EXHIBIT 2.2
ASSET PURCHASE AGREEMENT
between
Private Media Group, Inc.
and
Anton Enterprises, Inc.
d.b.a. Private USA.
THIS ASSET PURCHASE AGREEMENT is made as of the 27th day of February, 2001
BETWEEN
(1) Anton Enterprises, Inc. d.b.a. Private USA, a company incorporated under
the laws of California, USA, whose registered office is at 0000 Xxxxxx
Xxxx. Xxxxx X, Xxx Xxxxxxx, XX. 00000, XXX, (the "Seller"); and
(2) Private Media Group, Inc., a company incorporated under the laws of
Nevada, USA, whose registered office is at 0000 Xxxxxxxx Xxxx, Xxxxx 000,
Xxx Xxxxx, Xxxxxx (the "Buyer").
R E C I T A L S
A. WHEREAS, the Seller carries on the distribution and sale of entertainment
products (the "Business"); and
B. WHEREAS, Seller desires to sell and Buyer desires to acquire certain assets
of Seller used in, acquired for, or arising from the operation of the
Business in exchange for USD 875,000, subject to the provisions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings set
forth herein and in the Schedules hereto, the parties agree as follows:
1. DEFINITIONS
1.1 The "Closing Date" means March 5, 2000, or such other date as may be agreed
upon in writing by the parties for the closing of the transactions
contemplated by this Agreement (the "Closing").
1.2 The term "Purchased Assets" means the following assets existing at Closing:
(a) all stock or inventory held by Seller at Closing, such as magazines,
VHS-cassettes, DVDs, CD-Roms, etc.;
(b) all rights and privileges, obligations and liabilities under contracts
with clients and suppliers and all of Seller's interest in all
governmental permits or licenses held by Seller at Closing that relate
exclusively to the Purchased Assets and that can be transferred by
Seller to Buyer without violation of any law or governmental
regulation and without the incurrence of Seller of any material
penalty or expense, and all to be assigned to Buyer on the Closing
Date, (the "Assigned Contracts");
1.3 all product supplies and miscellaneous items used or usable in connection
with the Purchased Assets;
1.4 all relevant trade-marks, trade-names, copyrights, know-how, customer
lists, supplier lists used in connection with or relating to the Purchased
Assets;
1.5 all of Seller's non-financial records relating to the Purchased Assets
including, but not limited to, repair manuals, production records,
instruction, safety and maintenance manuals, records, documents,
correspondence, customer lists and supplier lists necessary to the use and
enjoyment of the Purchased Assets;
as more fully described in Schedule A.
2. THE TRANSFER OF PURCHASED ASSETS
2.1 Subject to the terms and conditions hereinafter set forth, Seller shall
sell, transfer, assign and convey to Buyer, and Buyer shall purchase,
receive, and accept the Purchased Assets on Closing.
2.2 Notwithstanding anything to the contrary contained elsewhere herein, the
Purchased Assets shall not include any cash or accounts receivable, any
prepaid expenses or rights to receive refunds, any other assets,
inventories or rights under any contract other than those set forth on
Schedule A.
2.3 Subject to the terms and conditions hereinafter set forth, on and after
Closing, Buyer will assume all of Seller's liabilities and obligations in
respect of the Assigned Contracts in accordance with the respective terms
thereof, (referred to hereinafter as the "Assumed Liabilities".)
2.4 For avoidance of doubt, Buyer shall be deemed to have assumed no liability
of Seller or any other person other than the Assumed Liabilities or
pursuant to the express terms of this Agreement or of any document or
instrument delivered hereunder and expressly assumes no liabilities or
obligations for any foreign, national, or municipal taxes, VAT, social
security charges, duties or otherwise levied on or incurred by the Seller
in the operation of the Business through the Closing or for income taxes or
otherwise in respect of any profit derived from the sale provided for under
this Agreement or any liability arising from any products sold by Seller to
any customer prior to the Closing Date. Such liabilities or obligations
other than Assumed Liabilities are called the retained liabilities (the
"Retained Liabilities").
All of the Purchased Assets will be transferred and conveyed to Buyer, free
and clear of all liens, floating mortgages and encumbrances except those
assumed by Buyer pursuant to the Assumed Liabilities.
3. PURCHASE PRICE
3.1 At Closing, subject to the terms and conditions of this Agreement, and in
full consideration for the aforesaid sale, conveyance and delivery of the
Purchased Assets and assumption of Assumed Liabilities, the Buyer shall pay
the Seller USD 875,000 (the "Consideration") payable in twelve (12) equal
installments at the end of each calendar quarter over a thirty-six month
period starting at the end of the quarter following the Closing.
3.2 Allocation of the Consideration to separate parts of the Purchased Assets
will be set forth on Schedule B.
4. CLOSING
4.1 The Closing of the transactions provided for in Sections 2 and 3 above
shall take place on the Closing Date at the offices of Xxxxx & Associates,
Los Angeles, or at such other time and place as shall be mutually agreed
upon by the parties hereto.
4.2 At Closing Seller shall procure:
(A) Deliveries of the following documents to Buyer, in form and
substance acceptable to Buyer, fully executed where appropriate:
(i) all instruments, assignments, and conveyances and other good and
sufficient instruments of conveyance necessary to vest in or
transfer to Buyer good and valid ownership, title and other rights
in and to all of the Purchased Assets;
(ii) full and unrestricted ownership of all of the Purchased Assets;
(iii) original copies of the Assigned Contracts, duly assigned to Buyer
by Seller;
(iv) all consents required for the assignment and transfer by Seller to
Buyer of the Assigned Contracts and to the other transactions
contemplated hereby; and
(v) proper releases and terminations of all liens, floating mortgages,
encumbrances, and security interests in the Purchased Assets, in
proper form for recording where appropriate;
(vi) the resolutions of the Board of Directors and stockholders of the
Seller taking appropriate action to authorize and approve the
execution, delivery and performance of this Agreement, the offer,
sale and delivery of the Purchased Assets and each other agreement
and document required to be executed and delivered pursuant hereto;
(vii) the Service Agreement stipulated in Section 7.4 below;
(viii) copies of such other documents and papers as Buyer or its counsel
may reasonably request in connection therewith, all in form and
substance reasonably satisfactory to Buyer and its counsel.
(B) that all indebtedness due from the Seller or any person connected
with the Seller to the Buyer is satisfied in full.
4.3 At Closing Buyer shall deliver appropriate instruments of assumption
necessary with respect to the Assumed Liabilities.
4.4 Upon completion of all matters referred to in Section 4.2 above and subject
to Section 9 below, Buyer shall begin to pay the Seller as set forth in
Section 3.1 above.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLER
Seller represents and warrants as of the date of this agreement and at
Closing, or as of such other date specifically stated below, the following
to Buyer.
5.1 Organization. Seller is a corporation validly existing in good standing
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under the laws of California and is duly qualified to do business in each
state in which its business activities require such qualification as of the
date first written above and will continue to be so up to and including the
Closing Date.
5.2 Authority. The execution, delivery and performance of this Agreement by
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Seller, including, without limitation, the sale, conveyance, transfer and
delivery contemplated hereby have been duly and effectively authorized by
Seller's Board of Directors, and approved by Seller's stockholders as
required by law or the Seller's Articles of Association.
5.3 No Conflicts, etc. The execution, delivery and performance by Seller of
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this Agreement will not, in any material respect: (i) result in a breach of
the terms of provisions of Seller's Articles of Association, as amended;
(ii) constitute a violation or breach of any statute, law, regulation,
decision, judgement, or other administrative, judicial or regulatory
prohibition or restriction against, affecting, or applicable to Seller or
any of the Purchased Assets; (iii) constitute (with due notice or lapse of
time or both) a violation, default, or breach of the terms or provisions of
any material contract, lease, option agreement, note, agreement, or other
obligation of Seller and its ability to perform its obligation under this
Agreement.
5.4 Material Liabilities, Changes.
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(a) As of September 28, 2000 and thereafter Seller has no material
liabilities relating to or affecting the Purchased Assets (other than
Assumed Liabilities) which would impair or restrict in any material
respect Buyer's use and enjoyment of the Purchased Assets upon
transfer.
(b) Since September 28, 2000, Seller has not incurred or suffered any
material liabilities existing or arising out of any transaction or
state of facts existing at or prior to the date hereof, which would in
any material respect prevent or interfere with Seller's full
performance of any of its obligations under this Agreement, including
the transfer of the Purchased Assets to Buyer.
(c) Since September 28, 2000, there has not been any material damage,
destruction or loss, whether or not covered by insurance, materially
and adversely affecting the Purchased Assets taken as a whole.
5.5 Ownership of and rights to the Purchased Assets. Seller has good and
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marketable ownership, rights and title to the Purchased Assets which Seller
owns and holds, free and clear of all liens, floating mortgages and
encumbrances, other than Assumed Liabilities.
5.6 Assigned Contracts. Each of the Assigned Contracts to which Seller is a
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party (i) is in force and effect and (ii) does not contain any restrictions
upon or require consent to the consummation of the transactions provided
for herein and (iii) Seller shall before the Closing Date have obtained all
consents and approvals to assign the Assigned Contracts to Buyer. Original
copies of each of such written Assigned Contracts and written confirmations
et cetera regarding Assigned Contracts shall on the Closing Date be given
to Buyer.
5.7 Conditions of Purchased Assets. The Purchased Assets are in good condition,
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repair and working order and the items of inventory are of a quality
useable or saleable in the normal course of the Seller's Business.
5.8 Compliance with Laws.
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(a) Seller holds all material licenses, certificates, permits, franchises,
and rights from all appropriate national, municipal, governmental, and
other public authorities relating to the Purchased Assets.
(b) Seller warrants and represents that it has complied in all material
respects with all applicable laws, including federal antitrust law and
the requirements of the Uniform Commercial Code relating to "bulk
sales", with respect to the Purchased Assets.
1.3 Completeness of Statements. The representations and warranties of Seller
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contained in this Agreement are accurate and complete in all material
respects.
1.4 Undisclosed Liabilities. Seller warrants and represents that there are no
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material undisclosed liabilities that would materially and adversely affect
Buyer's use of the Purchased Assets as presently used by Seller or any
material undisclosed obligations specifically binding on Seller that would
materially and adversely affect Buyer's use of the Purchased Assets as
presently used by Seller.
1.5 Licenses and Permits. Seller warrants and represents that the
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transfer of the Purchased Assets will not give rise at Closing or
thereafter to the right by any party, including any national, municipal or
governmental authority, to terminate any material licenses, permits,
leases, option agreements or other rights affecting the Purchased Assets.
1.6 Certified Lists. Seller has delivered to Buyer preliminary accurate
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lists to be up-dated at Closing including a summary description, certified
by authorized officers of Seller to be correct to the best of their
knowledge and belief of the following: (i) inventories, stock or equipment,
(ii) licenses held and (iii) contracts and commitments (to be completed).
6. REPRESENTATIONS AND WARRANTIES OF THE BUYER
Buyer represents and warrants to Seller as of the date of this agreement
and at Closing, or as of such other date specifically stated below as
follows:
6.1 Organization and Existence. Buyer is a corporation validly existing and in
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good standing, as of the date first written above, under the laws of Nevada
and will continue to be so up to and including the Closing Date.
6.2 Authorization; No Violations.
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(a) Upon approval of this Agreement by the board of directors, the Buyer
has full power and authority to consummate the transactions and to
perform all other undertakings contemplated hereunder including the
execution, delivery and performance of this Agreement. Upon approval
this Agreement is a valid and
binding obligation of Buyer enforceable against Buyer in accordance
with the terms herein.
(b) The execution, delivery, and performance of this Agreement by Buyer
does not: (i) violate the Articles of Association of Buyer; or (ii)
require the approval, consent, or authorization of any national,
municipal or other governmental authority or of any person, unless
otherwise explicitly stated in this Agreement.
6.3 Ongoing Investigations or Litigation. Buyer warrants and represents that
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there is no ongoing investigation or litigation that would affect the
ability of Buyer to close the transactions contemplated by this Agreement.
7. COVENANTS AND OTHER UNDERTAKINGS OF THE PARTIES
7.1 Further Assurances. Seller hereby agrees to execute and deliver such other
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instruments of conveyance and transfer and take such other action as Buyer
may reasonably require to more effectively convey, transfer to and vest in
Buyer, and to put Buyer in possession of, the Purchased Assets, and in the
case of contracts and rights which cannot be transferred effectively
without the consent of third parties which is unobtainable, to use Seller's
best efforts to assure to Buyer the benefits thereof, whether prior to, at,
or after the Closing.
7.2 Publicity; Confidentiality. Except as may be required by law and
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regulations or governmental and administrative decisions, neither Seller
nor Buyer shall (a) make any press release or any public statement
concerning this Agreement or the transactions contemplated hereby without
the prior consent of the other party, or (b) disclose either the terms or
existence of this Agreement to any person or entity, other than to their
respective attorneys, accountants and other representatives, and to those
parties, such as bankers and lessors, with whom they must communicate in
order to consummate the transactions contemplated by this Agreement.
7.3 Service Agreement. The Seller shall ensure that Xx. Xxx Xxxxxxx shall
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continue to be Custodian of Records related to U.S. government model
release laws for all products released by the Business prior to Closing and
shall assist in the performance of additional duties and responsibilities,
as more fully detailed in a definitive Service Agreement, in the form set
forth in Schedule C.
8. INDEMNIFICATION
8.1 Breach of Warranties.
Subject to Section 8.3, Seller shall indemnify and hold harmless Buyer
against and in respect of any damages, losses, costs or expenses that arise
in connection with any breach by the Seller of the representations,
warranties or covenants given herein, ("Losses").
8.2 Set-Off
Buyer shall be entitled to a set-off against the Consideration for any
Losses which are incurred by Buyer and for which Seller shall indemnify
Buyer pursuant to the terms of
this Agreement, a "Claimed Set-Off". Buyer shall give Seller written notice
of any Claimed Set-Off. Seller shall have 20 days from the date of Buyer's
written notice to object to the Claimed Set-Off. Seller shall make any
objection to a Claimed Set-Off in writing and shall forward the same to the
Buyer.
If Seller does not timely object, Buyer may, at its own discretion, deduct
the necessary amount from the Consideration in order to satisfy the Claimed
Set-Off.
If Seller does object in a timely manner, the Seller shall not deduct any
amount from the Consideration until the dispute has been solved and agreed
to in writing by both parties, or until the dispute has been definitely
resolved by arbitral proceedings.
If Seller does timely object and Seller and Buyer are unable to agree to
the amount of a Claimed Set-Off within thirty (30) days, either Seller or
Buyer may institute arbitral proceedings for a determination of the amount
of the Claimed Set-Off.
8.3 Limitation of Liability
(a) The liability of Seller shall be limited as follows:
(i) Seller shall have no liability in respect of any breach or
breaches of the warranties or covenants unless the amount of the
liability in respect of such breach or breaches exceeds in
aggregate the sum of USD 10,000 in which case (subject to the
other provisions of this Section 8) the whole amount of the
liability shall be payable;
(ii) the maximum aggregate liability of Seller in respect of all and
any claims in respect of the warranties and covenants shall not
exceed the Consideration;
(iii) liability in respect of the warranties and covenants shall
terminate on the second anniversary of the Closing, except in
respect of any claim of which notice in writing (specifying in
reasonable detail the event, matter or default which gives rise
to the claim and, if practicable, an estimate of the amount
claimed) is given to Seller before that date;
8.4 Notification
(a) In case Buyer becomes aware of any claim for which Seller may be
liable, Buyer shall, in order to maintain the right to bring a claim
against Seller:
(i) as soon as reasonably practicable, but in no event later than 20
days after the date Buyer becomes aware of any circumstance
giving rise to a claim, give written notice thereof to Seller;
(ii) not make any admission of liability, agreement or compromise
with any person, body or authority in relation thereto, without
obtaining the prior written consent of Seller;
(iii) take such action, as Seller may reasonably request, to avoid
dispute, appeal, compromise or defend such claim, with the
proviso, however, that Buyer shall
not accept or pay or compromise or make any submission in
respect of such claim, without Seller's prior written consent
thereto; and
(iv) give Seller, or Seller's duly authorized representatives,
reasonable access to relevant documents and records to enable
Seller, or Seller's duly authorized representatives, to examine
such accounts, documents and records and to take photocopies
thereof.
9. CONDITIONS PRECEDENT AND RIGHT OF TERMINATION
9.1 Conditions precedent
9.1.1 Conditions precedent to the Obligations of Buyer. The obligations of
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Buyer to purchase the Purchased Assets are subject to and conditioned upon
the satisfaction, on or prior to the Closing Date, of each of the
following conditions (any one or more of which may be waived in whole or
in part by Buyer in its sole discretion):
(a) Seller shall have performed or complied with all agreements,
covenants, and conditions required by this Agreement to be performed
or complied with by it at or prior to the Closing in all material
respects;
(b) The representations and warranties set forth in this Agreement made
by Seller shall be true and correct in all material respects on and
as of the Closing Date, with the same force and effect as though
such representations and warranties had been made on, as of and with
reference to the Closing Date;
(c) The execution, delivery and performance of this Agreement by Seller
has been duly authorized and approved by all requisite action of
Seller's Board of Directors and Stockholders, and that this
Agreement, duly executed and delivered by Seller, constitutes the
valid and binding obligation of Seller;
(d) Seller shall have obtained all necessary consents and approvals and
complied with all applicable statutes, laws, rules, and regulations
including applicable "bulk sales" laws under the UCC;
(e) Buyer's Shareholders shall have approved, if necessary, this
Agreement and the transactions contemplated hereunder;
(f) Buyer shall have been furnished with evidence satisfactory to Buyer
that Seller had good and marketable title to the Purchased Assets,
free and clear of all liens and encumbrances and that the
instruments of conveyance and transfer executed and delivered by
Seller at Closing are valid in accordance with their terms and
effectively vest in Buyer good and marketable title to all Purchased
Assets;
(g) All indebtedness due from the Seller or any person connected with
the Seller to the Buyer shall have been satisfied in full, except as
allowed for in Schedule D.
(h) Xx. Xxx Xxxxxxx and Buyer shall have entered into a Service
Agreement, as stipulated in Section 7.4 above.
9.1.2 Conditions Precedent to the Obligations of Seller. The obligations of
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Seller to sell the Purchased Assets are subject to and conditioned upon
the satisfaction, on or prior to the Closing Date, of each of the
following conditions (any one of which may be waived in whole or in part
by Seller in its sole discretion):
(a) Buyer shall have performed or complied with all agreements,
covenants, and conditions required by this Agreement to be performed
or complied with by it at or prior to the Closing;
(b) The representations and warranties set forth in this Agreement made
by Buyer shall be true and correct in all material respects on and
as of the Closing Date, with the same force and effect as though
such representations and warranties had been made on, as of, and
with reference to the Closing Date.
9.1.3 Conditions Precedent to the Obligations of Buyer and of Seller. The
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obligations of Buyer to purchase and of Seller to sell the Purchased
Assets are subject to and conditioned upon the satisfaction, on or prior
to the Closing Date, of each of the following conditions (any one of
which may be waived in whole or in part by Buyer or Seller in its sole
discretion):
(a) Laws. No statute, law, rule, or regulation or judgement or decision
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of any court, administrative national, municipal or governmental
authority shall be in effect that restrains or prohibits the
transactions contemplated hereby;
9.2 Right of termination
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9.2.1 This Agreement may be terminated:
(a) By mutual written consent of Seller and Buyer at any time prior to
Closing; or
(b) If Buyer prior to Closing considers that there is a material adverse
effect upon the Purchased Assets which would render the purchase of
the Purchased Assets undesirable, and, prior to the Closing Date,
provides Seller with a written statement explaining such material
adverse effect, unless Seller, having the burden of proof, proves
and evidences that there is no material adverse effect upon the
Purchased Assets as considered by Buyer.
9.2.2 Effect of Termination. In the event of termination of this Agreement by
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either Seller or Buyer or both of them as provided in Section 9.2.1, this
Agreement shall immediately terminate and be of no further force and
effect, and there shall be no liability on the part of either Seller or
Buyer.
10. MISCELLANEOUS
10.1 Entire Agreement; Modification Waiver. This Agreement, including the
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Exhibits hereto delivered in connection herewith, all written statements
(including, without limitation, financial statements and information),
and all certificates, agreements, documents and instruments which are
identified herein as having been furnished or delivered hereunder,
constitutes the entire agreement between the parties, and supersedes all
prior and contemporaneous agreements, representations, and
understandings of the parties, relating to this Agreement. No supplement,
modification, or amendment of this Agreement shall be binding on any
party hereto unless executed in writing by all parties hereto. No waiver
of any of the provisions of this Agreement will be deemed, nor will
constitute, a waiver of any other provision, whether or not similar, nor
will any waiver constitute a continuing waiver. No waiver will be binding
unless executed in writing by the party making the waiver.
10.2 Successors and Assigns; Assignment. This Agreement shall be binding on,
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on, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Agreement shall not be assigned by the
parties hereto, except that each party agrees that the other party may
assign and delegate its rights and obligations hereunder to a subsidiary
or other affiliate of such assigning party without the prior consent of
the other party and provided that such assigning party shall not be
released from any and all obligations and liabilities of any nature
hereto.
10.3 Notices. All notices, requests, demands, and other communications
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required or permitted to be given or made under this Agreement shall be
in writing and will be deemed to have been given (a) on the date of
personal delivery (against a written, executed receipt therefor), (b) on
the seventh day after a registered letter has been delivered to and
mailed by the Cypriot Postal Service, postage prepaid, or (c) on the date
of delivery by a nationally recognized overnight courier service, in each
case addressed as follows or to such other person or entity as each party
hereto shall designate by notice to all other parties, in accordance
herewith:
To Seller: Anton Enterprises, Inc.
d.b.a. Private USA.
0000 Xxxxxx Xxxx. Xxxxx X
Xxx Xxxxxxx, XX. 00000
XXX
Attn: Xxx Xxxxxxx
With a copy to: ............................
............................
............................
USA
Attn: .....................
To Buyer: Private Media Group, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx
XXX
Attn: Johan Gillborg
With a copy to: Law Offices Xxxxx & Associates
0000 Xxxxxxx Xxxx Xxxx, 0/xx/ Xxxxx
Xxx Xxxxxxx, XX 00000
XXX
Attn: Xxx Xxxxx
10.4 Execution in Counterparts. This Agreement may be executed in duplicate,
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each of which shall be deemed an original, but all of which together
shall constitute one and the same document.
10.5 Payment of Fees and Expenses. The parties hereto agree that each shall
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pay all of its own expenses incurred in connection with the negotiation
and preparation of this Agreement, consummation of the transactions
contemplated hereby.
10.6 Severability of Provisions. If any provision of this Agreement or the
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application thereof to any person or circumstance shall to any extent be
held in any proceeding to be invalid or unenforceable, the remainder of
this Agreement, or the application of such provision to persons or
circumstances other than those to which it was held to be invalid or
unenforceable, shall not be affected thereby, and shall be valid and be
enforceable to the fullest extent permitted by law, but only if and to
the extent such enforcement would not materially and adversely frustrate
the parties' essential objectives as expressed herein.
10.7 Risk of Loss. Until Closing, Seller shall be responsible for any loss or
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damage to the Purchased Assets.
10.8 Taxes. Unless otherwise agreed in this Agreement, Seller shall be liable
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and responsible for any and all tax liabilities in respect of the sale
and transfer of the Purchased Assets, if any.
11. GOVERNING LAW AND DISPUTES
11.1 This Agreement shall be governed by and shall be construed and enforced
in accordance with the laws of the State of Nevada without giving effect
to the choice of law principles thereof.
11.2 The parties will use their best efforts to amicably resolve any disputes
between them arising out of, or in connection with, this Agreement,
including disputes about its validity in whole or in part, by good faith
negotiations. In the event that the parties are unable to reach any
future agreement specifically provided for herein within ninety (90) days
of commencement of a written request for such agreement by either party,
the matter shall be finally settled by arbitration.
11.3 Any dispute, controversy or claim arising out of or in connection with
this Agreement, or the breach, termination or invalidity thereof, shall
be settled by arbitration in accordance with the commercial arbitration
rules of The American Arbitration Association.
11.4 The place of Arbitration shall be in the city of Las Vegas in the state
of Nevada.
___________________________
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
For and on behalf of: For and on behalf of:
Private Media Group, Inc. Anton Enterprises, Inc.
d.b.a. Private USA
/s/ /s/
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