ASSET PURCHASE AGREEMENT Between VEMICS, INC. and E LEARNING DESKTOP VENTURES, INC.
Exhibit
10.2
Between
and
E
LEARNING DESKTOP VENTURES, INC.
This
ASSET PURCHASE AGREEMENT ("Agreement") is entered into as of January 25,
2007
("Effective Date"), by and between Vemics, Inc., a Nevada Corporation whose
address is 000 Xxxxxx Xxxxxxx Xxxxx, Xxxxxx, Xxx Xxxx 00000 ("Vemics''),
and E
Learning Desktop Ventures Inc., a Canadian Corporation whose address is 0000
Xxxxxx Xx # 000, Xxxxxxxxxxx XX Xxxxxx ("EL Desktop").
1.
Sale
of business assets.
(a) |
Sale.
On the terms and subject to the conditions set forth herein, EL
|
Desktop
shall sell, convey, transfer, assign, and deliver to Vemics, and Vemics shall
purchase, acquire and accept, as provided for and subject to the limitations
set
forth herein, all of EL Desktop's assets, contracts, agreements, properties,
business, intellectual property, copyrights, patents, trademarks, leases
and
goodwill of every kind and description, wherever located, including but not
limited to those set forth on or as provided for in Exhibit A (Asset List)
and
Exhibits A-I through A-5 (Contracts), all as they exist upon the consummation
of
closing (collectively, the "Assets"). Vemics shall have the option (exercisable
in its sole and absolute discretion) to accept or reject the sale, conveyance,
transfer assignment and/or delivery of any EL Desktop assets, contracts,
agreements, properties, business, intellectual property, copyrights, patents,
trademarks, leases and goodwill, including but not limited to any of the
leases
listed in Exhibit B herein; any such items so rejected by Vemics shall be
retained by EL Desktop and shall not be included within the Assets. With
respect
to all EL Desktop assets, contracts, agreements, properties, business,
intellectual property, copyrights, patents, trademarks, leases and goodwill,
including but not limited to any of the leases listed in Exhibit B herein
that
EL Desktop obtains after the Effective Date, within 10 days of entering into
or
otherwise obtaining such assets, contracts, agreements, properties, business,
intellectual property, copyrights, patents, trademarks, leases and goodwill,
including but not limited to any of the leases listed in Exhibit B, EL Desktop
shall provide written notice thereof to Vemics, which notice shall be
accompanied by a complete and correct copy of the assets, contracts, agreements,
properties, business, intellectual property, copyrights, patents, trademarks,
leases and goodwill, including but not limited to any of the leases listed
in
Exhibit B; Vemics shall have 30 days after receipt of all of the foregoing
from
EL Desktop to accept or reject the assignment of such assets, contracts,
agreements, properties, business, intellectual property, copyrights, patents,
trademarks, leases and goodwill, including but not limited to any of the
leases
listed in Exhibit B.
Desktop
must reveal to and notify Vemics, in writing, of all revenue-generating
contracts, agreements, memoranda of agreements and other business arrangements
that EL Desktop has entered into and/or will enter into in the future ("New
Contracts"). Such notice shall be provided by EL Desktop to Vemics within
15
days of the first to occur of (i) the parties' execution and delivery of,
or
(ii) EL Desktop's direct or indirect receipt of any income, payments or other
compensation from, any such New Contracts. Upon written demand of Vemics,
EL
Desktop will assign to Vemics, at no additional cost or expense, any or all
such
New Contracts. These New Contracts shall include but not be limited to the
contracts attached hereto as Exhibits A-1 through A-5 (the "Contracts").
EL
Desktop shall be under a continuing on-going obligation now and in the future
to
reveal and notify Vemics of any such New Contracts, and its failure to do
so
shall be a material breach of this Agreement. EL Desktop represents and warrants
to Vemics that (1) all contracts being assigned to Vemics under this Agreement
(including the Contracts) are in full force and effect and are valid and
enforceable in accordance with their terms, (2) no party to any such contract
is
in breach in any manner whatsoever of its liabilities, duties and/or obligations
under such contract and (3) such contracts are fully assignable to Vemics
as
written without the need of any consents or approvals.
(c)
No
Assumption of liabilities.
Vemics
shall not now and/or in the future
assume,
pay, perform, or discharge any debts, obligations, contracts, agreements,
leases
and liabilities of EL Desktop of any kind, character, or description, whether
accrued, absolute, contingent, or otherwise (regardless of whether reflected
or
reserved against on EL Desktop's balance sheets, books of account, and records);
provided, however, that, subject to the terms and conditions of this Agreement,
Vemics shall assume and agree to discharge and perform, when due, any those
debts, obligations and liabilities arising entirely after the Closing Date
under
those contracts, agreements and leases included in the Assets (excluding
any
debts, obligations and/or liabilities accruing, arising out of or relating
to
any breach or default by EL Desktop on or prior to the Closing Date under
any
such contracts, agreements and leases included in the Assets). EL Desktop
agrees
to fully pay or otherwise satisfy when due, and to indemnify, hold harmless
and
defend Vemics from and against, all claims, debts, liabilities, obligations,
duties, defense costs (including reasonable attorneys' fees), judgments and
other expenses arising out of those debts, obligations, contracts, agreements,
leases and/or liabilities of EL Desktop not specifically assumed by Vemics
under
this Agreement.
(d)
Assurance.
EL
Desktop warrants and represents that Vemics shall not be
subjected
to any liability to any third party as the result of this Agreement, except
as
otherwise provided in Section 1(c) with respect to debts, obligations and
liabilities arising entirely after closing under those contracts, agreements
and
leases included in the Assets.
(e)
Conveyances.
The
sale, conveyance, transfer, assignment, and delivery of
the
Assets shall be effected by deeds, bills of sale, endorsements, assignments,
drafts, checks, and other instruments of transfer and conveyance, in form
and
substance acceptable to Vemics (collectively, the "Closing Documents'', which
shall be executed and delivered by EL Desktop at closing.
(f)
Additional
documents.
EL
Desktop shall, at any one or more times after the
Closing
Date, upon Vemics' request, execute, acknowledge, and deliver all further
deeds,
assignments, transfers, conveyances, powers of attorney, and assurances,
and do
all other acts and things, that are required or appropriate to assign, transfer,
grant, convey, assure, and confirm to Vemics, or to its successors and assigns,
or to aid and assist in collecting and reducing to possession, any of or
all the
Assets to Vemics, and/or any of or all the obligations of EL Desktop to be
assigned to, and assumed, paid, performed, and/or discharged by Vemics pursuant
to this Agreement.
2.
Composition
of purchase price.
On the
terms and subject to the conditions herein set forth, Vemics shall issue
and
deliver to EL Desktop on the Closing Date:
(a)
Common
stock.
At
closing, Vemics will issue to EL Desktop an aggregate
of
one
million one hundred eleven thousand one hundred twelve (1,111,112) restricted
shares (the "Shares") of Vemics common stock, with a par value of $.00I per
share (the "Common Stock"), all of which Shares shall be registered in the
name
of EL Desktop. With respect to said Shares, (i) at closing stock certificates
representing one million (1,000,000) restricted shares of Common Stock will
be
delivered by Vemics to EL Desktop, and (ii) at closing stock certificates
representing the remaining one hundred eleven thousand one hundred twelve
(111,112) restricted shares of Common Stock (the "Escrowed Shares") will
be
presented by Vemics to EL Desktop along with a blank stock power relating
to
said Escrowed Shares, and thereupon EL Desktop will sign the stock power
in
blank (with a signature guaranty) and deliver said signed stock power and
said
stock certificates representing the Escrowed Shares to Vemics to be held
in
escrow pursuant to this Agreement. Vemics will hold said stock power and
Escrowed Shares in escrow to offset any losses, debts, obligations or
liabilities which may be borne or incurred by Vemics due to, arising out
of or
otherwise relating to any breach or violation of this Agreement (including
without limitation Section 1(c) of this Agreement) by EL Desktop (collectively,
"Losses"). If by July 16, 2007, Vemics has not borne or incurred any Losses,
and
EL Desktop is not in breach or violation of any term and condition of this
Agreement (including without limitation Section 1(c) of this Agreement),
then,
subject to the terms and conditions of this Agreement, the Escrowed Stock
will
be released by Vemics to EL Desktop. If on or prior to July 16, 2007, Vemics
has
borne or incurred any Losses, or EL Desktop is in breach or violation of
any
term and condition of this Agreement (including without limitation Section
1(c)
of this Agreement), then on July 16, 2007, Vemics shall so notify EL Desktop,
and may offset its Losses and any other damages incurred or to be incurred
by
Vemics as a result thereof on a dollar-for-dollar basis against the Escrowed
Shares, in which event each such Escrowed Share shall be valued at the average
of the closing prices of Vemics Common Stock over the 30 trading days
immediately preceding July 16, 2007, as reported in the pink sheets or, if
Vemics Common Stock is traded on an exchange, as reported by such exchange
(if
Vemics Common Stock is not traded in the pink sheets or on an exchange an
any
date during said 30 trading days, each Escrowed Shares shall be valued at
US$.90); provided, however, in the event any such Losses and/or other damages
have not been liquidated on or prior to July 16, 2007 (including without
limitation any Losses or damages which may be reasonably anticipated by Vemics
to be incurred after July 16, 2007), then, for purposes of any such offset,
on
July 16, 2007, Vemics may make a reasonable estimate of the amount of such
unliquidated Losses and/or other damages which Vemics may incur. In the event
of
any such offset by Vemics, the Escrowed Shares as to which the offset is
applied
(rounded up to the next whole share) shall be deemed repurchased by Vemics
from
- EL Desktop and to thereupon become authorized but unissued shares, and
any
Escrowed Shares as to which the offset is not applied shall, subject to the
terns and conditions of this Agreement, be released and delivered to EL
Desktop.
(b)
Common
stock bonus - Warrant and Additional Warrant.
(1) Warrant.
Subject
to the provisions of this Section, on February 28,
2008,
Vemics will issue to EL Desktop a warrant for restricted shares of Vemics
Common
Stock, not to exceed 750,000 restricted shares of Vemics' Common Stock, with
a
strike price of US$.90 per share of Common Stock and a term of 5 (five) years,
which warrant shall be in the form attached hereto as Exhibit C (the "Warrant").
The number of restricted shares of Vemics Common Stock to be subject to the
Warrant will be based on the amount of net revenue received by Vemics which
is
generated by E. Xxxxx Xxxxxxxxxx ("Xxxxxxxxxx") as an employee of Vemics
between
the Closing Date and February 28, 2008, according to the matrix below; provided,
however, that no Warrant shall be issued if the amount of net revenue received
by Vemics which is generated by the International Education Solutions Division
directed by E Xxxxx Xxxxxxxxxx between the Closing Date and February 28,
2008,
is not at least US$975,000:
Target
Net Revenue: US$1,500,000
Date
to
Reach Target Net Revenue: February
28, 2008
%
of Target Net
Revenue
Reached
|
Percentage
of
Warrant
which will be
exercisable
|
Number
of shares which will be
exercisable
under the Warrant
|
Less
than 65%
|
-0-%
(no Warrant to be issued)
|
-0-
shares (no warrant to be issued)
|
65%
|
45%
|
337,500
shares
|
75%
|
60%
|
450,000
shares
|
85%
|
75%
|
562,500
shares
|
95% .
|
90%
|
675,000
shares
|
100%
or more
|
100%
|
750,000
shares
|
(2) Additional
Warrant.
(i) |
Subject
to the provisions of this Section, on February 28, 2008, Vemics will
|
issue
to
EL Desktop an additional warrant for 750,000 restricted shares of Vemics
Common
Stock, with a strike price equal to 90% of the average of the closing prices
of
Vemics Common Stock over the 30 trading days immediately preceding February
28,
2008 (as reported in the pink sheets or, if Vemics Common Stock is traded
on an
exchange, as reported by such exchange) (if Vemics Common Stock is not traded
in
the pink sheets or on an exchange an any date during said 30 trading days,
a
share of Vemics Common Stock shall be valued at US$.90 so that the strike
price
would be US$.81), if the amount of net revenue received by Verities which
is
generated by Xxxxxxxxxx as an employee of Vemics between the Closing Date
and
February 28, 2008, is US$2,250,000 or more. If Vemics does, or is obligated
to,
issue such an additional warrant to EL Desktop pursuant to this Section
2(b)(2)(i), then no additional warrant shall be issued or issuable pursuant
to
Section 2(b)(2)(ii).
(ii) |
Subject
to the provisions of this subsection, if Vemics does not and is not
|
obligated
to issue an additional warrant to EL Desktop pursuant to Section 2(b)(2)(i),
then on February 28, 2009, Vemics will issue to EL Desktop an additional
warrant
for 750,000 restricted shares of Vemics Common Stock, with a strike price
equal
to 90% of the average of the closing prices of Vemics Common Stock over the
thirty trading days immediately preceding February 28, 2009 (as reported
in the
pink sheets or, if Vemics Common Stock is traded on an exchange, as reported
by
such exchange) (if Vemics Common Stock is not traded in the pink sheets or
on an
exchange an any date during said 30 trading days, a share of Vemics Common
Stock
shall be valued at US$.90 so that the strike price would be US$.81), if the
amount of Vemics' net revenue which is generated by Xxxxxxxxxx as an employee
of
Vemics between March 1, 2008 and February 28, 2009, is US$3,000,000 or
more.
(iii) |
Any
additional warrant issued by Vemics pursuant to this Section 2(b)(2)
|
(an
"Additional Warrant") shall be for a term of 5 (five) years, and shall be
in
substantially the same form as the Warrant attached hereto as Exhibit C.
In the
event any stock split, reverse stock split, recapitalization, merger,
consolidation, conversion, or similar transaction to which Vemics is a party
occurs prior to the issuance of any Additional Warrant, then, notwithstanding
Sections
2(b)(2)(i)
and (ii) above, Vemics may, in ifs reasonable discretion, appropriately adjust
the strike price and/or number, class or type of shares to be received upon
exercise of the Additional Warrant as if the Additional Warrant had been
issued
immediately prior to such event or transaction.
(c)
Restrictions
and Rights.
The
following provisions shall apply to the Vemics Shares, the Warrant, Additional
Warrant and the Additional Shares (as defined below):
(1) The
Shares are not, and if and when issued neither (i) the Warrant and any
securities
issued upon exercise of the Warrant, (ii) the Additional Warrant and any
securities upon exercise of the Additional Warrant, nor (iv) the Additional
Shares will be, registered under the Securities Act of 1933, as amended
("Securities Act"), or under any state "blue sky" laws (collectively, "State
Acts"). The Shares are, and if and when issued (i) the Warrant and any
securities issued upon exercise of the Warrant, (ii) the Additional Warrant
and
any securities upon exercise of the Additional Warrant, and (iii) the Additional
Shares will be, "restricted securities," as that term is defined in U.S.
Securities and Exchange Commission ("SEC") Rule 144, and may not be sold,
assigned, transferred or otherwise disposed of unless registered under the
Securities Act and all applicable State Acts or unless exemptions from such
registration requirements are available for such transaction.
(2) |
The
certificate or certificates evidencing the Vemics Shares (including
any
|
Escrowed
Shares) to be delivered to EL Desktop, or, if and when issued, evidencing
(i)
the Warrant and any securities issued upon exercise of the Warrant, (ii)
the
Additional Warrant and any securities issued upon exercise of the Additional
Warrant, and (iii) the Additional Shares, will bear a restrictive legend
substantially in the following form as long as applicable:
"THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT
OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THESE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR
RESALE,
AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT COVERING THESE SECURITIES UNDER
THE
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL IN
FORM
AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT REGISTRATION OF THESE SECURITIES
IS NOT REQUIRED UNDER THE ACT OR UNDER APPLICABLE STATE SECURITIES
LAWS."
(3) |
(1)
If, at any time after the first anniversary of the Closing Date,
Vemics
|
files
a
registration statement under the Securities Act for purposes of a public
offering of securities of the Vemics for its own account, it shall notify
EL
Desktop in writing (the "Company Notice"). EL Desktop shall have the right
(the
"Piggyback Right"), subject to the limitations set forth in this Section,
to
include in any such registration statement all or any portion of the Vemics'
Shares and Additional Shares then held by EL Desktop. In order to exercise
the
Piggyback Right, EL Desktop shall give written notice to Vemics (the "Piggyback
Notice") no later than fifteen (15) days following the date on which the
Vemics
gives the Company Notice. The Piggyback Notice shall set forth the number
of
Vemics' Shares and Additional Shares that EL Desktop desires to include in
the
registration statement. All expenses of any such registration will be paid
by
the Vemics.
(ii) |
If
the registration statement under which Vemics gives a notice
|
under
this Section is for an underwritten offering, Vemics shall so advise the
EL
Desktop in the Company Notice. In such event, the right of any EL Desktop
to be
included in a registration pursuant to this Section shall be conditioned
upon EL
Desktop's participation in such underwritten offering and the inclusion of
EL
Desktop's Vemics' Shares and Additional Shares in the underwritten offering
to
the extent provided herein. All holders of Vemics' Shares and Additional
Shares
proposing to distribute their shares by means of such underwritten offering
(including without limitation EL Desktop) shall enter into an underwriting
agreement in customary form with the underwriter or underwriters selected
for
such underwriting by Vemics. Notwithstanding any other provision of this
Agreement, if the underwriter determines in good faith that marketing or
other
factors require a limitation of the number of shares to be underwritten,
the
number of shares that may be included in the underwriting shall be allocated,
first, to Vemics; second, if and to the extent permitted by the underwriter,
to
EL Desktop with respect to the Vemics' Shares and Additional Shares; and
third,
if and to the extent permitted by the underwrite, to any other stockholder
of
Vemics (i.e., other than EL Desktop) on a pro rata basis. No such reduction
shall reduce the securities being offered by Vemics for its own account to
be
included in the registration and underwriting. If EL Desktop disapproves
of the
terms of any such underwriting, EL Desktop may elect to withdraw therefrom
by
written notice to Vemics and the underwriter, delivered at least twenty (20)
business days prior to the effective date of the registration
statement.
(iii)
Vemics
shall have the right to terminate or withdraw any
registration
initiated by it under this Section prior to the effectiveness of such
registration whether or not EL Desktop has elected to include securities
in such
registration.
(4)
With
a
view to making available to EL Desktop the benefits of SEC Rule
144
and
any other rule or regulation of the SEC that may at any time permit EL Desktop
to sell securities of Vemics to the public without registration, Vemics agrees
to use reasonable efforts, after the first anniversary of Closing Date and
so
long as the EL Desktop owns any Vemics' Shares or Additional Shares, to:
(i)
make and keep available adequate current public information with respect
to
Vemics, as those terms are understood and defined in SEC Rule 144; (ii) to
file
with the SEC in a timely manner all reports and other documents required
of
Vemics under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (at any time after Vemics has become subject to such reporting
requirements); and (iii) furnish to any EL Desktop forthwith upon request
(A) to
the extent accurate, a written statement by the Company that it has complied
with the reporting requirements of SEC Rule 144, the Securities Act, and
the
Exchange Act, or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after Vemics so qualifies); and
(B) to
the extent accurate, a copy of the most recent annual or quarterly report
of
Vemics and such other reports and documents so filed by Vemics.
(d)
Cash
or Additional Shares.
Vemics
shall pay to EL Desktop Creditors up to US$250,000 in cash to satisfy any
outstanding debts, liabilities or obligations to EL Desktop's present creditors
(collectively, the "Cash Payments") identified in "Exhibit D " (collectively
the
"EL Desktop Creditors") with payment to be made to EL Desktop Creditors on
before the date indicated on said "Exhibit D". This Section 2(d) is subject
to
Section I (c) above, and in the event of any inconsistency, Section 1(c)
shall
control. Any such Cash Payments so made by Vemics will be used by EL Desktop
to
satisfy its current financial obligations, and Vemics may require a final
determination of what these financial obligations are prior to making any
such
Cash Payment. Exhibit D is a list prepared by EL Desktop of its current
financial obligations. No Cash Payments so made by Vemics will be paid, directly
or indirectly, by EL Desktop to the management or shareholders of EL Desktop,
except for such monies as are due for back salaries, expenses and documented
loans made to EL Desktop (excluding direct equity investments made by, and
any
convertible debentures held by, management or shareholders of EL Desktop,
which
shall not be paid or otherwise satisfied, in whole or in part, directly or
indirectly, with any such Cash Payments by Vemics). If on or before September
15, 2007, Vemics has not made Cash Payments aggregating US$250,000 pursuant
to
this Section 2(d), then on September 16, 2007, Vemics will issue to EL Desktop
such number of additional restricted shares (the "Additional Shares") of
Vemics
Common Stock, registered in the name of EL Desktop and rounded up to the
next
whole share, as shall have an aggregate value equal to the difference between
US$250,000 and the dollar amount of the aggregate Cash Payments (if any)
made by
Vemics on or prior to September 15, 2007. For this purpose, each Additional
Share shall be valued at the average of the closing prices of Vemics Common
Stock over the 30 trading days immediately preceding September 16, 2007,
as
reported in the pink sheets or, if Vemics Common Stock is traded on an exchange,
as reported by such exchange (if Vemics Common Stock is not traded in the
pink
sheets or on an exchange an any date during said 30 trading days, each Escrowed
Shares shall be valued at US$.90).
(e)
Excluded
property. Vemics
shall not acquire, and EL Desktop shall retain, all assets and property of
EL
Desktop which are not assigned to Vemics pursuant to this
Agreement.
(f)
Transfer
of Lease Interests.
EL
Desktop covenants and agrees that it will offer to transfer to Vemics, for
no
additional consideration, any lease or leasehold interest in the properties
it
has in its possession now (referred to in Exhibit B.) or in the future (at
which
time Vemics will have sole option whether to accept or reject said lease
interest). With respect to all leases and leasehold interests currently held
by
EL Desktop (referred to in Exhibit B), Vemics shall furnish an estoppel
certificate from each lessor under such leases, whereby the lessors will
verify
that each of the leases is not in default and is in full force and effect
as of
the date of closing. Such estoppel certificate shall contain a provision
whereby
the lessor consents to the transfer. With respect to all leases and leasehold
interests currently held by EL Desktop (referred to in Exhibit B), Vemics
will
accept or reject such assignment at closing. With respect to all leases and
leasehold interests that EL Desktop obtains after the Effective Date, within
10
days of entering into or otherwise obtaining such lease or leasehold interest,
EL Desktop shall provide written notice thereof to Vemics, which notice shall
be
accompanied by a complete and correct copy of the applicable lease and any
other
documents and agreements related thereto, along with an estoppel certificate
as
described above in this Section 2(f) from the applicable lessor; Vemics shall
have 30 days after receipt of all of the foregoing from EL Desktop to accept
or
reject the assignment of such new lease or leasehold interest.
(g)
Vemics
' account.
From
and after the Effective Date, all operations relating to EL Desktop's Assets
to
be conveyed to Vemics shall be for the account, and shall accrue to the benefit,
of Vemics.
3.
Representations
and warranties of EL Desktop.
EL
Desktop hereby represents and warrants to Vemics as follows:
(a)
Duly
organized.
EL
Desktop is a corporation duly organized and validly existing in good standing
under the laws of Canada, and is entitled to own or lease its properties
and to
carry on its business as and in the places where such properties are now
owned,
leased, or operated and such business is now conducted.
(b)
Subsidiary
corporations. EL
Desktop has no subsidiary corporations.
(c)
Leases.
Exhibit
B is a list and brief description of all material leases and agreements under
which EL Desktop leases, holds, and operates real property or significant
items
of personal property. All such leases and agreements are assignable except
as
stated therein, and no material adverse claim against, or defect in, the
interest purportedly leased or given under or by any such instrument exists.
EL
Desktop is not in default with respect to any instrument on such list. EL
Desktop owns outright and has good and marketable title to all the assets
and
properties listed in Exhibit A, Exhibit A-1 through Exhibit A-5, and Exhibit
B.
(d)
Intangible
property.
Exhibit
E is a list of all material United States and Canadian patents, patent
applications, and trademarks owned by or registered in the name of EL Desktop
or
in which EL Desktop has any rights, and in each case a brief description
of the
nature of such rights. EL Desktop is not a licensor in respect of any United
States or Canadian patents, trademarks, trade names, and applications therefor,
except as stated in such list.
(e)
Insurance.
Exhibit
F contains a brief description of all material policies of fire, liability,
and
other forms of insurance held by EL Desktop.
(f)
Authorization.
EL
Desktop's Board of Directors have approved this Agreement and the transactions
contemplated herein, and have authorized the execution and delivery of this
Agreement by EL Desktop. This Agreement and the transactions contemplated
herein, including the conveyance, assignment, transfer, and delivery of the
Assets of EL Desktop, have been consented to in writing by the shareholders
of
record of EL Desktop who are entitled to vote thereon. This Agreement and
the
transactions contemplated herein have been authorized and approved by all
necessary corporate action of EL Desktop.
This
Agreement constitutes the legal, valid and binding obligation of EL Desktop,
enforceable against EL Desktop in accordance with its terms. When executed
and
delivered by EL Desktop, the Closing Documents will constitute the legal,
valid
and binding obligations of EL Desktop, enforceable against EL Desktop in
accordance with their respective terms.
(g)
EL
Desktop has the Legal right, power, authority and ability to execute and
deliver
this Agreement and the Closing Documents and to perform its obligations
thereunder, including without limitation to transfer all of the Assets to
Vemics. EL Desktop hereby certifies that its intellectual property, patents,
copyrights, and trademarks do not and will not infringe upon or misappropriate
any intellectual property, copyright, patent, right of publicity or privacy
(including but not limited to defamation), trade secret, trademark, or other
proprietary rights of any third party. In addition, EL Desktop hereby certifies
that none of its Assets are subject to any lien or encumbrance by any third
party. EL Desktop also certifies that the Contracts referenced herein are
in
good standing and that EL Desktop is in full performance and compliance with
said Contracts and said Contracts are not subject to any right, setoff or
encumbrance by any third party.
(h)
EL
Desktop's performance of this Agreement will not conflict with any other
contract or other agreement to which EL Desktop is a party or otherwise
bound.
(i)
EL
Desktop warrants that none of the Assets are subject to any lien or encumbrance
of any kind in favor of any lender or other person.
(j)
EL
Desktop agrees to indemnify, hold harmless and defend Vemics from and against
all claims, defense costs (including reasonable attorneys' fees), judgments
and
other expenses arising out of the breach of any provisions of this Agreement
by
EL Desktop.
(k)
EL
Desktop is acquiring the Shares, the Warrant, the Additional Warrant and
the
Additional Shares for its own account and will not sell, assign, transfer,
or
otherwise dispose of any of the Shares, the Warrant (or any securities issued
upon exercise of the Warrant), the Additional Warrant (or any securities
issued
upon exercise of the Additional Warrant), any of the Additional Shares
(collectively, the "Vemics Securities"), or any interest in any of the Vemics
Securities, without registration under the Securities Act, and all applicable
State Acts, except in a transaction which is exempt from such registration
requirements. EL Desktop has no pm-existing plan or proposal to, and EL Desktop
has not and will not within the one-year period following the Closing Date,
distribute or adopt a plan or proposal to distribute any or all of the Vemics
Securities to its shareholders and/or other persons, whether in connection
with
a dissolution of EL Desktop or otherwise, without the prior written consent
of
Vemics or unless such Vemics Securities have been registered under the
Securities Act and all applicable State Acts.
EL
Desktop has such knowledge and experience in financial and business matters
as
to be capable of evaluating the merits and risk of an investment in the Vemics
Securities, and has obtained, in its judgment, sufficient information from
Vemics to evaluate the merits and risks of an investment in the Vemics
Securities. EL Desktop has been provided the opportunity to obtain information
and documents concerning Vemics and the Vemics Securities, and has been given
the opportunity to ask questions of and receive answers from, the directors
and
officers of Vemics concerning Vemics and the Vemics Securities and other
matters
pertaining to this investment. EL Desktop acknowledges and agrees that it
has
obtained from EL Desktop, and has reviewed, those documents listed on Exhibit
G
(the "Vemics Disclosure Documents"). EL Desktop is aware of the risks inherent
in an investment in Vemics, and specifically the risks of an investment in
the
Vemics Securities (including without limitation the risks referred to in
the
Vemics Disclosure Documents). In addition, EL Desktop is aware and acknowledges
that there can be no assurance of the future viability or profitability of
Vemics, nor can there be any assurance relating to the current or future
value
of the Vemics Common Stock or any of the other Vemics Securities.
4.
|
Representations
and warranties of Vemics Vemics represents and warrants to EL Desktop
as
follows:
|
(a)
Duly
organized.
Vemics
is a corporation duly organized and validly
existing
in good standing under the laws of Nevada, and is entitled to own or lease
its
properties and to carry on its business as and in the places where such
properties are now owned, leased, or operated and such business is now
conducted.
(b) |
Securities.
The Shares and any Additional Shares, when issued and
|
delivered
as provided herein, will be Vemics' duly authorized, validly issued and
outstanding, fully paid and non-assessable shares of Vemics Common Stock.
The
Warrant and the Additional Warrant, if and when issued and delivered as provided
herein, will be Vemics' duly authorized, validly issued and outstanding,
warrants, and if and when any securities are issued upon any exercise of
the
Warrant or the Additional Warrant, such securities will be the duly authorized,
validly issued and outstanding, fully paid and non-assessable securities
of
Vemics.
(c)
Authorization.
Vemics'
Board of Directors has approved this and authorized
this
Agreement.
5.
No
assumption of liabilities by Vemics
(a)
Except
as
otherwise provided in Section 1(c), EL Desktop acknowledges
that
Vemics is acquiring EL Desktop's Assets hereunder without any assumption
of EL
Desktop's liabilities. EL Desktop covenants that it shall fully and timely
satisfy all its present liabilities to creditors.
(b)
EL
Desktop will hold Vemics harmless against all claims for products,
service,
and professional liability against EL Desktop arising out of sales of products
or services rendered by EL Desktop.
(c)
EL
Desktop represents that it has disclosed all its debts, liabilities and
obligations
to Vemics, and that EL Desktop has no undisclosed liabilities.
(d)
EL
Desktop has paid or will pay or fully provide for all Canadian, United
States
and state income and other taxes which relate to the conduct of its business
through the Closing Date. EL Desktop represents that there is no pending
tax
claim or dispute on taxes which might result in a lien against EL Desktop's
Assets.
(e)
Bulk
sales law.
The
parties hereby waive EL Desktop's compliance with the
provisions
of any applicable bulk sales laws. EL Desktop shall hold a sufficient amount
of
the cash in trust to pay all its creditors as and when their claims come
due,
and hold and save Vemics harmless against any loss, damage or expense, including
reasonable attorneys' fees and court costs, incurred by Vemics as a result
of or
attributable to the parties' failure to comply with such
provisions.
(f)
Division
of taxation notice.
EL
Desktop shall cooperate with Vemics and
give
all
required information to the Canadian Division of Taxation as required by
the
Canadian Division of Taxation, and shall cooperate with Vemics and give all
required information to Vemics and the Internal Revenue Services as required
by
the Internal Revenue Code, and shall timely complete and execute such tax
returns, forms, notices and/or reports as may be required in connection with
the
foregoing.
(g)
Licensing.
EL
Desktop will comply with all United States and Canadian
laws
regarding licensing and import/export restrictions of technology.
6.
Excepted
transactions. None.
7.
Access
to records.
(a)
Available material. Before the Closing Date, each party's officers and
accredited representatives shall each have full access to the other party's
plants, properties, books, accounts, and records of every kind, including,
without limitation, the other party's monthly balance sheets and income and
operating statements, and each will furnish the other with all additional
financial and operating data and other information as to its business and
properties that is from time to time reasonably requested. Each party shall
authorize and direct its respective independent auditors to make available
to
the other party before the Closing Date any information, including access
to
work papers, requested by such party. Before the Closing Date, each party
may
also have representatives present at the taking of inventories by the
other.
(b)
Unavailable
material.
None.
(c)
Confidentiality.
Vemics
and EL Desktop mutually acknowledge that,
pursuant
to their respective rights to inspect the other's plants, properties, books,
accounts and records, and EL Desktop's receipt of the Vemics Disclosure
Documents, as provided in this Agreement, they may become privy to the other's
Confidential Information, and that communication of such Confidential
Information to third parties (whether such communication is authorized by
Vemics
or EL Desktop respectively or otherwise), or the unauthorized use of one
party's
Confidential Information by the other party, could damage the other's business
after the transaction is completed. Vemics and EL Desktop therefore mutually
agree to take reasonable steps to insure that such Confidential Information
about the other, obtained by Vemics or EL Desktop respectively, or any of
their
respective employees, officers, agents, attorneys, or other accredited
representatives, shall remain confidential, shall not be used by them except
as
authorized by this Agreement, and not be disclosed or revealed to third parties;
provided, however, that it is agreed that Vemics may use and disclose any
Confidential Information of EL Desktop that is included among the Assets
acquired by Vemics pursuant to this Agreement. "Confidential Information"
includes information not ordinarily known by noncompany personnel, including
customer lists, supplier lists, trade secrets, channels of distribution,
pricing
policy and records, inventory records, and all other information normally
understood to be confidential or otherwise designated as such by EL Desktop
or
Vemics respectively.
8.
(a)
Closing
date.
The
closing under this Agreement shall take place at 000 Xxxxxx Xxxxxxx, Xxxxxx,
XX
00000, Eastern Daylight Time, on January 25, 2007, at 10:00 AM, or such other
date as shall be mutually agreed upon by Vemics and EL Desktop (the "Closing
Date").
(b)
Payment.
All
payments required to be made under this Agreement shall be
made
in
the time period prescribed in this Agreement All stock to be issued to EL
Desktop shall be issued on the applicable dates set forth herein, subject
to the
escrow provision set forth herein.
(c)
All
Assets shall be transferred to Vemics on the Closing Date of this
transaction
or, with respect to Assets which may arise after the Closing Date, at such
future date as set forth herein.
9.
Approval
of Vemics' Board of Directors.
Vemics
had previously called a meeting of its Board of Directors at which time the
Board of Directors of Vemics approved this Agreement and its execution,
delivery, and performance by Vemics.
10.
Employment
of E. Xxxxx Xxxxxxxxxx
(a)
Principal.
Vemics
affirms that it intends to employ Xxxxxxxxxx in a
principal
executive capacity from and after the Closing Date, as Senior Vice President
International Sales, and EL Desktop hereby affirms that it is its understanding
that Xxxxxxxxxx intends to enter into the Vemics' employment in such a capacity
from and after the Closing Date. After closing, Xxxxxxxxxx will receive
compensation of US$120,000.00 per annum, plus bonuses and commissions to
be
determined, as shall be set forth in a separate Employment Agreement between
Vemics and Xxxxxxxxxx to be executed and delivered at closing (the "Employment
Agreement"). The Employment Agreement will have a term of 3 years, and will
contain such other terms and conditions, including, but not limited to,
appropriate non-competition, non-solicitation, and non-disclosure provisions
as
are usual and customary. This Employment Agreement shall be substantially
in the
form attached hereto as Exhibit H.
(c) |
Right
to terminate.
If Xxxxxxxxxx should die on or before the Closing Date,
|
Vemics
may terminate this Agreement by giving EL Desktop written notice on or before
the Closing Date of Vemics' exercise of such termination rights. If Vemics
does
not exercise its option to terminate, EL Desktop may terminate this Agreement
by
giving written notice to Vemics on or before the Closing Date. It shall be
a
condition precedent to Vemics obligation to close under this Agreement that
Xxxxxxxxxx executed and delivers the Employment Agreement on or before the
Closing Date.
11.
Survival
of representations and warranties.
EL
Desktop's representations and warranties made in this Agreement shall survive
for a period of 24 months after the Closing Date, except for the representation
and warranty contained in Sections 1(c), 1(d), 5 and 14 (relating, in general,
to EL Desktop's debts, liabilities and obligations not being assumed by Vemics),
which shall continue to survive until all debts, liabilities and obligations
are
satisfied in full by EL Desktop and all applicable preference periods have
expired.
Vemics'
representations and warranties made in this Agreement shall not survive the
Closing Date, and Vemics shall not have any subsequent liability with regard
thereto.
12.
Consent
of third party.
(a)
Assignments. To the extent that the assignment of any contract, license,
lease,
commitment, sales order, purchase order or any other Asset to be assigned
to
Vemics requires the consent of a third party, this Agreement shall not
constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof. EL Desktop will diligently pursue and use its
best
efforts to obtain any required consent of the third parties to the assignment
to
Vemics of any such contracts, licenses, leases, commitments, sales orders,
purchase orders or other Assets of EL Desktop. If such consent is not obtained
prior to the Closing Date, EL Desktop will cooperate with Vemics in any
reasonable arrangement designed to provide for Vemics the benefits under
any
such contracts, licenses, leases, commitments, sales orders, purchase orders
or
other Asset, including enforcement, at the cost and for the benefit of Vemics,
of all EL Desktop's rights against the third party arising out of a breach
or
cancellation by such third party or otherwise.
(b)
Accounts
receivable.
Vemics
may collect for its account all EL Desktop
receivables
and other items that are transferred to Vemics, and may endorse EL Desktop's
name on all checks received on account of such items. EL Desktop shall deliver
to Vemics all cash or other property EL Desktop receives for such
items.
13.
Fees
and expenses.
Each
party shall pay their own fees and expenses incurred in preparing this
Agreement, carrying it into effect, and consummating the transactions
contemplated hereby.
14.
Waiver
of compliance with bulk sale requirements.
Vemics
waives EL Desktop's compliance provisions with the provisions of the bulk
sales
law as enacted in any applicable jurisdiction. EL Desktop, however, shall
indemnify and hold Vemics harmless from all debts, liabilities and obligations
of EL Desktop which are not assumed by Vemics under this Agreement, and from
any
and all liabilities resulting from noncompliance with the bulk sales law,
including, but not limited to, all costs and expenses incurred in connection
with the defense or settlement of any such liability or obligation (including
without limitation reasonable attorneys fees).
15.
(a)
Assignment
of agreement.
This
Agreement shall not be assignable by either party except with the other's
written consent, which shall not be unreasonably withheld, conditioned or
delayed.
(b) |
Third
parties.
Nothing in this Agreement, expressed or implied, is intended
|
to
confer
upon any person, other than the parties hereto and their successors and
permitted assigns, any rights or remedies under or by reason of this
Agreement
16.
Brokerage.
Each
party represents and warrants to the other that there are no rights to or
claims
for brokerage commissions or finders' fees in connection with the transactions
contemplated by this agreement, insofar as such rights or claims are alleged
to
be based on arrangements or agreements made by it or on its behalf, and each
of
the parties agrees to indemnify the other against and hold it harmless from
all
liabilities arising from any such right or claim (including, without limitation,
cost of counsel fees in connection therewith).
17.
Notices.
All
notices and other communications ("Notices') to be given hereunder by either
party to the other shall be in writing and delivered personally or sent by
registered or certified mail, postage prepaid,
if
to
Vemics, addressed to:
Xxxx
Xxxxx, President
000
Xxxxxx Xxxxxxx Xxxxx
Xxxxxx,
Xxx Xxxx 00000
And
if to
EL Desktop:
E.
Xxxxx
Xxxxxxxxxx, President
E
Learning Desktop Ventures Inc
0000
Xxxxxx Xx # 000
Xxxxxxxxxxx
XX Xxxxxx
The
address for delivery of Notices may be changed by any party upon furnishing
to
the other the new address for Notices in accordance with the provisions of
this
paragraph.
18.
Entire
agreement.
This
Agreement, and the Closing Documents, contains the entire agreement between
the
parties with respect to the transactions contemplated herein, and is intended
by
the parties to be an integration of all of the promises, agreements, conditions,
understandings, warran-ties, representations and covenants between the parties
hereto with respect to the subject matter hereof All Exhibits referred to
in
this Agreement and attached hereto are hereby incorporated herein by reference.
Each party has caused to be included herein all representations and warranties
that it considers material for the purposes of the transactions contemplated
hereby, based upon investigations which each of them has made of the other's
business and affairs. The representations and warranties contained herein
constitute all the representations and warranties upon which the parties
have
relied. Nothing contained in this Agreement, any Closing Document, nor any
of
the exhibits referred to herein or any other instrument or document furnished
by
either party to the other after the Closing Date in relation to this
transaction, contains or will contain any untrue statement of any material
fact
or omits or will omit to state any material fact required to be stated in
order
to make such statement, document, or other instrument not
misleading.
19.
Execution.
This
Agreement is being executed and delivered by the parties as of the Effective
Date.
20.
Governing
law.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York, without giving effect to the principles of
choice
of law or conflicts of law.
21.
Severability
of provisions. The
invalidity or unenforceability of any term, phrase, clause, paragraph,
restriction, covenant, agreement or other provision hereof shall in no way
affect the validity or enforcement of any other provision, or any part
thereof.
22.
Headings.
The
captions and titles in this Agreement are for convenience and reference only,
and shall not be used to define, limit, or otherwise construe its teams and
provisions.
23.
Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original, but all of which shall constitute one and the same
instrument.
24.
Actions
necessary to complete transaction.
Each
party hereby agrees to execute and deliver all such other documents or
instruments and to take any action that is reasonably required to effectuate
the
transactions contemplated by this Agreement.
25.
Non-waiver.
No
delay or failure by either party to exercise any right hereunder, and no
partial
or single exercise of any such right, shall constitute a waiver of that or
any
other right, or release the other party from any claims arising out of or
connected with this Agreement, unless otherwise expressly provided
herein..
26.
Binding
effect.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
27.
Time
of essence.
Time is
of the essence of this Agreement.
In
witness whereof the parties have caused this Agreement to be duly executed
by
their respective officers.
VEMICS: EL
DESKTOP:
Vemics,
Inc. E
Learning Desktop Ventures Inc.
By____________________________ by__________________________
Xxxx
Xxxxx, President
E. Xxxxx
Xxxxxxxxxx, President
Exhibits:
A Asset
List
A-1
through A-5 Contracts
B Leases
C Warrant
D Current
Financial Obligations
E Patents
F Insurance
G Vemics
Disclosure Documents
H Employment
Agreement
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