Exhibit 10.1
ASSET ACQUISITION AGREEMENT
THIS ASSET ACQUISITION AGREEMENT (this "Agreement") is made effective as of
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the 1st day of January, 2005 (the "Effective Date"), by and among Musters &
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Company, Inc., a New York corporation (being herein referred to as "Musters"),
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and XA, Inc., a Nevada corporation (being herein referred to as "XA"). MUSTERS
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and XA are collectively referred to herein as the "Parties."
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PRELIMINARY STATEMENTS
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A. MUSTERS desires to transfer and XA desires to acquire substantially
all of the assets and assume certain liabilities of MUSTERS.
B. MUSTERS is an event planner and event decor firm ("Business").
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C. MUSTERS owns certain assets that XA intends to acquire as set forth in
Schedule A (the"Assets") having a fair market value of at least 80% of
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all of MUSTERS's assets.
D. The Parties have reached an understanding whereby MUSTERS will
transfer and XA will acquire Assets from MUSTERS and XA will assume
only those specific liabilities set forth in Schedule B
("Liabilities").
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E. The Parties mutually desire to set forth in writing all of the terms
and conditions whereby the aforementioned purchase and sale of the
assets, which is intended to constitute a tax-free reorganization
pursuant to Section 368(a)(1)(C) of the Internal Revenue Code of 1986
(the "Code"), shall take place.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, MUSTERS and XA do hereby agree as
follows:
ARTICLE I.
INTERPRETATION
1.1 The Preliminary Statements, above, shall form an integral part hereof as
if recited herein at length.
1.2 Where used herein or in any amendment hereto the following terms shall
have the meaning defined in this Section 1.2 unless the context indicates
otherwise:
(a) "Accounts Receivable" means all accounts receivable of MUSTERS as set
forth in MUSTERS's Balance Sheet on the Closing Date.
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(b) "Accounts Payable" means all accounts payable of MUSTERS as set forth
in MUSTERS's Balance Sheet on the Closing Date.
(c) "Agreement" means this Asset Purchase Agreement;
(d) "Business" has the meaning assigned thereto in the Preliminary
Statements;
(e) "Books and Records" means all books and records of MUSTERS other than
stock books and tax records to be retained by MUSTERS;
(f) "Cash" means all of MUSTERS's cash on hand and funds on deposit.
(g) "Checking/Savings Accounts" means the total Checking/Savings Accounts
of MUSTERS.
(h) "Closing" or "Closing Date" means January 3, 2005, or such other date
as mutually agreed to in writing by the Parties hereto;
(i) "Computer and Computer Equipment" means the computer peripherals of
MUSTERS relating to the Business to the extent transferable;
(j) "Computer Software" means the computer software of MUSTERS relating to
the Business;
(k) "Copyrights" means any copyrights held by MUSTERS;
(l) "Contract Rights" means MUSTERS's contract rights;
(m) "Customer Lists" means MUSTERS's lists of customers;
(n) "Equipment" means the office equipment of MUSTERS;
(o) "Financial Statements" means the financial statements of MUSTERS as of
the Closing Date as set forth in Schedule D;
(p) "Fixtures" means the fixtures owned by MUSTERS;
(q) "Goodwill" means the goodwill of MUSTERS relating to the Business,
books and records of MUSTERS, the right to all telephone, telecopier
numbers relating to the Business, the right to all web site and domain
names, all information in the possession of MUSTERS relating to the
operations of the Business, the exclusive right of XA to represent
itself as carrying on the Business as well as all corporate business
opportunities of MUSTERS;
(r) "Inventory" means the inventory of MUSTERS as set forth in Schedule A;
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(s) "Leasehold Improvements" means all leasehold improvements of MUSTERS
with respect to any and all premises currently being leased by
MUSTERS;
(t) "Leases" means all of the leases under which MUSTERS is currently
leasing any premises, wherever situated;
(u) "Letter of Intent" means the Acquisition Letter of Intent dated
Monday, November 1, 2004 by and between MUSTERS and The Experiential
Agency, Inc. (now known as XA, Inc.
(v) "Loans Receivable" means all loans receivable by MUSTERS including all
loans due from MUSTERS's officers, directors, affiliates or majority
shareholders;
(w) "Patents" means all patents held by MUSTERS;
(x) "Permits" means all permits held by MUSTERS, to the extent
transferable;
(y) "Prepaid Expenses" means all prepaid expenses and deposits of MUSTERS;
(z) "Production Equipment" means all production equipment of MUSTERS;
(aa) "Software" means all software of MUSTERS;
(bb) "Source Codes" means all software source codes owned by MUSTERS to the
extent same is transferable;
(cc) "Trademarks" means all trademarks, business logos designs and/or
corporate identity assets that are owned or in use by MUSTERS,
including any rights related to the name Musters & Company and any and
all trademarks, business logos, designs, and/or corporate identity
assets that are owned or in use by MUSTERS;
(dd) "Trade Names" means all trade names used by MUSTERS.
(ee) "Trade Secrets" means MUSTERS' method of conducting business.
1.3 The following Schedules are incorporated in this Agreement by reference
and are deemed to be an integral part hereof:
Schedule A - Schedule of assets to be acquired by XA.
Schedule B - Schedule of liabilities to be assumed by XA.
Schedule C - Schedule of work in progress adjustments
Schedule D - Financial Statements of MUSTERS as of the
Closing Date
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ARTICLE II.
ACQUISITION OF PROPERTY AND ASSETS
2.1 Subject to the terms and conditions hereof, MUSTERS hereby agrees to
transfer, assign, and deliver, free and clear of all liens, pledges,
encumbrances, charges, restrictions or known claims of any kind, nature, or
description, not excluded below, the Assets to XA and XA hereby agrees to
acquire the Assets from MUSTERS (the "Acquisition").
2.2 Assets excluded from the Acquisition will be Accounts Receivable,
insurance policies, claims for tax refunds, employee benefit plans (or interests
therein) and all real estate (excluding leasehold improvements) either held by
MUSTERS or an affiliated entity (the "Remaining Assets"), which Remaining Assets
shall have a fair market value equal to or less than 20% of all of MUSTERS'
assets.
2.3 The Assets to be acquired pursuant to this Agreement will be approved by
XA as listed on Schedule A.
2.4 XA shall cause to be issued to MUSTERS One Hundred Fifty Thousand
(150,000) post 1:20 reverse-split shares of XA's unregistered common stock
("Shares"). The Shares are referred to herein as the "SHARES". The Shares
shall be restricted under Rule 144.
2.5 XA will assume only certain liabilities of MUSTERS, as set forth on
Schedule B. Additionally, at the Closing date, by mutual agreement of the
Parties, XA may assume additional liabilities of MUSTERS. Liabilities excluded
from the Acquisition will be MUSTERS' Accounts Payable.
2.6 At Closing, MUSTERS shall (1) deliver to XA a general conveyance of the
Assets and all other deeds of conveyance, transfer and assignment, consents and
any other documents duly executed, in form and content satisfactory to XA,
appropriate to effectively vest good and marketable title to the Assets free and
clear of all encumbrances and immediately registrable in all places where
registration of such instruments is necessary or desirable duly endorsed for
transfer of the Assets to XA; (2) deliver possession of the Assets to XA; and
(3) deliver to XA certified copies of resolutions of the shareholders and
directors of MUSTERS authorizing the transfers contemplated hereby.
2.7 On Closing, XA shall deliver to MUSTERS the SHARES as set forth in
Section 2.4, above.
ARTICLE III.
ASSIGNMENT OF LEASES
3.1 Subject to XA's approval and acceptance, XA will assume and agree to
perform MUSTERS' Leases and MUSTERS will assign all of its right, title and
interest in all Leases to XA.
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3.2 In consideration of the assignment of the Leases, XA hereby undertakes
to discharge, perform and fulfill all obligations, commitments and engagements
of MUSTERS entered into in connection with said Leases and to indemnify and save
MUSTERS harmless with respect to same.
ARTICLE IV.
COVENANTS, REPRESENTATIONS AND WARRANTIES OF MUSTERS
MUSTERS covenants, represents and warrants as follows to XA and
acknowledges and confirms that XA is relying on such covenants, representations
and warranties in connection with the acquisition of the Assets:
4.1 MUSTERS is a corporation duly organized, validly existing, and in good
standing under the laws of the State of New York and has the corporate power and
is duly authorized, qualified, franchised, and licensed under all applicable
laws, regulations, ordinances, and orders of public authorities to own all of
its properties and assets, to carry on the Business in all material respects as
it is now being conducted, and except where failure to be so qualified would not
have a material adverse effect on the Business, there is no jurisdiction in
which it is not qualified in which the character and location of the assets
owned by it or the nature of the Business requires qualification.
4.2 All of the Assets are owned solely and unconditionally by MUSTERS and
MUSTERS has good, valid and marketable title thereto, free and clear of all
hypothecations, pledges, mortgages, liens, charges, security interests,
encumbrances, actions, claims or demands of any nature whatsoever or however
arising except for those charges disclosed to XA or created by operation of law
alone.
4.3 No person, firm or corporation has any written or oral agreement,
option, understanding or commitment, or any right or privilege capable of
becoming an agreement, for the purchase from MUSTERS of any of the Assets.
4.4 The execution, delivery and carrying out of this Agreement by MUSTERS
will not violate any provision of law, MUSTERS' Certificate of Incorporation or
its Bylaws, and will not conflict with or result in any breach of any of the
terms, conditions or provisions of or constitute a default pursuant to any
instrument or agreement to which MUSTERS is a party or by which MUSTERS is
bound.
4.5 MUSTERS has full corporate power, capacity and authority to enter into,
and to carry out and perform its obligations under this Agreement and any
agreements contemplated hereby. MUSTERS has taken all action required by law,
its Certificate of Incorporation, its Bylaws, or otherwise to authorize the
execution and delivery of this Agreement, and MUSTERS has full power, authority,
and legal right and has taken all action required by law, its Certificate of
Incorporation, Bylaws, or otherwise, including all approvals and consents,
necessary in order to effect the transactions contemplated hereby.
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4.6 All inventories have been accumulated in the ordinary course, are in
good and marketable condition save and except such reserves for damages as are
reflected in the Financial Statements.
4.7 Any announcement or press or news release by MUSTERS or its
shareholders, employees, officers, directors, or agents made prior to or after
Closing shall be reviewed and approved in writing by XA prior to its release,
subject to any requirement of law.
4.8 MUSTERS shall be responsible for any and all costs (including but not
limited to attorney's fees, settlement amounts, arbitration amounts, court
decrees, judgments or the like) and shall indemnify XA against any litigation,
actions, claims, suits, legal administration or arbitration proceedings existing
or pending with MUSTERS prior to Closing.
4.9 MUSTERS agrees that the information supplied to XA prior to the
acquisition Letter of Intent , regarding MUSTERS' assets including (a) MUSTERS'
financial projections prepared by MUSTERS; (b) the historical unaudited balance
sheets, and income statements for the fiscal years ended 1999 through 2003; and
(c) the quarterly financial statements provided, was substantially accurate.
4.10 MUSTERS agrees that no material adverse change, as determined by XA in
its reasonable judgment, in the Assets or the Liabilities of MUSTERS or in
MUSTERS' Business, financial condition or prospects shall have occurred, other
then changes that have been communicated to XA on or prior to the date of this
Agreement.
4.11 Prior to Closing this Agreement, MUSTERS shall have received all
necessary corporate approvals authorizing this Agreement and the transaction
contemplated pursuant to this Agreement.
4.12 This Agreement shall have received the necessary consents or approvals
from third parties, including any governmental approvals, and any necessary
governmental filings shall have been made prior to Closing.
4.13 In the event that this Agreement is terminated due to a material
misrepresentation or material omission of information known to MUSTERS or any of
its representatives, or pursuant to section 4.15, then MUSTERS shall be
responsible and shall reimburse XA for all expenses incurred by XA prior to such
termination.
4.14 MUSTERS acknowledges that the Shares will be restricted securities
under the Securities Act of 1933 (the "Securities Act"), will be issued pursuant
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to an exemption from registration requirements of the Securities Act pursuant to
Section 4(2) of the Securities Act and will be endorsed with a legend in a form
substantially similar to the following:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND
MAY NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED WITHOUT EITHER: i)
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS, OR ii) SUBMISSION TO THE CORPORATION OF AN OPINION OF COUNSEL,
SATISFACTORY TO THE CORPORATION THAT SAID SHARES AND THE TRANSFER THEREOF ARE
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND
APPLICABLE STATE SECURITIES LAWS."
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MUSTERS represents to XA that MUSTERS is acquiring the Shares for investment
purposes and not with a view to resell or distribute except with respect to its
complete liquidation which shall occur after the Closing pursuant to Section
368(a)(2)(G) of the Internal Revenue Code of 1986, as amended.
4.15 MUSTERS represents and warrants that immediately after the acquisition
of the Assets contemplated hereby, MUSTERS will liquidate the Remaining Assets
and any other assets that continue to be in MUSTERS' possession and dissolve its
status as a corporation.
ARTICLE V.
COVENANTS, REPRESENTATIONS AND WARRANTIES OF XA
XA covenants, represents and warrants as follows to MUSTERS and
acknowledges and confirms that MUSTERS is relying on such covenants,
representations and warranties in connection with the transfer of the Assets:
5.1 XA is a company duly organized, validly existing, and in good standing
under the laws of the State of Nevada and has the corporate power and is duly
authorized, qualified, franchised, and licensed under all applicable laws,
regulations, ordinances, and orders of public authorities to own all of its
properties and assets, to carry on its business in all material respects as it
is now being conducted, and except where failure to be so qualified would not
have a material adverse effect on its business, there is no jurisdiction in
which it is not qualified in which the character and location of the assets
owned by it or the nature of the business transacted by it requires
qualification.
5.2 The execution, delivery and carrying out of this Agreement by XA will
not violate any provision of law or XA's Articles of Incorporation as amended or
Bylaws, and will not conflict with or result in any breach of any of the terms,
conditions or provisions of or constitute a default pursuant to any instrument
or agreement to which XA is a party or by which XA is bound.
5.3 XA has full corporate power, capacity and authority to enter into, and
to carry out and perform its obligations under this Agreement and any agreements
contemplated hereby. XA has taken all action required by law, its Articles of
Incorporation as amended, its Bylaws, or otherwise to authorize the execution
and delivery of this Agreement, and XA has full power, authority, and legal
right and has taken all action required by law, its Articles of incorporation as
amended, Bylaws, or otherwise, including all approvals and consents, necessary
in order to effect the transactions contemplated hereby.
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5.4 This Agreement shall have received the necessary consents or approvals
from third parties, including any governmental approvals, and any necessary
governmental filings shall have been made prior to Closing.
5.5 Assets purchased by XA will be based on the Balance Sheet, and shall be
reviewed by a certified public accounting firm selected by XA to conduct
accounting due diligence, whose fees and expenses shall be paid by XA.
5.6 XA agrees that, at the time of Closing, it will enter into an Executive
Employment Agreement with Xxxx Xxxxxxx, MUSTERS' president, with terms
substantially similar to the document attached hereto as Exhibit A.
5.7 Prior to closing this Agreement, XA shall have received all necessary
corporate approvals authorizing this Agreement and the transaction contemplated
pursuant to this Agreement.
5.8 At Closing XA shall have entered into a lease of MUSTERS' business
premises on terms satisfactory to XA and premises owner.
5.9 At Closing, subject to XA's approval and acceptance, XA will assume and
agree to perform all of MUSTERS's executory contracts, leases, and employee
benefit plans that XA determines are necessary for the operation of MUSTERS's
business and specifically assumes under this Agreement.
5.10 XA retains the right, in its sole discretion, to bring in any partners
or co-investors to consummate the transaction contemplated herein.
ARTICLE VI.
EMPLOYMENT MATTERS
6.1 MUSTERS is not a party to and does not have, in effect or to become
effective after the date of this Agreement, any written (1) employment
agreement; (2) contract for employment or compensation arrangement with any
officer, director or employee; (3) consulting agreement; or (4) agreement or
arrangement that provides for bonus, cash or deferred compensation, severance
pay, medical, health or hospitalization benefits, pension, profit sharing,
thrift or retirement benefits, stock options, employee stock ownership, life or
group insurance, death or welfare benefits, incentives, vacation pay, sick
leave, a cafeteria plan, so-called "golden parachute" payments, disability
benefits or an employee trust.
ARTICLE VII.
INDEMNIFICATION
7.1 MUSTERS hereby undertakes and agrees to indemnify XA and save it
harmless from and against any claims, actions or suits which may be made or
instituted against XA, and from and against any and all damages or losses
suffered by XA by reason of or arising from the breach of any obligation of
MUSTERS under this Agreement, or any incorrectness in, or breach of, any
covenant, representation or warranty made by MUSTERS in this Agreement.
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7.2 XA hereby undertakes and agrees to indemnify MUSTERS and save it
harmless from and against any claims, actions or suits which may be made or
instituted against MUSTERS, and from and against any and all damages or losses
suffered by MUSTERS by reason of or arising from the breach of any obligation of
XA under this Agreement, or any incorrectness in, or breach of, any covenant,
representation or warranty made by XA in this Agreement.
ARTICLE VIII.
MISCELLANEOUS
8.1 The representations, warranties and covenants contained herein and the
documents submitted pursuant to or in connection with the transactions herein
provided shall survive for one year from the Closing of the acquisition and
transfer of the Assets and, notwithstanding such Closing and regardless of any
investigations by or on behalf of any of the Parties with respect thereto, shall
continue in full force and effect for the benefit of the respective Parties.
8.2 Each party shall bear and pay its own respective fees, costs, and
expenses incurred in connection with the negotiation, preparation and execution
of the Agreement and/or its consummation, the registering of any documents
pursuant to the transactions hereunder, and preparation and production of all
documents required to be delivered by either party at Closing, except as
otherwise provided in sections 4.8, 7.1 and 7.2 of this Agreement.
8.3 This Agreement, including the Schedules annexed hereto, constitutes the
entire Agreement between the Parties and may not be amended or modified in any
respect except by written instrument signed by the Parties.
8.4 This Agreement is personal to the Parties and may not be assigned,
transferred or otherwise disposed of to any other party.
8.5 This Agreement shall inure to the benefit of and be binding upon the
Parties and their respective administrators and successors.
8.6 In the event that any of the provisions, warranties, representations or
covenants or any portion of them contained in this Agreement are unenforceable
or are declared invalid for any reason whatsoever, such unenforceability or
invalidity shall not affect the enforceability or validity of the remaining
terms or portions thereof contained in this Agreement.
8.7 This Agreement shall be governed by and construed in accordance with the
laws of the State of Illinois.
8.8 The division of this Agreement into articles, sections, subsections,
paragraphs and schedules, the use of headings or the provision of a table of
contents are for convenience of reference only and should not affect the
interpretation or construction of this Agreement.
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8.9 The singular shall include the plural where indicated by the context and
all words and personal pronouns relating thereto shall be read and construed so
as to give them proper meaning within the context in which they are used.
8.10 This Agreement may be executed in one or more counterparts.
8.11 For purposes of this Agreement, a faxed signature shall constitute an
original signature.
IN WITNESS WHEREOF the Parties hereto have duly executed this Agreement
effective on the date first hereinabove mentioned.
MUSTERS & COMPANY, INC.
/s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
President
XA, INC.
/s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx
CEO
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