EXHIBIT 2.6
ASSIGNMENT, ASSUMPTION AND PLEDGE AGREEMENT
This Assignment, Assumption and Pledge Agreement (this "AGREEMENT") is
made and entered into as of March 21, 2005, by and between Genius Products,
Inc., a Delaware corporation ("PLEDGEE"), and American Vantage Companies, a
Nevada corporation ("PLEDGOR").
WHEREAS, Pledgee and Pledgor are parties to that certain Agreement and
Plan of Merger dated as of March 21, 2005 (the "MERGER AGREEMENT"), pursuant to
which Pledgee will acquire the Company (as defined in the Merger Agreement);
WHEREAS, as a further inducement to Pledgor to enter into and
consummate the transactions contemplated by the Merger Agreement, Pledgee
desires to assign and transfer certain assets to Pledgor, following the
consummation of the transactions contemplated by the Merger Agreement;
WHEREAS, as a further inducement to Pledgee to enter into and
consummate the transactions contemplated by the Merger Agreement, Pledgee
desires to assign, and Pledgor desires to assume, certain obligations of the
Company, on a going-forward basis, following the consummation of the
transactions contemplated by the Merger Agreement;
WHEREAS, American Vantage Media, Inc. is party to a separate employment
agreement dated as of February 6, 2004 with each of Xxxxx X. Xxxxxx ("XXXXXX")
and Xxxxxxx Xxxxx ("LIMAN") (each an "Employment Agreement" and collectively,
the "EMPLOYMENT AGREEMENTS"); and
WHEREAS, the execution and delivery of this Agreement by the parties
hereto is a condition to the closing of the transactions contemplated by the
Merger Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt, adequacy and legal sufficiency of which are hereby acknowledged, the
parties do hereby agree as follows:
1. CAPITALIZED TERMS. Capitalized terms used but not defined herein
shall have the meanings for such terms that are set forth in the Merger
Agreement.
2. CERTAIN DEFINITIONS.
(a) "ASSIGNMENT OF OBLIGATIONS" has the meaning set forth in
SECTION 3 hereof.
(b) "CERTIFICATES" means the certificate or certificates
evidencing ownership of the Collateral.
(c) "COLLATERAL" means 75,000 shares of Purchaser Common Stock
registered in the name of Pledgor and/or its Affiliates, which comprises a
portion of the Merger Consideration, to the extent not released and distributed
by Pledgee to Pledgor in accordance with Section 10(b) hereof.
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(d) "DEFAULT" has the meaning set forth in SECTION 8 hereof.
(e) "OBLIGATIONS" has the meaning set forth in SECTION 3
hereof.
3. ASSIGNMENT AND ASSUMPTION. Effective as of immediately following the
Effective Time, (i) Pledgee hereby assigns, sells, transfers and sets over to
Pledgor all right, title and interest in and to those assets set forth on
SCHEDULE 1 annexed hereto except for those Fees (as such term is defined in the
Employment Agreements) relating to such assets due to Xxxxxx and Liman pursuant
to Section 10 of the Employment Agreements (collectively, "PARTICIPATIONS"),
free and clear of any and all liens or encumbrances in respect thereof; and (ii)
Pledgee hereby assigns, sells, transfers and sets over (collectively, the
"ASSIGNMENT OF OBLIGATIONS") to Pledgor, Pledgee's obligations and liabilities
set forth on SCHEDULE 2 annexed hereto, which the parties expressly agree shall
not include any obligations or liabilities relating to or arising out of the
Participations (collectively, the "OBLIGATIONS"), PROVIDED THAT, in no event
shall Pledgor be liable for any Obligation in respect of (i) Xxxxxx unless and
until Xxxxxx terminates his Employment Agreement for Good Reason (as such term
is defined in his Employment Agreement) pursuant to Section 7 thereof and (ii)
Liman unless and until Liman terminates his Employment Agreement for Good Reason
(as such term is defined in his Employment Agreement) pursuant to Section 7
thereof. Subject to the above proviso, Pledgor hereby accepts the Assignment of
Obligations and assumes and agrees to pay and discharge all of the Obligations
when due from and after the Closing. In the event that Pledgor fails to pay any
Obligation when it becomes due, and Pledgee shall pay such amount on behalf of
Pledgor, then Pledgor shall pay the amount of such Obligation to Pledgee with
such amount carrying interest at a rate of 10.0% per annum from the due date for
such Obligation until satisfied in accordance with Section 10 of this Agreement.
4. PLEDGE AND SECURITY INTEREST. To secure Pledgor's obligations to
Pledgee to assume and fully discharge when due all of the Obligations, Pledgor
hereby pledges the Collateral to Pledgee and grants to Pledgee a continuing
security interest in the Collateral.
5. DEPOSIT OF COLLATERAL. Pledgor shall (i) deliver the Certificate(s)
to Pledgee and (ii) deliver stock power(s) in the form of EXHIBIT A attached
hereto, duly executed in blank, for the Collateral to Pledgee.
6. WARRANTIES AND COVENANTS OF PLEDGOR.
Pledgor represents, warrants, covenants and agrees as follows:
(a) NOVATIONS. Pledgor shall use its best efforts to seek
novations of all of the Obligations such that Pledgor is the obligor of record
with respect to all of the Obligations. Notwithstanding anything herein or in
the Merger Agreement to the contrary and for the avoidance of doubt, upon and
following the Assignment of Obligations, Pledgor shall be the primary obligor
with respect to all of the Obligations.
(b) OWNERSHIP OF COLLATERAL. Pledgor has good, valid
marketable title to the Collateral, free from any liens, charges, pledges,
security interests, encumbrances, rights to purchase or other claim or interest
of any kind, other than those granted herein.
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(c) LIENS. Pledgor will neither create nor permit the creation
of any lien charge, pledge, security interest, encumbrance or other claim or
interest in the Collateral without the prior written consent of Pledgee.
(d) FIRST-PRIORITY SECURITY INTEREST. Pledgee will at all
times have a valid, perfected first-priority security interest in the
Collateral.
(e) TRANSFERS. Pledgor will neither make nor permit any
transfer of the Collateral without the prior written consent of Pledgee.
(f) REIMBURSEMENT OF EXPENSES. Pledgor will reimburse Pledgee
for any expenses reasonably incurred by Pledgee in protecting or realizing on
the Collateral.
(g) PAYMENT OF TAXES AND INDEBTEDNESS. Pledgor shall promptly
pay all liens, taxes, assessments, or contributions required by law which may
come due and which are lawfully levied or assessed with respect to Pledgor, or
any of the Collateral.
7. EXERCISE OF SHAREHOLDER RIGHTS.
(a) RECEIPT OF DIVIDENDS AND DISTRIBUTIONS. Prior to the
occurrence of a Default, Pledgor shall have the right to receive and retain any
ordinary dividends or other distributions paid on the Collateral.
(b) RIGHT TO VOTE. Prior to the occurrence of a Default,
Pledgor may vote the Collateral for all purposes allowed within the restrictions
set by this Agreement and otherwise imposed by the Merger Agreement and the
agreements related thereto, including, without limitation, the Resale and Voting
Agreement.
8. DEFAULT.
Pledgor shall be in default hereunder (each such occurrence, a
"DEFAULT"), and Pledgee shall have the rights and remedies of a secured party
under Article 9 of the Uniform Commercial Code of Nevada, in addition to any
other remedies available to it hereunder or under any other agreement, if
Pledgor fails to pay or perform any of the Obligations when the same become due
and payable or performable.
9. REMEDIES UPON DEFAULT.
(a) PLEDGEE MAY REGISTER SHARES. Upon the occurrence of a
Default, Pledgee may cause the Collateral to be transferred to Pledgee's name
and may exercise any right normally incident to the ownership of the Collateral,
including the right to vote and to receive all dividends or other payments.
(b) COLLATERAL. Upon the occurrence of a Default, Pledgee may
sell all or any part of the Collateral at public or private sale, or retain the
Collateral in full or partial satisfaction of the Obligations. Pledgee may
purchase all or any part of the Collateral at the sale. Proceeds of any sale
shall be applied first to pay all costs and expenses related to the Default and
sale of the Collateral, including all attorneys' fees, and second, to pay all
amounts owed on the Obligations, with any excess to be returned to Pledgor.
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(c) REMEDIES CUMULATIVE. Upon the occurrence of a Default,
Pledgee shall have all rights and remedies available at law or in equity,
including all rights available under the Uniform Commercial Code, and all rights
and remedies granted under this Agreement, the Merger Agreement and any other
related documents or agreements. These rights and remedies shall be cumulative,
and may be exercised singly or concurrently with all other rights and remedies
Pledgee may have.
(d) ACKNOWLEDGMENTS AND AGREEMENTS OF PLEDGOR. Pledgor hereby
acknowledges and agrees (i) that Pledgor waives all rights of redemption, stay,
valuation and appraisal under any applicable laws, (ii) that ten (10) days'
prior written notice of Pledgee's intention to make any sale of the Collateral
is commercially reasonable notice, (iii) that the requirements of federal and
state securities laws may limit Pledgee's sale of all or part of the Collateral
as well as the extent or manner in which any subsequent transferee could dispose
of the same, (iv) in light of such restrictions, Pledgee may effect a private
sale to one or more purchasers who will agree, among other things, to acquire
the Collateral for their own account, for investment, and not with a view to the
distribution or resale thereof, (v) that Pledgee may proceed to make such a sale
whether or not a registration statement for the purpose of registering the
Collateral shall have been filed and may approach and negotiate with a single
potential purchaser to effectuate such sale, (vi) any such sale might result in
prices or other terms less favorable than if such sale were a public sale
without such restrictions, and Pledgee shall incur no liability for selling any
Collateral under such circumstances, and (vii) the foregoing shall apply not
withstanding the existence of a public or private market upon which the
quotations or sales prices may exceed substantially the price at which Pledgee
sells.
(e) REGISTRATION. Pledgor hereby assigns to Pledgee, upon the
occurrence of a Default, all registration rights Pledgor now has or may
hereafter acquire with respect to the Collateral.
10. TERMINATION OF PLEDGE AND SECURITY INTEREST.
(a) SECTIONS 4, 5, 7, 8 and 9 of this Agreement shall remain
in full force and effect until the Obligations have been fully and finally
discharged.
(b) Pledgee agrees that as Pledgor provides satisfactory
evidence (in the reasonable discretion of Pledgee) that Pledgor has fully paid,
discharged and satisfied each $25,000 increment of the Obligations, Pledgee will
distribute to Pledgor from the Collateral, within five (5) business days of
Pledgee's receipt of such satisfactory evidence, a stock certificate evidencing
Collateral having an aggregate Face Value equal to $25,000, together with the
stock power with respect to such delivered stock certificate. For purposes of
this Agreement, "FACE VALUE" means $1.56 per share, as the same may be adjusted
in respect of stock splits, dividends, mergers, reorganizations or similar
transactions.
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11. MISCELLANEOUS.
(a) WAIVER. No right or obligation under this Agreement will
be deemed to have been waived unless evidenced by a writing signed by the party
against which the waiver is asserted or by its duly authorized representative.
Any waiver will be effective only with respect to the specific instance
involved, and will not impair or limit the right of the waiving party to insist
upon strict performance of the right or obligation in any other instance, in any
other respect, or at any other time.
(b) NOTICE. Any notice or other communication required or
permitted under this Agreement shall be delivered in accordance with the notice
provision set forth in the Merger Agreement.
(c) MODIFICATIONS TO BE IN WRITING. To be effective, any
modification to this Agreement must be in writing signed by all parties to the
Agreement.
(d) AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS. This
Agreement shall bind both parties and their respective successors and assigns.
All rights, privileges and powers granted to each party under this Agreement
shall benefit such party and its successors and assigns.
(e) ASSIGNMENT OF AGREEMENT. At any time, Pledgee may assign
or transfer any of its rights or powers under this Agreement to any person or
entity. Pledgor may not transfer its rights, duties or obligations under this
Agreement without the prior written consent of Pledgee.
(f) FURTHER ASSURANCES. Both Pledgor and Pledgee agree to take
any further actions and to make, execute and deliver any further written
instruments which may be reasonably required to carry out the terms, provisions,
intentions and purposes of this Agreement.
(g) GOVERNING LAW. This Agreement shall be governed by and
construed and interpreted in accordance with the law of the State of California,
without regard to that state's conflict of laws principles. All disputes between
the parties hereto, whether sounding in contract, tort, equity or otherwise,
shall be resolved only by state and federal courts located in Los Angeles,
California, and the courts to which an appeal therefrom may be taken. All
parties hereto waive any objections to the location of the above referenced
courts, including but not limited to any objection based on lack of
jurisdiction, improper venue or forum non-conveniens. Notwithstanding the
foregoing, any party obtaining any order or judgment in any of the above
referenced courts may bring an action in a court in another jurisdiction in
order to enforce such order or judgment.
(h) RECOVERY OF FEES BY PREVAILING PARTY. If any legal action,
including, without limitation, an action for arbitration or injunctive relief,
is brought relating to this Agreement or the breach hereof, the prevailing party
in any final judgment or arbitration award shall be entitled to the full amount
of all reasonable expenses, including all court costs, arbitration fees and
actual attorneys' fees paid or incurred in good faith.
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(i) SEVERABILITY. If any provision of this Agreement or any
application of any provision is determined to be unenforceable, the remainder of
this Agreement shall be unaffected. If the provision is found to be
unenforceable when applied to particular persons or circumstances, the
application of the provision to other persons or circumstances shall be
unaffected.
(j) HEADINGS. Headings used in this Agreement have been
included for convenience and ease of reference only and will not in any manner
influence the construction or interpretation of any provision of this Agreement.
(k) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which will be deemed to be an original and all of which
together will constitute a single agreement.
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EXHIBIT A
IN WITNESS WHEREOF, the parties have executed this Assignment,
Assumption and Pledge Agreement as of the date first above written.
PLEDGEE:
GENIUS PRODUCTS, INC.
By: /S/ XXXXXX XXXXXXXXXX
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Name: XXXXXX XXXXXXXXXX
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Title: CHIEF EXECUTIVE OFFICER
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PLEDGOR:
AMERICAN VANTAGE COMPANIES
By: /S/ XXXXXX X. XXXXXXXXX
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Name: XXXXXX X. XXXXXXXXX
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Title: CHIEF EXECUTIVE OFFICER
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