EXHIBIT 10.1
MILCAP ACQUISITION AGREEMENT
This Acquisition Agreement is dated this 19/th/ day of December, 1997, and
is executed by and among Private Media Group, Inc., a Nevada Corporation, U.S.A.
(hereinafter referred to as "PRVT") and Milcap Media Limited, Cyprus, the owner
of Milcap Publishing Group AB, Sweden, Milcap Media Group SL, Spain, Legolas
Srl, Italy, AB Normcard, Sweden, and Private France SA, France, either directly
or indirectly (hereinafter collectively referred to as "MILCAP" or individually
as "subsidiaries").
WHEREAS, the parties hereto desire that PRVT acquire all of the issued and
outstanding stock and ownership of Milcap Media Limited in exchange for stock in
PRVT; and
WHEREAS, the parties hereto desire to set forth certain representations,
warranties and covenants made by each to the others as an inducement to the
transaction; and
WHEREAS, the parties hereto intend that this transaction qualify as a tax-
free reorganization under Section 368 of the U.S. Internal Revenue Code of 1954,
as amended, and related provisions thereunder or another applicable section;
NOW, THEREFORE, in consideration of the premises of the mutual
representations, warranties and covenants herein contained, the parties hereby
agree as follows:
ARTICLE I. EXCHANGE
PRVT and MILCAP agree and acknowledge as follows:
(a) SHARE OF MILCAP. Subject to the terms and conditions herein, on or before
January 30, 1998, MILCAP will have used its best effort to cause
shareholders of MILCAP holding its outstanding shares to endorse and
deliver to an escrow agent, selected by MILCAP, their shares.
(b) SHARES OF PRVT. On or before January 30, 1998, PRVT shall issue and
deliver to the escrow agent, 7,000,000 new Convertible Preferred Shares,
as described below, and 175,000 common stock purchase warrants as described
below (collectively the "PRVT Securities"). On the Final Closing Date
(defined below), the Escrow Agent shall deliver the MILCAP shares to PRVT
and shall deliver the PRVT Securities to the shareholders of MILCAP
(collectively, the "Stock Exchange").
(c) DESCRIPTION OF PREFERRED SHARES. Each share of the newly designated
Preferred shares to be issued pursuant to this agreement shall be
designated as $4.00 Series A Convertible Preferred stock, and shall provide
for a 5% annual stock dividend to be paid quarterly in common shares, at
the average closing price of common shares for the twenty
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(20) consecutive days prior to the quarterly record date, as reported by
NASDAQ or NASD BB. Each preferred share shall be convertible at any time
into common shares, on a one for one basis and, in addition, at any time
the common stock of PRVT has a closing price, as reported by NASDAQ or NASD
BB, of less than $4.00 per share for twenty (20) consecutive days, the
preferred stock may be converted, at the option of the holder thereof, into
common stock at a 20% discount to the five (5) day average closing price,
as reported by NASDAQ or NASD BB, prior to the date of conversion. The
preferred stock shall be substantially in the form agreed upon by the
parties before January 30, 1998.
(c) DESCRIPTION OF COMMON STOCK WARRANTS. Each of the common stock warrants to
be issued pursuant to the terms of this Agreement shall be exercisable at
any time between the date of issue and December 31, 2000, shall have an
exercise price of $4.00 per share, and shall be in the form agreed upon by
the parties before January 30, 1998.
ARTICLE II. REPRESENTATIONS AND COVENANTS OF MILCAP
MILCAP represents and warrants to PRVT, at the date and on the Interim
Closing Date (defined below) and the Final Closing Date (defined below) as
follows:
(a) ORGANIZATION. Milcap Media Limited, Cyprus, and each of the directly or
indirectly wholly owned subsidiaries is duly organized and validly existing
in good standing under the laws of the country of each company and, it is
duly authorized, qualified and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to carry on its
business in the places and in the manner as now conducted.
(b) CAPITALIZATION. The authorized and the issued capital stock of MILCAP is
listed on Exhibit I hereto and Exhibit II hereto contains a complete and
accurate list of all of the Shareholders and the number of shares held by
each free and clear of all liens, encumbrances and claims of every kind.
Each share is duly and validly authorized and issued, fully paid and
nonassessable, and was not issued in violation of the preemptive rights of
any shareholder. All options, warrants, calls or commitments of any kind,
if any, obligations if any of MILCAP, to issue any of its capital stock,
are listed on Exhibit I hereto.
(c) FINANCIAL STATEMENTS. MILCAP shall deliver to PRVT, on or before January
30, 1998 consolidated audited financial statements through December 31,
1996 and consolidated unaudited financial statements for the nine months
ending September 30, 1997. Except as and only to the extent expressly
disclosed, such consolidated financial statements will have been prepared
in accordance with generally accepted accounting principles in the country
of each company, applied on a consistent basis throughout the periods
indicated and will present fairly the financial condition of MILCAP and its
subsidiaries.
(d) PERMITS. MILCAP shall deliver to PRVT, on or before January 30, 1998, an
accurate list and summary description of all permits, licenses, franchises,
certificates, trademarks, trade
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names, patents, patent applications and copyrights of a material nature
owned or held by MILCAP and its subsidiaries.
(e) CONTRACTS. MILCAP shall deliver to PRVT, on or before January 30, 1998, a
complete list of all material contracts and agreements to which MILCAP and
its subsidiaries are a party or by which it or any of its property is
bound.
(f) BANKS. MILCAP shall deliver to PRVT, on or before January 30, 1998, an
accurate list showing, as of the Closing Date:
(1) the name of each bank, broker, or other financial institution with
which MILCAP and its subsidiaries have accounts or safe deposit boxes; and
(2) the names in which the accounts or boxes are held; and
(3) the names of each person authorized to draw thereon or have access
thereto.
(g) VIOLATIONS, SUITS, ETC. MILCAP shall deliver to PRVT, on or before January
30, 1998, an accurate complete list of all claims, actions, suits or
proceedings instituted, filed, or threatened presently against or affecting
MILCAP and its subsidiaries, at law or in equity, or before or by any
state, municipal or other governmental department or court, commission,
board, bureau, agency or instrumentality wherever located, if any.
(h) TITLE. MILCAP warrants that it has good and marketable title to all
properties, assets and leasehold estates, real and personal, owned and used
in its business, and which is material to the operation of that business,
subject to no mortgage, pledge, lien, conditional sales agreement,
encumbrance or charge, except for: (A) liens for current taxes and
assessments not in default; and (B) liens arising by operation of law of
which MILCAP and its subsidiaries have no knowledge of any such liens
existing.
(i) EXECUTION OF AGREEMENT. To the knowledge and belief of MILCAP, the
execution of this Agreement will not violate or breach any agreement,
contract, or commitment to which MILCAP and its subsidiaries are a party.
MILCAP is duly authorized to execute this Agreement and all actions
required by law and agreements, charters and bylaws to properly and legally
execute this Agreement have been taken.
(j) TAXES. MILCAP warrants, that at the time of closing, MILCAP and its
subsidiaries will not have any outstanding due and payable tax liability,
whatsoever, including, without limiting the generality of the foregoing,
national or state corporate tax.
ARTICLE III. OBLIGATIONS OF MILCAP AND THE SHAREHOLDERS PRIOR TO CLOSING
MILCAP hereby covenants, warrants and agrees that between the date of this
Agreement and
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the Final Closing Date, or the termination of this Agreement, whichever
occurs first:
(1) It will afford to the Officers and authorized representatives of PRVT
access to the plants, properties, books and records of MILCAP and it will
furnish to PRVT such additional financial and operating data and other
information as to the business and properties of MILCAP as PRVT may from
time to time reasonably request.
(2) It will cooperate with PRVT, its representatives and counsel in the
preparation of any documents or other material which may be required by any
governmental agency. PRVT will cause all information obtained in
connection with the negotiation and performance of this Agreement to be
treated as confidential (except such information as PRVT may be required to
disclose to any governmental agency or to provide current information to
the public, its shareholders, or its market makers) and will not use, and
will not knowingly permit others to use, any such information in a manner
detrimental to MILCAP or the Shareholders or in violation of any federal or
state statute.
(3) MILCAP and its subsidiaries will:
(a) carry on their business in substantially the same manner as it
presently does; and
(b) maintain their properties and facilities in as good working order
and condition as at present, ordinary wear and tear excepted; and
(c) perform all of their material obligations under agreements
relating to or affecting their assets, properties and rights, if any;
and
(d) keep in full force and effect present insurance policies or other
comparable insurance coverage, if any; and
(4) MILCAP and its subsidiaries will not, without the prior written consent
of PRVT:
(a) make any change in their Articles of Incorporation; or
(b) issue any securities, which, however, shall not prevent MILCAP
from issuing new share certificates in exchange for old share
certificates due to changes among the Shareholders prior to the Final
Closing Date; or
(c) declare or pay any dividend or make any distribution in respect
of their stock whether now or hereafter outstanding, or purchase,
redeem or otherwise acquire or retire for value any shares of their
stock; or
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(d) enter into any contract or commitment or incur or agree to incur
any liability or make any capital expenditures except in the normal
course of business; or
(e) increase the compensation payable or to become payable to any
Officer, employee or agent, or make any bonus payment to any such
person; or
(f) create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance upon any assets or properties whether now owned
or hereafter acquired; or
(g) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business; or
(h) merge or consolidate or agree to merge or consolidate with or
into any other corporation.
ARTICLE IV. REPRESENTATIONS AND COVENANTS OF PRVT
PRVT represents and warrants to MILCAP at the date hereof and on the
Interim Closing Date and the Final Closing Date as follows:
(a) ORGANIZATION. PRVT is a corporation duly organized and validly existing in
good standing under the laws of the State of Nevada, and it is duly
authorized, qualified and licensed under all applicable laws, regulations,
ordinances and orders of public authorities to carry on its business in the
places and in the manner as now conducted. The character and location of
the assets now owned or regularly leased by PRVT in the conduct of its
business and the nature of the business as now transacted by it does not
require qualification as a foreign corporation in any jurisdiction.
(b) CAPITALIZATION. The authorized capital stock PRVT consists solely of
50,000,000 shares of common stock with a par value of $.001 per share, of
which 543,668 shares are issued and outstanding at 10,000,000 shares of
Preferred stock with a par value of $.001 per share, none of which are
outstanding. Each share of stock of PRVT is duly and validly authorized
and issued, fully paid and nonassessable, and was not issued in violation
of the preemptive rights of any Shareholder. No option, warrant, call or
commitment of any kind obligating PRVT to issue any of its capital stock
exists, except as indicated on Exhibit III hereto. PRVT represents and
warrants that the holders of the 38,000 common stock warrants will exercise
these warrants on or prior to March 3, 1998 at a price of not less than $4
per share.
(c) FINANCIAL STATEMENTS. PRVT shall deliver to MILCAP, on or before January30,
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1998, copies of the following financial statements of PRVT. Audited
Financial Statements for the fiscal years ending March 31, 1997, 1996,
1995, 1994, 1993, 1992 and unaudited financial statements through October
31, 1997. Except as and only to the extent expressly disclosed on a
statement signed by the preparer of such financial statements, such
financial statements will have been prepared in accordance with generally
accepted accounting principles, applied on consistent bases throughout the
periods indicated and will present fairly the financial condition of PRVT
as of the dates indicated thereon.
(d) ACCOUNT RECEIVABLES. PRVT shall deliver to MILCAP, on or before January 30,
1998, an accurate list as of the most recent Balance Sheet Date of the
accounts and notes receivable of PRVT, if any.
(e) PERMITS. PRVT shall deliver to MILCAP, on or before January 30, 1998, an
accurate list and summary description as of the most recent Balance Sheet
Date of all permits, licenses, franchises, certificates, trademarks, trade
names, patents, patent applications and copyrights of a material nature
owned or held by PRVT, if any.
(f) CONTRACTS. PRVT shall deliver to MILCAP, on or before January 30, 1998, an
accurate complete list as of the most recent Balance Sheet Date of all
material contracts and agreements to which PRVT is a party or by which it
or any of its property is bound, if any.
(g) EMPLOYEE BENEFITS. PRVT shall deliver to MILCAP, on or before January 30,
1998, an accurate complete list from its inception or from the inception of
any predecessor of pension, profit-sharing, deferred compensation, stock
option, employee stock purchase or other employee benefit plans or
arrangements, if any.
(h) BANKS. PRVT shall deliver to MILCAP, on or before January 30, 1998, an
accurate list showing, as of the Closing Date:
(1) the name of each bank, broker, or other financial institution with
which PRVT has accounts or safe deposit boxes; and
(2) the names in which the accounts or boxes are held; and
(3) the names of each person authorized to draw thereon or have access
thereto.
(i) VIOLATIONS, SUITS, ETC. PRVT shall deliver to MILCAP, on or before January
30, 1998, an accurate complete list of all claims, actions, suits or
proceedings instituted, filed, or threatened presently against or affecting
PRVT, at law or in equity, or before or by any federal, state, municipal or
other governmental department or court, commission, board, bureau, agency
or instrumentality wherever located, if any. To the best of the knowledge
of PRVT there are no actions, suits, proceedings pending against PRVT which
could involve the possibility of any materially adverse judgment or ruling
against or liability of PRVT which could affect the assets or the business
of PRVT.
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(j) TITLE. To the knowledge and belief of PRVT, PRVT has good and marketable
title to all properties, assets and leasehold estates, real and personal,
owned and used in its business, and which is material to the operation of
that business, subject to no mortgage, pledge, lien, conditional sales
agreement, encumbrance or charge, except for: (A) liens for current taxes
and assessments not in default; and (B) lien arising by operation of law of
which PRVT has no knowledge of any such liens existing.
(k) EXECUTION OF AGREEMENT. To the knowledge and belief of PRVT, the execution
of this Agreement will not violate or breach any agreement, contract, or
commitment to which PRVT is a party. The Officers of PRVT are duly
authorized to execute this Agreement and have taken all action required by
law and agreements, charters and bylaws to properly and legally execute
this Agreement.
(l) TAXES. PRVT warrants, that at the time of closing, PRVT will not have any
outstanding due and payable tax liability, whatsoever, including, without
limiting the generality of the foregoing, federal, national, or state
corporate tax.
(m) NO MATERIAL CHANGE. There has been no material adverse change in the
financial condition, business or properties of PRVT since October 31, 1997.
(n) NO UNDISCLOSED LIABILITIES. PRVT does not have any liabilities or
obligations of any nature (absolute, accrued, contingent or otherwise)
which were not fully reflected or reserved against in the October 31, 1997
Balance Sheet or PRVT, except for liabilities and obligations incurred in
the ordinary course of business and consistent with past practice since
October 31, 1997 which do not exceed $25,000 in total.
(o) FULL DISCLOSURE. No representation or warranty made by PRVT in this
Agreement or in any exhibit or schedule delivered by PRVT to CINECRAFT
pursuant hereto, contains or will contain an untrue statement of a material
fact or omits or will omit to state any material fact required to be stated
herein or therein or necessary to make the statements herein or therein not
misleading in light of the circumstances under which they were made.
(p) BOARD OF DIRECTORS. The entire Board of Directors of PRVT constitutes one
director, Xx. Xxxxxxx Xxxxx. The size of the Board shall not be increased
during the term of this Agreement, except pursuant to this Agreement or the
Cinecraft Agreement.
ARTICLE V. OBLIGATIONS OF PRVT PRIOR TO CLOSING
PRVT hereby covenants, warrants and agrees that between the date of this
Agreement and the Final Closing Date or the termination of this Agreement,
whichever occurs first:
(1) It will afford to the Officers and authorized representatives of MILCAP
access to the plants, properties, books and records of PRVT and will
furnish to MILCAP
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such additional financial and operating data and other
information as to the business and properties of PRVT as MILCAP may from
time to time reasonably request.
(2) It will cooperate with MILCAP, its representatives and counsel in the
preparation of any documents or other material which may be required by any
governmental agency. MILCAP will cause all information obtained in
connection with the negotiation and performance of this Agreement to be
treated as confidential (except such information as MILCAP may be required
to disclose to any governmental agency) and will not use, and will not
knowingly permit others to use, any such information in a manner
detrimental to PRVT or in violation of any federal or state statute.
(3) PRVT will:
(a) carry on its business in substantially the same manner as prior
to this agreement; and
(b) maintain its properties and facilities in as good working order
and condition as at present, ordinary wear and tear excepted; and
(c) perform all of its material obligations under agreements relating
to or affecting its assets, properties and rights, if any; and
(d) keep in full force and effect present insurance policies or other
comparable insurance coverage, if any; and
(4) PRVT shall not, without the prior written consent of MILCAP:
(a) make any change in its Articles of Incorporation; or
(b) issue any securities, except as is provided for in Exhibit E; or
(c) issue any securities, except as contemplated in the Acquisition
Agreement with CINECRAFT
(d) declare or pay any dividend or make any distribution in respect
of their stock whether now or hereafter outstanding, or purchase,
redeem or otherwise acquire or retire for value any shares of their
stock; or
(e) enter into any contract or commitment or incur or agree to incur
any liability or make any capital expenditures except in the normal
course of business; or
(f) increase the compensation payable or to become payable to any
8
Officer, employee or agent, or make any bonus payment to any such
person; or
(g) create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance upon any assets or properties whether now owned
or hereafter acquired; or
(h) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business; or
(i) merge or consolidate or agree to merge or consolidate with or
into any other corporation, except for whatever will be contemplated
in the Acquisition Agreement with CINECRAFT
ARTICLE VI. OBLIGATIONS OF BOTH PARTIES PRIOR
(a) SHAREHOLDERS MEETING. If required by law or determinated advisable by
legal counsel, either or both of the parties hereto shall, as soon as
practical after the signing of this Agreement, call a shareholders meeting
of the party and recommend all matters necessary to consummate the
acquisition contemplated by and between the parties.
(b) BEST EFFORTS. Subject to Article IX, the parties will use their reasonable
best efforts to cooperate in all manners necessary to consummate the
transaction contemplated herein on a timely basis.
(c) EXCLUSIVITY. During the term of this Agreement, neither PRVT nor MILCAP
will enter into or continue negotiations with any third party for the sale
of the stock and assets of either party, nor any other negotiations that
might or would conflict or otherwise affect this Agreement, except for
whatever will be contemplated in the Acquisition Agreement with CINECRAFT.
(d) DISCLOSURE OF INFORMATION. The data and information coming into the
possession of any party to this Agreement which is otherwise not publicly
known shall be deemed strictly confidential and shall not be disclosed to
any third person, whether orally or in writing, including the media,
without the prior written consent of the parties to this Agreement. This
prohibition shall not prevent any party to this Agreement from making such
disclosures as are required by virtue of any law to which it is subject or
by any regulatory bodies having jurisdiction and specifically does not
apply to news releases that any party is required to make. A copy of a
news release that contains information about the intentions set out herein
shall be provided to all parties at least three (3) business days prior to
the issue of the news release. Notwithstanding anything to the contrary
contained herein, PRVT shall not issue any press releases without the prior
approval of MILCAP. Nothing in this paragraph shall prevent a party from
furnishing to any entity with which it is in good
9
faith negotiating in furtherance of its obligations contemplated herein,
such information as may reasonably be required by such entity.
ARTICLE VII. SECURITIES LAWS AND RESALE OF SHARES
(a) UNDERWRITER STATUS. The Shareholders of MILCAP have been informed that they
may be deemed to be "underwriters" under the Securities Act of 1933
(hereinafter the "Securities Act"), and are required to comply with the
requirements of the Securities Act, the Securities Exchange Act of 1934
(hereinafter the "Exchange Act"), various rules and regulations of the
Securities and Exchange Commission (hereinafter the "Commission") and state
securities laws in connection with any offer or transfer of the stock of
PRVT. PRVT has no obligation under the securities laws or under this
Agreement to register the stock of the surviving company or to register the
shares of stock of PRVT to be delivered pursuant to this Agreement with any
state or federal agency or to provide a prospectus for any offer or
transfer thereof by the Shareholders, except as set forth in Article VIII
below.
(b) SECURITIES ACT RESTRICTIVE LEGEND. Until registration, each preferred
certificate representing stock of PRVT issue pursuant to this Agreement
shall be imprinted with a legend in substantially the following form:
These securities have not been registered with the Securities and Exchange
Commission under the Securities Act of 1933 and have been sold in reliance
upon the exemption from registration contained in Section 4(2) of such Act.
The offer and transfer of the shares represented by this certificate are
subject to compliance with the Securities Act of 1933, the Securities
Exchange Act of 1934, rules and regulations of the Securities and Exchange
Commission and state securities laws, rules and regulations, and no
transfer of the shares represented by this certificate shall be valid or
effective unless made in accordance therewith.
ARTICLE VIII. REGISTRATION OF SHARES AND NASDAQ LISTING
(a) REGISTRATION OF COMMON SHARES OF PRVT. PRVT will use its best efforts to
take all necessary actions to ensure the registration (the "Exchange Act
Registration") of the common shares of PRVT under the U.S. Securities
Exchange Act of 1934, said registration to become effective as soon as
possible after the Interim Closing Date, to ensure that PRVT will become a
fully reporting company, as said term is generally known under the U.S.
Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx").
(b) NASDAQ LISTING. Contemporaneously with registration of the shares of PRVT
under the Exchange Act, PRVT will use its best efforts to ensure the
listing of the PRVT shares on the NASDAQ Small Cap Market or, if
appropriate, the NASDAQ National Market System.
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(c) COOPERATION OF PARTIES. Both parties recognize that the aforementioned
registrations will require that the parties provide for such registration
substantial information about the operations of the parties, the history of
the parties, the identity of officers and directors and audited financial
statements prepared in accordance with U.S. requirements. The parties
agree to cooperate in all manners necessary to provide the information to
cause the aforementioned registrations to be completed.
(d) PREPARATION OF DOCUMENTS. The preparation and filing of PRVT of all
necessary registration documents and filing with the U.S. federal and state
securities authorities in order to effect the Exchange Act Registration and
the Securities Act Registration and the preparation and filing with NASDAQ
of the Listing Application shall be performed by counsel and independent
public accountants chosen by MILCAP and agreed by PRVT under MILCAP's
supervision at PRVT's expense will the full cooperation of the officers,
directors, attorneys and independent public accountants of PRVT and MILCAP.
ARTICLE IX. CONDITIONS PRECEDENT AND RIGHT OF TERMINATION
(a) CONDITIONS PRECEDENT TO CLOSING. Unless this Agreement shall be earlier
terminated in accordance with the terms hereof, the closing of the Stock
Exchange and the release of shares from escrow shall take place within 10
days following the date (the "Final Closing Date") on which all of the
following have been satisfied:
1. The parties shall have entered into a mutually satisfactory escrow
agreement, in accordance with the terms of this Agreement with an escrow
agent selected by MILCAP.
2. PRVT shall have issued and delivered the PRVT Securities to the escrow
agent by January 30, 1998.
3. Shareholders of MILCAP owning at least 80% of the issued and outstanding
shares of MILCAP shall have delivered such shares of the escrow agent by
January 30, 1998.
4. That each certificate of PRVT be issued pursuant to Section 4(2) of the
Securities Act and shall contain the restrictive legend as indicated in
Article VI herein, until such time as they are registered under the
Securities Act.
5. Each shareholder of MILCAP that has delivered shares to the escrow agent
agrees that their shares and the PRVT shares to be issued to them shall
be held in escrow until such time as the right of termination contained
in (b) and (d) below has passed.
6. PRVT shall have filed a registration statement Form 10 to register as a
public company under the Exchange Act and the Securities and Exchange
Commission
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("SEC") shall have completed its review of such registration
statement on a satisfactory basis.
7. PRVT shall have filed a registration statement with the SEC under the
Securities Act for the sale by the shareholders of CINECRAFT of the
4,000,000 shares of Common Stock and such registration statement shall
have been declared effective by the SEC.
8. The shares of Common Stock of PRVT shall have been approved for listing
on either the NASDAQ Small Cap or National Market Systems.
(b) RIGHT OF TERMINATION OF MILCAP. MILCAP shall have the unilateral right to
terminate all transactions contemplated under this Agreement, for whatever
reason it deems appropriate or for no reason, at any time prior to the
effective date (the "Listing Date") of the NASDAQ listing, by giving
written notice to PRVT. From and after the Listing Date, this right of
termination shall expire and be of no further force or effect.
(c) PENALTY IN THE EVENT OF MILCAP TERMINATION. In the event hat MILCAP
terminates the transactions contemplated by this Agreement pursuant to
subparagraph (b) above, the only penalty suffered by MILCAP will be a
requirement to reimburse PRVT for all reasonable direct costs, including
legal and accounting, which PRVT has incurred in connection with the
Exchange Act Registration, the Securities Act Registration and the NASDAQ
Listing up to a maximum of $100,000; provided that CINECRAFT shall not be
required to reimburse PRVT for any such expenses if PRVT shall have
breached any of its representations, warranties and covenant contained
herein.
(d) RIGHT OF TERMINATION OF PRVT. For so long as MILCAP is proceeding in good
faith pursuant to Article VIII hereof to effect the Exchange Act
Registration , the Securities Act Registration and the NASDAQ Listing, PRVT
shall not have the right to terminate this Agreement unless such
registrations and listing shall not have been completed by June 30, 1998.
Thereafter, PRVT shall have the unilateral right to terminate all
transactions contemplated under this Agreement, for whatever reason it
deems appropriate at any time prior to the Listing Date, by giving written
notice to MILCAP. From and after the Listing Date, this right of
termination shall expire and be of no further force or effect.
(e) PENALTY IN THE EVENT OF PRVT TERMINATION. In the event that PRVT terminates
the transactions contemplated by this Agreement pursuant to subparagraph
(d) above, the only penalty suffered by PRVT will be its responsibility for
all reasonable direct costs, including legal and accounting, which MILCAP
has incurred in connection with the Exchange Act Registration, the
Securities Act Registration and the NASDAQ Listing up to a maximum of
$100,000; provided that PRVT shall not be required to reimburse MILCAP for
any such expense if MILCAP shall have breached any of its representations,
warranties and covenants contained herein.
(f) NO OTHER PENALTIES. In the event of a termination by either party under the
terms of
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this section, the only penalties, rights to reimbursement,
damages, or claims that either party may have against the other shall be
limited to the penalties contained in this section.
(g) Each of the parties hereto will provide the other party with monthly
written expense reports, which set forth any expenses for which such party
intends to seek reimbursement under this Article IX.
(h) Upon the termination of this Agreement, the escrow shall return the
deposited securities to the party depositing the same.
ARTICLE X. BOARD OF DIRECTORS OF PRVT
(a) APPOINTMENT. On or any time after the Closing Date, MILCAP is entitled to
appoint one of the Directors to the Board of Directors of PRVT.
(b) RESIGNATION. In the event that MILCAP or PRVT terminates the transactions
contemplated by this Agreement, the Director appointed pursuant to
subparagraph (a) above, will automatically resign from his position.
ARTICLE XI. EFFECTIVENESS, CLOSING, ESCROW AGENT
(a) BINDING EFFECT. This Agreement shall be binding and effective as to all
parties hereto upon the signing of this Agreement by PRVT and MILCAP.
(b) CLOSING DATES. For the purpose of this Agreement, the Interim Closing Date
shall be that date upon which the escrow agent has in it possession the
shares and other consideration contained in Article I, paragraphs (a) and
(b) herein. The "Final Closing Date" shall be the date on which all of the
conditions set forth in Article IX (a) have been satisfied.
(c) ESCROW AGENT. The parties agree that they shall enter into an escrow
agreement before January 30, 1998 to hold the PRVT and MILCAP preferred
shares and warrants subject to the terms of this Agreement. Any and all
escrow expenses shall be shared equally between the parties.
(d) FORM OF ACQUISITION. Because of the complexity of this acquisition, the
parties acknowledge that the exact form and structure of the final
acquisition will be based upon numerous legal and taxation questions which
have not been determined at this time. Therefore, the parties agree that
the final form and organization of this acquisition will be determined
based upon the advice of legal and accounting professionals so as to
maximize the benefit to all of the parties.
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ARTICLE XII. GENERAL
(a) ADDITIONAL INSTRUMENTS. The parties hereto shall deliver or cause to be
delivered on the Final Closing Date, and at such other times and places as
shall be reasonably agreed on, such additional instruments as any party may
reasonably request for the purpose of carrying out this Agreement. PRVT
and MILCAP will cooperate and use their reasonable best efforts to have the
present Officers, Directors and employees of PRVT and MILCAP cooperate on
and after the Final Closing Date in furnishing information, evidence,
testimony and other assistance in connection with any actions, proceedings,
arrangements or disputes of any nature with respect to matters pertaining
to all periods prior to the Final Closing Date.
(b) ASSIGNMENT. This Agreement and the rights of PRVT and MILCAP hereunder may
not be assigned (except by operation of law) and shall be binding upon and
shall inure to the benefit of the parties hereto, and the successors of and
the heirs and legal representatives of the parties hereto.
(c) ENTIRE AGREEMENT. This Agreement (including the Exhibits hereto) and the
documents delivered pursuant hereto constitute the entire agreement and
understanding between the parties hereto and supersede any prior agreement
and understanding relating to the subject matter of this Agreement. This
Agreement may be modified or amended only by a duly authorized written
instrument executed by the parties hereto.
(d) COUNTERPARTS. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. It shall not
be necessary that any single counterpart hereof be executed by all parties
hereto so long as at least one counterpart is executed by each party.
(e) SURVIVORSHIP. All warranties, covenants, representations and guarantees
shall survive the closing and execution of the documents contemplated by
this Agreement. The parties hereto in executing, and in carrying out the
provisions of this Agreement are relying solely on the representation,
warranties and agreements contained in this Agreement or in any writing
delivered pursuant to provisions of this Agreement or at the closing of the
transactions herein provided for and not upon any representation, warranty,
agreement, promise or information, written or oral, made by any person
other than as specifically set forth herein or therein.
(f) FEES. Each party agrees to pay their own fees, expenses and disbursements
to their agents, representatives, accountants and counseling incurred in
connection with the subject matter of this Agreement and any amendments
thereto subject only to any other provisions of this Agreement.
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(g) REQUIREMENTS OF NOTICE. All requirements for notice contained herein shall
be deemed effective upon delivery to the addresses of the respective
parties contained herein by certified mail, courier, facsimile, or personal
delivery.
(h) LAW. This Agreement shall be governed and construed in accordance with the
laws of the State of New York without giving effect to any choice of
conflict of law provision or rule (whether of the State of New York or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York. The parties expressly
consent to the personal and subject matter jurisdiction of the courts
(federal and state) in New York in connection with any disputes arising out
of or based upon this Agreement of the transactions contemplated hereby.
(i) CINECRAFT AGREEMENT. Notwithstanding anything to the contrary contained
herein, the Final Closing Date and the Stock Exchange shall not occur
unless there is a simultaneous closing pursuant to that certain agreement
dated the date hereof between PRVT and CINECRAFT.
(j) CORPORATE NAME. Within 5 days following the termination of this Agreement,
PRVT shall change its corporate name to a name other than "Private Media
Group, Inc." or any other variation thereof. Thereafter, PRVT shall not
use the name "Private Media Group" or any variation thereof for any
corporate or trade name purposes.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
Private Media Group, Inc.
By
-----------------------------------------
Xxxxxxx X. Xxxxx, President and Secretary
ON BEHALF OF THE SHAREHOLDERS OF MILCAP.
Milcap Media Limited
By
--------------------------------------
Xxxxx Xxxxxx, Director
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