or other payment to any Person,
      private or public, regardless of form, whether in money, property or services
      (A) to obtain favorable treatment in securing business, (B) to pay for favorable
      treatment for business secured, (C) to obtain special concessions or for special
      concessions already obtained, for or in respect of Seller or any of its
      Affiliates or (D) in violation of any Laws of the United States (including,
      without limitation, the Foreign Corrupt Practices Act of 1977, as amended (15
      U.S.C. Sections 78dd-1 et seq.)) or any laws of any other country having
      jurisdiction; or (ii) established or maintained any fund or asset that has
      not
      been recorded in the Corporate Records of Seller.

     

    Section
      7.21. No
      Other Agreements.
      Except
      as set forth in Section 3.1, neither Seller, nor any of its shareholders,
      officers, directors or Affiliates has any legal obligation, absolute or
      contingent, to any other Person to sell, assign or transfer any part of the
      Purchased Assets, to sell any stock of or other equity interest (other than
      warrants or options in favor of Seller’s officers, directors or employees) in
      Seller or to effect any merger, consolidation or other reorganization of Seller
      or to enter into any agreement with respect thereto.

     

    Section
      7.22. Material
      Misstatements Or Omissions.
      To the
      Knowledge of the representing parties, no representation or warranty made by
      Seller in this Agreement or the Disclosure Schedules hereto omits or will omit
      to state any material fact necessary to make the statements or facts contained
      therein not misleading.

     

    ARTICLE
      8

    PURCHASER’S
      REPRESENTATIONS

     

    Purchaser
      represents and warrants (and as to Section
      8.5,
      acknowledges) to Seller that the statements contained in this Article 8 are
      true, correct and complete as of the date of this Agreement and will be correct
      and complete as of the Closing Date (as though made then and as though the
      Closing Date were substituted for the date of this Agreement throughout this
      Article 8).

     

    Section
      8.1. Organization;
      Qualification and Authority.
      Purchaser is a limited liability company duly organized, validly existing and
      in
      good standing under the Laws of the State of Delaware, and as of the Closing
      Date, will be qualified to do business in the State of California. Purchaser
      has
      all necessary power and authority to (a) own and operate its properties, (b)
      carry on its business as it is now being conducted, (c) perform its obligations
      under this Agreement and the other Transaction Documents, and to undertake
      and
      carry out the transactions contemplated hereby and thereby, and (d) own and
      operate the Purchased Assets and Business.

     

    Section
      8.2. Authorization,
      Execution and Delivery of Agreement and Transaction Documents.
      All
      necessary consents and approvals have been obtained by Purchaser for the
      execution and delivery of this Agreement and the Transaction Documents. The
      execution, delivery and performance of this Agreement and the other Transaction
      Documents in accordance with their terms by Purchaser have been duly and validly
      authorized and approved by all necessary corporate action. Purchaser has full
      power, right and authority to acquire the Purchased Assets. This Agreement
      is,
      and each of the other Transaction Documents when so executed and delivered
      will
      be, a valid and binding obligation of Purchaser, enforceable against it in
      accordance with its terms.

     

    
      
        
        

      

      
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    Section
      8.3. Brokers.
      Purchaser has not engaged any agent, broker or other Person acting pursuant
      to
      the express or implied authority of Purchaser which is or may be entitled to
      a
      commission or broker or finder’s fee in connection with the transactions
      contemplated by this Agreement or otherwise with respect to the sale of the
      Purchased Assets.

     

    Section
      8.4. Funding.
      Purchaser has available to it all of the required cash or financing to pay
      the
      Consideration at Closing and to otherwise perform all of Purchaser’s obligations
      pursuant to this Agreement. Purchaser’s financial ability to consummate the
      transaction under this Agreement is therefore not subject to any financing
      contingency.

     

    ARTICLE
      9

    SELLER’S
      AND PURCHASER’S COVENANTS AND AGREEMENTS

     

    Section
      9.1. Conduct
      of Business.
      Subject
      to any restrictions and obligations imposed by the Bankruptcy Court, Seller
      will
      not, without Purchaser’s consent, engage in any practice, take any action, or
      enter into any transaction outside the Ordinary Course of Business, including,
      without limitation, any amendment or change to its employee retention program,
      or any employment agreements between Seller and its employees. Without limiting
      the generality of the foregoing (but subject to the express limitation set
      forth
      in the immediately preceding sentence), Seller will, other than in the Ordinary
      Course of Business, refrain from doing any of the following in respect of the
      Purchased Assets: (i) disposing of, or transferring, any material Purchased
      Asset, (ii) transferring any tangible Purchased Asset to any other location
      to
      the extent that such other location is not among the locations which is the
      subject of an Assumed Lease or otherwise part of the Purchased Assets, (iii)
      except as otherwise provided or required in this Agreement, terminating,
      amending or modifying the material terms of any of the Assumed Contracts,
      Assumed Leases or Personal Property Leases; or (iv) making any change in the
      compensation payable or to become payable to the employees of the Business,
      other than increases or promotions in the Ordinary Course of Business or
      compensation provided for in Seller’s key employee retention or similar program
      or employment agreements, approved by the Bankruptcy Court; provided,
      however,
      notwithstanding anything to the contrary in the preceding sentence, Seller
      may,
      upon prior written notice to Purchaser in their reasonable discretion take
      such
      actions in connection with or as a result of the consequences (adverse or
      otherwise) of filing the Chapter 11 Case, if any, to cure defaults in respect
      of
      the Assumed Contracts, Assumed Leases or Personal Property Leases.

     

    Section
      9.2. Mutual
      Covenants.
      The
      parties hereto mutually covenant (and subject to the other terms of this
      Agreement):

     

    (a) from
      the
      date of this Agreement to the Closing Date, to cooperate with each other in
      determining whether filings are required to be made or consents required to
      be
      obtained in any jurisdiction in connection with the consummation of the
      transactions contemplated by this Agreement and in making or causing to be
      made
      any such filings promptly and in seeking to obtain timely any such consents
      (each party hereto shall furnish to the other and to the other’s counsel all
      such information as may be reasonably required in order to effectuate the
      foregoing action), which consents shall not, in any event, include any consent
      the need for which is obviated by the Sale Order or otherwise by the provisions
      of the Bankruptcy Code;

     

    
      
        
        

      

      
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    (b) after
      the
      Closing Date, each of the parties hereto will give, or cause to be given, to
      the
      other and/or the other’s representatives, during normal business hours: (i)
      reasonable access, to the extent permitted by applicable law, to its personnel,
      properties, titles, contracts, books, records, files and documents
      (collectively, the “Documentation”);
      provided,
      however,
      Seller
      shall only be entitled to such reasonable access from Purchaser as required
      in
      connection with the transactions contemplated hereby or as is otherwise
      necessary or appropriate in connection with Seller’s ongoing administration
      and/or closing of the Bankruptcy Case; and (ii) at the requesting party’s
      expense, copies of such Documentation, as necessary to allow the requesting
      party to obtain information in connection with any claims, demands, other
      audits, suits, actions or proceedings by or against such requesting party as
      the
      owner and operator of the Purchased Assets and the Business or otherwise in
      furtherance of the purposes described in clause (i) above, including, without
      limitation, in connection with Seller’s bankruptcy proceedings. In connection
      with access to the records of a party’s accountants, the requesting party shall
      execute and deliver such “hold harmless” agreements as the other party’s
      accountants may reasonably request; and

     

    (c) from
      the
      date of this Agreement to the Closing Date, to advise the other parties promptly
      if such party determines that any condition precedent to its obligations
      hereunder will not be satisfied in a timely manner.

     

    Section
      9.3. Filings
      and Authorizations.
      The
      parties hereto shall, as promptly as practicable, cause to be made all such
      filings and submissions as may be required to consummate the terms of this
      Agreement. Seller and Purchaser shall keep each other apprised of the status
      of
      any communications with, and inquiries or requests for additional information
      from, any Governmental Authority, and shall comply promptly with any such
      inquiry or request. Seller shall not make any filings or submissions without
      the
      prior approval of Purchaser, which approval shall not be unreasonably
      withheld.

     

    Section
      9.4. Access
      to Information.

     

    (a) Prior
      to
      and through the date on which the Sale Order is entered by the Bankruptcy Court,
      Seller shall, so long as such cooperation and access are not materially
      disruptive of Seller’s operation of the Business, cooperate with Purchaser and
      shall give Purchaser and its representatives (including Purchaser’s accountants,
      consultants, counsel and employees), upon reasonable notice and during normal
      business hours, full access to the properties (including any Leased Real
      Property), contracts, leases, equipment, employees, affairs, books, documents,
      records and other information of Seller to the extent relating to the Business,
      the Purchased Assets, Assumed Liabilities, and any other aspect of this
      Agreement and shall cause their respective officers, employees, agents and
      representatives to furnish to Purchaser all available documents, records and
      other information (and copies thereof), to the extent relating to the Business,
      the Purchased Assets, Assumed Liabilities, and any other aspect of this
      Agreement as Purchaser may reasonably request. Purchaser expressly acknowledges
      and agrees that nothing in this Section
      9.4
      is
      intended to give rise to a condition or contingency of any kind to Purchaser’s
      obligation to consummate the transactions contemplated in this
      Agreement.

     

    
      
        
        

      

      
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    (b) Seller
      agrees to use commercially reasonable efforts to obtain consent from any third
      party with respect to a restriction against allowing Purchaser to receive and
      review any contract, agreement or lease of Seller.

     

    Section
      9.5. Public
      Announcement.
      Subject
      to the provisions of the Bankruptcy Code and Seller’s right to make such filings
      and disclosures as it in good faith deems necessary or appropriate in connection
      with the Bankruptcy Case, no party hereto shall make or issue, or cause to
      be
      made or issued, any public announcement or written statement concerning this
      Agreement or the transactions contemplated hereby without the prior written
      consent of the other party hereto (which will not be unreasonably withheld
      or
      delayed), unless counsel to such party advises that such announcement or
      statement is required by law (such as an obligation to disclose under federal
      securities laws of the United States) (in which case the parties hereto shall
      make reasonable efforts to consult with each other prior to such required
      announcement).

     

    Section
      9.6. Taxes.

     

    (a) Seller
      shall be responsible for all Taxes in connection with, relating to or arising
      out of the Business or the ownership of the Purchased Assets, or the Assumed
      Liabilities attributable to taxable periods, or portions thereof, ending on
      or
      before the Closing, which Taxes shall be a Non-Assumed Liability. Subject to
      the
      terms of Section
      5.4,
      Purchaser shall be responsible for all Taxes in connection with, relating to
      or
      arising out of the Purchased Assets attributable to taxable periods, or portions
      thereof, from and after the Closing. All state and local sales and use Taxes,
      to
      the extent attributable to periods prior to the Closing, shall be paid or
      otherwise discharged by Seller, including any and all sales taxes incurred
      or
      owed as a result of the transactions contemplated by this Agreement.


     

    (b) If
      Seller
      is unable to obtain an exemption, pursuant to Section 1146(c) of the Bankruptcy
      Code in the Sale Order, from all Transfer Taxes, such Transfer Taxes shall
      be
      borne and paid 100% by Seller. 

     

    (c) Seller
      and Purchaser shall (i) provide the other with such assistance as may reasonably
      be requested by either of them in connection with the preparation of any
      Tax Return,
      any audit or other examination by any taxing authority or any judicial or
      administrative proceeding with respect to Taxes, (ii) retain and provide the
      other with any records or other information which may be relevant to such
      return, audit, examination or proceeding, and (iii) provide the other with
      any
      final determination of any such audit or examination proceeding or determination
      that affects any amount required to be shown on any Tax Return of the other
      for
      any period (which shall be maintained confidentially).

     

    
      
        
        

      

      
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    Section
      9.7. Consents.
      Each
      party hereto will use its reasonable commercial efforts and will cooperate
      with
      the other party hereto to obtain all consents required from third persons,
      whose
      consent or approval is required pursuant to any Assumed Contract, Assumed Lease,
      Personal Property Leases, Permit, or otherwise, in order to consummate the
      transaction contemplated hereby; provided it shall be the responsibility of
      Seller to obtain any necessary such consents; and further provided that
      Purchaser and Seller agree that Seller shall not be required to obtain any
      consent the need for which is obviated by the entry of the Sale Order or
      otherwise by any provision of the Bankruptcy Code or where the failure to obtain
      such consent would have a Material Adverse Effect. In connection with the
      foregoing the Purchaser and the Seller agree that the only consents and waivers
      necessary for the consummation of the Transactions are those consents and
      waivers listed in Schedule
      9.7
      hereto
      (the “Required
      Consents”).

     

    Section
      9.8. Good
      Faith Efforts.
      Without
      limiting the specific obligations of any party hereto under any covenant or
      agreement hereunder, each party hereto shall use its good faith efforts to
      take
      all action and do all things necessary to consummate the transactions
      contemplated in this Agreement on or before the Outside Date.

     

    Section
      9.9. Employees.
      

     

    (a) Subject
      to and in accordance with the provisions of this Section
      9.9,
      Purchaser shall, effective upon the Closing, offer full-time employment to
      the
      employees who are employed by Seller as of the Closing and are listed on
Schedule
      9.9
      hereto
      (such employees other than the Key Employees, the “Employees”)
      on
      terms and conditions substantially equivalent to the terms and conditions of
      employment and benefits for current employees of Purchaser in similar job
      classifications and grades. Purchaser shall hire all of the Employees who accept
      such offer. Employees who accept such offers and become either full-time or
      part-time employees of Purchaser upon the Closing are hereinafter referred
      to as
“Transferred
      Employees.”
Seller
      shall use reasonable efforts to assist Purchaser in securing the employment
      of
      the Employees.

     

    (b) The
      employment of each Transferred Employee by Seller shall end effective as of
      the
      close of business on the day before the Closing and the employment of the
      Transferred Employees by Purchaser shall commence at or after 12:01 a.m. on
      the
      day of the Closing. 

     

    (c) Coverage
      for Transferred Employees under Purchaser’s benefit plans and programs shall
      commence as of 12:01 a.m. on the Closing. Purchaser shall give each Transferred
      Employee credit for such Transferred Employee’s years of most recent continuous
      service (including time during approved leaves of absences of less than
      twenty-six (26 weeks)) with Seller for purpose of determining participation
      and
      benefit levels under all of Purchaser’s vacation policies and benefit plans and
      programs, unless otherwise prohibited by law or the terms of any of Purchaser’s
      benefit plans and programs. Transferred Employees shall also receive credit
      for
      any unused vacation accrued since March 11, 2008.

     

    
      
        
        

      

      
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    Section
      9.10. Key
      Employees.
      

     

    (a) Key
      Employee Agreements.
      As soon
      as practicable following the execution of this Agreement, but in any event
      prior
      to the Closing Date, Purchaser shall execute and enter into employment
      agreements with those Key Employees of Seller listed on Schedule 9.10
      hereto
      (such employees, the “Key
      Employees”),
      subject to the terms and conditions set forth in each such Key Employee
      employment agreements (and if any of such Persons are signatory to employment
      agreements with Seller, such employment agreements shall be terminated in
      writing).

     

    Section
      9.11. Further
      Assurances.
      From
      time to time after the Closing and without further consideration, Purchaser
      and
      Seller, at the request of the other, will execute and deliver such other
      instruments of conveyance and transfer or other instruments or documents, and
      take or arrange for such other actions, as may reasonably be required to effect
      any of the transactions contemplated by this Agreement or to provide any party
      hereto with the benefits intended to be conferred and conveyed by this
      Agreement; provided that, notwithstanding anything to the contrary in this
      Section
      9.11
      or any
      other provision of this Agreement, neither Purchaser nor Seller shall be
      required to execute any document or take any action that would (i) increase
      the
      liability or obligation of the party of whom such document or action is
      requested beyond that such party would have pursuant to the other provisions
      of
      this Agreement, (ii) require or cause the party of whom such action or document
      is requested to initiate, join in or otherwise become a party to any litigation,
      action or other proceeding, (iii) cause such party to incur any material cost
      or
      expense that is not already imposed upon it by another provision of this
      Agreement. The parties undertake, for a period of two (2) years (or the
      applicable statute of limitations) after the Closing Date (or, as to Seller,
      until the Bankruptcy Case is closed if that occurs sooner), to retain at their
      own expense all records and documents relating to the Purchased Assets and
      to
      make such records and documents available for inspection and copying at
      reasonable times and upon reasonable notice, at the expense of the requesting
      party; provided, however, no party shall be required to make available records
      and documents which it is prohibited to make available by law.

     

    Section
      9.12. Survival
      of Representations and Warranties.
      None of
      the representations and warranties of Seller to Purchaser contained in this
      Agreement or made in any other documents or instruments delivered pursuant
      to
      this Agreement shall survive the Closing hereunder. The representations and
      warranties of the Purchaser shall survive the Closing. 

     

    Section
      9.13. “AS
      IS” Transaction; Disclaimer of Implied Warranties.
      Except
      as expressly provided in Article 7 above, Purchaser hereby acknowledges and
      agrees that Seller makes no representations or warranties whatsoever, express
      or
      implied, with respect to any matter relating to the Purchased Assets (including
      income to be derived or expenses to be incurred in connection with the Purchased
      Assets, the physical condition of any personal property comprising a part of
      the
      Purchased Assets or which is the subject of any Assumed Contract or Personal
      Property Leases, the environmental condition or other matter relating to the
      physical condition of any real property or improvements which are the subject
      of
      any Assumed Leases, the zoning of any such real property or improvements, the
      value of the Purchased Assets (or any portion thereof), the transferability
      of
      the Purchased Assets, the terms, amount, validity, collectibility or
      enforceability of any Assumed Liabilities, Assumed Contracts, Assumed Leases
      or
      Personal Property Leases, the title of the Purchased Assets (or any portion
      thereof), the merchantability or fitness of the personal property comprising
      a
      portion of the Purchased Assets or any other portion of the Purchased Assets
      for
      any particular purpose, or any other matter or thing relating to the Purchased
      Assets (or any portion thereof). Without in any way limiting the foregoing,
      except as otherwise expressly provided in Article 7 above, Sellers hereby
      disclaim any warranty (express or implied) of merchantability or fitness for
      any
      particular purpose as to any portion of the Purchased Assets. Purchaser further
      acknowledges that Purchaser has conducted an independent inspection and
      investigation of the physical condition of all portions the Purchased Assets
      and
      all such other matters relating to or affecting the Purchased Assets as
      Purchaser deemed necessary or appropriate and that in proceeding with the
      consummation of its acquisition of the Purchased Assets, except for the
      representations and warranties set forth in Article 7 above, Purchaser is doing
      so based solely upon such independent inspections and investigations.
      Accordingly, and in light of the fact that the representations and warranties
      set forth in Article 7 will lapse and terminate and be of no further force
      or
      effect following the Closing, Purchaser will accept the Purchased Assets at
      the
      Closing “AS
      IS,” “WHERE IS,” and “WITH ALL FAULTS.”

     

    
      
        
        

      

      
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    ARTICLE
      10

    CONDITIONS
      PRECEDENT TO PURCHASER’S OBLIGATION TO CLOSE

     

    The
      obligation of Purchaser under this Agreement with respect to the purchase and
      sale of the Purchased Assets shall be subject to the fulfillment on or prior
      to
      the Closing of each of the following conditions, any of which may be waived
      in
      writing by Purchaser:

     

    Section
      10.1. Accuracy
      of Representations and Warranties; Performance of this Agreement.
      Each of
      the representations and warranties made by Seller shall, to the best of Seller’s
      knowledge, be true and correct in all material respects on and as of the date
      hereof (unless such representation or warranty is given as of a particular
      date
      in which case such representation or warranty will be considered only as of
      such
      particular date) and at and as of the Closing Date, except to the extent that
      such representations and warranties are qualified by terms such as “material”
and “Material Adverse Effect,” in which case such representations and warranties
      shall be true and correct in all respects at and as of the Closing Date. Seller
      shall have complied with and performed in all material respects all of the
      agreements and covenants required by this Agreement and each other Transaction
      Document to be performed or complied with by it on or prior to the
      Closing.

     

    Section
      10.2. Authorizing
      Resolutions.
      Seller
      shall have delivered to Purchaser copies of the authorizing resolutions of
      the
      Board of Directors of Seller authorizing the execution, delivery and performance
      of this Agreement and the other Transaction Documents and all instruments and
      documents to be delivered in connection herewith and the transactions
      contemplated hereby or thereby.

     

    Section
      10.3. Officer’s
      Certificate.
      Seller
      shall have delivered to Purchaser a certificate executed by an executive officer
      of Seller (including incumbency certificates) as Purchaser may reasonably
      request in order to evidence compliance with the conditions set forth in this
      Article 10.

     

    
      
        
        

      

      
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    Section
      10.4. Bill
      of Sale; Assumption Agreement.
      Seller
      shall have delivered to Purchaser an executed Bill of Sale and Assumption
      Agreement pursuant to Sections
      4.1
      and
4.2
      hereof.

     

    Section
      10.5. Bankruptcy
      Matters.
      

     

    (a) To
      the
      extent the sales procedures authorized by the Bankruptcy Court provide for
      a
      break-up fee, such break up fee shall not exceed $150,000 to be paid to the
      Stalking Horse if a party other than the Stalking Horse is the successful bidder
      at the public auction of the Purchased Assets;

     

    (b) A
      hearing
      to approve the successful bid at a public auction of the Assets shall have
      been
      scheduled for no later than November 15, 2008, with the parties hereby
      acknowledging satisfaction of this condition through the sale hearing set for
      November 13, 2008 at 10:00 a.m.; 

     

    (c) The
      Sale
      Procedures Order and the Sale Order shall have been entered by the Bankruptcy
      Court by no later than the Sale Order Date. All such orders must be in effect,
      and must not have been reversed or stayed or modified in any material
      respect.

     

    Section
      10.6. Consents.
      Purchaser shall have received all required consents.

     

    Section
      10.7. No
      Material Adverse Change or Destruction of Property.
      Between
      the date hereof and the Closing and except as otherwise provided in this
      Agreement, there shall have been no Material Adverse Change to the Purchased
      Assets or the Assumed Liabilities which would continue to affect the Purchaser’s
      utilization of the Purchased Assets following the Closing. 

     

    Section
      10.8. Outside
      Date.
      The
      Closing shall have occurred no later than the Outside Date, unless such date
      is
      extended in writing by Purchaser.

     

    Section
      10.9. Key
      Employee Agreements.
      The Key
      Employees shall have executed and delivered to Purchaser the Key Employment
      Agreements.

     

    Section
      10.10. Real
      Property Leases.
      Purchaser shall have entered into a new lease with Two Bills, LLC with respect
      to the real property located at 3350, 3400, 3402, 3410 Winona Avenue, Burbank,
      California on terms and conditions as are acceptable to Purchaser and TwoBills,
      pursuant to which the arrearages owed to Two Bills, LLC will be “rolled into”
the lessee’s obligations under such new lease. Purchaser shall provide notice to
      Seller of the satisfaction of this condition no later than five (5) days prior
      to the Sale Hearing Date. In addition to the foregoing, Seller shall have
      effectively exercised the option to extend the term of the so called “Alpert
      Lease” of the real property located at 3407 Winona Avenue, Burbank, California,
      which lease is contemplated to be one of the Assumed Leases hereunder so long
      as
      such option is exercised and the terms of such lease are acceptable to
      Purchaser. Purchaser shall also have entered into a new lease or have assumed
      the lease at 2600 Bristol Pike, Bensalem, PA. Notwithstanding any other
      provision of this Agreement, including this Section
      10.10
      and
Section 11.6
      below,
      any obligations between Purchaser and any lessor of real property are subject
      to
      further negotiation and agreement by and between Purchaser and any such lessor,
      as well as negotiation by and between Purchaser and the holders of Liens on
      such
      underlying real property.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

       

    

    Section
      10.11 Real
      Property Owned By Jan & Johnny, Inc.
      Purchaser shall have purchased the real property owned by Jan & Johnny, Inc.
      located at 2820 Hollywood Way, Burbank, California (“Hollywood
      Way Property”)
      at the
      public auction of the Hollywood Way Property pursuant to Jan & Johnny,
      Inc.’s pending Chapter 11 bankruptcy (Case No. 08-18277-VZ) (the “J&J
      Bankruptcy Case”),
      for a
      purchase price of not more than Four Million Dollars ($4,000,000), free and
      clear of all Liens, pursuant to an entered court Order by the court having
      jurisdiction over the J&J
      Bankruptcy Case,
      which
      Order must be in effect, and must not have been reversed or stayed or modified
      in any material respect. Notwithstanding the foregoing, alternatively, if
      Purchaser is either unable to, or determines not to, purchase the Hollywood
      Way
      Property on the terms described in this subsection, Purchaser shall have entered
      into a new real property lease with Jan & Johnny, Inc. with respect to the
      Hollywood Way Property on terms and conditions as are acceptable to Purchaser
      and Jan and Johnny, Inc., and Purchaser’s obligation to Jan & Johnny, Inc.
      with respect to such new lease shall be subject to satisfactory negotiation
      among Purchaser, Jan & Johnny, Inc. and the holders of Liens on the
      Hollywood Way Property.

     

    Section
      10.12 Updated
      Schedules.
      Seller
      shall have updated all schedules attached to the Stalking Horse APA and
      delivered them to Purchaser no later than November 11, 2008, and with
      respect to Schedule 7.10(a), Seller shall have itemized on such schedule
      all employment and consulting agreements between Seller and any of its
      employees, and Purchaser shall have approved such updated
      schedules.

     

    ARTICLE
      11

    CONDITIONS
      PRECEDENT TO SELLER’S OBLIGATION TO CLOSE

     

    The
      obligations of Seller under this Agreement with respect to the purchase and
      sale
      of the Purchased Assets shall be subject to the fulfillment on or prior to
      the
      Closing of each of the following conditions, any of which, other than the
      condition set forth in Section
      11.6
      below,
      may be waived in writing by Seller:

     

    Section
      11.1. Accuracy
      of Representations and Warranties; Performance of this Agreement.
      Each of
      the representations and warranties made by Purchaser in this Agreement shall,
      to
      be best of Purchaser’s knowledge, be true and correct in all material respects
      on and as of the date hereof (unless such representation or warranty is given
      as
      of a particular date in which case such representation or warranty will be
      considered only as of such particular date) and at and as of the Closing
      Date.

     

    Section
      11.2. Authorizing
      Resolutions.
      Purchaser shall have delivered to Seller copies of the authorizing resolutions
      of its Board of Managers authorizing the execution, delivery and performance
      of
      this Agreement and the other Transaction Documents and all instruments and
      documents to be delivered in connection herewith and the transactions
      contemplated hereby or thereby together with copies of all other documents
      that
      the Seller may reasonably request relating to the existence of the Purchaser
      and
      the authority of the purchaser to execute the agreement, all in form and
      substance reasonably satisfactory to the Seller.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

       

    

    Section
      11.3. Assumption
      Agreement.
      The
      Purchaser shall have executed and delivered to the Seller this Agreement and
      all
      ancillary agreements hereto, including an executed Assumption Agreement pursuant
      to Section
      4.2
      hereof.

     

    Section
      11.4. Bankruptcy
      Matters.
      The
      Sale Order shall have been entered by the Bankruptcy Court by no later than
      the
      Outside Date, respectively. The Sale Order must be in effect, and must not
      have
      been reversed or stayed or modified in any material respect.

     

    Section
      11.5. Outside
      Closing Date. The
      Closing shall have occurred no later than the Outside Date, unless such date
      is
      extended by Seller.

     

    Section
      11.6. [INTENTIONALLY
      OMITTED]

     

    Section
      11.7. Performance
      of Purchaser’s Obligations.
      The
      Purchaser shall have performed in all material respects all of its obligations
      hereunder required to be performed by it at or prior to the Closing Date,
      including payment of the Consideration in accordance with Article 5 of this
      Agreement.

     

    ARTICLE
      12

    INDEMNIFICATION

     

    [This
      Article intentionally omitted.]

     

    ARTICLE
      13

    TERMINATION

     

    Section
      13.1. Breaches
      and Defaults; Opportunity to Cure.
      Prior
      to the exercise by a party of any termination rights afforded under this
      Agreement, if either party (the “Non-Breaching
      Party”)
      believes the other (the “Breaching
      Party”)
      to be
      in breach hereunder, the Non-Breaching Party shall provide the Breaching Party
      with written notice specifying in reasonable detail the nature of such breach,
      whereupon if such breach is curable the Breaching Party shall have ten (10)
      calendar days from the receipt of such notice to cure such breach to the
      reasonable satisfaction of the Non-Breaching Party; provided,
      however,
      that
      the cure period for a breach shall in no event extend beyond the Outside Date.
      If the breach is not cured within such time period, then the Non-Breaching
      Party
      shall be entitled to terminate this Agreement if the breach is such that the
      condition set forth in Section
      10.1
      or
11.1,
      as
      applicable, shall not be satisfied (as provided in Section
      13.2).
      This
      right of termination shall be in addition to, and not in lieu of, any rights
      of
      the Non-Breaching Party under Article 12 of this Agreement. Upon any termination
      with respect to which Purchaser is a Non-Breaching Party, among other equitable
      and legal rights and remedies available to purchaser, Seller shall cause the
      Consideration Deposit to be promptly returned to Purchaser.

     

    Section
      13.2. Termination.
      This
      Agreement may be terminated and the transactions contemplated herein may be
      abandoned, by written notice given to the other party hereto, at any time prior
      to the Closing:

     

    (a) by
      mutual
      written consent of Seller and Purchaser;

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

       

    

    (b) by
      Seller
      or Purchaser if (i) the Bankruptcy Court enters an Order approving the sale
      of
      the Purchased Assets to a third-party purchaser following the hearing on the
      Sale Order, or (ii) the Sale Order is for any reason (other than a breach or
      default hereunder by the party seeking to terminate) not entered on or before
      the Outside Sale Order Date;

     

    (c) subject
      to the right to cure set forth in Section
      13.1
      at any
      time prior to the Closing Date, by Purchaser if Seller alters, amends or
      breaches any of the covenants in Section 9.1,
      is in
      breach of any material covenant, representation, undertaking or warranty, or
      if
      it appears that a condition set forth in Article 10 is impossible (other than
      through the failure of Purchaser to comply with its obligations under this
      Agreement) to satisfy and Purchaser has not waived such condition in writing
      on
      or before the Closing Date;

     

    (d) subject
      to the right to cure set forth in Section
      13.1,
      at any
      time prior to the Closing Date by Seller if Purchaser is in breach of any
      material covenant, representation or warranty or if it appears that a condition
      set forth in Article 11 is impossible (other than through the failure of Seller
      to comply with their obligations under this Agreement) to satisfy and Seller
      has
      not waived such condition in writing on or before the Closing Date;

     

    (e) at
      or
      prior to the Bankruptcy Court hearing regarding approval of this Agreement,
      by
      either Seller or Purchaser, if an Alternative Bid is accepted and approved
      by
      the Bankruptcy Court, subject to Section 3.1(d);

     

    (f) by
      Purchaser if Seller refuses to close for any reason whatsoever, other than
      a
      breach or default by Purchaser of Purchaser’s obligations under this Agreement;
      or

     

    (g) by
      Seller
      or Purchaser if the Closing shall not have occurred on or before the Outside
      Date, unless the failure to have the Closing shall be due to the failure of
      the
      party seeking to terminate this Agreement to perform in any material respect
      its
      obligations under this Agreement required to be performed by it at or prior
      to
      the Closing.

     

    Upon
      entry of the Sale Order, the mutual termination right set forth in Section
      13.2(b)
      above
      shall cease.

     

    ARTICLE
      14

    BROKERS’
      FEES

     

    Each
      party represents and warrants to the other that it shall be solely responsible
      for the payment of any fee or commission due to any broker or finder it has
      engaged with respect to this transaction, if any, and the other party hereto
      shall be indemnified for any liability with respect thereto.

     

    ARTICLE
      15

    MISCELLANEOUS

     

    Section
      15.1. Additional
      Instruments of Transfer.
      From
      time to time after the Closing, each party shall, if requested by another party,
      make, execute and deliver such additional assignments, bills of sale, deeds
      and
      other instruments and documents, as may be reasonably necessary or proper to
      carry out the specific provisions of this Agreement, including, without
      limitation, transfer to Purchaser of all of Seller’s right, title and interest
      in and to the Purchased Assets and any right, title or interest that Seller
      may
      have in any asset used or held for use in Business, other than an Excluded
      Asset. 

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

       

    

    Section
      15.2. Notices.
      All
      notices and other communications required or permitted to be given hereunder
      shall be in writing and shall be deemed to have been duly given if delivered
      personally, sent by telecopier, recognized overnight delivery service or
      registered or certified mail, return receipt requested, postage prepaid, to
      the
      following addresses:

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

       

    

    If
      to
      Purchaser:

    


    Mix
      Entertainment Holdings, LLC

    c/o
      Sunset Bronson Studios

    5800
      W.
      Sunset Boulevard

    Building
      10 Suite 4

    Los
      Angeles, CA 90028

    Attn:
      Raymond Gaston

    Facsimile:
      (602) 296-0260

    Email:
      rgaston@mixeholdings.com

    


    with
      a
      required copy to:

    


    Greenberg
      Glusker Fields Claman & Machtinger, LLP

    1900
      Avenue of the Stars

    Suite
      2100

    Los
      Angeles, CA 90067

    Attn:
      Jeffrey Krieger

    Facsimile:
      (310) 201-2343

    Email:
      jkrieger@greenbergglusker.com

    


    If
      to
      Seller:

    


    Johnny
      Caswell

    President,

    Center
      Staging Musical Productions, Inc.

    3407
      Winona Avenue

    Burbank,
      CA 91504

    Facsimile:
      818.848.4016

    Email:
      Johnny@centerstaging.com

    


    with
      required copies to:

    


    Lewis
      Landau

    Attorney
      at Law

    23564
      Calabasas Road, Suite 104

    Calabasas,
      CA 91302

    Voice
      and
      Fax: (888)822-4340

    Email:
      lew@landaunet.com

    


    Notices
      delivered personally shall be effective upon delivery against receipt. Notices
      transmitted by telecopy shall be effective when received, provided that the
      burden of proving notice when notice is transmitted by telecopy shall be the
      responsibility of the party providing such notice. Notices delivered by
      overnight mail shall be effective when received. Notices delivered by registered
      or certified mail shall be effective on the date set forth on the receipt of
      registered or certified mail, or 72 hours after mailing, whichever is
      earlier.

     

    
      
        
        

      

      
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    Section
      15.3. Expenses.
      Except
      as provided in the second sentence of this Section 15.3,
      and, to
      the extent that Purchaser is otherwise entitled thereto in accordance with
      the
      provisions of this Agreement, each party shall bear its own expenses and costs,
      including the fees of any attorney retained by it, incurred in connection with
      the preparation of this Agreement and the consummation of the transactions
      contemplated hereby. In the event either party shall bring any action or
      proceeding in connection with the performance, breach or interpretation of
      this
      Agreement or any Transaction Document, the prevailing party in such action
      or
      proceeding shall be entitled to recover from the losing party all court costs
      reasonable costs and expenses of such action, including, without limitation,
      attorneys’ fees.

     

    Section
      15.4. Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of California (without application of principles of conflicts of law).
      In
      connection with any controversy arising out of or related to this Agreement,
      Seller and Purchaser hereby irrevocably consent to the exclusive jurisdiction
      of
      the Bankruptcy Court, or if, and only if, the Bankruptcy Case has been closed,
      the courts of the State of California. Seller and Purchaser each irrevocably
      consents to service of process out of the aforementioned courts and waives
      any
      objection which it may now or hereafter have to the laying of venue of any
      action or proceeding arising out of or in connection with this Agreement brought
      in the aforementioned courts.

     

    Section
      15.5. Assignment.
      This
      Agreement binds and benefits the parties and their respective successors and
      assignees. Purchaser shall have the right to freely assign any of its rights
      under this Agreement provided, however, Seller will not assign any of its rights
      under this Agreement prior to the Closing without the prior written
      discretionary consent of Purchaser. No party may delegate any performance of
      its
      obligations under this Agreement, except that Purchaser may at any time delegate
      the performance of its obligations to any Affiliate of Purchaser so long as
      Purchaser remains fully responsible for the performance of the delegated
      obligation.

     

    Section
      15.6. Successors
      and Assigns.
      All
      agreements made and entered into in connection with this transaction shall
      be
      binding upon and inure to the benefit of the parties hereto, their successors
      and permitted assigns.

     

    Section
      15.7. Amendments;
      Waivers.
      No
      alteration, modification or change of this Agreement shall be valid except
      by an
      agreement in writing executed by the parties hereto. Except as otherwise
      expressly set forth herein, no failure or delay by any party hereto in
      exercising any right, power or privilege hereunder (and no course of dealing
      between or among any of the parties) shall operate as a waiver of any such
      right, power or privilege. No waiver of any default on any one occasion shall
      constitute a waiver of any subsequent or other default. No single or partial
      exercise of any such right, power or privilege shall preclude the further or
      full exercise thereof.

     

    Section
      15.8. Entire
      Agreement.
      This
      Agreement merges all previous negotiations and agreements between the parties
      hereto, either verbal or written, and constitutes the entire agreement and
      understanding between the parties with respect to the subject matter of this
      Agreement.

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

       

    

    Section
      15.9. Counterparts.
      This
      Agreement may be executed in one or more counterparts, each of which when so
      executed shall be an original, but all of which together shall constitute one
      agreement. Facsimile and/or PDF signatures shall be deemed original
      signatures.

     

    Section
      15.10. Severability.
      If any
      provision of this Agreement or the application thereof to any person or
      circumstance shall be invalid or unenforceable to any extent, the remainder
      of
      this Agreement and the application of such provision to other persons or
      circumstances shall not be affected thereby and shall be enforced to the
      greatest extent permitted by law, but only as long as the continued validity,
      legality and enforceability of such provision or application does not materially
      (a) alter the terms of this Agreement, (b) diminish the benefits of this
      Agreement or (c) increase the burdens of this Agreement, for any
      person.

     

    Section
      15.11. Section
      Headings.
      The
      section headings contained in this Agreement are solely for the purpose of
      reference, are not part of the agreement of the parties and shall not in any
      way
      affect the meaning or interpretation of this Agreement.

     

    Section
      15.12. Interpretation.
      As both
      parties have participated in the drafting of this Agreement, any ambiguity
      shall
      not be construed against either party as the drafter. Unless the context of
      this
      Agreement clearly requires otherwise, (a) “or” has the inclusive meaning
      frequently identified with the phrase “and/or,” (b) “including” has the
      inclusive meaning frequently identified with the phrase “including, but not
      limited to” and (c) references to “hereof,” “hereunder” or “herein” or words of
      similar import relate to this Agreement.

     

    Section
      15.13. Reasonable
      Access to Records and Certain Personnel.
      For a
      period of six (6) months following the Closing (or until the closing of the
      Bankruptcy Case, if the Bankruptcy Case is closed sooner): (i) Purchaser shall
      permit Seller’s counsel and other professionals and counsel for any successor to
      Seller and its respective professionals (collectively, “Permitted
      Access Parties”)
      reasonable access to the financial and other books and records relating to
      the
      Purchased Assets or the Business, which access shall include (xx) the right
      of
      such Permitted Access Parties to copy, at such Permitted Access Parties’
expense, such documents and records as they may request, and (yy) Purchaser’s
      copying and delivering to the relevant Permitted Access Parties such documents
      or records as they may request, but only to the extent such Permitted Access
      Parties furnish Purchaser with reasonably detailed written descriptions of
      the
      materials to be so copied and the applicable Permitted Access Party reimburses
      Purchaser for the reasonable costs and expenses thereof, and (ii) Purchaser
      shall provide the Permitted Access Parties (at no cost to the Permitted Access
      Parties) with reasonable access during regular business hours to assist Seller
      and the other Permitted Access Parties in their post-Closing activities
      (including, without limitation, preparation of tax returns), provided that
      such
      access does not materially interfere with Purchaser’s business operations and
      does not require access to Purchaser documents which are covered by a duty
      of
      confidentiality or impact protection of such documents under attorney-client
      privilege.

     

    Section
      15.14. Third
      Parties.
      Nothing
      herein, expressed or implied, is intended to or shall confer on any person
      other
      than the parties hereto any rights, remedies, obligations or liabilities under
      or by reason of this Agreement.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

       

    

    Section
      15.15. Definitions.
      For
      purposes of this Agreement (including the Disclosure Schedules hereto) the
      terms
      defined in this Agreement shall have the respective meanings specified herein,
      and, in addition, the following terms shall have the following
      meanings:

     

    “Advances”
shall
      have the meaning ascribed to it in the Credit Facility Agreement.

     

    “Affiliate”
means,
      as to any Person, any other Person, which, directly or indirectly, is in control
      of, is controlled by, or is under common control with, such Person. The term
      “control” (including, with correlative meanings, the terms “controlled by” and
“under common control with”), as applied to any Person, means the possession,
      direct or indirect, of (i) 20% or more of the then outstanding voting securities
      of such Person, or (ii) the power to direct or cause the direction of the
      management and policies of such Person, whether through the ownership of voting
      securities or other direct or indirect ownership interest, by Contract or
      otherwise.

     

    “Bankruptcy
      Code”
means
      11 U.S.C. Section 101, et. seq., and any amendments thereof.

     

    “Bankruptcy
      Case”
shall
      mean the case commenced by Seller under chapter 11 of the Bankruptcy
      Code.

     

    “Benefit
      Arrangement”
means
      any employment, consulting, severance or other similar contract, plan,
      arrangement or policy, and each plan, arrangement (written or oral), program,
      agreement or commitment providing for insurance coverage (including any
      self-insured arrangements), workers’ compensation, disability benefits,
      supplemental unemployment benefits, vacation benefits, retirement benefits,
      life, health, disability or accident benefits or for deferred compensation,
      profit-sharing bonuses, stock options, 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 Multi-employer Plan, and (B)
      is
      entered into, maintained, contributed to or required to be contributed to,
      by
      Seller or an ERISA Affiliate or under which Seller or any ERISA Affiliate may
      incur any liability.

     

    “Code”
means
      the Internal Revenue Code of 1986, as amended.

     

    “Contract”
means
      any written or oral contract, agreement, lease, license, instrument, or other
      document or commitment, arrangement, undertaking, practice or authorization
      that
      is binding on any Person or its property under any applicable Law.

     

    “Disclosure
      Schedule”
means
      the schedule executed and delivered by Seller to Purchaser as of the Closing
      Date setting forth the exceptions to the representations and warranties
      contained in Article 7 and certain other information called for by this
      Agreement. Unless otherwise specified, each reference in this Agreement to
      any
      numbered schedule is a reference to the corresponding numbered schedule that
      is
      included in the Disclosure Schedule.

     

    “Employee
      Plans”
means
      all Benefit Arrangements, Pension Plans and Welfare Plans.

     

    “Environmental
      Claim”
shall
      mean any claim, action, demand, order, or notice by or on behalf of, any
      Governmental Authority or person alleging potential liability arising out of,
      based on or resulting from the violation of any Environmental Law or permit
      or
      relating to any Hazardous Materials.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

       

    

    “Environmental
      Laws”
shall
      mean all Laws that are applicable to the Business o relating to Releases or
      threatened Releases of Hazardous Materials or otherwise relating to pollution
      or
      protection of the environment, health, safety or natural resources, including,
      without limitation, those relating to (A) the Releases or threatened releases
      of
      Hazardous Materials or materials containing Hazardous Materials or (B) the
      manufacture, generation, handling, treatment, storage, transport, disposal
      or
      handling of Hazardous Materials or materials containing Hazardous
      Materials.

     

    “ERISA”
means
      the Employee Retirement Income Security Act of 1974, as amended, or any
      successor law, and regulations and rules issued pursuant to that Act or any
      successor law.

     

    “Family
      Member”
means,
      with respect to any individual (i) the individual, (ii) the individual’s spouse,
      (iii) any other natural Person who is related to the individual or the
      individual’s spouse within the second degree (including adopted children) and
      (iv) any other natural Person who resides with such individual.

     

    “Financial
      Statements”
means
      the Year-End Financial Statements and the Interim Financial
      Statements.

     

    “GAAP”
means
      generally accepted accounting principles as used in the United States, as in
      effect from time to time.

     

    “Governmental
      Authority”
means
      any federal, state, provincial, municipal and foreign governmental entity,
      authority, or agency, or any other political subdivision, or any entity
      exercising executive, legislative, judicial, regulatory or administrative
      functions of government.

     

    “Hazardous
      Materials”
means
      all substances, matters and other particles defined or listed as "hazardous"
      or
      "toxic" under Environmental Laws or are otherwise subject to or regulated by
      Environmental Laws.

     

    “Interim
      Balance Sheet”
means
      the unaudited consolidated balance sheet of Seller dated the Interim Balance
      Sheet Date, together with notes thereon.

     

    “Interim
      Balance Sheet Date”
means
      September 1, 2008.

     

    “Interim
      Financial Statements”
means
      the Interim Balance Sheet and the unaudited statements of operations, changes
      in
      members’ equity and cash flow for the period ended on the Interim Balance Sheet
      Date.

     

    “Laws”
means
      any federal, state, provincial, local or foreign statute, law, ordinance,
      regulation, rule, code, order or other requirement or rule of law. 

     

    “Leased
      Real Property”
means
      all leasehold or subleasehold estates and other rights to use or occupy any
      land, buildings, structures, improvements, fixtures, or other interest in real
      property which is used in Seller’s business pursuant to the Assumed
      Leases.

     

    “Legal
      Proceeding”
means
      any action, arbitration, audit, hearing, investigation, litigation or suit
      (whether civil, criminal, administrative, investigative or informal) commenced,
      brought, conducted or heard by or before, or otherwise involving, any
      Governmental Authority or arbitrator.

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

       

    

    “Liability”
means
      any liability, indebtedness, obligation, expense, claim, loss, cost, damage,
      obligation, responsibility, guaranty or endorsement of or by any Person,
      absolute or contingent, accrued or unaccrued, known or unknown, due or to become
      due, liquidated or unliquidated, whether or not secured.

     

    “Liens”
      means
      any security interests, mortgages, interests, liens, pledges, charges, defects
      of title, options and other rights of third parties, rights of first refusal,
      claims (as defined in Section 101 of the Bankruptcy Code), or any other
      encumbrance or restriction on ownership provided such encumbrance or restriction
      on ownership can be overridden by Section 363 of the Bankruptcy Code. “Liens”
shall not include liens for current taxes not yet due and payable.

     

    “Material
      Adverse Effect”
or
      “Material
      Adverse Change”
means
      a
      change in or effect on the Purchased Assets or the Assumed Liabilities that
      is
      or could reasonably be expected to materially and adversely affect the
      Purchaser’s ability to utilize the Purchased Assets taken as a whole.  
Material Adverse Change does not include any change or effect caused by war,
      acts of nature, general strike, acts of terror, general economic changes or
      conditions or changes in Laws; unless such Laws or conditions apply solely
      or
      principally to the Business or the Company.

     

    “Multiemployer
      Plan”
means
      any “multiemployer plan” as defined in Section 3(37) of ERISA.

     

    “Ordinary
      Course of Business”
means
      the ordinary course of business consistent with past custom and practice
      (including with respect to quantity and frequency).

     

    “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 has maintained,
      administered, contributed to or was required to contribute to, or under which
      Seller or any ERISA Affiliate may incur any liability.

     

    “Person”
means
      any corporation, partnership, limited liability company, joint venture, business
      association, entity or individual.

     

    “Release”
shall
      mean any release, spill, emission, leaking, pumping, pouring, injection,
      escaping, deposit, disposal, discharge, dispersal, dumping, leaching or
      migration of Hazardous Materials into the indoor or outdoor environment,
      including the movement of Hazardous Materials through the air, soil, surface
      water or groundwater.

     

    “Sale
      Motion”
means
      the motion to be filed with the Bankruptcy Court by Seller seeking (a) approval
      of the terms and conditions of the Transaction Documents, and (b) authorization
      for (i) the sale of the Purchased Assets pursuant to Section 363 of the
      Bankruptcy Code and the assumption and assignment of the Purchased Assets that
      are executory contracts pursuant to Section 365 of the Bankruptcy Code, free
      and
      clear of all Liens. 

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

       

    

    “Sale
      Order”
means
      the order of the Bankruptcy Court granting the relief requested in the Sale
      Motion and authorizing the sale of the Purchased Assets pursuant to Section
      363
      of the Bankruptcy Code and the assumption and assignment of the Purchased Assets
      that are executory contracts pursuant to Section 365 of the Bankruptcy Code,
      free and clear of all Liens, claims and interests.

     

    “Sale
      Procedures Motion”
means
      the motion to be filed with the Bankruptcy Court seeking approval of the bidding
      procedures as contemplated pursuant to Article 3 hereof.

     

    “Taxes”
means
      taxes, charges, fees, levies, penalties or other assessments imposed by any
      federal, state, territorial, local or foreign taxing authority, including
      income, gross receipts, excise, property, sales, transfer, franchise, payroll,
      withholding, social security and other taxes, and shall include any interest,
      penalties or additions attributable thereto.

     

    “Tax
      Return”
means
      any return, report, information return or other document (including any related
      or supporting information).

    


    “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 under which Seller or any ERISA Affiliate may
      incur any Liability.

     

    “Year-End
      Financial Statements”
means
      the Balance Sheet and the related audited statements of operations, changes
      in
      members’ equity and cash flow for the fiscal years ended June 30, 2007 and
      2006.


     

    [Remainder
      of Page Intentionally Left Blank]

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

       

    

    IN
      WITNESS WHEREOF,
      each of
      the parties hereto has caused this Asset Purchase Agreement to be executed
      by
      its duly authorized representative as of the day and year first above
      written.

     

    
      	 	 	 
	 	SELLER:
	 	 
	 	
              CENTERSTAGING
                MUSICAL 

              PRODUCTIONS,
                INC., Debtor and

              Debtor
                in Possession

            
	 
 	 
 	 
 
	 	By:	  
              
	 	Name:	  

	 	Title:	  
              


    

     

    
      
        	 	 	 
	 	PURCHASER:
	 	 
	 	
                
                  MIX
                    ENTERTAINMENT HOLDINGS, LLC,

                  a
                    Delaware limited liability company

                

              
	 
 	 
 	 
 
	 	By:	  
                
	 	Name:	Raymond
                Gaston
	 	Title:	Member
                Manager


      

    

    


    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    Exhibit
      A

    


    Sale
      Procedures Order


    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

       

    

    Exhibit
      B

    


    Bill
      of Sale

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

       

    

    Exhibit
      C

    


    Assumption
      Agreement

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

       

    

    Exhibit
      D

    


    Key
      Employee Agreements


     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    Annex
      I

    


    Year
      End Financial Statements

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

       

    

    Annex
      II

    


    Interim
      Financial Statements

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

      

        TABLE
          OF CONTENTS

        


        Page

        

          
            	
                    ARTICLE
                      1

                  	
                    PURCHASE
                      AND SALE

                  	
                    2

                  
	
                    ARTICLE
                      2

                  	
                    DESCRIPTION
                      OF PURCHASED ASSETS; EXCLUDED ASSETS; ASSUMPTION OF
                      LIABILITIES

                  	
                    2

                  
	
                    Section
                      2.1.

                  	
                    Purchased
                      Assets

                  	
                    2

                  
	
                    Section
                      2.2.

                  	
                    Excluded
                      Assets

                  	
                    3

                  
	
                    Section
                      2.3.

                  	
                    Assumed
                      Liabilities; Non-Assumed Liabilities

                  	
                    4

                  
	
                    ARTICLE
                      3

                  	
                    BANKRUPTCY
                      COURT APPROVAL

                  	
                    6

                  
	
                    Section
                      3.1.

                  	
                    History
                      of Sale Procedures

                  	
                    6

                  
	
                    Section
                      3.2.

                  	
                    Entry
                      of Order Approving Sale

                  	
                    8

                  
	
                    Section
                      3.3.

                  	
                    Certain
                      Bankruptcy Undertakings by Seller

                  	
                    9

                  
	
                    ARTICLE
                      4

                  	
                    INSTRUMENTS
                      OF TRANSFER AND ASSUMPTION

                  	
                    10

                  
	
                    Section
                      4.1.

                  	
                    Transfer
                      Documents

                  	
                    10

                  
	
                    Section
                      4.2.

                  	
                    Assignment
                      and Assumption Documents

                  	
                    10

                  
	
                    ARTICLE
                      5

                  	
                    CONSIDERATION;
                      ALLOCATION

                  	
                    10

                  
	
                    Section
                      5.1.

                  	
                    Consideration

                  	
                    10

                  
	
                    Section
                      5.2.

                  	
                    Allocation
                      of Consideration

                  	
                    11

                  
	
                    Section
                      5.3.

                  	
                    Prorations

                  	
                    11

                  
	
                    ARTICLE
                      6

                  	
                    CLOSING

                  	
                    12

                  
	
                    Section
                      6.1.

                  	
                    Closing
                      Date

                  	
                    12

                  
	
                    ARTICLE
                      7

                  	
                    SELLER’S
                      REPRESENTATIONS AND WARRANTIES

                  	
                    12

                  
	
                    Section
                      7.1.

                  	
                    Organization,
                      Qualification and Corporate Power

                  	
                    13

                  
	
                    Section
                      7.2.

                  	
                    Authorization,
                      Execution and Delivery of Agreement and Transaction
                      Documents

                  	
                    13

                  
	
                    Section
                      7.3.

                  	
                    Title
                      to and Condition of Assets

                  	
                    13

                  
	
                    Section
                      7.4.

                  	
                    Liabilities

                  	
                    13

                  
	
                    Section
                      7.5.

                  	
                    Corporate
                      Records

                  	
                    13

                  
	
                    Section
                      7.6.

                  	
                    Legal
                      Proceedings

                  	
                    14

                  
	
                    Section
                      7.7.

                  	
                    Real
                      Property

                  	
                    14

                  
	
                    Section
                      7.8.

                  	
                    No
                      Violation of Laws or Agreements

                  	
                    14

                  
	
                    Section
                      7.9.

                  	
                    Employee
                      Benefits; ERISA Matters

                  	
                    14

                  


          

           

          
            
              
                
                

              

              
                i

                
                  

                

              

              
                
                

              

               

            

            TABLE
              OF
              CONTENTS

            (continued)

            


            Page

             

          

          
            	
                    Section
                      7.10.

                  	
                    Labor
                      Matters

                  	
                    15

                  
	
                    Section
                      7.11.

                  	
                    Transferred
                      Intellectual Property

                  	
                    16

                  
	
                    Section
                      7.12.

                  	
                    Defaults

                  	
                    16

                  
	
                    Section
                      7.13.

                  	
                    Environmental
                      Matters

                  	
                    16

                  
	
                    Section
                      7.14.

                  	
                    Brokers

                  	
                    16

                  
	
                    Section
                      7.15.

                  	
                    Permits

                  	
                    17

                  
	
                    Section
                      7.16.

                  	
                    Insurance

                  	
                    17

                  
	
                    Section
                      7.17.

                  	
                    Taxes;
                      Tax Returns

                  	
                    17

                  
	
                    Section
                      7.18.

                  	
                    Financial
                      Statements

                  	
                    18

                  
	
                    Section
                      7.19.

                  	
                    Related
                      Party Transactions

                  	
                    18

                  
	
                    Section
                      7.20.

                  	
                    Compliance
                      with Law

                  	
                    18

                  
	
                    Section
                      7.21.

                  	
                    No
                      Other Agreements

                  	
                    19

                  
	
                    Section
                      7.22.

                  	
                    Material
                      Misstatements Or Omissions

                  	
                    19

                  
	
                    ARTICLE
                      8

                  	
                    PURCHASER’S
                      REPRESENTATIONS

                  	
                    19

                  
	
                    Section
                      8.1.

                  	
                    Organization;
                      Qualification and Authority

                  	
                    19

                  
	
                    Section
                      8.2.

                  	
                    Authorization,
                      Execution and Delivery of Agreement and Transaction
                      Documents

                  	
                    19

                  
	
                    Section
                      8.3.

                  	
                    Brokers

                  	
                    20

                  
	
                    Section
                      8.4.

                  	
                    Funding

                  	
                    20

                  
	
                    ARTICLE
                      9

                  	
                    SELLER’S
                      AND PURCHASER’S COVENANTS AND AGREEMENTS

                  	
                    20

                  
	
                    Section
                      9.1.

                  	
                    Conduct
                      of Business

                  	
                    20

                  
	
                    Section
                      9.2.

                  	
                    Mutual
                      Covenants

                  	
                    20

                  
	
                    Section
                      9.3.

                  	
                    Filings
                      and Authorizations

                  	
                    21

                  
	
                    Section
                      9.4.

                  	
                    Access
                      to Information

                  	
                    21

                  
	
                    Section
                      9.5.

                  	
                    Public
                      Announcement

                  	
                    22

                  
	
                    Section
                      9.6.

                  	
                    Taxes

                  	
                    22

                  
	
                    Section
                      9.7.

                  	
                    Consents

                  	
                    23

                  
	
                    Section
                      9.8.

                  	
                    Good
                      Faith Efforts

                  	
                    23

                  
	
                    Section
                      9.9.

                  	
                    Employees

                  	
                    23

                  
	
                    Section
                      9.10.

                  	
                    Key
                      Employees

                  	
                    23

                  


          

           

          
             

            
              
                
                

              

              
                ii

                
                  

                

              

              
                
                

              

               

            

            TABLE
              OF
              CONTENTS

            (continued)

            


            Page
 

          
            	
                    Section
                      9.11.

                  	
                    Further
                      Assurances

                  	
                    24

                  
	
                    Section
                      9.12.

                  	
                    Survival
                      of Representations and Warranties

                  	
                    24

                  
	
                    Section
                      9.13.

                  	
                    “AS
                      IS” Transaction; Disclaimer of Implied Warranties

                  	
                    24

                  
	
                    ARTICLE
                      10

                  	
                    CONDITIONS
                      PRECEDENT TO PURCHASER’S OBLIGATION TO CLOSE

                  	
                    25

                  
	
                    Section
                      10.1.

                  	
                    Accuracy
                      of Representations and Warranties; Performance of this
                      Agreement

                  	
                    25

                  
	
                    Section
                      10.2.

                  	
                    Authorizing
                      Resolutions

                  	
                    25

                  
	
                    Section
                      10.3.

                  	
                    Officer’s
                      Certificate

                  	
                    25

                  
	
                    Section
                      10.4.

                  	
                    Bill
                      of Sale; Assumption Agreement

                  	
                    26

                  
	
                    Section
                      10.5.

                  	
                    Bankruptcy
                      Matters

                  	
                    26

                  
	
                    Section
                      10.6.

                  	
                    Consents

                  	
                    26

                  
	
                    Section
                      10.7.

                  	
                    No
                      Material Adverse Change or Destruction of Property

                  	
                    26

                  
	
                    Section
                      10.8.

                  	
                    Outside
                      Date

                  	
                    26

                  
	
                    Section
                      10.9.

                  	
                    Key
                      Employee Agreements

                  	
                    26

                  
	
                    Section
                      10.10.

                  	
                    Real
                      Property Leases

                  	
                    26

                  
	
                    ARTICLE
                      11

                  	
                    CONDITIONS
                      PRECEDENT TO SELLER’S OBLIGATION TO CLOSE

                  	
                    27

                  
	
                    Section
                      11.1.

                  	
                    Accuracy
                      of Representations and Warranties; Performance of this
                      Agreement

                  	
                    27

                  
	
                    Section
                      11.2.

                  	
                    Authorizing
                      Resolutions

                  	
                    27

                  
	
                    Section
                      11.3.

                  	
                    Assumption
                      Agreement

                  	
                    28

                  
	
                    Section
                      11.4.

                  	
                    Bankruptcy
                      Matters

                  	
                    28

                  
	
                    Section
                      11.5.

                  	
                    Outside
                      Closing Date

                  	
                    28

                  
	
                    Section
                      11.6.

                  	
                    [INTENTIONALLY
                      OMITTED]

                  	
                    28

                  
	
                    Section
                      11.7.

                  	
                    Performance
                      of Purchaser’s Obligations

                  	
                    28

                  
	
                    ARTICLE
                      12

                  	
                    INDEMNIFICATION

                  	
                    28

                  
	
                    ARTICLE
                      13

                  	
                    TERMINATION

                  	
                    28

                  
	
                    Section
                      13.1.

                  	
                    Breaches
                      and Defaults; Opportunity to Cure

                  	
                    28

                  
	
                    Section
                      13.2.

                  	
                    Termination

                  	
                    28

                  
	
                    ARTICLE
                      14

                  	
                    BROKERS’
                      FEES

                  	
                    29

                  


          

           

          
            
              
              

            

            
              iii

              
                

              

            

            
              
              

            

             

          

          
            TABLE
              OF
              CONTENTS

            (continued)

            


            Page
 

          
            	
                    ARTICLE
                      15

                  	
                    MISCELLANEOUS

                  	
                    29

                  
	
                    Section
                      15.1.

                  	
                    Additional
                      Instruments of Transfer

                  	
                    29

                  
	
                    Section
                      15.2.

                  	
                    Notices

                  	
                    30

                  
	
                    Section
                      15.3.

                  	
                    Expenses

                  	
                    32

                  
	
                    Section
                      15.4.

                  	
                    Governing
                      Law

                  	
                    32

                  
	
                    Section
                      15.5.

                  	
                    Assignment

                  	
                    32

                  
	
                    Section
                      15.6.

                  	
                    Successors
                      and Assigns

                  	
                    32

                  
	
                    Section
                      15.7.

                  	
                    Amendments;
                      Waivers

                  	
                    32

                  
	
                    Section
                      15.8.

                  	
                    Entire
                      Agreement

                  	
                    32

                  
	
                    Section
                      15.9.

                  	
                    Counterparts

                  	
                    33

                  
	
                    Section
                      15.10.

                  	
                    Severability

                  	
                    33

                  
	
                    Section
                      15.11.

                  	
                    Section
                      Headings

                  	
                    33

                  
	
                    Section
                      15.12.

                  	
                    Interpretation

                  	
                    33

                  
	
                    Section
                      15.13.

                  	
                    Reasonable
                      Access to Records and Certain Personnel

                  	
                    33

                  
	
                    Section
                      15.14.

                  	
                    Third
                      Parties

                  	
                    33

                  
	
                    Section
                      15.15.

                  	
                    Definitions

                  	
                    34