ASSET PURSCHASE AGREEMENT
ASSET
PURSCHASE AGREEMENT
AGREEMENT
dated as
of August 22,, 2006, by and between friendlyway Inc., a Nevada based publicly
traded company with offices at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, hereinafter referred to as “friendlyway” and Ignition Media Group.,
Inc.., a wholly owned subsidiary of friendlyway Inc, with offices at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ hereinafter
referred to as “IMG” and collectively with friendlyway referred to as “Buyer”,
and Captive Audience, LLC, a limited liability company, hereinafter referred
to
as (“Seller”) with offices at ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
Background
Seller
agrees, in principal, to sell to Buyer all of the assets of Seller set forth
on
Schedule A hereto (“Assets”).
Therefore,
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows, Seller desires to sell the
Assets to Buyer and Buyer desires to purchase the Assets from Seller on the
terms and conditions set forth below.
1. Purchase
and Sale.
(a) In
consideration of Buyer’s payment of two million four hundred thousand dollars
(US $2,400,000) (the “Purchase Price”), Seller hereby sells, assigns, transfers
and delivers the Assets to Buyer. The Purchase Price shall be paid at the
Closing as follows: (i) cash in the amount of one million one hundred thousand
dollars ($1,100,000) to Seller and (ii) shares of friendlyway’s, common stock
(having an agreed aggregate value of One Million three hundred thousand dollars
(US $1,300,000) hereinafter referred to as, “Common Stock”. The number of shares
to be issued shall be equal to dividing the agreed aggregate value above by
the
average closing bid price of the Buyer’s public stock during the ten days
preceding closing.
(b) In
connection with the sale of the Assets to Buyer, Seller shall execute and
deliver to Buyer at Closing the ▇▇▇▇ of sale and the assignments of contracts
and other assets attached hereto as Exhibits A, B, C, and D
respectively.
(c)
Buyer
shall pay Seller a deposit of $25,000 at the execution of this agreement which
shall be credited to the cash paid at closing.
(d)
friendlyway, at Seller’s written request, shall repurchase a specific number of
shares of Common Stock from Seller. If Seller elects to request friendlyway
to
repurchase the shares of Common Stock pursuant to Par 1(a) then Seller must
notify friendlyway by mail on or before November 1, 2006, of its desire to
have
the shares repurchased and the amount of shares of Common Stock it desires
to
have repurchased. Seller may request friendlyway to repurchase an amount of
shares of Common Stock which have a value not to exceed $700,000 based upon
the
per share value of the Common Stock on the Closing, hereinafter defined.
Friendlyway shall repurchase any shares of Common Stock at this time for a
28.5%
discount of the value as measured at the Closing. The payments due Seller from
friendlyway for the repurchase of the Common Stock shall be made in monthly
increments of $100,000 USD due and owing Seller on a monthly basis commencing
on
December 31, 2006 until the complete payment of the repurchase has been made.
(e)
If by
August 1, 2007 the average closing bid price of the public stock of friendlyway
for the ten days proceeding August 1, 2007 is lower then the average closing
bid
price defined in Par 1(a) above then the Seller will be entitled to a per share
cash payment, hereinafter to as “Cash Payment”, according to the following
formula:
(A
x
.715) = C
(C-
B) =
Cash Payment
wherein:
A:
the
average closing per share bid price for the ten days preceding the closing
of
this transaction.
B:
the
average closing per share bid price for the ten days preceding the one year
anniversary of the closing of this transaction
The
Cash
Payment shall be made by friendlyway on or before November 30,
2007.
2.
Notice.
(a)
Buyer
acknowledges that Seller has entered into an agreement with a third party
hereinafter referred to as (“The Third Party”) which allows The Third Party the
right to purchase certain assets of Seller, and requires Seller to notify The
Third Party of the existence of this Asset Purchase Agreement. Seller shall
only
notify The Third Party of the existence of this Asset Purchase Agreement but
shall not disclose the financial terms of this Agreement. Seller shall provide
Buyer with written notification on or before June 2, 2006 of Seller’s ability to
contractually complete this transaction with Buyer as it pertains to its
contractual obligations to The Third Party, hereinafter referred to as
(“Notification”) attached as Schedule D. In the event Seller does not provide
Buyer with Notification on or before June 2, 2006 then Seller shall be bound
to
the terms of this Agreement.
(b)
In
the event Seller is contractually unable to complete this transaction with
Buyer
as it pertains to Notification in section 2(a) then Seller shall immediately
refund Buyer’s twenty- five thousand dollars (US $25,000) and both Buyer and
Seller shall be released from this Agreement.
(c)
In
the event Seller is contractually able to complete this transaction with Buyer
as it pertains to Notification in section 2(a) then Buyer shall remit an
additional twenty- five thousand dollars (US $25,000) to seller which shall
be
credited to the Closing.
3. Liabilities.
Buyer is
not assuming any existing, contingent or future liability of Seller (the
“Excluded Liabilities”). Without limitations, the Excluded Liabilities
include:
(i) any
liability for taxes of Seller;
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(ii)
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any
obligations of Seller in respect of the assets of Seller not included
in
the Assets acquired hereunder;
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(iii) any
liability of Seller pursuant to any employee benefit plan;
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(iv)
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any
liabilities or obligations of Seller for borrowed money or interest
on
borrowed money;
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(v)
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any
liabilities or obligations of Seller to affiliates of
Seller;
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(vi)
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all
claims, liabilities, or obligations of Seller as an employer, including,
without limitation, liabilities for wages, supplemental unemployment
benefits, vacation benefits, severance benefits, retirement benefits,
Federal Consolidated Omnibus Budget Reconciliation Act of 1985 benefits,
Federal Family and Medical Leave Act of 1993 benefits, Federal Workers
Adjustment and Retraining Notification Act obligations and liabilities,
or
any other employee benefits, withholding tax liabilities, workers’
compensation, or unemployment compensation benefits or premiums,
hospitalization or medical claims, occupational disease or disability
claims, or other claims attributable in whole or in part to employment
or
termination by Seller or arising out of any labor matter involving
Seller
as an employer, and any claims, liabilities and obligations arising
from
or relating to any employee benefit
plans;
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(vii)
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all
claims, liabilities, losses, damages, or expenses relating to any
litigation, proceeding, or investigation of any nature arising out
of the
Business or ownership of the Assets on or prior to the Closing Date
including, without limitation, any claims against or any liabilities
for
injury to, or death of, persons or damage to or destruction of property,
any workers’ compensation claims, and any warranty
claims;
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(viii)
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except
as may otherwise be provided herein, any accounts payable, other
indebtedness, obligations or accrued liabilities of Seller;
and
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(ix)
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any
contracts, agreements, leases, licenses or other commitments of Seller
not
expressly assumed hereunder by
Buyer.
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4. Representations
and Warranties of Seller.
Seller
hereby represents and warrants to Buyer as follows:
| (a) |
As
of the Closing, Seller is a limited liability company duly organized
and
validly existing under the laws of the State of Nevada; Seller has
full
power and authority to execute and deliver this Agreement and all other
agreements to be executed and delivered by Seller hereunder or in
connection herewith (the “Ancillary Agreements”) and to consummate the
transactions hereby or thereby contemplated; all necessary corporate
action has been taken to authorize Seller to enter into this Agreement
and
the Ancillary Agreements;
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| (b) |
This
Agreement and the Ancillary Agreements have been duly executed and
delivered by Seller and each such agreement constitutes the legal,
valid
and binding obligations of Seller enforceable against it in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency or other laws for the protection of
debtors;
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| (c) |
Neither
the execution, delivery or performance of this Agreement, the Ancillary
Agreements, nor the transactions contemplated hereby or thereby will
violate Seller’s operating agreement or any other agreements or
instruments, law, regulation, judgment or order by which Seller is
bound;
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| (d) |
At
the Closing, Seller will transfer to the Buyer good and valid title
to all
the Assets, free and clear of all liens, claims or other
encumbrances.
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(e)
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Consents.
No consent, authorization, approval, order, license, certificate
or permit
of or from, or declaration or filing with, any federal, state, local
or
other governmental authority or any court or other tribunal, and
no
consent or waiver of any party to any contract to which Seller is
a party
is required or declaration to or filing with any governmental or
regulatory authority, or any other third party is required to: (i)
execute
this Agreement or any Ancillary Agreement, (ii) consummate this Agreement
or any Ancillary Agreement and the transactions contemplated hereby
or
thereby, or (iii) permit Seller to assign or transfer the Assets
(including without limitation, the Material Contracts) to Buyer.
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(g)
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Intellectual
Property.
The Seller does not use any third party patent, trademark, copyright,
trade secrets or other intellectual or industrial property rights,
other
than non-exclusively licensed use of commercially available software,
in
the Business.
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(h)
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Material
Contracts.
Each Material Contract is valid and binding on and enforceable against
Seller and, to the knowledge of Seller, each other party thereto
and is in
full force and effect. Seller is not in breach or default under any
Material Contract. Seller does not know of, and has not received
notice
of, any violation or default under (nor, to the knowledge of Seller,
does
there exist any condition which with the passage of time or the giving
of
notice or both would result in such a violation or default under)
any
Material Contract by any other party thereto. Prior to the date hereof,
Seller has made available to Buyer true and complete copies of all
Material Contracts.
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5. Representations
and Warranties of Buyer.
Buyer
represents and warrants to Seller as follows:
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(a)
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Buyer
is a corporation duly organized and validly existing under the laws
of the
State of Nevada; Buyer has full power and authority to execute and
deliver
this Agreement and all other agreements to be executed and delivered
by
Buyer hereunder or in connection herewith the “Ancillary Agreements” and
to consummate the transactions hereby or thereby contemplated; all
necessary corporate action has been taken to authorize Buyer to enter
into
this Agreement and the Ancillary
Agreements;
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(b)
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This
Agreement and the Ancillary Agreements have been duly executed and
delivered by Buyer and each such agreement constitutes the legal,
valid
and binding obligations of Buyer enforceable against it in accordance
with
its terms, except as enforceability may be limited by bankruptcy,
insolvency or other laws for the protection of
debtors;
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(c)
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Neither
the execution, delivery or performance of this Agreement, the Ancillary
Agreements, nor the transactions contemplated hereby or thereby will
violate Buyer’s Articles of Incorporation or by-laws or any other
agreements or instruments, law, regulation, judgment or order by
which
Buyer is bound;
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6.
Closing.
Provided that all consents set forth in Section 3 have been obtained or waived
by the Buyer, the closing of the transactions contemplated hereby (the
“Closing”) shall occur on or before July 31, 2006 at 3:00 PM. If closing does
not occur by the time and date noted above, friendlyway shall pay the Seller
an
additional $50,000 in full satisfaction of any damages realized or not realized
by the failure for the Buyer to close. Unless both parties agree in writing,
this agreement shall not survive past July 31, 2006 and shall become null and
void without recourse (except as noted herein). If the parties agree to extend
the closing date, then all funds advanced to the Seller shall be credited to
the
cash component of the purchase.
7.
Deferred Revenue and Accounts Receivable.
Seller
shall retain an amount of revenue which Seller has invoiced yet has not provided
services for, hereinafter referred to as (“Deferred Revenue”). Seller shall be
entitled to retain an amount of Deferred Revenue up to four hundred thousand
dollars (US $400,000) as of the closing which shall not represent more than
fifteen hundred minutes (1500 min) of inventory, hereinafter referred to as
the
(“Deferred Revenue Limit”). Buyer shall be entitled to collect from Seller an
amount of Deferred Revenue greater than four hundred thousand dollars (US
$400,000). The Deferred Revenue Limit shall be calculated by subtracting the
applicable collectable accounts receivable which the Seller has not collected
as
of the Closing from the Deferred Revenue. All accounts receivable outstanding
on
the Closing Date in excess of the Deferred Revenue Limit shall be collected
by
Buyer. At Closing, Seller shall deliver to Buyer a complete statement of each
account receivable as of the Closing Date. Seller agrees to cooperate with
Buyer
to effect the purpose and intent of this Section 6, including, but not limited
to, immediately turning over to Buyer any and all such accounts receivable
which
are received or collected by Seller in excess of the Deferred Revenue Limit
after the closing.
8.
Indemnification by Seller.
Seller
agrees to indemnify, defend and hold Buyer and its affiliates harmless from
and
against any and all losses, liabilities, obligations, suits, proceedings,
demands, judgments, damages, claims, expenses and costs, including, without
limitation, reasonable fees, expenses and disbursements of counsel
(collectively, “Damages”), which any of them may suffer, incur or pay in
connection with (i) any breach of a representation or warranty made by Seller,
(ii) any liability accruing prior to the Closing Date incurred in connection
with the Business or Assets other than those constituting Assumed Liabilities,
(iii) the non-fulfillment by Seller of any covenant contained herein or in
the
Ancillary Agreements or (iv) any Excluded Liabilities.
9. Indemnification
by Buyer.
Buyer
agrees to indemnify defend and hold Seller and its affiliates harmless from
and
against any and all Damages which any of them may suffer, incur or pay in
connection with (i) any breach of a representation or warranty made by Buyer
herein, (ii) any liability arising under or in connection with the use and/or
ownership of the Assets arising on or after the Closing Date, (iii) the
non-fulfillment by Buyer of any covenant contained herein or in the Ancillary
Agreements or (iv) any Assumed Liabilities.
10.
Taxes and Other Fees.
Seller
shall pay any and all sales taxes or other taxes or recording fees payable
as a
result of the sale of the Assets hereunder.
11.
Survival.
The
representations, warranties, indemnification, covenants and agreements of Seller
and Buyer contained in this Agreement shall survive the execution and delivery
hereof for a period of three years.
12.
Severability.
If any
provision of this Agreement is determined to be invalid, illegal or incapable
of
being enforced by reason of any rule of law or public policy, all other
provisions of this agreement shall remain in full force and effect.
13.
No Waiver.
No
waiver by any party of any breach or nonperformance of any provision or
obligation of this Agreement shall be deemed to be a waiver of any preceding
or
succeeding breach of the same or any provision of this agreement.
14.
Entire Agreement.
This
Agreement is the entire agreement of the parties with respect to the subject
matter hereof, supersedes all prior agreements and understandings, oral and/or
written, relating to the subject matter hereof, and may not be amended,
supplemented, or modified, except by written instrument executed by all parties
hereto. This Agreement shall be binding upon and inure to the benefit of the
parties hereto, their successors and permitted assigns. Where the context so
requires, the singular shall include the plural and vice versa.
15.
Execution in Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
constitute an original and all of which shall constitute one and the same
document.
16.
Governing Law; Counsel.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Nevada, without giving effect to conflict of laws principles. The
parties acknowledge that they have each had an opportunity to be represented
by
legal counsel of their choice and that they enter into this Agreement and the
transactions contemplated hereby freely and voluntarily with full knowledge
and
understanding of its contents.
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement as of the date first written
above.
friendlyway
Corporation
By:
/s/ ▇▇▇ ▇▇▇▇▇▇▇
Name:
▇▇▇
▇▇▇▇▇▇▇
Title:
Chief Executive Officer
Ignition
Media Group, Inc
By:/s/
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Name:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title:
President
Captive
Audience, LLC
By:/s/
▇▇▇▇ ▇▇▇▇▇▇
Name:
▇▇▇▇ ▇▇▇▇▇▇
Title:
Chairman
SCHEDULE
A
ASSETS
TO BE TRANSFERRED
The
following should be attached:
| 1. |
Captive
Audience Agreements with Javit’s Center, SeaStreak, Wakefern, Big Y, and
Foodtown. The Agreements should include any documentation from the
retailer agreeing to the assignment
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| 2. |
The
spreadsheet which lists the hardware that is installed in each Supermarket
and the corresponding address location
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| 3. |
The
contracts with advertisers that require continued servicing beyond
the
close date
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| 4. |
The
list of all advertisers that have utilized the Supermarket network
since
inception including contact information
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| 5. |
The
necessary passwords to operate the digital signage network through
the
Broadsign platform
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SCHEDULE
B
ASSUMED
LIABILITIES
There
are
no assumed liabilities by Buyer.
SCHEDULE
C
ASSIGNMENT
AND ASSUMPTION AGREEMENT
THIS
ASSIGNMENT AND ASSUMPTION AGREEMENT (this
“Agreement”) is
made
and entered into this August 22, 2006 by and among Captive Audience, LLC, a
New
Jersey limited liability company (“Assignor”)
and
Ignition Media Group, Inc, a Nevada corporation (“Assignee”).
Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Purchase Agreement (as hereinafter defined).
WHEREAS,
Assignor and Assignee entered into that certain Asset Purchase Agreement dated
as of August 22, 2006 (the “Purchase
Agreement”),
the
terms of which are incorporated herein by reference, which provides, among
other
things, for the sale by Assignor to Assignee of certain assets, property and
rights, tangible and intangible, of Assignor used or useful in the Business
(as
defined in the Purchase Agreement); and
WHEREAS,
pursuant to the Purchase Agreement, Assignor desires to transfer to Assignee,
and Assignee desires to assume, all of Assignor’s right, title and interest in
and to all Material Contracts (collectively, the “Assumed
Contracts”).
NOW,
THEREFORE, in
consideration of
the
mutual promises contained in the Purchase Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Assignor, and subject to the terms and conditions of the
Purchase Agreement:
1. Assignment
and Assumption.
Assignor hereby assigns, transfers and conveys to Assignee all of Assignor’s
right, title and interest in and to the Assumed Material Contracts the
Assumed
Contracts, and Assignee hereby assumes and agrees to perform any and all
obligations and liabilities of Assignor under the Assumed Contracts
arising
after the Closing (as defined in the Purchase Agreement). Without limiting
the
foregoing, Assignor shall remain liable for all Excluded Liabilities (as defined
in the Purchase Agreement), and all obligations and liabilities under the
Assumed Contracts which arose or are incurred prior to Closing.
2. Successors.
All of
the covenants, terms and conditions set forth herein shall be binding upon,
and
shall inure to the benefit of, the parties hereto and their respective heirs,
successors and assigns.
3. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Nevada, without giving effect to conflict of laws principles. The
parties hereby consent to the jurisdiction of the courts of the State of Nevada
and shall be subject to service of process in the State of Nevada with respect
to any disputes arising, directly or indirectly, out of this
Agreement.
4. Counterparts.
This
Agreement may be executed in one or more counterparts, all of which together
shall for all purposes constitute one and the same instrument.
5. Further
Assurances.
From
time to time after the date hereof, without further consideration, Assignor
shall execute and deliver such other instruments of assignment, transfer and
conveyance and shall take such other action as Assignee may reasonably request
to more effectively assign, transfer and convey to Assignee, all of Assignor’s
right, title and interest in and to any of the Assumed Contracts, or to enable
it to exercise and enjoy all rights and benefits of Assignor with respect
thereto.
[remainder
of page left intentionally blank; signature page follows]
IN
WITNESS WHEREOF,
and
intending to be legally bound hereby, each of Assignor and Assignee has caused
this Agreement to be executed and delivered by its duly authorized
representative as of the day and year first above written.
| ASSIGNOR | ASSIGNEE | |
| Captive Audience, LLC | Friendlyway Corporation | |
| By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ | By: /s/ ▇▇▇ ▇▇▇▇▇▇▇ | |
| Name: ▇▇▇▇ ▇▇▇▇▇▇ | Name: ▇▇▇ ▇▇▇▇▇▇▇ | |
| Title: Chairman | Title: Chief Executive Officer | |
| Ignition Media Group, Inc | ||
| By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | ||
| Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | ||
| Title: President | ||
SCHEDULE
D
Notification