Exhibit 10.6
ASSET PURCHASE AGREEMENT
This Agreement ("Agreement") is entered into as of April 19, 2004, by and
between Americana Publishing, Inc., a Colorado corporation (ABPH.OB)
("Americana"), on the one hand and Action Media Group, L.L.C., a California
limited liability company ("Action"), Xxxxxx X. Xxxxxxxx ("Agliozzo"), Xxxxxxxx
X. Xxxxxx ("Xxxxxx") and Xxxxx X. Xxxxxx ("Xxxxxx"), on the other hand.
Agliozzo, Xxxxxx and Xxxxxx are collectively referred to herein as the
"Members."
In consideration of the mutual covenants, agreements, representations and
warranties contained in this Agreement, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1. Sale and Transfer of Assets. Subject to the terms and conditions set
forth in this Agreement, Action agrees to sell, convey, transfer, assign and
deliver to Americana, and Americana agrees to purchase from Action, all of the
business, properties and assets of Action of every kind, character, and
description, whether tangible, intangible, real, personal, or mixed, and
wherever located, including, but not limited to, accounts receivables, revenue,
notes, claims, choses in action, software, data bases, insurance policies,
licenses, equipment, fixtures, executory contracts, agreements and orders,
royalty rights, deposits, inventions, patents, trademarks, copyrights and
applications for any patents, trademarks or copyrights, trade secrets, web
sites, universal resource locators (URLs), data and any other assets used in
connection with the business and operations of Action free and clear of all
liabilities, liens, security interests, claims, obligations, and encumbrances of
any kind what so ever (collectively referred to as the "Purchased Assets"). The
Purchased Assets shall also include without limitation the following specific
assets:
1.1.1. All property listed as assets of Action in Schedule 1.1.1;
1.1.2. Any and all rights in the tradenames "Coreflix" and any names confusingly
similar thereto, any other names used by Action in its business (except for the
name "Action Media Group, LLC," which shall be retained by Action) and other
intellectual property associated with its business;
1.1.3. the web sites with a URL: xxx.xxxxxxxx.xxx, xxx.xxxxxxxx.xxx,
xxx.xxxxxxxx.xxx (collectively, the "Websites");
1.1.4. Goodwill, as a going business concern and all corporate names (except for
the name "Action Media Group, LLC," which shall be retained by Action);
1.1.5. All hardware currently used by Action to operate the Websites, including,
but not limited to, any servers;
1.1.6. All current and former customer or subscriber lists, including all
customers or subscribers to the Websites, and any contracts or agreements with
other parties for advertising or sponsorship of the Websites;
1.1.7. Any and all trademarks, service marks or any other intellectual property;
1.1.8. All software, software licenses and source code;
1.1.9. All branded merchandise and promotional materials; and
1.1.10. All other supplies, materials, equipment, machinery, tools, supplies,
furniture, fixtures, inventory, files and records.
1.2 Assumption of Liabilities. Americana shall assume the liabilities of
Action set forth on Schedule 1.2 (collectively, the "Assumed Liabilities"),
including without limitation, all liabilities arising out of or related to the
ownership and/or operation of the Purchased Assets on and after the Closing.
1.3 No Assumption of Liabilities. Except for the Assumed Liabilities,
Americana shall in no event assume or be responsible for any liabilities, liens,
security interests, claims, obligations or encumbrances of Action, contingent or
otherwise. Subject to Section 8.1 hereof, in addition, Action shall continue to
be liable for any damages, liabilities, expenses or costs arising out of any
claims of infringement of any third party intellectual property rights.
1.4 Purchase Price.
1.4.1 Common Stock. In exchange for all of the Purchased Assets, and other
consideration provided to Americana herein, Americana shall issue and deliver to
the Members an aggregate of 8,000,000 shares (the "Shares") of restricted common
stock ("Common Stock") of Americana. Such shares shall be evidenced by three (3)
stock certificates issued to Members as follows:
1.4.1.1 a Stock Certificate representing 3,680,000 shares of Common Stock, in
the name of Xxxxxx X. Xxxxxxxx.
1.4.1.2 a Stock Certificate representing 3,680,000 shares of Common Stock, in
the name of Xxxxxxxx X. Xxxxxx.
1.4.1.3 a Stock Certificate representing 640,000 shares of Common Stock, in the
name of Xxxxx X. Xxxxxx.
1.4.2 Price Protection. Provided that neither Action nor any Member is in
breach of any obligations hereunder, for a period of six (6) months commencing
from the date the Shares are tradable on the Over-the-counter Bulletin Board
(whether pursuant to an effective registration statement or pursuant to an
available exemption from registration) (such six month period being referred to
herein as the "Price Protection Period"), if a Member ("Selling Member") sells
any Shares during the Price Protection Period (the "Protected Shares") at an
Effective Price (defined below) less than $0.015625 per share (as adjusted for
stock splits, stock dividends, reverse stock splits, and the like), Americana
shall deliver to the Selling Member a payment so that the Effective Price of
such Protected Shares shall increase to $0.015625 per share (the "Price
Protection Payment"). Effective Price shall mean the total sale proceeds from
the sale of Protected Shares divided by the total number of shares sold during
the Price Protection Period. Americana shall, within thirty (30) days after the
Price Protection Period, be obligated to make such payment in cash. However, at
Americana's sole discretion, Americana may elect to pay the Price Protection
Payment, or any portion thereof, in restricted Common Stock of Americana priced
at a 25% discount to the average closing bid price for the five trading days
immediately preceding the date of the election. The Price Protection Payment
shall apply solely to the 8,000,000 Shares acquired hereunder, and not to any
other shares acquired or sold by the Selling Member in any other transactions.
Accordingly, Americana shall not be obligated to make any Price Protection
Payment unless (1) the Selling Member has held the Protected Shares separate
from any other shares of Common Stock of Americana (and, specifically, the
Protected Shares shall not be held in a brokerage account commingled with other
shares of Americana) and (2) provides evidence reasonably satisfactory to
Americana that the Protected Shares were in fact sold during the Price
Protection Period and the amounts realized from each sale (i.e., copies of
brokerage account statements with detailed sales history showing trade dates,
number of shares, and sale price).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF ACTION AND MEMBERS
Action and each of the Members, severally (and not jointly or jointly and
severally), represent and warrant to Americana that:
2.1. Financial Statements. Schedule 2.1 of this Agreement sets forth the
balance sheets of Action as of December 31, 2002, as of December 31, 2003 and as
of March 31, 2004, the Profit & Loss Statements for March 2004, the Income
Statement for fiscal year 2003, and from January to February 2004 (the
"Financial Statements"). The Financial Statements present fairly, in all
material respects, the financial position of Action as of their respective
dates.
2.2. Absence of Specified Changes. Since February 29, 2004, there has
not been any:
2.2.1. material adverse change in the financial condition, liabilities,
assets, business, or prospects of Action;
2.2.2. destruction, damage to, or loss of any assets of Action (whether or
not covered by insurance), which are the subject of this Agreement, that
materially and adversely affects the financial condition, business or prospects
of Action;
2.2.3. labor trouble or other event or condition of any character
materially and adversely affecting the financial condition, business, assets, or
prospects of Action;
2.2.4. change in accounting methods or practices, including, without
limitation, any change in depreciation or amortization policies or rates by
Action;
2.2.5. increase in the salary or other compensation payable or to become
payable by Action to any of Action's employees, or the declaration, payment,
commitment or obligation of any kind for the payment by Action of a bonus or any
other additional salary or compensation to any such person, in excess of the
rates paid during the calendar year 2003;
2.2.6. sale or transfer of any asset of Action or cancelled any debts or
claims except in each case in the ordinary course of business; and in any event,
not in an aggregate amount which is material;
2.2.7. amendment or termination of any contract, agreement, or license to
which Action is a party, except in the ordinary course of business;
2.2.8. loan by Action to any person or entity or guaranty by Action of any
loan which affects Americana's liability under this Agreement;
2.2.9. mortgage, pledge, or other encumbrance of any of the assets of
Action which are the subject of this Agreement;
2.2.10. waiver or release of any right or claim of Action which affects
Americana's liability under this Agreement except in the ordinary course of
business;
2.2.11. other event or condition of any character that has or might
reasonably have a material and adverse effect on the financial condition,
business, assets of Action, which would affect Americana's liability under this
Agreement; and
2.2.12. agreement by Action to do any of the things described in the
preceding clauses.
2.3. Action's Liabilities. Other than as set forth on Schedule 2.3,
there are no outstanding liabilities or obligations of Action of any nature,
whether accrued, absolute, contingent, or otherwise, and whether due or to
become due, in excess of $5,000 in the aggregate, other than (a) in the amounts
set forth in the Financial Statements, and (b) liabilities or obligations
incurred since the date of the Financial Statements in the ordinary course of
Action's business less than $5,000.
2.4. Tax Returns and Audits. Within the times and in the manner
prescribed by law, Action has filed all Federal, state and local tax returns
required by law and has paid all taxes, assessments, and penalties due.
2.5. Assets of Business.
2.5.1. Other Tangible Personal Property. Schedule 2.5.1 is a complete
and accurate schedule describing and specifying the location of the Purchased
Assets. The property listed in Schedule 2.5.1 constitutes all such tangible
personal property necessary for the conduct by Action of its business as now
conducted. Except as stated in Schedule 2.5.1, no personal property used by
Action in connection with its business is held under any lease, security
agreement, conditional sales contract, or other title retention or security
arrangement, or is located other than in the possession of Action.
2.5.2. Intellectual Property. Schedule 2.5.2 is a schedule of all of the
service marks, copyrights, franchises, software, patents, licenses, trademarks,
trade names, URLs and other similar intangible assets maintained, owned, used,
held for use or otherwise held or licensed by Action in connection with the
business of Action any (including any and all applications, registrations,
extensions and renewals relating thereto), and all of the rights, benefits and
privileges associated therewith (collectively, "Intellectual Property"). The
Intellectual Property has not infringed, and is not now infringing, on any third
party intellectual property rights except for any such infringement which would
not have, individually or in the aggregate, a material adverse effect on the
business of Action. Action owns, or holds adequate licenses or other rights to
use all of the intellectual property necessary for its business as now conducted
by Action.
2.5.3. Netflix Patent. Action has not received any notification or
communication from Netflix that Action's business or Intellectual Property
infringes or allegedly infringes on any patent or other intellectual property
owned by Xxxxxxx.xxx, Inc., including but not limited to U.S. Patent Number
6,584,450.
2.5.4. Trade Secrets. Schedule 2.5.4 is a true and complete list of
Action's trade secrets, computer programs, routines, and other data. The
specific location of each trade secret's documentation, including its complete
description, specifications, charts, procedures, and other material relating to
it, is also set forth with it in that Exhibit. Each trade secret's documentation
is current and accurate so as to allow its full and proper use by Americana
without reliance on the special knowledge or memory of others. Action is the
sole owner of these trade secrets, free and clear of any liens, encumbrances,
restrictions, or legal or equitable claims of others, except as specifically
stated in Schedule 2.5.4. Action has taken all reasonable security measures to
protect the secrecy, confidentiality, and value of these trade secrets; any of
its employees and any other persons who, either alone or in concert with others,
developed, discovered, or derived these secrets, or who have knowledge of or
access to information relating to them, have been put on notice and, if
appropriate, have entered into agreements that these secrets are proprietary to
Action and not to be divulged or misused. All these trade secrets are, to
Action's knowledge, presently valid and protectible, and are not part of the
public knowledge or literature, nor to Action's knowledge have they been used,
divulged, or appropriated for the benefit of any past or present employees or
other persons, or to the detriment of Action.
2.6. Title to Purchased Assets. Action has good and marketable title
to all its assets and interest in the Purchased Assets and has full power and
authority to sell, assign and transfer to Americana all of the Purchased Assets
free and clear of restrictions on or conditions to transfer or assignment, and
free and clear of mortgages, liens, pledges, charges, encumbrances, equities,
claims, covenants, conditions, or restrictions, except for (i) those described
in the various Schedules and Exhibits, (ii) the lien of current taxes not yet
due and payable, (iii) possible minor matters that, in the aggregate, are not
substantial in amount and do not materially detract from or interfere with the
present or intended use of any of these assets, nor materially impair business
operations. All of the Purchased Assets are in good operating condition and
repair, ordinary wear and tear excepted. Action is in possession of all premises
leased to Action from others. Neither Action nor any employee of Action nor a
spouse, child, or other relative of any of these persons owns or has any
interest, directly or indirectly, in any of the real or personal property owned
by or leased to Action or in any copyrights, trade marks, trade names, or trade
secrets licensed by Action. Action does not occupy any real property in
violation of any law, regulation or decree.
2.7. Existing Employment Contracts. Action does not have any
employees, other than its Members and is not a party to any employment
contracts, collective bargaining agreements, pension, bonus, profit sharing,
stock option, or other agreements or arrangements providing for employee
remuneration or benefits.
2.8. Insurance Policies. Schedule 2.8 is a description of all
insurance policies held by Action concerning its business and properties. All
these policies are in the respective principal amounts set forth in Schedule
2.8.
2.9. Casualty Loss. Action assumes all risk of loss, destruction, or
damage due to fire or other casualty up to the physical transfer of the
Purchased Assets to Americana, and Americana shall have the right to terminate
this Agreement if Action's business is curtailed or interrupted prior to the
Closing by such loss, destruction or damage.
2.10. Other Contracts. Action is not a party to, nor is its property
bound by, any agreements except those listed in Schedule 2.10, copies of which
have been furnished or made available to Americana. There is no default or event
that with notice or lapse of time, or both, would constitute a default (a) by
Action, or (b) to Action's best knowledge, by any other party, to any of these
agreements. Action has not received notice that any party to any of these
agreements intends to cancel or terminate any of these agreements or to exercise
or not exercise any options under any of these agreements. Action is not a party
to, nor is its property bound by, any agreement that is materially adverse to
the business, property, or financial condition of Action.
2.11. Compliance with Laws. Action has complied with, and is not in
violation of, applicable Federal, state, or local statutes, laws, and
regulations, including, without limitation, any applicable building, zoning, or
other law, ordinance, or regulation affecting its property or the operation of
its business, except for such failures or violations which would not have,
individually or in the aggregate, a material adverse effect on the business of
Action.
2.12. Litigation. There are no suits actions, arbitrations, legal,
administrative or other proceedings, or governmental investigations pending or,
to the best knowledge of Action, threatened against or affecting Action or its
business, assets, or financial condition. Action is not in default with respect
to any order, writ, injunction, or decree of any Federal, state or local or
foreign court, department, agency or instrumentality.
2.13. Agreement will not Cause Breach or Violation. The consummation
of the transactions contemplated by this Agreement will not result in or
constitute any of the following:
2.13.1. A breach of any term or provision of this Agreement;
2.13.2. A default or any event that with notice or lapse of time, or
both, would be a default, breach or violation of any lease, license,
promissory note, conditional sales contract, commitment, indenture,
mortgage, deed of trust, or other agreement, instrument or arrangement to
which Action is a party or by which it or its property is bound;
2.13.3. An event that would permit any party to terminate any
agreement or to accelerate the maturity of any indebtedness or other
obligation of Action; or
2.13.4. The creation or imposition of any lien, charge or encumbrance
on any of the properties of Action.
2.14. Authority and Consents. Action and each Member has the right,
power, legal capacity and authority to enter into, and perform its obligations
under this Agreement and no approvals or consents of any persons other than
Action is necessary in connection with it. The Members own 100% of the
membership interests of Action.
2.15. Interest in Customers, Suppliers and Competition. Except as
set forth in Schedule 2.15, neither Action nor any employee of Action, nor any
spouse, child, or relative of any of them, has any direct or indirect interest
in any competitor, supplier, or customer of Action or in any person from whom or
to whom Action leases any real or personal property, or in any other person with
whom Action is doing business.
2.16. Full Disclosure. None of the representations and warranties
made by Action or made in any documents furnished or to be furnished by Action,
or on its behalf, contains or will contain any untrue statement of a material
fact, or omit any material fact, the omission of which would be materially
misleading.
2.17. Risk Factors. Each Member understands that its investment in
the Shares involves a high degree of risk. Accordingly, each Member (i) has been
provided with sufficient information with respect to the business of Americana
for each Member to determine the suitability of making an investment in
Americana and such documents relating to Americana as each Member has requested
and each Member has carefully reviewed the same, (ii) has been provided with
such additional information with respect to Americana and its business and
financial condition as each Member, or each Member's agent or attorney, has
requested, and (iii) has had access to management of Americana and the
opportunity to discuss the information provided by management of Americana and
any questions that each Member had with respect thereto have been answered to
the full satisfaction of each Member. In addition, each Member has obtained and
reviewed from the XXXXX Web site of the Securities and Exchange Commission (the
"Commission") all of Americana's public filings filed prior to the Closing Date,
including but not limited to Americana's annual and quarterly reports, and
reports filed on Form 8-K (hereinafter referred to collectively as the
"Reports"). Each Member has received in writing from Americana such other
information concerning its operations, financial condition and other matters as
the Members have requested (such other information is collectively, the "Other
Written Information"), and considered all factors Members deem material in
deciding on the advisability of investing in the Shares.
2.18. Information on Member. Each Member is an "accredited
investor", as such term is defined in Regulation D promulgated by the Commission
under the Securities Act of 1933, as amended (the "1933 Act"), is experienced in
investments and business matters, has made investments of a speculative nature
and has purchased securities of United States publicly-owned companies in
private placements in the past and, with its representatives, has such knowledge
and experience in financial, tax and other business matters as to enable the
Members to utilize the information made available by Americana to evaluate the
merits and risks of and to make an informed investment decision with respect to
the proposed purchase, which represents a speculative investment. Each Member
has the authority and is duly and legally qualified to purchase and own the
Shares. Each Member is able to bear the risk of such investment for an
indefinite period and to afford a complete loss thereof.
2.19. Restricted Securities. Each Member understands and agrees that
the Shares have not been registered under the 1933 Act or any applicable state
securities laws, by reason of their issuance in a transaction that does not
require registration under the 1933 Act (based in part on the accuracy of the
representations and warranties of the Members contained herein), and that such
Shares must be held indefinitely unless a subsequent disposition is registered
under the 1933 Act or any applicable state securities laws or are exempt from
such registration.
2.20. Shares Legend. The Shares shall bear the following or similar
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW
OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
ARTICLE III
AMERICANA'S REPRESENTATIONS
Americana hereby represents and warrants to Action and the Members that:
3.1. Due Incorporation. Americana is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power to own its properties and to
carry on its business as now being conducted. Americana is duly qualified as a
foreign corporation to do business and is in good standing in each jurisdiction
where the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a material adverse effect on the business, operations
or financial condition of Americana or its subsidiaries.
3.2. Authority; Enforceability. This Agreement and any other
agreements delivered together with this Agreement or in connection herewith have
been duly authorized, executed and delivered by Americana and are valid and
binding agreements enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
generally and to general principles of equity; and Americana has full corporate
power and authority necessary to enter into this Agreement and such other
agreements delivered together with this Agreement or in connection herewith and
to perform its obligations hereunder and under all other agreements entered into
by Americana relating hereto.
3.3. Issuance of Shares. When issued all of the Shares will be duly
authorized, validly issued, fully paid and non-assessable.
ARTICLE IV
ACTION'S OBLIGATIONS BEFORE CLOSING
Action covenants, from the date of this Agreement until the Closing Date as
follows:
4.1. Americana's Access to Premises and Information. Americana and
its counsel, accountants and other representatives shall have full access during
normal business hours to all properties, books, accounts, records, contracts,
and documents of or relating to Action. Action shall furnish or cause to be
furnished to Americana and its representatives all data and information
concerning the business, finances and properties of Action that may reasonably
be requested.
4.2. Conduct of Business in Normal Course. Action will carry on its
business and activities diligently and in substantially the same manner as it
has previously been carried out, and shall not make or institute any unusual or
novel methods of purchase, sale, lease, management, accounting, or other
operations that will vary materially from those methods used by Action as of the
date of this Agreement.
4.3. Preservation of Business and Relationships. Action will use its
best efforts to preserve its business organization intact, to keep available to
Action its present employees and agents, and to preserve its present
relationships with suppliers, customers and others having business relationships
with them.
4.4. Maintenance of Insurance. Action will continue to carry its
existing insurance. At the request of Americana and at Americana's sole expense,
the amount of insurance against fire and other casualties which, at the date of
this Agreement, Action carries on any of its property or in respect of its
operations shall be increased by such amount or amount as Americana shall
specify. Americana shall have the right to have any or all insurance policies
carried by Action, including Worker's Compensation Insurance, transferred to
Americana at Americana's request.
4.5. New Transactions. Action will not, without Americana's written
consent, do or agree to do any of the following acts:
4.5.1. Enter into any contract, commitment, or transaction not in the
usual and ordinary course of business, or
4.5.2. Enter into any contract, commitment, or transaction in the
usual and ordinary course of business involving an amount exceeding Five
Thousand Dollars ($5,000.00), individually, or in the aggregate.
4.6. Payment of Liabilities and Waiver of Claims. Action will not waive
or compromise any right or claim, or cancel, without full payment, any note,
loan, or other obligation owing Action.
4.7. Existing Agreements. Action will not modify, amend, cancel or
terminate any of its existing contracts or agreements, or agree to do any of
those acts.
4.8. Consents of Others. As soon as reasonably practical after the
execution and delivery of this Agreement, and in any event on or before the
Closing Date, Action will obtain the written consent when required of the
persons described in the various Schedules and Exhibits and will furnish to
Americana executed copies of those consents. Counsel for Americana in his sole
discretion shall determine when such consents are reasonably required. Provided,
however, that Americana shall not be obligated under this paragraph to execute
any guarantee, assumption of liability or other document or instrument requiring
it to assume obligations not contemplated by this Agreement.
4.9. Documentation of Procedures and Trade Secrets. At the request
of Americana, Action will document and describe any of its trade secrets,
processes, or business procedures specified by Americana, in form and content
satisfactory to Americana.
4.10. Representations and Warranties True at Closing. All
representations and warranties of Action set forth in this Agreement and in any
written statements delivered by Action to Americana under this Agreement will
also be true and correct as of the Closing Date as if made on that date.
ARTICLE V
CONDITIONS PRECEDENT TO AMERICANA'S PERFORMANCE
5.1. Accuracy of Action's Representations and Warranties. Except as
otherwise permitted by this Agreement, all representations and warranties by
Action and Members in this Agreement or in any written statement that shall be
delivered to Americana under this Agreement shall be true in all material
respects on and as of the Closing Date as though made at that time.
5.2. Performance by Action. Action shall have performed, satisfied
and complied with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by it on or before the Closing Date.
5.3. No Material Adverse Change. During the period from the date of
this Agreement to the Closing Date there shall not have been any material
adverse change in the financial condition or the result of operations of Action,
and Action shall not have sustained any material loss or damage to its assets,
whether or not insured, that materially affects its ability to conduct a
material part of its business.
5.4. Tax Clearance. Action shall deliver confirmation that all Los
Angeles County Taxes, all California Franchise Taxes, any sales and use taxes,
and any other taxes accruing prior to the Closing Date have been paid.
5.5. Consents. All necessary agreements and consents of any parties
to the consummation of the transactions contemplated by this Agreement, or
otherwise pertaining to the matters covered by it, shall have been obtained by
Action and delivered to Americana.
5.6. Bulk Sales Transfer. At the Closing, Action will have taken all
necessary steps to enable Action to effectuate a valid, indefeasible transfer
and sale of the assets described in this Agreement. Among other things, Action
will have fully complied with all California statutes regulating bulk transfers,
and will have obtained all consents, releases, permissions and documents, if
any, which may be necessary for the transfer and sale of the Purchased Assets to
Americana.
5.7. Action's Approval. Prior to the Closing, Action shall deliver
to Americana copies, duly certified by its Members authorizing, ratifying and
approving the terms and conditions of this Agreement, and the transactions
contemplated hereby.
5.8. Approval of Documentation. The form and substance of all
certificates, instruments, opinions, and other documents delivered to Americana
under this Agreement shall be reasonably satisfactory in all respects to
Americana.
5.9. Delivery of Consulting Agreement. Done! Ventures shall execute
and deliver the Consulting Agreement attached hereto as Exhibit A.
ARTICLE VI
CONDITIONS PRECEDENT TO ACTION'S PERFORMANCE
The obligations of Action to sell and transfer the Purchased Assets under
this Agreement are subject to the satisfaction, at or before the Closing, of all
the following conditions:
6.1. Accuracy of Americana's Representations and Warranties. All
representations and warranties by Americana contained in this Agreement or in
any written statement delivered by Americana under this Agreement shall be true
in all material respects on and as of the Closing as though such representations
and warranties were made on and as of that date.
6.2. Americana's Performance. Americana shall have performed and
complied with all covenants and agreements and satisfied all conditions that it
is required by this Agreement to perform, comply with or satisfy before or at
the Closing.
6.3. Americana's Corporate Approval. The Board of Directors of
Americana shall have duly authorized and approved the execution and delivery of
this Agreement and all corporate action necessary and proper to fulfill the
obligations of Americana to be performed under this Agreement on or before the
Closing Date.
ARTICLE VII.
THE CLOSING
7.1. Time and Place. The transfer of Purchased Assets by Action to
Americana (the "Closing") shall take place at 10:00 a.m. on April 19, 2004, at
the offices of Xxxxxxxxxx & Xxxxx LLP, 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx
Xxxxxx, Xxxxxxxxxx or at such other time and place as parties may agree (the
"Closing Date").
7.2. Action's Obligations at Closing. At the Closing, Action shall
deliver or cause to be delivered to Americana:
7.2.1. Instruments transferring to Americana all right, title and
interest in and to Purchased Assets, or such other forms as Americana may
reasonably request.
7.2.2. A Xxxx of Sale transferring all of the Assets of Action being
purchased hereunder in a form acceptable to Americana and its counsel.
7.2.3. The various letters, clearances, releases and certificates
required to be delivered by Action to Americana hereunder.
7.2.4. The consents required to be delivered hereunder.
7.2.5. Such other items as may be reasonably necessary for the Closing
to occur.
7.3. Cooperation by Action. Action, at any time before or after the
Closing Date, will execute, acknowledge, and deliver any further assignments,
conveyances, and other assurances, documents, and instruments of transfer,
reasonably requested by Americana, and will take any other action consistent
with the terms of this Agreement that may reasonably be requested by Americana
for the purpose of assigning, transferring, granting, conveying, and confirming
to Americana, or reducing to possession, any or all property to be conveyed and
transferred by this Agreement.
7.4. Americana's Obligations at Closing. Americana will deliver each
the Member Certificates representing an aggregate of 8,000,000 Shares; and such
other items as may be reasonably necessary for the Closing to occur.
ARTICLE VIII
ACTION'S OBLIGATIONS AFTER CLOSING
8.1. Indemnities. Action shall indemnify, defend and hold Americana
harmless against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including, without limitation, reasonable attorneys' fees (collectively,
"Losses"), that it shall incur or suffer, which directly or indirectly arise out
of, result from, or relate to any breach, or failure to perform, any of Action's
representations, warranties, covenants, or agreements in this Agreement or in
any schedule, certificate, exhibit, or other instrument furnished or to be
furnished by Action under this Agreement; provided, however, that with respect
to any such breach or failure to perform the representations and warranties of
Action under this Agreement, Action shall only be required to indemnify
Americana to the extent such Losses exceed $5,000 (the "Threshold Amount") and
in which event Action shall be responsible to indemnify Americana for all
amounts including the Threshold Amount, subject to the other provisions of this
Section 8.1. The indemnification described herein shall also apply in the event
of an assertion against Americana, or Action's assets, by any person, entity,
government or subdivision thereof, of any claim, demand, penalty, fine, or tax
accruing prior to the Closing. Said right of indemnification shall be the sole
and exclusive right and remedy of the parties hereto with respect to third party
claims; provided, that any party may seek injunctive relief in any proper court
in accordance with the terms and provisions of this Agreement. Notwithstanding
the foregoing, Action's liability with respect to any claims arising out of or
related to this Agreement shall in no event exceed $125,000. Losses to be
indemnified by Action under this Article VIII shall not include any
consequential, incidental, special, indirect, exemplary or punitive damage or
damages for lost profits or loss of business. In addition, Action shall have no
indemnification obligation or liability with respect to any misrepresentation or
breach of warranty if the conditions, facts or circumstances giving rise to such
misrepresentation or breach were disclosed in this Agreement or were otherwise
known to Americana prior to or at the Closing (and such misrepresentation or
breach of warranty shall not constitute a breach of this Agreement).
8.2. Non-Compete. Each of the Members, severally (and not jointly or
jointly and severally), hereby covenant and agree that for a period of two (2)
years from the Closing Date, they will not directly or indirectly, whether with
or through any person, firm, partnership, corporation or other entity or venture
now existing or hereafter created, engage in, acquire an interest in (whether as
an employee, consultant, agent, proprietor, principal, partner, major
stockholder, corporate officer, director or otherwise), nor participate in the
financing, operation, management or control of any business which is competitive
with the business of renting or selling extreme sports DVDs or videos; provided,
however, that ownership or acquisition by any of the Members of an aggregate of
less than 5% of the outstanding stock of any publicly traded company shall not
constitute a violation of this Section 8.2.
8.3. Covenant Not to Solicit. Each of the Members, severally (and
not jointly or jointly and severally), hereby covenant and agree that for a
period of two (2) years from the Closing Date, they will not directly or
indirectly, whether with or through any person, firm, partnership, corporation
or other entity or venture now existing or hereafter created, solicit or employ,
or attempt to solicit or employ, any person who is or has been an officer,
director, partner, manager, agent employee or consultant of Americana in a
manner which would interfere with their services provided to Americana.
8.4. Covenant Not to Interfere. Each of the Members, jointly and
severally, hereby covenant and agree that for a period of two (2) years from the
Closing Date, they will not directly or indirectly, whether with or through any
person, firm, partnership, corporation or other entity or venture now existing
or hereafter created, solicit the business of any person, firm or business
entity which is or has been a customer, client, contractor, joint venturer,
supplier or vendor of Americana, either directly or indirectly, whether with or
through any person, firm, partnership, corporation or other entity now existing
or hereafter created, in connection with the business of renting or selling
extreme sports DVD's or videos, if the solicitation is done for the purpose of
or with the reasonably foreseeable effect of harming or adversely affecting the
business or operations of Americana.
8.5. Confidential Information. Action further agrees not to divulge,
communicate, use to the detriment of Americana, use for the benefit of any other
person or persons, or misuse in any way, any confidential information or trade
secrets of Action, including personnel information, secret processes, know-how,
customer lists, or other technical data. Members acknowledge and agree that any
information or data they have acquired on any of these matters or items was
received in confidence and as a fiduciary of Action and is included in the
Purchased Assets hereunder.
ARTICLE IX
AMERICANA'S OBLIGATIONS AFTER CLOSING
9.1. Americana's Indemnity. Americana agrees to indemnify and hold
harmless Action against, and in respect of, any and all claims, losses,
expenses, costs, obligations and liabilities it may incur by reason of
Americana's breach of or failure to perform any of its warranties, guarantees,
commitments, or covenants in this Agreement, or by reason of any act or omission
of Americana, or any of its successors or assigns, after the Closing Date, that
(a) constitutes a breach or default under, or a failure to perform, any
obligation, duty, or liability of Action under any loan agreement, lease
contract, order, or other agreement to which it is a party or by which it is
bound at the Closing Date, but only to the extent to which Americana expressly
assumes these obligations, duties, and liabilities under this Agreement, or (b)
arise out of, result from, or relate to any breach, or failure to perform, any
of Americana's representations, warranties, covenants, or agreements in this
Agreement or in any schedule, certificate, exhibit, or other instrument
furnished or to be furnished by Americana under this Agreement. Notwithstanding
the foregoing, Americana's liability with respect to any claims arising out of
or related to this Agreement shall in no event exceed $125,000. Losses to be
indemnified by Americana under this Article IX shall not include any
consequential, incidental, special, indirect, exemplary or punitive damage or
damages for lost profits or loss of business. In addition, Americana shall have
no indemnification obligation or liability with respect to any misrepresentation
or breach of warranty if the conditions, facts or circumstances giving rise to
such misrepresentation or breach were disclosed in this Agreement or were
otherwise known to Action prior to or at the Closing (and such misrepresentation
or breach of warranty shall not constitute a breach of this Agreement).
9.2. Registration Rights/Leak-Out.
9.2.1. Piggy-Back Registration Rights. If Americana at any time
proposes to register any of its securities under the 1933 Act for sale to
the public, whether for its own account or for the account of other
security holders or both, except with respect to registration statements on
Forms X-0, X-0 or another form not available for registering the securities
for sale to the public, each such time it will give at least fifteen (15)
days' prior written notice to the record holder of the Shares of its
intention so to do. Upon the written request of the record holder of the
Shares, received by Americana within ten (10) days after the giving of any
such notice by Americana, to register any of the Shares not previously
registered, Americana will cause such Shares (the "Registrable Securities")
as to which registration shall have been so requested to be included with
the securities to be covered by the registration statement proposed to be
filed by Americana, all to the extent required to permit the sale or other
disposition of the Registrable Securities so registered by the record
holder of such Registrable Securities. In the event that any registration
pursuant to this Section shall be, in whole or in part, an underwritten
public offering of Common Stock of Americana, the number of shares of
Registrable Securities to be included in such an underwriting may be
reduced by the managing underwriter if and to the extent that Americana and
the underwriter shall reasonably be of the opinion that such inclusion
would adversely affect the marketing of the securities to be sold by
Americana therein; provided, however, that Americana shall notify Action in
writing of any such reduction.
9.2.2. Demand Registration Rights. If Americana has not filed a
registration statement to register the Registrable Securities within 180
days after the Closing Date, Americana, upon a written request therefore
from the record holders of a majority of the Shares, shall prepare and file
with the Commission a Registration Statement covering the Shares which are
the subject of such request. In addition, upon the receipt of such request,
Americana shall promptly give written notice to all other record holders of
the Registrable Securities that such Registration Statement is to be filed
and shall include in such Registration Statement Registrable Securities for
which it has received written requests within ten (10) days after Americana
gives such written notice. Such other requesting record holders shall be
deemed to have exercised their registration rights under this Section.
9.2.3. Leak-Out. For a period of two (2) years following the
Closing Date, each of the Members shall not, except as permitted herein,
transfer, sell or assign any of the Shares without the prior written
consent of Americana. Each Member agrees and covenants not to sell any
Shares within any three month period in excess of the volume limitations
imposed by Rule 144(d). Notwithstanding anything to the contrary contained
herein, a Member may transfer the Shares, subject to applicable Federal and
state securities laws, to any spouse, parent or member of such Member's
immediate family, or any lineal descendent of such Member, a custodian,
trustee (including a trustee of a voting trust), executor, or other
fiduciary for the account of such Member's spouse, parent, lineal
descendent, or a member of such Member's immediate family, or a trust,
corporation, limited liability company, partnership or other entity, of
which all of the beneficial interests are held directly or indirectly by
such person or one or more persons described in this paragraph provided
that such transferee agrees to be bound by the terms of this agreement.
ARTICLE X
COSTS
10.1. Finder's or Broker's Fees. Each of the parties represent that
it has dealt with no broker or finder in connection with any of the transactions
contemplated by this Agreement, and insofar as it knows, no broker or other
person is entitled to any commission or finder's fee in connection with any of
these transactions. Action and Americana each agree to indemnify and hold the
other harmless against any loss, liability, damage, cost, claim or expense
incurred by reason of any brokerage, commission or finder's fee alleged to be
payable because of any act, omission or statement of the indemnifying party.
10.2. Expenses. Each of the parties hereto shall pay their own costs
and expenses incurred or to be incurred by it in negotiating and preparing this
Agreement and enclosing and carrying out the transactions contemplated by this
Agreement. The expenses incurred in doing any act or in furnishing any document
under this Agreement shall be borne by the party whose obligation it is to do so
under this Agreement.
ARTICLE XI
GENERAL
11.1 Effect of Heading. The subject headings of the paragraphs and
subparagraphs of this Agreement are included for purposes of convenience only
and shall not affect the construction or interpretation of any of its
provisions.
11.2 Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
11.3. Schedules; Exhibits. All schedules and exhibits referred to
herein shall be deemed incorporated by reference in their entirety as though
fully set forth at the places to which they are referred. Unless otherwise
stated, all references to schedules and exhibits are references to schedules and
exhibits to this Agreement.
11.4. Gender. Wherever appropriate in this Agreement, plural shall
be deemed also to refer to the singular, the neuter shall be deemed to refer to
the masculine, and vice versa.
11.5. Parties in Interest. Nothing in this Agreement whether express
or implied, is intended to confer any rights or remedies under or by reason of
this Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third person any right of
subrogation or action over or against any party to this Agreement.
11.6. Assignment. This Agreement shall be binding on, and shall
inure to the benefit of, the parties to it and their respective heirs, legal
representatives, successors and assigns; provided, however, no party may assign
any or all of its rights under this Agreement without the prior written consent
of the others.
11.7. Nature and Survival of Representations and Obligations. All
representations, warranties, covenants and agreements of Americana, Action, and
the Members contained in this Agreement, or in any instrument, certificate,
opinion or other writing provided for in it, shall survive the Closing (a) with
respect to representations and warranties, for a period of two (2) years after
the Closing, and (b) with respect to covenants and agreements, until all
obligations imposed thereby shall have been performed or satisfied or have
terminated or expired in accordance with the respective terms of such covenant
or agreement. No claim for indemnification under this Agreement may be made by
any party, and no obligation to indemnify in respect thereof shall exist, unless
written notice of such claim shall have been given on or prior to the last day
of the survival period relating to the provision(s) of this Agreement on which
such claim is to be based. The termination of any such representation, warranty
or covenant shall not affect any claim for breach or inaccuracy of
representations, warranties or covenants if such written notice shall have been
given on or prior to such last day of such survival period.
11.8. Preparation of Agreement. Each party acknowledges that: (i)
the party had the advice of, or sufficient opportunity to obtain the advice of,
legal counsel separate and independent of legal counsel for any other party
hereto; (ii) the terms of the transactions contemplated by this Agreement are
fair and reasonable to such party; and (iii) such party has voluntarily entered
into the transactions contemplated by this Agreement without duress or coercion.
Each party further acknowledges that such party was not represented by the legal
counsel of any other party hereto in connection with the transactions
contemplated by this Agreement, nor was he or it under any belief or
understanding that such legal counsel was representing his or its interests and
specifically Action and each Member understand that Xxxxxxxxxx and Xxxxx, LLP
represents the interests of Americana only. Each party agrees that no conflict,
omission or ambiguity in this Agreement, or the interpretation thereof, shall be
presumed, implied or otherwise construed against any other party to this
Agreement on the basis that such party was responsible for drafting this
Agreement.
11.9. Governing Law; Waiver of Jury Trial. All questions concerning
the construction, interpretation and validity of this Agreement shall be
governed by and construed and enforced in accordance with the domestic laws of
California without giving effect to any choice or conflict of law provision or
rule (whether in the State of California or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
California. In furtherance of the foregoing, the internal law of the State of
California will control the interpretation and construction of this Agreement,
even if under such jurisdiction's choice of law or conflict of law analysis, the
substantive law of some other jurisdiction would ordinarily or necessarily
apply.
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS
ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT
PERSON AND THE PARTIES WISH APPLICABLE LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST
COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
11.10. Submission to Jurisdiction. Any legal action or proceeding
with respect to this Agreement must be brought in the courts of the State of
California or the United States of America located in the City of Los Angeles,
California and, by execution and delivery of this Agreement, the parties hereby
accept for themselves and in respect to their property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The parties hereby
irrevocably waive, in connection with any such action or proceeding, any
objection, including, without limitation, any objection to the venue or based on
the grounds of forum non-conveniens, which it may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions.
11.11. Injunctive Relief. The Parties agree that a breach of this
Agreement may cause Americana irreparable harm for which monetary damages are
not adequate. In addition to all other available legal remedies, Americana shall
have the right to injunctive relief to enforce this Agreement.
11.12. Disclaimer. ALL OF THE PURCHASED ASSETS AND ASSUMED
LIABILITIES ARE BEING SOLD AND TRANSFERRED TO AMERICANA "AS IS" AND "WHERE IS"
AND ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR USE OR A PARTICULAR PURPOSE, ARE EXCLUDED
FROM THE SALE AND TRANSFER OF THE PURCHASED ASSETS AND ASSUMED LIABILITIES,
EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE II HEREOF, BUT SUBJECT TO THE
PROVISIONS OF SECTIONS 8.1 AND 11.7 HEREOF. NEITHER ACTION NOR ANY
OF THE MEMBERS MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY NATURE WITH
RESPECT TO THE PURCHASED ASSETS.
11.13. Severability. It is the desire and intent of the parties that
the provisions of this Agreement be enforced to the fullest extent permissible
under the law and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, in the event that any provision of this
Agreement would be held in any jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so
as not to be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
11.14. Independence of Agreements, Covenants, Representations and
Warranties. All agreements and covenants hereunder shall be given
independent effect so that if a certain action or condition constitutes a
default under a certain agreement or covenant, the fact that such action or
condition is permitted by another agreement or covenant shall not affect the
occurrence of such default, unless expressly permitted under an exception to
such covenant. In addition, all representations and warranties hereunder shall
be given independent effect so that if a particular representation or warranty
proves to be incorrect or is breached, the fact that another representation or
warranty concerning the same or similar subject matter is correct or is not
breached will not affect the incorrectness of or a breach of a representation
and warranty hereunder. The exhibits and any schedules attached hereto are
hereby made part of this Agreement in all respects.
11.15. Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party to
whom notice is to be given, or on the date of delivery if by overnight delivery
by a recognized overnight delivery service with proof of delivery. Notice to
Americana shall be delivered to Americana Publishing, Inc., 000 Xxx Xxxxx XX,
Xxxxx 000X, Xxxxxxxxxxx, XX 00000, Attention: Xxxxxx Xxxxxx, Xx., with a copy to
Xxxxxxxxxx & Xxxxx LLP, 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, facsimile: (000) 000-0000, Attention: Addison X. Xxxxx, Esq.,
and to Action and each Member at the applicable address listed on the signature
page hereto. Any party may change its address for purposes of this paragraph by
giving the other party written notice of the new address in the manner set forth
above.
11.16 Entire Agreement; Modification; Waiver. This Agreement and the
Exhibits attached hereto constitute the entire agreement between the parties
pertaining to the subject matter contained in it and supersedes all prior and
contemporaneous agreements, representations and understandings of the parties.
No supplement, modification, or amendment of this Agreement shall be binding
unless executed in writing by all parties. No waiver of any of the provisions of
this Agreement shall be deemed, or shall constitute, a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a continuing
waiver. No waiver shall be binding unless executed in writing by the party
making the waiver.
[Signature page follows]
IN WITNESS WHEREOF the parties have duly executed this Asset Purchase
Agreement as of the date first written above.
"Action" "Members"
ACTION MEDIA GROUP, L.L.C.
By:
Name: Xxxxxx X. Xxxxxxxx Xxxxxx X. Xxxxxxxx
Title: Chief Executive Manager Address:
By:
Name: Xxxxxxxx X. Xxxxxx
Title: Manager
Xxxxxxxx X. Xxxxxx
Address:
Address for Notice to Action:
______________________________
Xxxxx X. Xxxxxx
______________________________ Address:
"Americana"
AMERICANA PUBLISHING, INC.
By:
Name: Xxxxxx Xxxxxx
Title: CEO and Chairman of the Board
DISCLOSURE SCHEDULES
(see attached)
EXHIBIT A
CONSULTING AGREEMENT
(see attached)
