XXXXXXXX.XXX ASSET ACQUISITION AGREEMENT OF
XXXXXXXXX.XXX AND XXXXXXXXX.XX
This Asset Acquisition Agreement (the "Agreement") is to be made effective on
November 1, 2000 (the "Effective Date") between XxxxxXxxx.Xxx, Inc., a Colorado
corporation ("Seller"), certain shareholders of Seller set forth on the
signature pages hereto (the "Shareholders") and Xxxxxxxx.xxx, Inc.,a Nevada
corporation ("Xxxxxxxx.xxx") with respect to the following facts:
RECITALS
A. Seller is the registered owner of the Internet domains listed on Exhibit A
hereto (the "Domains").
B. Seller is also the beneficial owner, with the same registration rights of
certain trademark/service xxxx registrations and certain common law trademark/
service xxxx rights in the Domains (collectively "Trademarks") (listed on
Exhibit B hereto).
C. Seller owns the content and end user information (including e-mail addresses)
available at the Domains and also the content and end user information
(including e-mail addresses) available at the XxxxxXxxx.Xxx, Inc. domains
(the "Content").
D. Seller has agreed to assign the Domains, Trademarks (and associated goodwill)
and Content, on the terms set forth below.
E.. This agreement is intended to replace and cancel the asset purchase
agreement dated December 15, 1999.
AGREEMENT
1. ASSIGNMENT. The Seller hereby assigns, transfers and conveys to Xxxxxxxx.xxx
all right, title and interest (including but not limited to any and all rights
and interest under common law) in the Domains, the InterNic (or other relevant
body) registrations of the same, the Trademarks and the Content. Seller further
waives all claims it has to the Domains, Trademarks and Content and agrees to
cease all use of the Domains, Trademarks and Content.
2. CONSIDERATION. In consideration of the assignments set forth in Section 1
hereof and Seller's representations, warranties and covenants made hereunder,
Xxxxxxxx.xxx will pay to seller:
A) Timebeat has issued to Seller or to his designees 225,000 stock
options of Xxxxxxxx.xxx Common Stock (appropriately adjusted for any
stock split, dividend, combination or other recapitalization) (the
"Options") at a strike price of $.56 Canadian. Seller acknowledges that
150,000 of these stock options were originally granted on December 15,
1999 whose exercise price has been reduced to $.56 Canadian and the
remaining 75,000 stock options were granted on October 20, 2000. In
addition both Xxxxxxxx.xxx and Seller acknowledge that 33,000 option of
the 150,000 granted on December 15, 1999 have already been exercised
leaving a remaining balance to be exercised of 117,000 options. A copy
of those stock options agreements are attached in Exhibits C. Timebeat
will not cancel those stock options for any reason.
B) certain watches as described more fully in Exhibit D and
C) accounting reconciliation as more fully outlined in Exhibit E
3. LIABILITIES. It is understood and agreed that Xxxxxxxx.xxx will not assume
any direct or indirect debts, obligations or liabilities of the Seller of any
nature, whether absolute, accrued, contingent, liquidated or otherwise, and
whether due or to become due, asserted or unasserted, known or unknown. Xxxxx
Xxxxxxx ( the "Indemnifying Shareholder"), shall indemnify and hold harmless
Xxxxxxxx.xxx and its transferees, successors and assigns for any liabilities,
contingent or otherwise, associated with the
Domains, Trademarks and Content (including but not limited to claims of
trademark infringement) or otherwise associated with the business of Seller for
a period of five years from the Closing; provided, however, that the amount, if
any, to be paid by Indemnifying Shareholders to Xxxxxxxx.xxx under this Section
3 shall not exceed one hundred thousand dollars (US $100,000).
4. CLOSING. The closing of the transactions contemplated by this Agreement (the
"Closing") will take place on November 6, 2000 (or such other time or by
facsimile as the parties may agree). Upon closing the seller will notify
internic and take the necessary steps to record ownership of the domain names
xxxxxxxxx.xxx and xxxxxxxxx.xx in the name of "Xxxxxxxx.xxx Inc" and after
receiving documentation of this transfer from Seller Timebeat will immediately
send the Seller of a check from Timebeat in the amount of US $3,500 made payable
to Xxxxx Xxxxxxx.
5. FURTHER ASSURANCES. The Seller shall assist Xxxxxxxx.xxx in every proper way
to evidence, record and perfect the assignments described in Section 1 above and
to perfect, obtain, maintain, enforce, and defend the rights assigned. For
example, the Seller agrees that it will immediately apply for and effect
re-registration of the Domains and Trademarks in Xxxxxxxx.xxx's name according
to InterNic's (or other relevant body's) current policy. Seller intends to
liquidate in accordance with Section 368 of the Code. Xxxxxxxx.xxx does not make
any representation as to the applicability of Section 368 of the Code.
6. REPRESENTATIONS; WARRANTIES. The Seller and each of the Shareholders, jointly
and severally, represent and warrant to Xxxxxxxx.xxx that:
A. Seller is the sole owner (other than Xxxxxxxx.xxx) of all rights,
title and interest in the Domains, Trademarks, Content and Contracts
to be transferred by Seller.
B. After the Closing, the Seller will discontinue all further use of
the Domains, Trademarks and Content.
C. Seller and Shareholders have full power and authority to enter into
this Agreement, and this Agreement constitutes a valid and legally
binding obligation of Seller and the Shareholders, enforceable in
accordance with its terms.
D. Neither the execution, delivery or performance of this Agreement nor
the consummation of the transactions contemplated thereby, including
without limitation the sale of the Domains, Trademarks and Content to
Xxxxxxxx.xxx and Xxxxxxxx.xxx's exercise of control over the Domains,
Trademarks and Content after Closing, will conflict with any material
contract or result in the creation of any lien, claim, security
interest or encumbrance (collectively, "Lien") on the Domains,
Trademarks and Content pursuant to, or relieve any third party of any
obligation to the Seller or give any third party the right to terminate
or accelerate any obligation.
E. The Seller and the Shareholders acknowledge that Xxxxxxxx.xxx will
not be responsible for any income, sales, use, excise or other tax that
arises out of or results from the sale of the Domains, Trademarks and
Content.
F. The Seller and the Shareholders represent that there are currently
no pending, or to the knowledge of Seller and Shareholders, threatened
lawsuits, administrative proceedings or reviews, or formal or informal
complaints or investigations (including any regarding trademark
infringement) by any individual or other entity against or relating to
the Seller or the Shareholders, Domains, Trademarks and Content.
G. Seller and Shareholders acknowledge that they have each relied on
their own tax advisors for the advice regarding the tax consequences of
the transactions contemplated by this Agreement and has not received
tax advice with respect thereto from Xxxxxxxx.xxx or any of its
officers, employees, or agents.
Timebeat Asset Acquisition Agreement of
Xxxxxxxxx.xxx and Xxxxxxxxx.xx Page 2 of 6
H. Seller and Shareholders acknowledge that they are each able to fend
for themselves, can bear the economic risk of the investment, and have
such knowledge and experience in financial, tax and business matters
that they are capable of evaluating the merits and risks of the
assignments provided for herein and the investment in the Options.
Seller also represents it has not been organized for the purpose of
acquiring the Options.
I. Without in any way limiting the representations set forth above,
Seller and Shareholders each further agree not to make any disposition
of all or any portion of the Options unless and until the transferee
has agreed in writing for the benefit of the Company to be bound by
this Section 6, provided and to the extent this Section are then
applicable, and:
(i) There is then in effect a Registration Statement under the
Act covering such proposed disposition and such disposition is
made in accordance with such Registration Statement; or
(ii) (A) Seller and Shareholders shall have notified
Xxxxxxxx.xxx of the proposed disposition and shall have
furnished Xxxxxxxx.xxx with a detailed statement of the
circumstances surrounding the proposed disposition, and (B) if
reasonably requested by Xxxxxxxx.xxx, Seller and Shareholders
shall have furnished Xxxxxxxx.xxx with an opinion of counsel,
reasonably satisfactory to Xxxxxxxx.xxx, that such disposition
will not require registration of such options under the Act.
It is agreed that Xxxxxxxx.xxx will not require opinions of
counsel for transactions made pursuant to Rule 144 except in
unusual circumstances.
N. It is understood that the certificates evidencing the Options and
shares purchased under the Options may bear one or all of the following
legends:
"These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold,
offered for sale, pledged or hypothecated in the absence of a
registration statement in effect with respect to the
securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not
required or unless sold pursuant to Rule 144 of such Act."
O. The Seller and shareholder Xxxxx Xxxxxxx each represent that for a
period of two (1) year from the date of this Agreement, Seller and Xx.
Xxxxxxx will not without the prior written consent of the Chief
Executive Officer of Xxxxxxxx.xxx, which shall not unreasonably be
withheld (except as an employee of Xxxxxxxx.xxx or a subsidiary of
Xxxxxxxx.xxx), directly or indirectly,
(i) (A) Participate or engage in the design, development,
manufacture, production, marketing, sale or servicing of any
product related to the Domains, Trademarks and Content or (B)
provide any service for any entity whose primary business is
to develop or provide products and/or services similar to the
Domains, Trademarks and Content (the "Business") in the
international internet business (the "Geographic Scope of
Employee's Business") or
(ii) Permit the name of Seller or Xx. Xxxxxxx to be used in
connection with a competitive Business.
7. REPRESENTATIONS; WARRANTIES. Xxxxxxxx.xxx represents, warrants and covenants
to the Seller that:
A. Xxxxxxxx.xxx is a corporation duly organized, validly existing and
in good standing under the laws of the State of Nevada. Xxxxxxxx.xxx
Company is a wholly-owned subsidiary of Xxxxxxxx.xxx Enterprises, Inc.
a Yukon territory of Canada corporation.
Timebeat Asset Acquisition Agreement of
Xxxxxxxxx.xxx and Xxxxxxxxx.xx Page 3 of 6
B. Xxxxxxxx.xxx has full power and authority to enter into this
Agreement, and this Agreement constitutes a valid and legally binding
obligation of Xxxxxxxx.xxx, enforceable in accordance with its terms.
C. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not violate any provision of
the certificate of incorporation or bylaws of Xxxxxxxx.xxx, or any
provision of any material agreement or instrument to which Xxxxxxxx.xxx
is a party.
8. MISCELLANEOUS. This Agreement shall be construed pursuant to the laws of the
state of Colorado without regard to conflicts of laws provisions thereof. Any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, shall be settled in Denver, Colorado, by arbitration in accordance with
the National Rules for the American Arbitration Association. The decision of the
arbitrator shall be final and binding on the parties, and judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The parties hereby agree that the arbitrator shall be empowered to
enter an equitable decree mandating specific enforcement of the terms of this
Agreement. Employee hereby consents to personal jurisdiction of the state and
federal courts located in the State of Colorado for any action or proceeding
arising from or relating to this Agreement or relating to any arbitration in
which the parties are participants.
9. LIQUIDATED DAMAGES. The parties agree that the actual damages that might be
sustained by Xxxxxxxx.xxx by reason of the breach by Xxxxx Xxxxxxx of Section 6
are uncertain and would be difficult to ascertain and that the sum of US
$20,000 would be reasonable compensation for such breach. Xxxxx Xxxxxxx hereby
promises to pay, and Xxxxxxxx.xxx hereby agrees to accept, such sum as
liquidated damages, and not as a penalty, in the event of such breach. The
parties agree that the damages received by Xxxxxxxx.xxx pursuant to this section
and pursuant to Section 10 of the Asset Acquisition Agreement of even date
herewith between Xxxxxxxx.xxx and Xxxxx Xxxxxxx shall not, in the aggregate,
exceed US $20,000.
10. LIQUIDATED DAMAGES. The parties agree that the actual damages that might be
sustained by Xxxxx Xxxxxxx by reason of the breach by Xxxxxxxx.xxx of Section 6
are uncertain and would be difficult to ascertain and that the sum of US $20,000
would be reasonable compensation for such breach. Timebeat hereby promises to
pay, and Xxxxx Xxxxxxx hereby agrees to accept, such sum as liquidated damages,
and not as a penalty, in the event of such breach. The parties agree that the
damages received by Xxxxx Xxxxxxx pursuant to this section and pursuant to
Section 10 of the Asset Acquisition Agreement of even date herewith between
Xxxxxxxx.xxx and Xxxxx Xxxxxxx shall not, in the aggregate, exceed US $20,000.
11. BREACH. If a party is in breach of any requirement of this agreement, the
party affected by such breach (the "Non-Breaching Party"), shall give written
notice to other party within thirty (30) days of becoming aware of such breach,
specifying the breach, and the Breaching Party shall not lose any rights,
remedies or cause of action pursuant to this Agreement, or otherwise hereunder
as a result of such breach, unless within thirty days (30) days after giving
notice of breach by the Non-Breaching Party, the Breaching Party fails within
such period to cure such breach, the Non-Breaching Party shall only then be
entitled to seek any remedy it may have on account of such breach.
12. NOTICES: .The provisions of this paragraph shall apply to any notice
contemplated or provided for in this Agreement.
a. All notices shall be in writing and shall be
made by registered or certified mail and by
transmission by telecopy to such person at such person's telecopy
number and email address to the attention of such person's
Telecopy Addressee.
b. The notice addresses and telecopy numbers are:
i. For XXXXXXXX.XXX: Xxxxxxxx.xxx Inc
Timebeat Asset Acquisition Agreement of
Xxxxxxxxx.xxx and Xxxxxxxxx.xx Page 4 of 6
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0
Xxxxxx Xxxx XX 00000
With a copy to: Xxxxxx X. Xxxx
X.X. Xxx 0
Xxxxxx, XX 00000-0000
Telecopy (000) 000-0000
Email address: xxxxx@xxxxxxx.xxx
ii) For Watchzone Attention: Xxxxx Xxxxxxx
0000 Xxxxx Xxxxxxxxx Xxx
Xxxxxx, Xx 00000
Telecopy--(303) 369-6848
Email address: xxxxxxxxx@xxxxxx.xxx
13. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
14. ENTIRE AGREEMENT. This Agreement constitutes and contains the entire
agreement and understanding between the parties and supersedes all prior
agreements, memoranda, correspondence, communications, negotiations and
representations, whether oral or written, express or implied, statutory or
otherwise between the parties or any of them with respect to the subject matter
hereof.
IN WITNESS WHEREOF, the parties here to have executed this Agreement effective
as of the date first written above.
XxxxxXxxx.Xxx, Inc.
By:
----------------------------------------
Name: Xxxxx Xxxxxxx
Title: President
XXXXXXXX.XXX, INC. XXXXXXX.XXX ENTERPRISES INC.
By: By:
-------------------------- ---------------------------
Name: Xxxxxx X. Xxxx Name: Xxxxxx X. Xxxx
Title : Chairman Title: Chairman
Timebeat Asset Acquisition Agreement of
Xxxxxxxxx.xxx and Xxxxxxxxx.xx Page 5 of 6
EXHIBIT A----LIST OF DOMAINS
XxxxxXxxx.Xxx, XxxxxXxxx.XX
EXHIBIT B-LIST OF TRADEMARK/SERVICE XXXX REGISTRATIONS
-none--------
EXHIBIT C-STOCK OPTION AGREEMENTS
Attached to all the stock option agreements will be a letter from Xxxxxxxx.xxx
Enterprises Inc which states. "As required under the Asset Acquisiton Agreement
dated October 26, 2000 these options can not be cancelled for any reason by
Xxxxxxxx.xxx Enterprises Inc or Xxxxxxxx.xxx Inc."
C-1--55,000 New stock options to Xxxxx Xxxxxxx granted on October 20, 2000
C-2- 5,000 New Stock options to Xxxxx Xxxxxx granted on October 20, 2000
C-3-5,000 New stock options to Xxxxxxx XxXxxxx granted on October 20, 2000
C-4--5,000 New stock options to Xxxx Xxxxxxxx granted on October 20, 2000
C-5- 5,000 New stock options to Xxxxx Xxxxxx granted on October 20, 2000
C-6- 66,000 Repriced stock options (original number granted was 99,000 stock
options) to Xxxxx Xxxxxxx granted on December 15, 1999
C-7--22,500 Repriced stock options to Xxxxxxx Xxxxxxx granted on
December 15, 1999
C-8- 9,000 Repriced stock options to Xxxx Xxxxxxxx granted on December 15,
1999
C-9- 7,500 Repriced stock options to Xxxxx Xxxxxx granted on December 15,
1999
C-10 7,500 Repriced stock options to Xxxxx Xxxxxx granted on December 15,
1999
C-11 2,500 Repriced stock options to Xxxxxxx XxXxxxx granted on December
15, 1999
EXHIBIT D--LIST OF WATCHES RECEIVED
Two IWC Fliegerchronographs, One Omega Speedmaster, and Three Omega Seamaster
Professionals.
EXHIBIT E--ACCOUNTING RECONCILIATION
INCOME- On behalf of Xxxxxxxx.xxx, Watchzone management received the following
advertising revenues.
From December 15, 1999 through September 30, 2000 a total of US
$16,178.86 (Watchbuy- $4,300.00; Time of Switzerland $3,200.00; Silver
Magic $4,348.00; Armadale $1,875.00 and Timebeat $2,455.86) . In
addition there is an amount due of $1,000 from Value Swiss.
EXPENSE- On behalf of Xxxxxxxx.xxx Watchzone management incurred a total of US
$3,045.69 of expenses. These expenses were: server $450.00; ebay $254.83; domain
name renewal $ 35.00; purchase domain name xxxxxxxxx.xx $50.00; Xxxxxxxx.xxx
advertising $2,455.86) Net income-Under the prior agreement of December 15, 1999
50% of the advertising revenue or $8,589.43 would belong to Xxxxxxxx.xxx and the
expenses of $3,045.69 would be paid by Timebeat.
The net due to Xxxxxxxx.xxx under the prior agreement would be $5,543.74.
However in recognition of the extra effort put forth by Watchzone management
Xxxxxxxx.xxx agrees that the Watchzone management can keep this amount. Xxxxx
Xxxxxxx will retain this amount as additional compensation which can be
allocated among the Watchzone management in his sole discretion.
Timebeat Asset Acquisition Agreement of
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