ASSET PURCHASE AGREEMENT by and between ADEX MEDIA, INC. and BAY HARBOR MARKETING, LLC
EXHIBIT 2.1
by and
between
ADEX MEDIA, INC.
and
BAY HARBOR MARKETING,
LLC
August
29, 2008
This Asset Purchase Agreement (“Agreement”) is
entered into and made effective as of August 29, 2008 (“Effective Date”) by and
between AdEx Media, Inc., a Delaware corporation
(“Buyer”) and Bay
Harbor Marketing, LLC, a California limited
liability company (“Company”, and with
Buyer, the “Parties” or
individually “Party”).
WHEREAS, Company owns certain assets
that it uses in the conduct of the Business (as defined below);
and
WHEREAS, Buyer desires to purchase from
the Company, and the Company desires to sell to
Buyer, the Purchased Assets (as defined
below), upon the terms and subject to the conditions of this Agreement.
NOW THEREFORE, in consideration of the
respective covenants and promises contained herein and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENT
1.1 “Action” shall mean
any action, claim, suit, litigation, proceeding, arbitral action, governmental
audit, criminal prosecution, governmental investigation or
unfair labor practice charge or complaint.
1.3 “Ancillary Agreements”
shall mean the ancillary agreements to be entered into in connection with the
consummation of the transactions contemplated by this Agreement.
1.4 “Books and Records”
shall mean (a) all records and lists pertaining to the
Business, including records and lists of
Company relating to the customers, suppliers or personnel of the Business, (b) all product, business and marketing plans of Company relating to the Business, and (c) all books, ledgers, files, reports, plans, drawings and
operating records of every kind maintained by Company
relating to the Business.
1.5 “Business” shall mean
Company’s online marketing business, including but not limited to Company’s lead
generation platforms, networks and programs, Company’s proprietary financial
guides and all content therein, and all associated Proprietary Rights, which
Buyer shall continue to operate subsequent to the Closing with the Purchased
Assets.
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1.6 “Business Day(s)” shall mean any
day other than a Saturday, Sunday,
national holiday or other day on which banks are generally
closed in the State of California.
1.8 “Code” shall mean the
Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder.
1.9 “Contract” shall mean
any agreement, contract, sub-contract, note, loan, evidence of indebtedness,
lease, purchase order, letter of credit, indenture, security or pledge agreement, franchise agreement, undertaking, covenant not
to compete, employment agreement, license, instrument, obligation or commitment to which the Company is a party
or is bound, whether oral or written, that
is necessarily related to one or more Purchased Assets or otherwise is material
to the Business.
1.11 “Copyrights” shall
mean United States and foreign registered copyrights,
copyright applications, and unregistered copyrights.
1.12 “Court Order” shall
mean any judgment, writ, decision, consent decree, injunction, determination,
ruling, or order of any federal, state or
local court or governmental agency, department or authority that is binding on any person or its
property under applicable law.
1.13 “Damages” shall mean
damages, Liabilities, losses (including
diminution in value), obligations, deficiencies, claims, demands, Taxes, fines, penalties, costs, and expenses of any kind or nature whatsoever (whether or not arising out
of third-party claims), including interest, costs of
mitigation, lost profits, attorneys’ fees and all amounts paid in investigation,
defense, or settlement of any of the
foregoing.
1.14 “Default” shall mean
(a) a breach of or default under any Contract, (b) the occurrence of an event that with the passage of time
or the giving of notice or both would
constitute a breach of or default under
any Contract, or (c) the occurrence of an event that with or
without the passage of time or the giving of notice or both would (i) give rise to a termination,
renegotiation or acceleration under any Contract, or (ii) give rise to
a right of termination, renegotiation or
acceleration under any Contract.
1.15 “Disclosure Schedule”
shall mean a schedule executed and delivered by the Company
to Buyer as of the date hereof that sets
forth the exceptions to the representations and warranties contained in Section
4 and certain other information called for by this Agreement. Unless otherwise specified, each reference in
this Agreement to any numbered schedule is a reference to
that numbered schedule that is included in the Disclosure Schedule.
1.16 “Encumbrance” shall
mean any claim, lien, pledge, option, charge, easement, security interest
(including any security interest filed pursuant to a financing statement in
order to perfect and/or establish the priority of such security interest), deed
of trust, mortgage, right-of-way, encroachment, building or
use restriction, conditional sales agreement, encumbrance
or other right of third parties, whether voluntarily incurred
or arising by operation of law, and includes any agreement to give any of the foregoing in the future,
and any contingent sale or other title retention agreement
or lease in the nature thereof.
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1.17 “Escrow Agent” means
the escrow agent identified in the Escrow Agreement.
1.18 “Escrow Agreement”
means the escrow agreement entered into by Buyer, the Company and the Escrow
Agent, in the form attached hereto as Exhibit C.
1.19 “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.
1.20 “Financial Statements”
shall mean (i) the audited statement of results of operations of the Company and
the Subsidiaries that covers the years ended December 31, 2006 and December 31,
2007, (ii) the audited balance sheets of the Company and the Subsidiaries as of
December 31, 2006 and December 31, 2007, and (iii) the unaudited statements of
results of operations of the Company and the Subsidiaries as of July 31,
2008. The July 31, 2008, balance sheet is hereinafter referred to as
the “Most Recent
Balance Sheet” and July 31, 2008, is hereinafter referred to as the
“Most Recent Balance
Sheet Date.”
1.22 “IT Assets” shall mean
those Purchased Assets comprised of any computers, computer software, firmware,
middleware, servers, workstations, routers, hubs, switches, data communications
lines, and other information technology equipment, and all associated
documentation.
1.23 “Knowledge” shall
mean, with respect to the Company and the Subsidiaries, the knowledge of a
particular fact, circumstance, event or matter in question of any manager,
member, executive officer or director, or any employee having direct
responsibility for the matter at issue (each, an “Entity
Representative”). Any such Entity Representative will be deemed to
have knowledge of a particular fact, circumstance, event or other matter if (i)
such Entity Representative has actual knowledge of the fact, circumstance or
event or (ii) knowledge of such fact, circumstance or event would be obtained by
reasonable inquiry under the circumstances.
1.24 “Liabilities” shall
mean any direct or indirect liability, indebtedness,
obligation, commitment, expense, claim, guaranty or
endorsement of or by any person of any type, whether accrued,
absolute, contingent, matured, unmatured or
other.
1.25 “Material Adverse
Effect” shall mean (a) with respect to the Business or the Purchased
Assets, any material adverse effect or
change in the condition (financial or other), business,
results of operations, prospects, assets, Liabilities or operations of the Business and/or the Purchased Assets or on
the ability of the Company to consummate
the transactions contemplated hereby, or
any event or condition that could, with the passage of time,
constitute a material adverse effect or
material adverse change, and (b) with respect to Buyer, any material adverse effect or change in the condition (financial or other),
business, results of operations, prospects, assets, Liabilities or operations of Buyer or on the ability of Buyer to consummate the
transactions contemplated hereby, or any event or condition that could, with the passage of time, constitute a
material adverse effect or material
adverse change.
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1.27 “Ordinary
Course of Business” or “Ordinary Course”
or any similar phrase shall mean the ordinary course of the
Business consistent with the Company’s past commercially
reasonable business practice (including with respect to
frequency and quantity).
1.28 “Patents” shall mean
United States and foreign patents, letters patent,
applications for any of the foregoing, all continuations, continuations in part,
divisions, reissues, substitutions and extensions thereof, any and all rights
corresponding thereto, and all inventions and discoveries that are or may be patentable.
1.29 “Permits” shall mean
all licenses, registrations, certifications, permits, franchises, approvals,
authorizations, consents or orders of, or
filings with, any governmental authority, whether foreign, federal, state or local, or any other person, necessary or desirable for the present conduct of, or
relating to the operation of the Business.
1.30 “Proprietary Rights”
shall mean all Copyrights, Trademarks,
Patents, technology rights and licenses, computer software
(including any source or object codes
therefor or documentation relating thereto, other than
generally commercially available third party software (a) that has not been materially modified by Company, (b) for which Company can either freely
assign its rights to a successor of Company or that Buyer may separately obtain on reasonable
terms, and (c) that is either subject only to a shrink
wrap license agreement, or is immaterial to the Business), Trade Secrets, franchises, know-how,
inventions, website and other media and text content, whether copyrighted,
copyrightable or otherwise, designs, specifications, plans, processes, drawings,
mask works, utility models, URLs and Domain Names, protocols, moral rights,
internal operating systems and intellectual property rights of Company, including the Owned Proprietary Rights and the
Licensed Proprietary Rights; and any renewal, extension,
reissue, continuation, or division rights, applications, and/or registrations
for any of the foregoing.
1.31 “Purchased Assets”
shall mean all rights, title and interest of the Company as
of the Closing Date in and to the assets set forth on Schedule
2.1.
1.32 “Regulations” shall
mean any laws, statutes, ordinances, regulations, rules, court decisions,
principles of law, orders and other provisions of any foreign, federal, state
or local government and any other governmental department
or agency, including environmental laws, energy, motor vehicle safety, public utility,
zoning, building and health codes, import and export laws, Foreign Corrupt Practices Act, and occupational safety and health
and laws respecting employment practices, employee documentation, terms and
conditions of employment and wages and hours.
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1.33 “Representative” shall
mean any officer, director, principal, attorney, agent, manager, member,
employee or other representative.
1.34 “Securities Act” shall
mean the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
1.35 “Subsidiary” shall
mean any entity with respect to which the Company (or a
subsidiary thereof) owns a majority of the voting securities
or has the power to vote or direct the
voting of sufficient securities to elect a majority of the
directors.
1.36 “Tax” and “Taxes” shall mean all
taxes, charges, fees, levies or other assessments, including all net income, gross income, gross receipts, sales, use,
VAT, service, service use, ad
valorem, transfer, franchise, profits, capital stock, alternative or add-on minimum, estimated, license, lease, withholding, social
security, payroll, employment, excise, estimated, severance, stamp, recording,
occupation, real and personal property, gift, windfall profits or other taxes, customs duties, fees,
assessments, or charges of any kind whatsoever, whether
computed on a separate, consolidated, unitary, combined or
other basis, together with any interest, fines, penalties, additions to tax or other additional amounts imposed thereon
or with respect thereto imposed by any taxing authority
(domestic or foreign). The terms “Tax” and “Taxes” shall include any Liability of Company for the payment of any amounts of any of the foregoing types
as a result of being a member of an affiliated, consolidated, combined, or unitary group, or being a party to any
agreement or arrangement whereby Liability
of Company for payment of such amounts was determined or taken into account with reference to the Liability of any other person.
1.37 “Trade Secrets” shall
mean all know-how, trade secrets, confidential information, customer lists,
software, technical information, data, process technology, plans, drawings, blue
prints, designs, data compilations, research results, and other
information.
1.38 “Trademarks” shall
mean United States and foreign registered trademarks,
registered service marks, trademark and service xxxx applications, unregistered
trademarks and service marks, registered domain names, trade
names, trade dress, designs, and general intangibles of a like nature, together
with all goodwill related to the foregoing.
1.39 “URLs and Domain
Names” shall mean all Internet uniform resource locators and domain names
of Company and the
Subsidiaries.
2.1 Sale of Assets.
Upon the
terms and subject to the conditions contained herein, at the
Closing, Company shall sell, convey,
transfer, assign, and deliver to Buyer, and Buyer shall purchase and acquire from Company, the Purchased Assets, free and clear of all Encumbrances, for the consideration specified below in Section
2.3. Schedule 2.1
contains an accurate list and summary descriptions of all Purchased Assets.
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2.2 No Assumption of
Liabilities. The Buyer shall not assume, shall have no
obligation to pay, perform or discharge, and shall not otherwise be responsible
for, any obligations or Liabilities of the Company, any Subsidiary or any
Affiliates, whether arising out of occurrences prior to, on or after the Closing
Date, including but not limited to any (a) Taxes of Company; (b) Liabilities
with respect to employees of Company and their dependents and beneficiaries,
including Liabilities with respect to violations of labor or immigration laws,
with respect to employment agreements, with respect to any benefits or benefit
programs, including accrued vacation time, and with respect to any Tax
withholdings to the extent existing or arising at or prior to the Closing Date;
(c) Liabilities for tort claims that are based on acts or events that occurred
at or prior to the Closing Date; (d) Liabilities with respect to alleged or
actual infringement of proprietary rights or other intellectual property rights
of any third party in connection with any products developed, produced,
manufactured, marketed, sold, or offered for sale by the Business, in each case,
at or prior to the Closing Date; (e) Liabilities relating to or arising out of
any Default occurring prior to or upon the Closing Date; (f) litigation or other
matters set forth on Schedule 4.14;
or (g) Liabilities related to any trade or creditor debt.
2.3 Purchase Price
2.3.1 Buyer
will provide consideration for the Purchased Assets as follows:
(a) At the Closing, Buyer will pay Company the sum of Fifty Thousand
Dollars ($50,000) (the “Cash Consideration”) less
any amounts deducted and withheld pursuant to Section
2.5;
(b) At the
Closing, Buyer will issue to Company fifty thousand (50,000) restricted shares
of Buyer’s common stock (the “Closing Shares”),
subject to Section 2.3.2;
(c) At the
Closing, Buyer will issue to Xxxxxxx one hundred fifty two thousand one hundred
fifty one (152,151) restricted shares of Buyer’s common stock (the “Xxxxxxx Shares”) in
consideration for Xxxxxxx’x assumption of certain outstanding unsecured
obligations of the Company to certain Company creditors;
(d) At the
Closing, Buyer will issue to Remington Partners, Inc. (“Remington”), a
creditor of the Company, one hundred forty-seven thousand two hundred
seventy-three (147,273) restricted shares of the Company’s common stock (the
“Remington
Shares”) in satisfaction in full of that certain outstanding obligation
of the Company to Remington, evidenced by that certain Secured Promissory Note
and Security Agreement dated May 24, 2007, by and between Company and
Remington;
(e) At the
Closing, Buyer and the Company will enter into the Escrow Agreement, pursuant to
which Buyer will issue to the Escrow Agent a number of restricted shares of
Buyer’s common stock (the “Earn Out Shares”) as
follows and subject to Section 2.3.2:
(i) Buyer
will deliver to the Escrow Agent a certificate, or certificates, representing
one hundred fifty thousand (150,000) restricted shares of Buyer’s common stock
in the name of the Company, to be held and distributed by the Escrow Agent in
accordance with the terms of this Agreement and the Escrow
Agreement.
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(ii) During
the sixty-day period (the “Earn Out Audit
Period”) following the expiration of the period commencing on the Closing
Date and terminating on the twelve-month anniversary of the Closing Date (the
“Earn Out
Period”), Buyer shall conduct and complete an internal audit of the
aggregate revenues generated by the Business during the Earn Out
Period.
(iii) If, at
the conclusion of Buyer’s audit, the number of Earn Out Shares earned by the
Company according to the Earn Out formula set forth on Schedule B (the
“Earned
Shares”) is greater than zero, then no later than ten days after the
expiration of the Earn Out Audit Period (the “Earn Out Payment
Date”), Buyer will instruct the Escrow Agent to release the Earned Shares
from escrow and deliver the Earned Shares to the Company. Buyer’s
instruction of the Escrow Agent shall include a written instruction from Buyer
to Buyer’s transfer agent, instructing such transfer agent to issue a new
certificate in the amount of the Earned Shares to the Escrow Agent in the name
of the Company. Upon receipt of such instruction from Buyer, Escrow
Agent shall promptly surrender the certificate(s) representing the Earn Out
Shares to the Buyer’s transfer agent for cancellation together with the letter
of instruction to issue a new certificate. Promptly after Escrow
Agent’s receipt of a certificate representing the Earned shares, Escrow Agent
shall deliver such certificate to the Company.
(iv) If, at
the conclusion of Buyer’s audit, the amount of the Earned Shares is zero, Buyer
will instruct the Escrow Agent to surrender the certificate(s) representing the
Earn Out Shares to the Buyer’s transfer agent for cancellation and the Company
shall have no further interest in the Earn Out Shares.
2.3.2 The
Closing Shares and the Earn Out Shares will be subject to a lockup and share
release schedule as set forth on Schedule
C. The Company will enter into a Lock-Up and Share Release
Agreement with the Buyer substantially in the form attached hereto as Exhibit
A.
2.3.3 The
Closing Shares, the Xxxxxxx Shares, the Remington Shares and the Earn Out Shares
(collectively, the “Shares”), along with
the Cash Consideration, shall constitute the total purchase price (the “Purchase Price”) for
the Purchased Assets.
2.3.4 Buyer
shall issue share certificates (“Share Certificates”)
evidencing the Shares as soon as reasonably practicable after
Closing. The Parties agree and acknowledge that the issuance of Share
Certificates by Buyer is not a condition precedent to Closing.
2.4 Purchase Price Allocation. The
Purchase Price shall be allocated among the Purchased Assets in the manner determined by Buyer and as required by Section 1060 of the Code (the “Allocation”). The
Allocation shall be conclusive and binding upon Buyer and the Company for all purposes, and
Buyer and the Company agree that all
returns and reports and all financial statements shall be prepared in a manner
consistent with (and Buyer and Company
shall not otherwise file a Tax Return position
inconsistent with) the Allocation unless required by the
Internal Revenue Service (“IRS”) or any other applicable taxing authority. Buyer shall provide the allocation to the Company as soon as reasonably practicable following the Closing Date. Buyer and the Company shall each prepare and file on a timely basis with the
IRS substantially identical initial and supplemental IRS Forms 8594 “Asset Acquisition Statements
Under Section 1060” consistent with the Allocation.
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2.5 Withholding. Buyer shall be entitled
to deduct and withhold from the Purchase Price such amounts as Buyer is required
to deduct and withhold under the Code, or any provision of state, local,
provincial or other tax law, with respect to the making of such payment. To the
extent that amounts are so withheld by Buyer, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid and delivered to
the Company.
3. CLOSING
3.1 Closing. Unless
this Agreement is earlier terminated, and subject to the satisfaction or waiver
of each of the conditions set forth herein in writing executed by the Parties,
the closing of the acquisition of the Purchased Assets (the “Closing”) shall be
held at the offices of Bullivant Xxxxxx Xxxxxx PC, 000 Xxxxxxxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxxxxxxx, XX 00000 on August 29, 2008, or on such other date as Buyer
and the Company may mutually agree in writing (the “Closing
Date”). All transactions at the Closing shall be deemed to
take place simultaneously, and no transaction shall be deemed to have been
completed and no documents or certificates shall be deemed to have been
delivered until all other transactions are completed and all other documents and
certificates are delivered.
3.2 Closing Transactions. Upon
the terms and subject to the conditions set forth in this Agreement, following execution of this Agreement
and simultaneously with the Closing:
3.2.1 To effect the sale and transfer referred to in Section 2.1, Buyer and Company shall execute and deliver
or cause to be executed and delivered to the other Party, as
applicable:
(a) one or more Bills of Sale,
conveying in the aggregate all of the Company’s owned personal property included
in the Purchased Assets;
(b) one or more Assignments of
Contract Rights, to the extent necessary to assign in the aggregate all Contract Rights included in the Purchased
Assets;
(c) one or more Trademark Assignments, in recordable form to the extent necessary to
assign in the aggregate all Trademarks included in the Purchased Assets;
(d) one or
more Domain Name Assignments, in recordable form to the extent necessary to
assign in the aggregate all URLs and Domain Names included in the Purchased
Assets; and
(e) such other instruments as shall be reasonably
requested by Buyer to vest in Buyer title
in and to the Purchased Assets in accordance with the
provisions hereof.
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3.2.4 Buyer
shall issue to Xxxxxxx the Xxxxxxx Shares.
3.2.5 Buyer
shall issue to Remington the Remington Shares.
3.2.6 The
Company shall file (where necessary) and deliver to Buyer all
documents necessary, and shall have otherwise made any and all payments and
taken any other actions necessary, to release the Purchased
Assets from all Encumbrances, which documents shall be in
form and substance reasonably satisfactory to Buyer.
3.2.7 The Company shall deliver to Buyer all third party consents required for the valid transfer of
the Purchased Assets as contemplated by this Agreement.
3.2.9 The
Company shall deliver to Buyer a Members’ Consent (“Members’ Consent”) signed by
the Members of the Company holding membership interests in the Company
constituting, in the aggregate, a Percentage Interest (as defined in the
Company’s Operating Agreement) in the Company that is greater than sixty percent
(60%), approving this Agreement and the asset purchase transaction contemplated
hereby, and further authorizing the Managing Member of the Company to execute
and deliver this Agreement and all additional documents required to be executed
and delivered by and on behalf of the Company under this Agreement and to take
such additional actions as may be reasonably necessary to close this
transaction.
3.2.10 The
Company shall deliver to Buyer a certificate signed by the managing Member of
the Company (the “Seller Closing
Certificate”), stating that (i) Buyer’s acquisition of the Company’s
assets and the execution of this Agreement have been approved by the Members of
the Company in accordance with the Company Organizational Documents; (ii) the
Members of the Company have authorized Xxxxxxx to execute this Agreement and all
Ancillary Agreements on the Company’s behalf; (iii) the representations and
warranties of the Company are true and correct in all material respects as of
the Closing Date, as if made as of the Closing Date; and (iv) the covenants and
agreements of the Company to be performed on or prior to the Closing have been
duly performed in all material respects.
4. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
4.1 Making of
Representations and
Warranties. As
a material inducement to Buyer to enter into this Agreement and consummate the
transactions contemplated hereby and except as set forth on corresponding
sections of the Disclosure Schedule,
the Company hereby makes to Buyer the
unqualified representations and warranties contained in this Article
4.
4.2 Organization and
Qualifications of Company. The Company is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of
California with corporate power and authority to conduct the Business in the manner and in the places where the Business is currently conducted or currently proposed to be conducted. The copies of the
Company’s Articles of Organization, as amended to date,
certified by the Secretary of State of the State of California (the “Company Charter”),
and of the Company’s other organizational documents, as amended to date (together with the Company
Charter, the “Company Organizational
Documents”), are complete and correct, and no amendments, restatements,
supplements or modifications thereto are
pending. The Company is not in violation of any
term of the Company Organizational
Documents. The Company is duly qualified or authorized to do business as a California limited liability
company and is in good standing under the laws of California
and each jurisdiction in which the conduct of the Business
requires such qualification or
authorization.
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4.3 Authority of
Company. The Company has full power and authority to enter into this Agreement and Ancillary Agreements and to carry out the transactions
contemplated hereby or thereby. The execution and
delivery by the Company of this Agreement and, subject to requisite Member
approval, the performance by the Company of this Agreement and the Ancillary
Agreements and the consummation by the Company of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action on the part of the Company. Without limiting the generality of
the foregoing, the Members of the Company, by a vote in
accordance with the Company Organizational Documents, determined that the
transactions contemplated by this Agreement are fair to and in the best
interests of the Company and its Members. This Agreement has been duly and
validly executed and delivered by the Company and constitutes, and each of the
Ancillary Agreements, upon its execution and delivery by the Company, will
constitute, a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting or relating to creditors rights generally, and is subject to
general principles of equity.
4.4 The
execution, delivery and performance by the Company of this Agreement or the Ancillary Agreements:
4.4.1 will not conflict with or violate any provision of the Company Organizational Documents or the charter,
by-laws or other organizational document of any Subsidiary;
4.4.2 will not violate any applicable Regulations,
including the laws of the United States
and the State of California, or any state
or other jurisdiction applicable to the Company or any Subsidiary or require the Company or any Subsidiary to obtain any approval, consent or waiver of, or make any notice to or filing
with, any person or entity (governmental or otherwise) that has not been obtained or made,
which would cause a Material Adverse Effect; and
4.4.3 will not result in a breach of, constitute a Default under, accelerate any obligation under, or give rise to a right of termination of any Contract, Permit, Court Order or arbitration award to which the Company or any Subsidiary is a party or by
which the real or personal property of the
Company or any Subsidiary is bound or affected, or result in the creation or imposition of any
security interest or Encumbrance on any of Company’s
assets.
4.5 Purchased Assets. The Company has and will transfer to Buyer good, valid and marketable title to the Purchased Assets and upon the consummation of the transactions contemplated hereby, Buyer
will acquire good, valid and marketable title to all of the Purchased Assets, free and clear of any Encumbrances. The Purchased Assets
include all assets necessarily used in the Business as currently conducted or currently proposed to be conducted, as further set forth on Schedule
2.1.
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4.6 Subsidiaries. Each
Subsidiary is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. Each Subsidiary is duly qualified
to conduct business and is in good standing under the laws of each jurisdiction
in which the nature of its businesses or the ownership or leasing of its
properties requires such qualification. Each Subsidiary has all requisite power
and authority to carry on the businesses in which it is engaged and to own and
use the properties owned and used by it. The Company has delivered to the Buyer
complete and accurate copies of the charter, by-laws or other organizational
documents of each Subsidiary. No Subsidiary is in default under or in violation
of any provision of its charter, by-laws or other organizational documents. All
of the issued and outstanding shares of capital stock of each Subsidiary are
duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. All shares of each Subsidiary that are held of record or
owned beneficially by either the Company or any Subsidiary are held or owned
free and clear of any restrictions on transfer (other than restrictions under
the Securities Act, as amended and state securities laws), claims, security
interests, options, warrants, rights, contracts, calls, commitments, equities
and demands. There are no outstanding or authorized options,
warrants, rights, agreements or commitments to which the Company or any
Subsidiary is a party or which are binding on any of them providing for the
issuance, disposition or acquisition of any capital stock of any Subsidiary.
There are no outstanding stock appreciation, phantom stock or similar rights
with respect to any Subsidiary. There are no voting trusts, proxies or other
agreements or understandings with respect to the voting of any capital stock of
any Subsidiary. The Company does not control directly or indirectly
or have any direct or indirect equity participation or similar interest in any
corporation, partnership, limited liability company, joint venture or other
business association or entity which is not a Subsidiary.
4.7 Financial
Statements;
Liabilities.
4.7.1 The Company has provided to Buyer
true, complete and correct copies of the Financial Statements. The
Financial Statements have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods
covered thereby, fairly present the financial condition, results of operations
and cash flows of the Business as of the
respective dates thereof and for the periods referred to therein and are
consistent with the Books and Records.
4.7.2 As of the date hereof and as of the Closing Date, Company has not had and will not
have any Liabilities relating to the Business or the Purchased Assets of any nature, whether accrued,
absolute or contingent (including Liabilities as guarantor or otherwise with
respect to obligations of others, or Liabilities for Taxes due or
contingent or potential Liabilities
relating to activities of Company with respect to the
operation of the Business prior to the date hereof or the Closing, as the
case may be, regardless of whether claims in respect thereof had been asserted
as of such date), except Liabilities (i) stated or adequately reserved against on
the Most Recent Balance
Sheet or the notes thereto, (ii) incurred in the Ordinary
Course of Business of the Company consistent with the terms
of this Agreement since the Most Recent
Balance Sheet Date or (iii) relating to future performance obligations under Contracts, none of which relates to
any Default, breach of warranty, tort infringement, or violation of any Regulations or Court Orders or arose out of any Action.
11
4.8.1 Any change in the Business and its real or personal properties, assets, results of operations, financial
condition, Liabilities, or prospects of
the Company, which change by itself or in
conjunction with all other such changes, whether or not
arising in the Ordinary Course of Business,
could have a Material Adverse Effect;
4.8.2 Any contingent Liability incurred by the Company as guarantor or otherwise with
respect to the obligations of others or any cancellation of
any material debt or claim owing to, or
waiver of any material right of, the Company with respect to
the operation of the Business;
4.8.3 Any Encumbrance placed on any of the Purchased Assets that remains in existence on the date hereof or will remain on the Closing Date;
4.8.4 Any Liability incurred by the
Company in the Business other than Liabilities incurred in the Ordinary Course of Business consistent with the obligations under
this Agreement (it being understood that claims relating to
the failure to perform or the improper performance of
services shall not be deemed to be incurred in the Ordinary Course of Business);
4.8.5 Any purchase, sale or other disposition, or any agreement or other arrangement for the
purchase, sale or other disposition, of any of the real
or personal properties or assets of
the Company used in the Business other
than in the Ordinary Course of
Business;
4.8.6 Any damage, destruction or loss, whether or not covered by insurance, materially adversely affecting the
Purchased Assets or the Business;
4.8.7 Any material dispute with employees or claim of
unfair labor practices related to the Business; any change
in the compensation payable or to become payable by the Company to any of its officers, managers, employees, agents
or independent contractors involved in the operation of the
Business; or any bonus payment or arrangement made to or with any of such
officers, employees, agents or independent
contractors;
4.8.8 Any payment or discharge of a material Encumbrance or Liability of
the Company relating to the Business
that was not shown on the Most Recent Balance Sheet or incurred in the Ordinary Course of Business
thereafter;
4.8.9 Any Liability incurred by the Company to any of the directors, officers,
managers or employees of the Business, or any loans or
advances made by Company to any of such directors, officers,
managers or employees, except normal compensation and
expense reimbursement or severance payable to officers
or employees;
4.8.10 Any change in accounting methods or practices,
credit practices or collection policies used by the
Company;
12
4.8.11 Any other transaction relating to the Business
entered into by the Company other than transactions in the
Ordinary Course of
Business;
4.8.12 Any
change made or authorized in the Company Organizational Documents;
or
4.8.13 Any grant
of a license or sublicense of any rights under or with respect to any
Proprietary Rights.
4.9.1 All Patents, Trademarks and
Copyrights that are owned by the Company
or any Subsidiary and used by the Company in the Business are listed on Section 4.9.1(a)
of the Disclosure Schedule and hereinafter referred to as the “Owned
Proprietary Rights.” All Proprietary
Rights (other than generally commercially available third party software (i) that have not been materially modified by the Company, and
(ii) for which the Company can
either freely assign its rights to a successor of the
Company or that Buyer may separately
obtain on reasonable terms, and (iii) that is either
subject only to a shrink wrap license agreement, or is
immaterial to the Business) that are either licensed to
the Company or are otherwise used in the
Business but are not owned by the Company are listed on Section 4.9.1(b)
of the Disclosure Schedule and hereinafter referred to as the “Licensed
Proprietary Rights.”
4.9.2 The Proprietary Rights are all of the
intellectual property rights and proprietary rights that are necessary to
operate and conduct the Business as
currently conducted or currently proposed to be conducted by
the Company. All Proprietary Rights immediately
prior to the Closing Date owned or
licensed and available for use by the Company will be
available to Buyer on and after the Closing Date on identical terms and conditions.
4.9.3 The Company has good, valid and marketable title to
all of the Owned Proprietary Rights free and clear of any
Encumbrances, and has the right to use, exploit, dispose of,
license, sublicense, grant the right to sublicense, and distribute, without the
payment of any fees, royalties or other payments all Owned Proprietary Rights.
4.9.4 All licenses and other agreements under which the Company has been granted or otherwise has
the right to use any of the Licensed Proprietary Rights are
in full force and effect, and there is no Default by the
Company or any other party
thereto. The licensors under said licenses and other agreements have
and had all requisite power and authority to grant the rights purported to be
conferred thereby. The Company has provided to Buyer complete and
correct copies of all such licenses or other agreements, and
any amendments thereto. There are no payments due or that will become due after the Closing Date
from the Company or Buyer under any of such licenses or other
agreements that are individually or collectively material to
the conduct or operation of the Business
as currently conducted or currently
proposed to be conducted, the non-payment of which by the
Company or Buyer would either (i) cause a breach under any such license or other agreement, or (ii)
have a Material Adverse Effect.
4.9.5 All
Company-owned software has been exclusively developed either (i) internally
by employees of Company working within the scope of their employment or
(ii) by third parties pursuant to written work made for hire and/or
assignment agreements placing ownership of such computer software with Company.
True and complete copies of all such agreements have been made available to
Buyer.
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4.9.6 The conduct and operation of the Business,
including with respect to any technology used or products developed, produced, sold or
offered for sale by the Business, as
currently conducted or currently proposed to be conducted
and the use and exploitation by the Company of the Proprietary Rights in connection therewith, do not conflict with,
infringe upon, or misappropriate the proprietary rights
or other intellectual property rights of any third
party. The Company has not received notice of any
claim or allegation by any third party alleging that, in
connection with the conduct and operation of the Business
as currently conducted or as currently
proposed to be conducted, the Company has infringed or misappropriated any proprietary rights or
other intellectual property rights of such third party, or
contesting the validity, enforceability, ownership, exploitation, disposition,
license, sublicense or distribution by the Company of any of the Proprietary Rights,
and, to the Knowledge of the Company, no such claim has been threatened and
there are no grounds for any such claim.
4.9.7 All of the Trademarks that have
been registered or for which registrations have been applied
for with the United States Patent and Trademark Office
(or the corresponding offices of other jurisdictions) are
currently in compliance with all requirements regarding post-registration filing
of affidavits of use and incontestability and renewal applications, are valid
and enforceable, and are not subject to any maintenance fees or Taxes on actions falling due within one
hundred eighty (180) days after the Closing Date. None of such Trademarks has been or is now involved in any
opposition, invalidation, or cancellation proceeding and, to
the Knowledge of the Company, no such actions are threatened
with respect to any of such Trademarks.
4.9.8 The Company has taken all steps required in
accordance with commercially reasonable business practices to establish and
preserve its ownership of, and the validity and enforceability of, all Proprietary Rights with respect to the products, services and
technology used in the Business. The Company has required all professional and technical employees
and all other employees having access to valuable non-public Proprietary Rights of the Company to execute
written agreements under which such employees are required to convey all of
their right, title and interest to the Company in all
inventions and developments conceived or created by them in
the course of their employment and to maintain the confidentiality of all such
information of the Company. The Company has not made any
such non-public Proprietary Rights available to any person
other than employees of the Company, except pursuant to written agreements
requiring the recipients to maintain the confidentiality of such information and
appropriately restricting the use thereof. No current or former employee, officer, director, manager
or member has any rights to future royalty payments or any
other fees from the Company or Buyer deriving from Buyer’s use or other exploitation of the Proprietary
Rights. Neither the Company nor any of the
Members has Knowledge of any infringement, misappropriation
or other unauthorized use, duplication or performance by others of any Proprietary
Rights of Company with respect to the Business.
4.9.9 The Company is in compliance in all material
respects with its privacy and security commitments, has not received any
inquiries from any governmental agency regarding such commitments, has not
received any complaints with respect to compliance with such commitments, and
has not been rejected by any applicable certification organization which has
reviewed such commitments or to which any such commitments
have been submitted.
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4.9.10 The Company owns exclusively or
has the exclusive right to use, free and clear of all Encumbrances, the URLs and Domain
Names. All fees to maintain the URLs and Domain
Names including registration, maintenance and prosecution
fees, and all professional fees incurred in connection therewith, have been
paid. To the Knowledge of the Company, there are
no defects in any Company-owned software which provides end user functionality
on any of the URLs and Domain Names.
4.9.11 The
Company’s material IT Assets operate and perform in all material respects in
accordance with past performance, subject to reasonable scheduled and
unscheduled downtime. To the Knowledge of the Company, the IT Assets
do not contain any “time bombs,” “Trojan horses,” “back doors,” “trap doors,”
“worms,” viruses or other similar devices or effects that (i) enable or assist
any person or entity to access without authorization the IT Assets or (ii)
otherwise hinder operation of material functionality of the IT Assets except as
disclosed in its documentation. The Company has taken reasonable
measures to protect the confidentiality of its trade secrets and confidential
information contained within the IT Assets. The Company has taken
reasonable security measures to protect the operation of the material IT Assets
consistent with industry practice. To the Knowledge of the Company, no person or
entity has access to any IT Assets without proper authorization.
4.9.12 The
Company owns exclusively or has the exclusive right to use, free and clear of
all Encumbrances, any and all guides and other informational materials published
and distributed by the Company (“Guides”), and the
Company has obtained any and all Permits, licenses, certifications, approvals
and or consents required in connection with the publication, distribution or
dissemination of such Guides, including but not limited to approval and/or
certification by FINRA, NASD and other regulatory oversight boards and bodies,
and the Company has not received any notice from any third party or governmental
entity regarding the failure of any such Guide to comply with relevant Laws or
governing body/board/industry watch dog standards.
4.10.1 Section 4.10 of the
Disclosure Schedule lists the following agreements (written or oral) to
which the Company or any Subsidiary is a party as of the date of this
Agreement:
(a) any
agreement (or group of related agreements) for the lease of personal property
from or to third parties providing for lease payments in excess of $1,000 per
annum or having a remaining term longer than twelve (12) months;
(b) any
agreement (or group of related agreements) for the purchase or sale of products
or for the furnishing or receipt of services that calls for performance over a
period of more than one (1) year, that involves more than the sum of $10,000, or
in which the Company or any Subsidiary has granted manufacturing rights, most
favored nation pricing provisions or exclusive marketing or distribution rights
relating to any products or territory or has agreed to purchase a minimum
quantity of goods or services or has agreed to purchase goods or services
exclusively from a certain party;
15
(c) any
agreement concerning the establishment or operation of a partnership, joint
venture or limited liability company;
(d) any
agreement (or group of related agreements) under which it has created, incurred,
assumed or guaranteed (or may create, incur, assume or guarantee) indebtedness
(including capitalized lease obligations) involving more than $10,000 or under,
which it has imposed (or may impose) a security interest on any of its assets,
tangible or intangible;
(e) any
agreement for the disposition of any significant portion of the assets or
business of the Company or any Subsidiary (other than sales of products in the
Ordinary Course of Business) or any agreement for the acquisition of the assets
or business of any other entity (other than purchases of inventory or components
in the Ordinary Course of Business);
(f) any
agreement concerning confidentiality or noncompetition;
(g) any
employment or consulting agreement;
(h) any
agreement involving any current or former officer, director or member of the
Company or an Affiliate thereof;
(i) any
agreement under which the consequences of a default or termination would
reasonably be expected to have a Material Adverse Effect;
(j) any
agreement which contains any provisions requiring the Company or any Subsidiary
to indemnify any other party (excluding indemnities contained in agreements for
the purchase, sale or license of products entered into in the Ordinary Course of
Business); and
(k) any
other agreement (or group of related agreements) either involving more than
$10,000 or not entered into in the Ordinary Course of Business.
4.10.2 The
Company has delivered to the Buyer a true, complete and accurate copy of each
agreement listed in Section 4.10 of the
Disclosure Schedule, except as otherwise indicated in such Section 4.10 of the
Disclosure Schedule. With respect to each agreement so listed:
(i) the agreement is legal, valid, binding and enforceable and in full force and
effect; (ii) for those agreements to which the Company is a party, the agreement
is assignable by the Company to the Buyer without the consent or approval of any
party (except as set forth in Sections 4.4 and 4.10 of the
Disclosure Schedule) and will continue to be legal, valid, binding and
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect immediately prior to the Closing;
(iii) neither the Company nor any Subsidiary nor any other party is in breach or
violation of, or default under, any such agreement; and (iv) no event has
occurred, is pending or is threatened, which, after the giving of notice, with
lapse of time, or otherwise, would constitute a breach or default by the Company
or any Subsidiary or any other party under such agreement.
16
4.11 No Real Property. The
Company does not own any real property.
4.12 Real Property Leases.
Section 4.13 of the
Disclosure Schedule lists all leases (the “Leases”). The Company
has delivered to the Buyer complete and accurate copies of the Leases. With
respect to each Lease:
4.12.1 such
Lease is valid;
4.12.2 such
Lease is assignable by the Company or a Subsidiary to the Buyer without the
consent or approval of any party, except as set forth in Section 4.13 of the
Disclosure Schedule, and such Lease will continue to be legal, valid,
binding, enforceable and in full force and effect immediately following the
Closing in accordance with the terms thereof as in effect immediately prior to
the Closing;
4.12.3 neither
the Company nor any Subsidiary nor any other party, is in breach or violation
of, or default under, any such Lease;
4.12.4 no event
has occurred, is pending or is threatened, which, after the giving of notice,
with lapse of time, or otherwise, would constitute a breach or default by the
Company or any Subsidiary or any other party under such Lease;
4.12.5 there are
no disputes, oral agreements or forbearance programs in effect as to such Lease;
and
4.12.6 neither
the Company nor any Subsidiary has assigned, transferred, conveyed, mortgaged,
deeded in trust or encumbered any interest in the leasehold or
subleasehold.
4.13 Litigation. Except
as set forth on Section 4.14 of the Disclosure
Schedule, the Company is not (a) subject to any outstanding Court Order, (b) a party or, to the Knowledge of the Company, threatened
to be made a party to, and (c) to the Knowledge of the Company no facts exist
which would give rise to or form the basis for any Action,
in each instance that relates to or could affect the Business or the Purchased Assets.
4.14 Compliance with
Laws. The Company and its predecessors and Affiliates are in compliance
with all applicable Regulations and Court Orders promulgated
by any federal, state, municipal entity, agency, court or
other governmental authority that apply to the Company in
respect of the Business.
4.15 Inventory. All
inventory of the Company and the Subsidiaries, whether or not reflected on the
Most Recent Balance Sheet, consists of a quality and quantity usable and
saleable in the Ordinary Course of Business, except for obsolete items and items
of below-standard quality, all of which have been written-off or written-down to
net realizable value on the Most Recent Balance Sheet. All
inventories not written-off have been priced at the lower of cost or net
realizable value on a first-in, first-out basis. The quantities of
each type of inventory, whether raw materials, work-in-process or finished
goods, are not excessive in the present circumstances of the Company and the
Subsidiaries.
17
4.16 Permits. Except
as set forth in Section 4.17 of the
Disclosure Schedule, the Company and each Subsidiary has Permits required
by applicable Regulations for the carrying on of its current
operations. Each such Permit was validly issued, is in full force and
effect, and is not subject to appeal or challenge. No suspension,
cancellation or termination of any Permit is pending or
threatened. There is no Action, suit, proceeding, investigation,
complaint or notice that is pending or threatened that challenges or questions
the validity of any rights of the Company or any Subsidiary as holder under any
Permit or the legal right of the Company or any Subsidiary to own, operate and
conduct its Business, nor is the Company or any Subsidiary subject to any
outstanding Court Order.
4.17 Powers of Attorney; Bank
Accounts. There are no outstanding powers of attorney executed
on behalf of the Company or the Subsidiaries. Section 4.18 of the
Disclosure Schedule sets forth an accurate and complete list of the names
and locations of all financial institutions at which the Company and each
Subsidiary maintains accounts of any nature or safe deposit boxes and the names
of all persons authorized to draw thereon.
4.18 Finder’s
Fee. Neither
the Company, any Subsidiary nor any Member has incurred or become liable for any broker’s commission or
finder’s fee relating to or in connection with the
transactions contemplated by this Agreement. A
true and complete copy of any engagement letter pursuant to which any such
broker’s commission or finder’s fee is payable has been made available to Buyer
by the Company prior to the date of this Agreement.
4.19 Records; Copies of
Documents. The Company has made available for inspection and copying by Buyer and its counsel complete and correct copies of all documents
referred to in this Article 4, in the
Schedules delivered to Buyer pursuant to this Agreement, or pursuant
to the due diligence checklist delivered by Buyer to the
Company.
4.20 Transactions with Interested
Persons. Neither
the Company nor any officer, director,
manager or employee of Company owns directly or indirectly on an individual or joint basis
any material interest in, or serves as
an officer, director or manager in another similar capacity
of, any competitor, supplier, or customer of the Business, or any organization which has a
Contract or arrangement with the Company relating to the
Business.
4.21.1 The Company has timely filed with the appropriate
taxing authorities all declarations, reports, estimates, statements, schedules,
information returns or other information or documents with respect to all Taxes of the
Company, including any schedule or
amendment thereto (collectively, “Tax Returns”), and
will timely file any such Tax Returns
required to be filed prior to or on the Closing Date. All such Tax Returns are (or, in the case of Tax Returns and information not yet filed, will be
when filed) complete and accurate in all material respects.
4.21.2 All Taxes, in respect of periods beginning
before the Closing Date, have been timely paid by the
Company, or will be timely paid by the
Company, and the Company does not and will not have any
Liability for Taxes in excess of the
amounts so paid.
4.21.3 There are no Encumbrances for
Taxes (other than Encumbrances for
current Taxes not yet due and payable) on any of the Purchased Assets. None of the Purchased Assets is property that is required to be treated for
Tax purposes as being owned by any other
person.
18
4.21.4 The Company has not
received a ruling from any taxing authority or signed an
agreement with any taxing authority that could reasonably be expected to have a
Material Adverse Effect.
4.21.5 The Company has complied in all material respects
with all applicable laws, rules and regulations relating to
the payment and withholding of Taxes (including withholding of Taxes pursuant to
Sections 1441, 1442, 1445 and 1446 of the Code or similar provisions under any applicable state and foreign laws)
and has, within the time and the manner prescribed by law, paid over to the
proper governmental authorities all amounts so withheld.
4.21.6 There are no facts of which the Company has Knowledge which would
constitute grounds for the assessment of any material amount of Taxes payable by the Company for any period
ending on or prior to the Closing
Date.
4.21.7 The Company is not subject to any Liability for Taxes (i) as
a transferee or successor, (ii) under
Treasury Regulations Section 1.1502-6
(or any similar provision of state, local or foreign law), (iii) by contract or (iv) otherwise, nor will Buyer be subject to any such Liability as a
direct or indirect result of Buyer’s
acquisition of the Purchased Assets. The Company has paid all Taxes for which Buyer may be held liable as a successor to the Purchased Assets.
4.22 Guaranties. Neither
the Company nor any Subsidiary is a guarantor or otherwise liable for any
liability or obligation (including indebtedness) of any other
entity.
4.23 Environmental, Health, and
Safety Matters. The Company and each Subsidiary:
4.23.1 have
complied in all material respects and are in material compliance with all
Regulations having the force or effect of law, all Court Orders, all common law
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, as now in effect (collectively, “Environmental, Health and
Safety Requirements”);
4.23.2 have
obtained, and at all times have complied and are in compliance with, all Permits
currently required pursuant to Environmental, Health, and Safety Requirements
for the operation of the Company and the Subsidiaries;
4.23.3 has not
received any written or verbal, notice or other information regarding any actual
or alleged violation of Environmental, Health, and Safety Requirements, or any
liabilities or potential liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any investigatory, remedial or corrective
obligations, relating to any of them arising under Environmental, Health, and
Safety Requirements; and
4.23.4 has not
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or released any substance, including without limitation
any hazardous substance, or owned or operated any property or facility (and no
such property or facility is contaminated by any such substance), in a manner
that has given or would give rise to liabilities, including any liability for
response costs, corrective action costs, personal injury, property damage,
natural resources damages or attorney fees, pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
(“CERCLA”), the
Solid Waste Disposal Act, as amended (“SWDA”) or any other
Environmental, Health, and Safety Requirements.
19
4.24 Privacy
Policies. Section 4.25 of
the Disclosure Schedule contains a complete list of all of Company’s
privacy policies (the “Privacy Policies”)
that are presently in effect and will be in effect on the Closing Date. The Company is in
compliance with all of the terms, conditions and provisions of the Privacy Policies. No Action is pending or, to the
Knowledge of the Company, threatened in writing against the Company concerning
any claim that the Company has violated the terms of any applicable privacy
statement or similar policy published by Company. The Company does
not distribute “spyware” or “adware” in connection with the business it conducts
which is in contravention of applicable laws or the Company’s privacy policies
posted on the URLs and Domain Names. For purposes of this Section 4.25, “spyware” means any
software that gathers information regarding user online activity through the
user’s Internet connection (i.e., without notice that
such information may be gathered), other than information (i) reasonably
gathered in connection with services or information provided by the Company to
such users or (ii) that is not associated with personally identifiable
information; and “adware” means any
software that causes advertising to pop-up as a new window (over or under) on
the user’s computer based on the user’s online activity or which is used to
distribute spyware.
4.25 No Other Agreements to Sell the Purchased
Assets. Neither
the Company nor any of its officers,
directors, employees, manager, member or Affiliates have any
commitment or legal obligation, absolute or contingent, to any other person or firm
other than Buyer to sell, assign, transfer or effect a sale of any of the Purchase
Assets.
4.26 Restricted
Shares. The Company acknowledges that the Shares are being
issued hereunder pursuant to applicable exemptions from registration
requirements under the Securities Act and applicable exemptions from the
securities qualification requirements of state law, and that the Shares may not
be resold or transferred unless an exemption from such registration and
qualification requirements is available and unless any prospective transferee
enters into a Lock-Up and Share Release Agreement with Buyer in substantially
the form as set forth on Exhibit
A. the Company is in compliance with the requirements of
Section 2.3.2. The Company further understands and acknowledges that
the Shares may not be resold pursuant to Rule 144, as promulgated by the
Securities and Exchange Commission under the Securities Act, as amended, unless
all of the conditions of such Rule 144 are met. Notwithstanding the
foregoing, the Company agrees not to effect any transfer or resale of the Shares
unless and until:
4.26.2 The
Company shall have complied with all requirements of this Agreement and of the
Lock-Up and Share Release Agreement applicable to the proposed disposition of
such shares; and
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4.26.3 The
Company shall have provided Buyer with written assurances, in form and substance
satisfactory to Buyer including an opinion of counsel, that the proposed
disposition does not require registration of such shares under the Act or
qualification under state securities laws of any applicable state, or all
appropriate action necessary for compliance with the registration requirements
of the Act or of any exemption from registration under the Act, and of
qualification under applicable state law or exemption therefrom, has been
taken.
Company further acknowledges that Buyer
shall not be required to transfer on its books any of the Shares that have been
sold or transferred in violation of the provisions of this Agreement or treat as
the owner of any such Shares, or otherwise to accord voting or dividend rights,
to any transferee to whom any such Shares have been transferred in violation of
this Agreement.
4.27 Disclosure. The
representations, warranties and statements contained in this Agreement and in the exhibits and schedules hereto do not contain
any untrue statement of a material fact, and, when taken together, do not omit
to state a material fact required to be stated therein or
necessary in order to make such representations, warranties or statements not misleading in light of the circumstances under
which they were made. To the Knowledge of the Company, there are no
facts, including any Contract, which
presently or are reasonably likely in the future to have a
Material Adverse Effect that have not been specifically
disclosed herein or in a schedule
furnished herewith.
5. REPRESENTATIONS
AND WARRANTIES OF BUYER
5.1 Making of
Representations and Warranties. As
a material inducement to Company to enter into this Agreement and consummate the transactions contemplated hereby, Buyer
hereby makes the representations and warranties to the
Company contained in this Article 5.
5.2 Organization of
Buyer. Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of
Delaware.
5.3 Authority. Buyer has full power and authority to enter into this Agreement and to carry out
the transactions contemplated hereby. This
Agreement constitutes the valid and legally binding obligation of the Buyer,
enforceable in accordance with its terms and conditions, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to creditors rights
generally, and is subject to general principles of equity.
6. COVENANTS
6.1 Further
Assurances. Upon
the terms and subject to the conditions contained herein, the
Company and Buyer shall, after the
Closing Date, (a) use all
reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement,
(b) execute any documents, instruments or conveyances of any kind that may be reasonably necessary or advisable to carry out the transactions
contemplated hereby, and (c) cooperate with each other in connection with the
foregoing. Without limiting the foregoing, the
Company shall use its best efforts (i) to obtain all
necessary waivers, consents and approvals from other parties to the Contracts (or
portions of Contracts) to be
assumed by Buyer, (ii) to obtain
all necessary Permits as are required to be obtained under
any Regulations, (iii) to give all
notices to, and make all registrations and filings with third parties, including submissions of information requested by governmental
authorities, and (iv) to fulfill all conditions of this
Agreement. In case at any time after the Closing
any further action is necessary to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, all at the sole cost and expense of the requesting
Party.
21
6.2 Domain Name
Registrations. The Company shall, immediately or as soon as
practicable following the Closing, take all necessary steps to update all Domain
Name and URL registrations to reflect the Buyer as the current registrant and
owner of such Domain Names and URLs.
The obligations of the
Company to consummate the transactions
contemplated hereby are subject to the satisfaction, in the sole discretion of
the Company, on or prior to the Closing
Date, of each of the following conditions, any of which may be waived in writing
by the Company:
7.1 Representations, Warranties
and Covenants. All
representations and warranties of Buyer contained in this Agreement shall be true and correct in all respects at and as of
the date of this Agreement and at and as of the Closing Date.
7.2 Purchase
Price. The Company shall have received from Buyer the
Cash Consideration and the Closing Shares as set forth in Section
2.3
The obligations of Buyer to consummate the
transactions contemplated hereby are subject to the satisfaction, in the sole
discretion of Buyer, on or prior to the Closing Date, of each of the following conditions, any
of which may be waived in writing by Buyer:
8.1 Representations, Warranties
and Covenants; Closing Certificate;
Members’ Consent. All representations and warranties of Company contained in this Agreement shall be
true and correct in all respects at and as of the date of this Agreement and at and as of the Closing Date,
and Buyer shall have received the Members’ Consent required under Section 3.2.9 and the
Seller Closing Certificate required under Section
3.2.10.
8.3 No Actions
or Court
Orders. No
Action by any governmental authority or
other person shall have been instituted or threatened that
questions the validity or legality
of the transactions contemplated hereby and that could
reasonably be expected (a) to materially damage the
Purchased Assets or the Business if the transactions contemplated hereunder are consummated, including any Material Adverse Effect on the right or ability
of Buyer to own, operate, possess or
transfer the Purchased Assets after the Closing or (b) to
materially damage the business or financial condition of
Buyer if the transactions contemplated hereunder are consummated. There shall not be any Regulation or Court Order that makes the purchase and sale of the Business or the Purchased
Assets contemplated hereby illegal or otherwise
prohibited.
22
8.4 Consents;
Regulatory Compliance and Approval. All
Permits and waivers from governmental authorities and other
parties necessary or appropriate for the
consummation of the transactions contemplated hereby and for
the operation of the Business by Buyer
(including all required third party consents to the
assignment of the Contracts
or portions of Contracts to be assumed by Buyer) shall have
been obtained. Buyer shall be satisfied that all
approvals required under any Regulations to carry out the transactions contemplated by this Agreement shall have been obtained and that the parties shall have
complied with all Regulations applicable to this Agreement and the
transactions contemplated hereby.
8.5 No
Material Change. Since
the Most Recent Balance Sheet Date, there
shall not have been any change in the condition (financial or other), business, results of operations, prospects, assets,
Liabilities or operations of the Business or the Purchased
Assets, that could have a Material Adverse
Effect.
8.6 Employees; Independent
Contractors. Xxxxx Xxxxxxx and Xxxxxxx Xxxxxxx shall have
entered into appropriate employment agreements, independent contractor
agreements and/or Proprietary Information and Invention Agreements, as the case
may be, with Buyer.
8.7 Audit. A
two (2) year audit (the “Audit”) of the Financial Statements of the Company
shall have been agreed to be conducted by a Public Company Accounting Oversight
Board (“PCAOB”)
firm to be selected by the Company and approved by Buyer, such approval not to
be unreasonably withheld, and all costs associated therewith to be paid by
Buyer, and such Audit shall not have revealed any material adverse information
regarding the Company or any Subsidiary and shall otherwise be acceptable to the
Buyer in its sole reasonable discretion.
9.1.1 Books and
Records. Each Party shall cooperate with and make available to
the other Party, during normal business hours, all Books and
Records, information and employees (without substantial disruption of
employment) retained and remaining in existence after the Closing that are necessary or useful in
connection with any tax inquiry, audit, investigation or dispute, any litigation or investigation
or any other matter requiring any such Books and Records, information or employees for
any reasonable business purpose.
9.1.2 Tax Matters. The
Parties shall (i) each provide the other with such
assistance as may reasonably be requested by either of them in connection
with the preparation of any Tax Return,
audit, or other examination by any taxing authority or judicial or administrative proceedings
relating to Liability for Taxes, (ii) each retain and provide the other with any records or other information that may be relevant to such Tax Return, audit or
examination, proceeding or determination, and (iii) each provide the other with any final determination of
any such audit or examination, proceeding, or determination that affects any amount required to be shown on
any Tax Return of the other for any
period. Without limiting the generality of the foregoing, the Parties
shall each retain, until the applicable statutes of limitation (including any extensions) have expired, copies of all Tax Returns, supporting work schedules, and other
records or information that may be relevant to such Tax Returns for all Tax periods
or portions thereof ending on or before
the Closing Date and shall not destroy or otherwise dispose of any such records without first providing
the other party with a reasonable opportunity to review and copy the
same.
23
9.1.3 Transition. The Company shall not take any action that is
designed or intended to have the effect of discouraging any
actual or potential lessor, licensor, customer, supplier
or other business associate of the Company from maintaining the same business relationship with Buyer after the Closing as it maintained with
Company prior to the Closing.
9.2.1 All wages, salary, bonuses, severance payments and
other compensation and accrued benefits (including accrued
vacation and sick leave) owed to the Business Employees
through the Closing Date shall be paid by
Company.
9.2.2 Except as
otherwise expressly provided herein, nothing in this Agreement
shall confer upon any Business Employee any right with
respect to continuance of employment by Buyer, nor shall
anything interfere with the right of Buyer to terminate the
employment of any Business Employee at any time, with or without cause, or restrict Buyer in the exercise of its independent business judgment in
modifying any of the terms or conditions of employment of
the Business Employees. No provision of this
Agreement shall create any third party beneficiary rights in
any Business Employee, any beneficiary or dependents thereof, or any collective
bargaining representative thereof, with respect to (i) the compensation, terms and conditions of employment and
benefits that may be provided to any Business Employee by
Buyer or under any benefit plan that
Buyer may maintain or (ii) any of the transactions contemplated by this Agreement.
9.2.3 Company shall be responsible for providing
continuation coverage as required by Section 4980B of the Code or similar state law (“COBRA”), under any
group health plan maintained by Company, to the Business
Employees and other qualified beneficiaries under COBRA with
respect to such employees, who have a COBRA qualifying event
(due to termination of employment with Company or otherwise) prior to or in connection with
the transactions contemplated by this Agreement (the “Continuees”). Company shall indemnify and hold Buyer harmless
from any and all Damages incurred by Buyer as a result of (i) the failure of
Company to comply with any of the requirements of COBRA, including applicable notice
requirements, or (ii) any
obligation imposed on Buyer to provide COBRA continuation coverage for any of the Continuees by reason of Company and members of
its controlled group (as determined for purposes of COBRA)
ceasing to maintain a group health plan.
24
9.2.4 Company
shall be solely responsible for and shall hold Buyer harmless against any
Liabilities related to Company’s classification and treatment of persons deemed
by the IRS to be employees of the Company as independent
contractors.
9.3 Survival of Representations,
Etc. Each
of the representations, warranties, agreements, covenants and obligations herein and in each agreement, document, certificate, schedule and
exhibit contemplated by this Agreement that are material,
shall be deemed to have been relied upon by the other Party and shall survive
the Closing regardless of any investigation and shall not
merge in the performance of any obligation by any party hereto.
10. INDEMNIFICATION
10.1 Indemnification by
Company. Subsequent
to the Closing Date, each of the Company and
Subsidiaries shall indemnify and hold Buyer, its Affiliates, successors and assigns and persons serving as current
and future officers, directors, partners, managers, stockholders, employees,
attorneys and agents thereof (individually a “Buyer Indemnified
Party” and collectively the “Buyer Indemnified
Parties”) harmless from and against any Damages that
may be sustained or suffered by any of them arising out of
or based upon (a) any fraud, intentional
misrepresentation or the cause or knowledge of a deliberate or willful breach of
any representations, warranties or covenants of the Company under this Agreement or in any agreement, document, certificate, schedule or exhibit delivered pursuant hereto; or (b) any other breach of any representation, warranty or covenant of the Company under this Agreement or in any agreement, document,
certificate, schedule or exhibit delivered pursuant hereto,
or by reason of any Action asserted
or instituted growing out of any matter or thing constituting a breach of such representations, warranties
or covenants.
10.2 Indemnification by
Buyer. Buyer shall indemnify and hold the Company and
persons serving as their officers, directors, partners, managers, members,
employees and agents thereof (individually a “Company Indemnified
Party” and collectively the “Company Indemnified
Parties”) harmless from and against any Damages which
may be sustained or suffered by any of them arising out of
or based upon any breach of any representation, warranty
or covenant made by Buyer in this Agreement or in any agreement, document,
certificate, schedule or exhibit delivered by Buyer hereunder, or by
reason of any claim, action or
proceeding asserted or instituted growing out of any matter
or thing constituting such a breach.
10.3 Indemnification
Procedure.
The term
“Indemnified Party” shall mean the Buyer Indemnified Party or Buyer Indemnified
Parties or the Company Indemnified Party or Company Indemnified Parties, as the
case may be, and the term “Indemnifying Party” shall mean the indemnifying party
referred to herein.
10.3.1 The
Indemnified Party shall use commercially reasonable efforts to mitigate any
Damages in respect of which indemnity may be sought hereunder. The
Indemnified Party shall give written notice (the “Indemnification
Notice”) to the Indemnifying Party within ninety (90) days after
discovery by the Indemnified Party of any matters that may be reasonably
expected to give rise to a claim for indemnification or reimbursement under this
Agreement, specifying in reasonable detail the nature and estimated amount of
the claim; provided,
however, that failure to give such notice shall not affect the
indemnification obligations of the Indemnifying Party hereunder in the absence
of actual prejudice and then shall limit such obligations only to the extent of
such prejudice.
25
10.3.2 With
respect to any Action, proceeding or claim that is brought by a third party
against an Indemnified Party, the Indemnified Party shall be entitled to select
counsel of its choice.
10.3.3 The
Indemnified Party shall cooperate fully in the defense of any such Action,
proceeding or claim. The Indemnified Party shall keep the
Indemnifying Party reasonably informed at all times as to the status of the
defense. Neither the Indemnified Party nor the Indemnifying Party
will consent to the entry of any judgment or enter into any settlement with
respect to the third party claim without the prior written consent of the other
party, which shall not be unreasonably withheld, delayed or
conditioned.
11.1 Fees and
Expenses
11.1.1 . Except
as otherwise specified in this Agreement, each Party hereto
shall pay its own legal, accounting, out-of-pocket and other expenses incident
to this Agreement and to any action
taken by such Party in preparation for carrying this Agreement into effect. Notwithstanding anything in the
foregoing to the contrary, the Company shall be responsible
for any documentary and transfer taxes and any sales, use
or other Taxes imposed by reason of the
transfer of the Purchased Assets provided hereunder and any deficiency, interest or
penalty asserted with respect thereto, shall file in a timely manner all Tax Returns relating to such Taxes and shall hold Buyer harmless for
same.
11.2 Governing
Law. This Agreement (including any claim or controversy arising out
of or relating to this Agreement) shall
be governed by the law of the State of
California without regard to conflict of law principles that would result in the
application of any law other than the law of the State of California.
11.3 Entire
Agreement. This Agreement, including the schedules and exhibits hereto reflects the entire
agreement of the Parties with respect to the subject matter hereof, and supersedes all previous written or
oral negotiations, commitments and writings. No promises,
representations, understandings, warranties and agreements have been made by any
of the parties hereto except as referred to in this Agreement, including the schedules and exhibits
hereto.
11.4 Notices. Any
notice, request, demand or other communication required or permitted hereunder shall be in writing and
shall be deemed to have been given if delivered or sent by
facsimile transmission, upon receipt, or if sent by
registered or certified mail, upon the sooner of the date on
which receipt is acknowledged or the expiration of three (3)
Business Days after deposit in United
States post office facilities properly addressed with postage
prepaid. All notices to a Party will be sent to the addresses set
forth below or to such other address or
person as such Party may designate by notice to each other Party hereunder:
26
|
|
000
Xxxxx Xxxxxxxxx Xxxx #X000
|
|
|
Xxxxxxxx
Xxxx, XX
|
|
|
Attention:
Xxx Xxxxx, Chief Financial Officer
|
|
|
Fax:
000-000-0000
|
|
|
Xxxx
X. Xxxxxxx, Esq.
|
|
|
Bullivant
Xxxxxx Xxxxxx PC
|
|
|
000
Xxxxxxxxxx Xxxxxx, Xxxxx 0000
|
|
|
Xxx
Xxxxxxxxx, XX 00000-0000
|
|
|
Fax: 000-000-0000
|
|
|
Bay
Harbor Marketing, LLC
|
|
|
000
Xxxxxx Xxxxxx, Xxxxx 000
|
|
|
Xxxxx
Xxxxxx, XX 00000
|
|
|
Attn: Xxxxx
Xxxxxxx
|
Any
notice given hereunder may be given on behalf of any party
by its counsel or other authorized
representatives.
11.5.1 . This
Agreement shall not confer any rights or
remedies upon any person other than the Parties and their respective successors
and permitted assigns.
11.6 Construction. Buyer
and the Company have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation
arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of
the authorship of any of the provisions of this Agreement.
Nothing in the Disclosure Schedule shall be
deemed adequate to disclose an exception to a representation or warranty made herein unless the Disclosure Schedule identifies the exception with
reasonable particularity and describes the relevant facts in reasonable detail.
Buyer and the Company intend that each
representation, warranty and covenant contained herein shall
have independent significance. If any Party has breached any representation,
warranty or covenant contained herein in
any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the
relative levels of specificity) that the Party has not breached shall not
detract from or mitigate the fact that the party is in
breach of the first representation, warranty or
covenant.
11.7 Assignment. Neither
this Agreement nor any of the rights or
obligations hereunder may be assigned by any Party without
the prior written consent of the other Party; provided, however, that Buyer may, without consent, assign all such rights to any
corporation, partnership, limited liability company or other
entity that at any time controls, is controlled by or under
common control with Buyer or to any
entity that acquires substantially all of the assets of Buyer or survives any merger with Buyer. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the
Parties hereto and their respective successors and permitted
assigns.
27
11.8 Captions. The
captions in this Agreement are for convenience only and
shall not affect the construction or interpretation of any
term or provision hereof.
11.9 Gender. The use of the
masculine, feminine or neuter gender herein shall not limit any provision of
this Agreement
11.10 Counterparts; Faxed
Signatures. For the convenience of the Parties hereto and to
facilitate execution, this Agreement may be executed in two
(2) or more counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same
document. The Parties agree that signatures received by facsimile or
scanned electronic transmission shall be deemed to be original
signatures.
11.11 Amendments. This
Agreement may not be amended or
modified, nor may compliance with any condition or covenant
set forth herein be waived, except by a writing duly and
validly executed by each party hereto, or in the case of a
waiver, the party waiving compliance.
11.12 Cumulative
Remedies. All rights and remedies of either party hereto are
cumulative of each other and of every other right or remedy
such party may otherwise have at law or in equity, and the
exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of other rights or
remedies.
11.13 Publicity
and Disclosures. Neither the Company nor any Member shall
issue any press release or public announcement relating to
the subject matter of this Agreement without the prior
written approval of Buyer.
11.14 Consent to
Jurisdiction. Each party hereto irrevocably and
unconditionally (a) agrees that any suit, Action or other legal proceeding arising out of
this Agreement shall be brought in any state court of
general jurisdiction located in San Francisco County, California (or, if no such court has
jurisdiction or accepts jurisdiction, in the United States District Court for the Northern
District of California); (b) consents to the
jurisdiction of any such court in any such suit, Action
or proceeding; and (c) waives any
objection that such party may have to the laying of venue of any such suit,
Action or proceeding in any such
court.
11.15 Attorney’s
Fees. If either party to this Agreement
brings an Action to enforce its rights under this Agreement, the prevailing party shall be entitled to recover its
costs and expenses, including reasonable attorneys’ fees and
expenses, incurred by such party in connection with such Action, including any appeal of such Action.
28
In
Witness
Whereof, the parties hereto have caused this Agreement to be duly executed on their respective behalf, by their
respective officers thereunto duly authorized, all as of the day and year first
above written.
|
By:
Name:
Title:
|
Bay
Harbor Marketing, LLC
By:
Name: ________________
Title: ________________
|
EXHIBIT
A
LOCK-UP
AND SHARE RELEASE AGREEMENT
ii
EXHIBIT
B
REMINGTON
PAYOFF LETTER
iii
EXHIBIT
C
ESCROW
AGREEMENT
iv
SCHEDULE
A
MEMBERS
|
Number
of Interests
|
Capital
Contribution
|
Fully
Diluted
Ownership
%
|
|
|
Xxxxx
Xxxxxxx
000
Xxxxx Xxxxx Xxxxxx
Xxxxxxxx,
XX 00000
|
83,750
|
$26,000
|
63.17
|
|
Xxxxxxx
Xxxxxxx
00
Xxxx Xxxx Xxxxx
Xxx
Xxxxxx, XX 00000
|
11,250
|
$25,000
|
8.49
|
|
Xxxx
Xxxxx
XX
Xxx 0000
Xxxx,
XX 00000
|
5,263
|
$25,000
|
3.97
|
|
Xxxx
Xxxxxx
0
Xxxx Xxxxx
Xxxxxxxxxxxxx,
XX, 00000
|
5,156
|
$25,000
|
3.90
|
|
Xxxx
Xxxxxxxxx
000
Xxxxxxxx Xxx
Xxxxxxx,
XX 00000
|
5,000
|
$1,000
|
3.77
|
|
Xxxxxxx
Xxxxxxx
0000
Xxxxxx Xxx
Xxxxxxxxxx,
XX 00000
|
3,977
|
-
|
3.00
|
|
Xxxxx
Xxxxxx
000
Xxxxxx Xxx
Xxxxxxxxx,
XX 00000
|
3,900
|
$25,000
|
2.94
|
|
Xxxxxx
Xxxxx
000
Xxxx 00xx xxxxxx, Xxx 0X
Xxx
Xxxx XX 00000
|
3,900
|
$25,000
|
2.94
|
|
Xxx
Xxxxxxx
000
Xxxx Xxxxxx
Xxxxxx,
XX 00000
|
3,900
|
$25,000
|
2.94
|
|
Xxxxxx
Xxxxxx
00
Xxxxx Xxxxxx, 0xx Xxxxx
Xxx
Xxxxxxxxx, XX 00000
|
3,900
|
$25,000
|
2.94
|
|
Xxx
Xxxxxxxx
0000
Xxxxxxxxxxx Xxxxx
Xxxxx
Xxxx, XX 00000
|
2,572
|
-
|
1.94
|
|
TOTAL
|
132,568
|
100.00%
|
v
SCHEDULE
B
EARN
OUT
12 Month
Forecasted Net Business Revenue from Closing Date: $2,000,000
On the
Earn Out Payment Date, as set forth in Section 2.3 of the Agreement, the Company
shall receive up to 150,000 Earn Out Shares on a pro rata basis in accordance
with the following:
If 12
month Net Business Revenue from Closing Date is $2,000,000 = 150,000 Earn Out
Shares*
If 12
month Net Business Revenue from Closing Date is $0 = 0 Earn Out
Shares
Earn Out
to be paid if 12 month Net Business Revenue from Closing Date is between $0 and
$2,000,000 shall be calculated pro-rata based on the above scale.
For
example:
Earn Out
to be paid if 12 month Net Business Revenue from Closing Date is $1,500,000 =
112,500 Earn Out Shares*
Earn Out
to be paid if 12 month Net Business Revenue from Closing Date is $1,000,000 =
75,000 Earn Out Shares*
* For
any earn out to be paid, the Business must achieve a “Break Even Profit Margin”
over the entire Earn Out Period. Break Even Profit Margin means, for purposes of
this Earn Out Schedule, that the gross revenues attributable to the Business,
less the direct costs of goods sold, direct headcount, direct contractor costs,
and direct lease/office rental costs, must be equal to or greater than
zero.
vi
SCHEDULE
C
LOCK-UP
AND SHARE RELEASE SCHEDULE
Date Percent of Shares
Released
12 month
anniversary of Share issuance
date 20%
13 month
anniversary of Share issuance
date
15%
14 month
anniversary of Share issuance
date
15%
15 month
anniversary of Share issuance
date 15%
16 month
anniversary of Share issuance
date 15%
17 month
anniversary of Share issuance
date 10%
18 month
anniversary of Share issuance
date
10%
vii
SCHEDULE
2.1
PURCHASED
ASSETS
|
1.
|
Source
Code & Database
|
|
2.
|
Customer
List & Database
|
|
3.
|
Web
Domains and Content
|
|
|
xxxxxxxx.xxx
|
|
|
xxxxxxxxxxxxxxxxxx.xxx
|
|
|
xxxxxxxxxxxxxxxx.xxx
|
|
|
xxxxxxxxxxx.xxx
|
|
|
xxxxx-xx.xxx
|
|
|
xxxxxxxxxxxxxx.xxx
|
|
|
xxxxxxxxxxxx.xxx
|
|
|
xxxxxxxxxxxxxx.xxx
|
|
4.
|
Financial
Guides (FINRA-reviewed)
|
|
|
401k
Rollovers
|
|
|
Annuities
|
|
|
Estate
Planning
|
|
|
IRAs
|
|
|
Long
Term Care Insurance
|
|
|
Retirement
Planning
|
|
5.
|
Physical
Assets
|
|
|
Computers
|
|
|
Dell
Dimension 3000 (1) XXXXX
|
|
|
Dell
Dimension 4100 (1)
|
|
|
Dell
Dimension 4300 (1)
|
|
|
Dell
Optiplex GX240 (2)
|
|
|
eMachine
T5010 (1)
|
|
|
HP
Vectra
|
viii
|
|
Printers
|
|
|
Oki
Data C5500 Color Laser
|
|
|
Canon
Pixma Pro 9000
|
|
|
Monitors
– Flat Panel
|
|
|
Viewsonic
19” (1)
|
|
|
Viewsonic
17” (1)
|
|
|
Dell
17” (1)
|
|
|
I-Inc
19” (1)
|
|
|
Xxxxxxx
17” (1)
|
|
|
Furniture
|
|
|
Executive
“L” Desks (4)
|
|
|
Office
Desks (4)
|
|
|
Cubicle
Walls (20)
|
|
|
Chairs
(20)
|
|
|
Executive
Filling Cabinets (3)
|
|
|
Basic
Filling Cabinets (8)
|
|
|
Telephones
(6)
|
|
|
Office
refrigerator (1)
|
|
|
Keyboards
/ Mice / Etc.
|
ix
DISCLOSURE
SCHEDULE
10712980.5
x
