ASSET PURCHASE AGREEMENT
------------------------
This Agreement entered into this 27 day of January, 1999 by and between In Store
Media Systems, Inc. a Colorado Corporation whose principal place of business is
00000 Xxxx Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000 (hereinafter referred to as
"ISMSI") and Partnership For Shared Marketing, Inc. Xxxxxx Plaza, 400 Kelby
Street, Suite 1500, Fort Xxx, New Jersey, 07024 (hereinafter referred to as
"PSM") collectively (the "Parties").
RECITALS
WHEREAS, PSM owns the multi-categorical database and other assets described in
Exhibit A and;
WHEREAS, PSM desires to sell its multi-categorical database and other assets
under certain terms and conditions and;
WHEREAS, ISMSI has loaned Fifty Thousand and 00/100 Dollars ($50,000.00) to the
principals of PSM pursuant to a Promissory Note (the "Note") dated March 7,
1997, Exhibit B and;
WHEREAS, ISMSI is currently in the process of raising equity in the amount of
$6.8 million by means of Private Placement Offering dated November 3, 1998 (the
"Private Placement"); and
WHEREAS, ISMSI desires to purchase all of PSM's assets and;
WHEREAS, the Parties wish to execute an Asset Purchase Agreement
(the "Agreement") between the Parties.
NOW THEREFORE, in consideration of mutual covenants, promises and other valuable
consideration the Parties hereto mutually agree:
ARTICLE I
PURCHASE
SECTION 1.1 TRANSFER OF ASSETS Subject to the terms and conditions contained
herein, ISMSI agrees to purchase and PSM agrees to sell, transfer and convey,
free and clear of debt and without liens or encumbrances of any kind, all of
PSM's rights, title and interest in and to all of the assets of PSM, of whatever
nature and kind (the "Assets") as listed on attached Exhibit A and which Assets
include without limitation, PSM's original data records and all extant copies of
household names, addresses and other information set forth in Exhibit A hereto.
The Assets shall also include any arrangement, agreement, contract,
E211.001b ISMSI and PSM Asset Purchase Agreement / Page 1 of 8 Rev 03/29/99
purchase order and other sources of revenue of PSM, whether presently existing
or created subsequent to the execution of this Agreement, for a total purchase
price of Five Hundred Thousand and % Dollars ($500,000.00) and One Million Five
Hundred Thousand Shares (1,500,000) of ISMSI common stock, which stock shall be
"restricted" under Rule 144 promulgated by the SEC pursuant to its powers under
the Securities and Exchange Act of 1934 (the "Stock").
SECTION 1.2 Payment
The purchase price of $500,000 plus 1,500,000 shares of the Stock shall be paid
at closing as follows:
(a) $50,000.00 in the form of the discharge of the Note.
(b) $450,000.00 in cash or certified funds.
(c) 1,500,000 shares of the Stock.
SECTION 1.3 Registration Rights
All stock issued to PSM pursuant to the Agreement is subject to Demand
Registration Rights by PSM after one year of date of issue (excepting only that
PSM may not exercise Demand Registration Rights within 180 days of any proposed
public offering by ISMSI) and Piggyback Registration Rights anytime ISMSI files
a Registration Statement of its shares for its own account, provided, that PSM
must advise ISMSI of its decision to register some or all of its shares within
ten (10) days of receipt of notice from ISMSI that ISMSI intends to register
some of its shares for sale to the public.
SECTION 1.4 REDUCTION OF PAYMENT The Payment shall be reduced by any account
payable of PSM that must be paid by ISMSI to acquire the Assets, or any one of
the Assets, free and clear of all liens and encumbrances.
SECTION 1.5 ISMSI and PSM agree that subject to the provisions of the above, the
payment of Five Hundred Thousand and 00/100 Dollars ($500,000.00) and 1,500,000
shares of ISMSI common stock is acceptable to both parties and that upon
Closing, the shareholders of PSM shall have no further claim whatsoever to the
Assets except as specified in Article IX.
ARTICLE II
CLOSING
Subject to the provisions of Article IX, the Closing for the purchase and sale
of the Assets as described in Articles I and II shall take place on or before
May 15, 1999. The Closing
E211.001b ISMSI and PSM Asset Purchase Agreement / Page 2 of 8 Rev 03/29/99
is to occur at a place to be agreed upon by the Parties. Nothing herein shall
preclude the Parties from Closing at an earlier date.
ARTICLE III
CONDUCT OF PSM BUSINESS OPERATIONS PRIOR TO CLOSING
SECTION 3.1 EXCLUDED ASSETS ISMSI and PSM agree that the term "Assets" shall not
include any of PSM's accounts receivable in connection with orders, contracts or
jobs which are completed prior to the date of Closing.
SECTION 3.2 PRO-RATA APPORTIONMENT OF SERVICES In the event that PSM has
accepted payment in advance from a client for specific services, none of which
services have been performed by PSM at the time of Closing, the cash payment by
ISMSI to PSM shall be reduced at Closing by the amount prepaid. In the event
that PSM has accepted payment in advance from a client for a specific service
only partially performed by PSM at the time of Closing, PSM shall retain the
payment pending determination of the ratio of services performed prior to the
Closing to services performed after the Closing. In the event that PSM's
pro-rata share is less than that prepaid to it, then PSM shall refund the excess
to ISMSI not later than ten (10) days after the Closing. PSM shall provide a
preliminary, and immediately prior to Closing, shall provide a final, report on
all contracts for which payment has been received, but for which services have
only been partially performed, or for which no services have been performed or
for which payables remain. The report shall be updated monthly and shall include
all of the then available information so that the Parties ultimately may
determine the ratio of services performed prior to the Closing to services
performed subsequent to the Closing.
SECTION 3.3 APPROVAL OF CONTRACTS Upon execution of this agreement, PSM shall
submit to ISMSI for review and approval all contracts that call for services of
$50,000.00 or more to be performed by PSM. ISMSI has the right to approve such
contracts, which approval shall not be unreasonably withheld. ISMSI agrees to
review such contracts within five (5) business days.
SECTION 3.4 OPERATION OF BUSINESS PSM agrees to operate its business in the
usual course until Closing. Any actions not in the usual course of business must
be pre approved in writing by ISMSI which approval shall not be unreasonably
withheld. PSM shall retain (subject to 3.2 above) all net operating revenues
generated before Closing from PSM's business operations until Closing. However,
ISMSI reserves the right to conduct periodic financial review, of all of PSM
books and records during the interim period before Closing upon reasonable,
written notice to PSM.
E211.001b ISMSI and PSM Asset Purchase Agreement / Page 3 of 8 Rev 03/29/99
ARTICLE IV
TRANSFER OF OWNERSHIP
ISMSI and PSM agree that upon payment of the purchase price in accordance with
Article I above, and subject to the provisions of Article II above, at Closing
PSM shall transfer to ISMSI all its right, title, interest and ownership in its
entirety of the Assets.
ARTICLE V
WARRANTIES
SECTION 5.1 WARRANTIES PSM warrants and guarantees that the Assets to be
purchased by ISMSI are free and clear of any liens or encumbrances whatsoever or
that to the extent that any of the Assets shall have any liens judgments or
other encumbrances on them, PSM will use the funds paid at Final Payment to
satisfy such obligations. If PSM is unable to satisfy and discharge such liens,
judgements or other encumbrances from the payment at Final Payment, both parties
shall have the right to terminate the Agreement pursuant to the provisions of
Article IX.
SECTION 5.2 INSPECTION OF BOOKS AND RECORDS PSM agrees to provide current
financial and services contract information, and to permit ISMSI and its
representatives to inspect the books and records of PSM prior to Closing. PSM
represents that the financial information provided to ISMSI is and will be true
and correct, and further agrees that it will promptly advise ISMSI of any
material change to its financial condition.
ARTICLE VI
EMPLOYMENT AGREEMENTS
ISMSI and PSM agree that as further consideration for the purchase of the
Assets, that ISMSI through its subsidiary shall enter into employment agreements
at Closing with each of the following parties: Xxxx X. Xxxxxx; and, Xxxxxxx X.
Xxxxxx (hereinafter "Monskys"). The employment agreements shall be in the form
attached hereto as Exhibits C, D and E.
ARTICLE VII
FORMATION OF NEW CORPORATION
SECTION 7.1 DATA DRIVEN MARKETING. INC. On January, 9, 1997, ISMSI formed a
wholly-owned subsidiary corporation, Data Driven Marketing Inc. ("DDMI"). ISMSI
and PSM agree that upon Closing, ISMSI shall name new officers and directors of
DDMI to which it will contribute as capital, the Assets purchased under this
Agreement.
E211.001b ISMSI and PSM Asset Purchase Agreement / Page 4 of 8 Rev 03/29/99
SECTION 7.2 DDMI MONTHLY CASH MINIMUM DDMI's monthly operating cash revenues are
to come from billed services provided to independent third parties or to ISMSI.
Therefore, for a period of fourteen (14) months following Closing, ISMSI agrees
to subsidize DDMI monthly cash revenues to the extent funds are available, in
the amount mutually agreed prior to Closing to be necessary to meet the monthly
cash requirements of DDMI (the "Monthly Cash Minimum") as follows:
(a) To provide up to a maximum of $50,000.00 at the end of each
month in which a subsidy is required to reach the Monthly
Cash Minimum.
(b) In any month of ISMSI's fourteen (14) month subsidy
obligation period in which DDMI cash revenues exceed the
Monthly Cash Minimum for that month, the maximum subsidy
obligation of ISMSI in the following month shall be reduced
by the amount of the excess in the previous month.
(c) At any time the aggregate cash revenues of DDMI in excess of
the Monthly Cash Minimum totals more than the aggregate of
the maximum subsidizing obligation of ISMSI to DDMI, then
ISMSI shall have no further obligation to subsidize DDMI's
operating expenses.
ARTICLE VIII
EXPENSES
ISMSI and PSM mutually agree that each Party shall bear all of its own expenses
whatsoever incurred in connection with the transactions contemplated hereby,
including without limitation, the negotiation and finalization of the definitive
agreement, whether or not a definitive agreement is executed or the transactions
contemplated hereby are consummated.
ARTICLE IX
DEFAULT
SECTION 9.1 EVENTS OF DEFAULT The following shall constitute Events of Default
by either of the parties:
(a) Failure to provide requested information about business operations.
(b) Failure to disclose material, adverse changes in the operational or
financial status.
(c) Failure to Close or comply with other terms of the Agreement.
E211.001b ISMSI and PSM Asset Purchase Agreement / Page 5 of 8 Rev 03/29/99
SECTION 9.2 NOTIFICATION OF DEFAULT ISMSI and PSM agree that in the event either
Party is in default of any of the terms and conditions contained in the
Agreement, that the party claiming a default shall give written notice by
certified mail, return receipt requested-to the other party at the address
listed in Article X below, identifying such default, and said defaulting party
shall have Sixty (60) days in which to cure the default.
SECTION 9.3 FAILURE TO CURE DEFAULT In the event the default is not cured within
the sixty (60) day cure period, the Agreement may be terminated by either party.
Notwithstanding the foregoing, ISMSI and PSM agree that in the event of default
by either Party, ISMSI and PSM shall negotiate in good faith to preserve the
Agreement by amendment of its terms.
ARTICLE X
TERMINATION
In the event of Default by either Party, which Default is not cured pursuant to
IX above, the Agreement may be terminated by written notice to the Party not in
Default.
ARTICLE XI
NOTIFICATION
All written notices and correspondence shall be delivered to the address listed
below:
IN STORE MEDIA SYSTEMS, INC. PARTNERSHIP FOR SHARED MARKETING, INC.
00000 Xxxx Xxxxxxx Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000 000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxx, Xxx Xxxxxx 00000
ARTICLE XII
MODIFICATION
The Agreement shall not be modified or altered in any manner whatsoever except
in writing and with the expressed written consent of the Parties.
ARTICLE XIII
SEPARABILITY OF PROVISIONS
The provisions of the Agreement shall be considered to be separable and
independent of each other, and in the event any provisions of the Agreement
shall be found to be invalid,
E211.001b ISMSI and PSM Asset Purchase Agreement / Page 6 of 8 Rev 03/29/99
such finding shall not affect the validity or effectiveness of any other, or
all, of the remaining provisions hereof
ARTICLE XIV
BINDING EFFECT
The Agreement is not transferable. It shall be binding upon and shall inure to
the benefit of (a) ISMSI and its successors and assigns and (b) PSM and Monskys'
successors and assigns, heirs. legatees, executors, administrators, or legal
representatives.
ARTICLE XV
JURISDICTION
The Agreement shall be construed under the laws of the State of Colorado. The
Parties agree to submit all disputes to arbitration pursuant to the applicable
rules of the American Arbitration Association.
ARTICLE XVI
EXECUTION
The Agreement is executed and delivered with the understanding that it reflects
the entire understanding of the Parties and supersedes any prior written or
verbal agreements.
Executed this 27 day of January by:
For: For:
IN STORE MEDIA SYSTEMS, INC. PARTNERSHIP FOR SHARED
MARKETING, INC.
/s/ Xxxxxxx X. Xxxxxxx, Xx. /s/ Xxxxxx Xxxxxx
------------------------------ ------------------------------
Xxxxxxx X. Xxxxxxx, Fr. Xxxxxx Xxxxxx
President/CEO President
Witness:
/s/ Xxxxxx X. Xxx VP /s/ Xxxx Xxxxxx
------------------------------ ------------------------------
Xxxx Xxxxxx
Executive Vice President
E211.001b ISMSI and PSM Asset Purchase Agreement / Page 7 of 8 Rev 03/29/99
APPROVED:
DATA DRIVEN MARKETING, INC.
/s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxxxx
------------------------------ ------------------------------
President/CEO Xxxxxxx X. Xxxxxx
Vice President
Date: 1-27-99
--------------
E211.001b ISMSI and PSM Asset Purchase Agreement / Page 8 of 8 Rev 03/29/99
Exhibit A
ASSETS
------
PROPRIETARY SYSTEMS AND OPERATIONS
(PC LEVEL SYSTEMS. PROCEDURES AND PROGRAMS)
1. ACT Sales Targeting and Client Control System - Network
2. GEOSTAR: Geographic Client Integration System
3. Database Management and Modeling System
4. Telephone Survey System
5. The RED PHONE: Phone-Mail Customize Print Survey System
6. Database Inventory and Reporting System
7. Information Warehousing and Customer Service Systems
8. Sales Tracking and Accounting System
9. Novell Netware V3
10. Lotus 123 V2.2
11. Lotus 123 V5
12. Impress
13. Allways
14. Visio V3.O
15. WordPerfect 6.0 for Windows
16. WordPerfect 5.0
17. Reachout V5.0
18. ProComm Plus V2
19. WinFax Pro V4
20. Monarch V1
21. FoxPro for Windows v2.6
22. Lotus Approach V3
23. MAR Report
24. DOS V6.0
25. Windows 3.1
26. Windows 95
27. Microsoft Presentation
28. Windows File Management
29. Xtree for Windows VI File Management
30. Norton Utilities V1 (utility software)
31. Norton Utilities V6 (utility software)
32. CA Clipper V5 (programming)
33. Microsoft Office (including Word, Excel, PowerPoint, Schedule+)
34. Equipment - see attached listing
exhibitA-assets.wpd
12/09/09
DATABASE ASSETS
---------------
ALL UPDATED AS OF 11/98
UPDATE CYCLE IS QUARTERLY
1. Database Name: American Purchase Diary (APD) Master Database
Description: Household names with state, address, etc.
Inventory Qty as of 12/98: 70,376,680 households
105,350,969 individuals
2. Database Name: APD Household Names with Telephone Numbers
Description: " " " " " "
Inventory Qty as of 12/98: 57,000,000 households
3. Database Name: APD Families with Teenage Children
Description: Families with teenager living at home
Inventory Qty as of 12/98: 4,681,384 households
4. Database Name: APD Mail Order Buyer Transactions
Description: Mail order purchases by category
Inventory Qty as of 12/98: 223,000,000 individual mail order purchases
Total processed 2+ billion MOB records
5. Database Name: PSM Completed (Enhanced) Telephone Surveys
Description: " " " " " "
Inventory Qty as of 12/98: 880,000
6. Database Name: Smokers Master Database by Brand
Description: " " " " "
Inventory Qty as of 12/98: 6,375,149
7. Database Name: Adult Exact Date of Birth Database
Description: " " " "
Inventory Qty as of 12/98: 98,000,000
exhibitA-assets.wpd
12/09/09
8. Database Name: Household Names with Credit Cards
Description: " " " " "
Inventory Qty as of 12/98: 68,000,000 bank
36,000,000 retail
2,856,000 premium
13,089,000 finance loans
9. Database Name: Financial Marketing Database
Description: Combination of all financial information on APD
Inventory Qty as of 12/98: 105,000,000
10. Database Name: Print Survey Database
Description: Responses to (completed) print questionnaires
Inventory Qty as of 12/98: 8,902,000
11. Database Name: Kids and Pets Database
Description: Families with at least one child between age 0-18
Inventory Qty as of 12/98: 6,138,014
2,304,949 have both kids and pets
12. Database Name: Sufferers and Ailment Database
Description: Individuals who suffer from specific diseases and
ailments
Inventory Qty as of 12/98: 7,500,000
exhibitA-assets.wpd
12/09/09
ATTACHMENT TO EXHIBIT A
EQUIPMENT
---------
1 x Pitney Xxxxx Fax Machine, Model: 9300 (Discontinued/Refurbished)
1 x Brother Fax Machine, Model: Intellifax 635
1 x Pitney Xxxxx Digital Postal Scales, Model: 5820
PC Hardware:
------------
1 x Intel Pentium II CPU, 300mhz/128mb/6.4gb
1 x Pentium 166, 1.44mb/1.6gb
1 x 486DX, S0mhz/340mb
2 x 486DX, 33mhz/340mb
Printers
--------
2 x Hewlett Packard Laserjet 6L Printer
1 x Hewlett Packard Laserjet III Printer
1 x Epson LQ-2070 Printer
1 x Hewlett Packard 620 Color Printer
exhibitA-assets.wpd
12/09/09
00 Xxxxxxxxx Xxxx
Xxx Xxxx, XX 00000
February 24, 1999
Messrs. Xxxx Xxxxxx and Xxxxxxx Xxxxxx
The Pantnership For Shared Marketing, Inc.
Xxxxxx Plaza
400 Kelby Street, Suite 1500
Xxxx Xxx, XX 00000
RE: In Store Media Systems, Inc. Asset Purchase of
The Partnership For Shared Marketing, Inc. (PSM)
Dear Sirs,
As discussed, I am prepared to sign the Asset Purchase Agreement pertaining to
the above-referenced, as a one-third owner of PSM, with the following provision.
Paragraph 6 of the referenced Asset Purchase Agreement provides for employment
agreements to be executed by Xxxxxx Xxxxxx, Xxxxxxx Xxxxxx and Xxxx Xxxxxx. It
is my desire, for personal reasons, to be excluded from the requirement of
executing an employment agreement for the completion of this transaction. I
thereby authorize you to have my name removed from this paragraph, at which time
I will provide the requested signature.
All other terms and conditions of the Asset Purchase Agreement will, by
definition, remain in place.
Sincerely,
/s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
ACCEPTED AND AGREED TO:
/s/ Xxxx Xxxxxx 2/24/99
---------------------- ------------
Xxxx Xxxxxx Date
/s/ Xxxxxxx Xxxxxx 2/25/99
---------------------- ------------
Xxxxxxx Xxxxxx Date
CONFIDENTIAL
THE PARTNERSHIP
FOR SHARED MARKETING, INC.
Xxxxxx Plaza
000 Xxxxx Xxxxxx, Xxxxx 0000 Xxxx Xxx, XX 00000
Tel. (000) 000-0000 - FAX (000) 000-0000
FACSIMILE TRANSMISSION
FROM: TO:
Name: Xxxx Xxxxxx Name: Xxxxxxx Xxxxxxx
Compnay: ISMSI
Fax Number: 000-000-0000 Fax Number: 000-000-0000
Voice Phone: 000-000-0000 Voice Phone:
FAX NOTES
--------------------------------------------------------------------------------
Please find attached the Database Assets listing with values which was
erroneously omitted from the signed A.P.A. package sent to you last week.
--------------------------------------------------------------------------------
Date of transmission: 4/14/99
Number of pages including this cover sheet: 3
DATABASE ASSETS with value
--------------------------
ALL UPDATED AS OF 11/98
UPDATE CYCLE IS QUARTERLY
1. Database Name: American Purchase Diary (APD) Master Database
Description: Household names with state, address, etc.
Inventory Qty as of 12/98: 70,376,680 households
105,350,969 individuals
Seller's Estimated Value: $2,500,000
2. Database Name: APD Household Names with Telephone Numbers
Description: " " " " " "
Inventory Qty as of 12/98: 57,000,000 households
Seller's Estimated Value: $1,710,000
3. Database Name: APD Families with Teenage Children
Description: Families with teenager living at home
Inventory Qty as of 12/98: 4,681,384 households
Seller's Estimated Value: $200,000
4. Database Name: APD Mail Order Buyer Transactions
Description: Mail order purchases by category
Inventory Qty as of 12/98: 223,000,000 individual mail order purchases
Total processed 2+ billion MOB records
Seller's Estimated Value: $5,520,000
5. Database Name: PSM Completed (Enhanced) Telephone Surveys
Description: " " " " " "
Inventory Qty as of 12/98: 880,000
Seller's Estimated Value: $352,000
6. Database Name: Smokers Master Database by Brand
Description: " " " " "
Inventory Qty as of 12/98: 6,375,149
Seller's Estimated Value: $3,100,000
7. Database Name: Adult Exact Date of Birth Database
Description: " " " "
Inventory Qty as of 12/98: 98,000,000
Seller's Estimated Value: $2,550,000
exhibitA-assets.wpd
12/09/09
8. Database Name: Household Names with Credit Cards
Description: " " " " "
Inventory Qty as of 12/98: 68,000,000 bank
36,000,000 retail
2,856,000 premium
13,089,000 finance loans
Seller's Estimated Value: $1,785,000
9. Database Name: Financial Marketing Database
Description: Combination of all financial information on APD
Inventory Qty as of 12/98: 105,000,000
Seller's Estimated Value: $1,380,000
10. Database Name: Print Survey Database
Description: Responses to (completed) print questionnaires
Inventory Qty as of 12/98: 8,902,000
Seller's Estimated Value: $1,450,000
11. Database Name: Kids and Pets Database
Description: Families with at least one child between age 0-18
Inventory Qty as of 12/98: 6,138,014
2,304,949 have both kids and pets
Seller's Estimated Value: $2,500,000
12. Database Name: Sufferers and Ailment Database
Description: Individuals who suffer from specific diseases and
ailments
Inventory Qty as of 12/98: 7,500,000
Seller's Estimated Value: $2,500,000
exhibitA-assets.wpd
12/09/09
