EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made as of March 17,
2003, by and among Immediatek, Inc., a Nevada corporation (the "Purchaser" or
"Immediatek"), and ▇▇▇▇ ▇▇▇▇▇, an individual (the "Seller"),
BACKGROUND
Immediatek is an "Efficient Solutions Provider," or "ESP" company,
located in the Richardson, TX. Immediatek has developed a parallel software
development effort in addition to its IT outsourcing solutions with available
24x7 TekNet OnCall technicians, and a guaranteed minimum 2-4 hour response time.
The Company desires to purchase, and the Seller desires to sell,
certain of the assets associated with the Systems utilized by Immediatek.
In consideration of the mutual covenants and agreements set forth in
this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. Sale and Purchase.
1.1 Sale and Purchase of Assets. Subject to the terms and conditions
set forth in this Agreement, ▇▇▇▇ ▇▇▇▇▇ shall sell, convey, assign, transfer and
deliver to the Purchaser, or such entity as the Purchaser designates, and
the Purchaser shall purchase, acquire and take assignment and delivery of, all
of the right, title and interest of ▇▇▇▇ ▇▇▇▇▇ in and to all of the assets,
properties and rights of any kind owned by ▇▇▇▇ ▇▇▇▇▇ used in connection
with or related to the Systems, of every type and description, real, personal
and mixed, tangible and intangible, wherever located and whether or not
reflected on the books and records maintained by ▇▇▇▇ ▇▇▇▇▇, excluding those
assets, properties and rights which are specifically excluded pursuant to
Section 1.2 hereof (collectively the "Assets"), free and clear of all mortgages,
liens, pledges, security interests, charges, claims, restrictions and
encumbrances of any nature whatsoever ("Liens"). The Assets include, without
limitation, all of the right, title and interest of the following:
(1) "TwoBigToes Website & Name" assets include company
name, logo and website. This includes name, logo,
domain name, graphic images and existing website,
e-commerce system, back-end application programming,
management utilities, and sales reporting utilities,
(includes both ▇▇▇▇▇▇▇▇▇▇.▇▇▇ & ▇▇▇▇▇▇▇▇.▇▇▇ domains)
(2) "Sequel Server Database", complex database with over 70
unique tables and over 145 unique store procedures,
plus SQL 7.0 license intact.
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(3) "Dedicated Server", One SuperMicro server, P4 1.6Ghz,
512MB RAM, ▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇ expandable to 300 GB on
existing server. Leased from "The Planet."
(4) "E-commerce" comprehensive integrated functionality
for capturing and purchasing CD purchases by track,
CD or subscription on the existing TwoBigToes site.
(5) "Digital Music Library" consisting of 26,000 MP3 files
encoded at 128Kbps, all cataloged by label ID, artist ID,
CD product ID, and track ID.
(6) "Digital CD Cover Art". Over 2,000 scanned 200x200
(300 dpi) JPEG files complete with cataloging.
(7) "Content License Agreements" comprise an aggregate of
331 record labels, 1,317 artists, over 2,000 CDs, and
26,000 tracks.
(8) "Artist Subscription Base" artists charged monthly fees
for posting his music to TwoBigToes.
(9) "Consumer Subscription Base" music fans charged monthly
fees for accessing music from TwoBigToes.
(10) All express and implied warranties and guarantees from
third parties with respect to any property constituting
part of the Assets;
(11) Rights of ▇▇▇▇ ▇▇▇▇▇ under any liability insurance
policies now or heretofore in effect to the extent any
claim is made against the Purchaser with respect to
liabilities and obligations of ▇▇▇▇ ▇▇▇▇▇ that are not
Assumed Liabilities (as defined in Section 1.3
hereof); and
(12) All rights in any action against third parties relating
to the Systems.
1.2 Excluded Assets. Notwithstanding any provision of this Agreement
to the contrary, the Purchaser shall not acquire and there shall be excluded
from the Assets, or ▇▇▇▇ ▇▇▇▇▇ 's interest in each of the following (the
"Excluded Assets"):
(1) any and all rights of ▇▇▇▇ ▇▇▇▇▇ to cash received from
the conduct of its business prior to the Closing Date (as
defined in Section 2 hereof), including all cash on hand
or in banks, cash equivalents, accounts receivable
("Accounts Receivable"), marketable and non-marketable
securities and other investments and all rights in any
funds of any nature wherever maintained;
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(2) the rights of ▇▇▇▇ ▇▇▇▇▇ under this Agreement and the
documents and other papers delivered to ▇▇▇▇ ▇▇▇▇▇ by
the Seller pursuant to this Agreement;
(3) the minute book, stock book, tax returns and related
papers, employment and personnel records and other books
and records of ▇▇▇▇ ▇▇▇▇▇ that do not relate
to the Systems;
(4) all refunds or credits, if any, of taxes due to or from
▇▇▇▇ ▇▇▇▇▇ by reason of its ownership of the Assets or
operation of its business to the extent attributable to
any time period ending prior to the Closing Date;
(5) motor vehicles or leases therefor;
(8) the names (including without limitation any rights of use)
"▇▇▇▇ ▇▇▇▇▇" or any URLS or Internet domain names
containing such names or any variation thereof.
1.3 Assumed Liabilities. Subject to the terms set forth in this
Agreement, the Seller hereby assumes and shall pay, perform and discharge
when due only the following liabilities and obligations of the assets from
▇▇▇▇ ▇▇▇▇▇ (the "Assumed Liabilities"):
(1) customer deposits as of the Closing Date set forth in the
Working Capital Statement;
(2) express warranty obligations of ▇▇▇▇ ▇▇▇▇▇ to correct
services rendered, or to repair or replace defective
products related to the Systems of ▇▇▇▇ ▇▇▇▇▇ shipped,
prior to Closing Date, but only to the extent that the
Seller's costs associated therewith do not exceed the
reserve therefor as set forth in the Financials
(as defined in Section 3.11 hereof) (provided, however,
that to the extent the Seller's costs associated therewith
do exceed the reserve therefor, the Purchaser may perform
the express warranty work during the life of the warranty
and invoice the Seller at the Seller's full absorption
cost for such correction, repair or replacement); and
1.4 No Other Liabilities Assumed. Except as expressly set forth in
Section 1.3, the Purchaser shall not and does not assume any direct or
indirect liability, indebtedness, obligation (including, but not limited to,
accounts payable ("Accounts Payable"), tax liability, expense, claim, loss,
damage, deficiency, guaranty or endorsement of, related to, or arising out of,
in any manner whatsoever, the Assets, ▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇ 's
business, whether absolute or contingent, accrued or unaccrued, due or to become
due, liquidated or unliquidated (collectively, the "Unassumed Liabilities").
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1.5 Consideration.
(1) In exchange for the Assets and for the covenants not to
compete set forth in Section 6 herein (the "Non-Competition Covenants"), the
Purchaser shall deliver to ▇▇▇▇ ▇▇▇▇▇, 7,360,000 shares of restricted
common stock, par value per share $0.001 (the "Shares"), of Immediatek, Inc.
("Purchaser"), a Nevada corporation (the "Base Purchase Price").
(2) Delivery of Consideration.
(i) At the Closing (as defined in Section 2 hereof),
Immediatek shall deliver to ▇▇▇▇ ▇▇▇▇▇, 7,360,000 shares
of its restricted common stock,
(ii) The Seller, upon receipt of the shares, will
deliver the assets described in Section 1.1 above. The
Purchaser will take a physical inventory to determine the
Inventory as of the Closing Date.
1.6 Allocation of the Purchase Price. The Base Purchase Price shall be
allocated among the Assets as mutually agreed to by the Seller and the
Purchaser in accordance with the respective fair market values of the Assets
pursuant to Section 1060 of the Code and the regulations adopted thereunder (the
"Purchase Price Allocation"). Neither the Seller nor the Purchaser will take a
position on any income tax return, before any governmental agency charged with
the collection of any income tax, or in any judicial proceeding that is in any
way inconsistent with the terms of this Section 1.6, and ▇▇▇▇ ▇▇▇▇▇
and the Purchaser shall file Form 8594 with the U.S. Internal Revenue Service in
a manner consistent with the Purchase Price Allocation.
2. Closing. The closing of the purchase and sale of the Assets (the
"Closing") shall take place simultaneously with the execution of this Agreement.
The date on which the Closing occurs shall be called the "Closing Date." The
Closing shall be consummated by facsimile transmission. On the Closing Date,
subject to the terms and conditions herein contained, the following shall occur:
2.1 Deliveries by ▇▇▇▇ ▇▇▇▇▇ at the Closing. On the Closing Date,
▇▇▇▇ ▇▇▇▇▇ shall deliver, or cause to be delivered, to the Purchaser:
(1) a ▇▇▇▇ of Sale and Assignment, dated as of the date hereof
and in a form satisfactory to the Purchaser, duly executed by ▇▇▇▇ ▇▇▇▇▇ (the
"▇▇▇▇ of Sale Agreement");
(3) a Trademark Assignment, a Copyright Assignment, a Patent
Assignment and a Domain Name Assignment, as applicable, for such registered
trademarks, copyrights, patents and URL's included as are in the Assets (the
"Intellectual Property Conveyance Documents"); and
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(4) such other documentation reasonably requested by the
Purchaser, in a form reasonably satisfactory to the Purchaser and its counsel,
as shall be necessary and effective to transfer and assign to, and vest in, the
Purchaser all of ▇▇▇▇ ▇▇▇▇▇'▇ right, title and interest in and to the Assets,
and simultaneously with such delivery, all steps will be taken as may be
required to put the Purchaser in actual possession and operating control of the
Assets.
2.2 Deliveries by the Purchaser at the Closing. On the Closing Date
or as otherwise provided herein, the Purchaser shall deliver, or cause to be
delivered to ▇▇▇▇ ▇▇▇▇▇(except as noted below):
(1) the Purchase Price, the Shares to be evidenced by an
irrevocable instruction to Immediatek's transfer agent to deliver the
certificates for the Shares to ▇▇▇▇ ▇▇▇▇▇ promptly after the Closing; and
3. Representations and Warranties of the Seller. ▇▇▇▇ ▇▇▇▇▇ represents,
warrants and covenants to the Purchaser as follows:
3.1 Organization. ▇▇▇▇ ▇▇▇▇▇ is an individual, who resides in the
State of Texas and has all requisite power and authority to own, lease, and
operate its properties and to carry on his personal business as it is now being
conducted.
3.2 Power and Authority.
(1) ▇▇▇▇ ▇▇▇▇▇ has the full right, power, lawful
authority and legal capacity to execute and deliver this Agreement, and the
Intellectual Property Documents and to consummate and perform the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action required on
the part of the Seller, and no other corporate proceedings on the part of ▇▇▇▇
▇▇▇▇▇ is necessary to authorize this Agreement or to consummate the sale
contemplated hereby and thereby. This Agreement has been, and any other
agreements, documents and instruments required to be delivered by ▇▇▇▇ ▇▇▇▇▇ in
accordance with the provisions hereof have been duly executed and delivered
by or on behalf of the Seller and constitute the legal, valid and binding
obligations of the Seller, enforceable against the Seller in accordance with
his respective terms, except as enforceability may be limited by laws of
general application relating to bankruptcy, reorganization, moratorium,
insolvency and debtors' relief and similar laws affecting the enforcement of
creditors' rights, and by general principles of equity.
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(2) ▇▇▇▇ ▇▇▇▇▇ has full legal capacity, right, power and
authority to execute and deliver this Agreement and to perform all transactions
contemplated hereby. This Agreement has been, and any other agreements,
documents and instruments required to be delivered by ▇▇▇▇ ▇▇▇▇▇ in accordance
with the provisions hereof have been duly executed and delivered by or on
behalf of ▇▇▇▇ ▇▇▇▇▇ and constitute the legal, valid and binding obligations
of ▇▇▇▇ ▇▇▇▇▇, enforceable against ▇▇▇▇ ▇▇▇▇▇ in accordance with his
respective terms, except as enforceability may be limited by laws of general
application relating to bankruptcy, reorganization, moratorium, insolvency and
debtors' relief and similar laws affecting the enforcement of creditors'
rights, and by general principles of equity.
3.3 Conflicts; Consents. Neither the execution and delivery of this
Agreement by the Seller nor the consummation and performance of the transactions
contemplated hereby and thereby (i) conflict with or result in the breach or
violation of any provision of the Articles of Incorporation or bylaws of ▇▇▇▇
▇▇▇▇▇, (ii) conflict with or violate any agreement to which ▇▇▇▇ ▇▇▇▇▇ is a
party or by which ▇▇▇▇ ▇▇▇▇▇ is bound or any federal, state, local or other
governmental law or ordinance, (iii) require the authorization, approval,
consent or permit of, or any notice to or filing with or declaration to, any
third party (including, without limitation, any governmental or regulatory
authority), or (iv) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to ▇▇▇▇ ▇▇▇▇▇ or any of its assets, including the
Assets.
3.4 Contracts. ▇▇▇▇ ▇▇▇▇▇ is not party to any contracts,
agreements or commitments in connection with the Systems or the Assets itemized
on and included as SCHEDULE 1.1(2), This Agreement and other agreement entered
to by ▇▇▇▇ ▇▇▇▇▇ with regards to the Assets are valid and binding obligation in
full force and effect in accordance with its respective terms with respect to
▇▇▇▇ ▇▇▇▇▇ and is a valid and binding obligation in full force and effect in
accordance with its respective terms with respect to any other party thereto,
except as enforceability may be limited by laws of general application relating
to bankruptcy, reorganization, moratorium, insolvency, fraudulent conveyance and
debtors' relief and similar laws affecting the enforcement of creditors' rights,
and by general principles of equity. ▇▇▇▇ ▇▇▇▇▇ is not in default under any of
the Contracts and, to the knowledge of ▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇ ▇▇▇▇▇'▇ Knowledge"),
no other party is in material default under any of the Contracts.
3.5 Legal Proceedings; Compliance with Law. There are no disputes,
claims, actions, suits or proceedings, arbitrations or investigations pending
or, to ▇▇▇▇ ▇▇▇▇▇'▇ knowledge, threatened against or affecting the Systems
or the Assets. There is no state of facts that might reasonably form the basis
of any claim, liability or litigation against the Seller affecting the Systems
or the Assets. The development of the Systems by ▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇'▇
use thereof, are in compliance with all applicable federal, state, local or
other governmental laws, ordinances, codes, rules and regulations. ▇▇▇▇ ▇▇▇▇▇
owns or possesses all franchises, licenses, permits, consents, approvals,
rights, waivers and other authorizations, governmental or otherwise, which are
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necessary for ▇▇▇▇ ▇▇▇▇▇ to develop and use the Systems as now used; ▇▇▇▇ ▇▇▇▇▇
is not in default, nor has ▇▇▇▇ ▇▇▇▇▇ received any notice of any claim or
default thereunder, or any notice of any other claim or proceeding or threatened
proceeding relating thereto; and neither the execution or delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
require any notice or consent thereunder.
3.6 Intellectual Property. SCHEDULE 1.1(1) contains a true, correct and
complete list of all Intellectual Property used by ▇▇▇▇ ▇▇▇▇▇ in connection with
the Systems. ▇▇▇▇ ▇▇▇▇▇ owns or licenses pursuant to the License Agreements
all of the Intellectual Property, (this includes its websites and URL's) used or
held for use by ▇▇▇▇ ▇▇▇▇▇ in connection with the Systems (the "Intellectual
Property"), free and clear of any Lien, and no other person or entity has any
proprietary, financial or other interest, direct or indirect, in whole or in
part, in any of the Seller's Intellectual Property. ▇▇▇▇ ▇▇▇▇▇'▇
Intellectual Property and ▇▇▇▇ ▇▇▇▇▇'▇ use thereof do not infringe upon or
unlawfully or wrongfully use any Intellectual Property owned or claimed by any
other person or entity, or otherwise use any material that defames, slanders,
libels or violates any right of publicity, right of privacy or other proprietary
right of any other person or entity, and ▇▇▇▇ ▇▇▇▇▇ has not received notice of
any claim or threatened claim to the contrary. All rights of ▇▇▇▇ ▇▇▇▇▇ in and
to its Intellectual Property are fully valid and enforceable, and ▇▇▇▇ ▇▇▇▇▇ has
not received notice of any claim or threatened claim to the contrary. To the
▇▇▇▇ ▇▇▇▇▇ 's knowledge, ▇▇▇▇ ▇▇▇▇▇'▇ Intellectual Property is not being
infringed upon or unlawfully or wrongfully used by any other person or
entity. ▇▇▇▇ ▇▇▇▇▇ has not provided any other person or entity with
notice of any claim or threatened claim to the contrary. ▇▇▇▇ ▇▇▇▇▇ has taken
all reasonable and appropriate steps to protect, maintain and defend its
rights in and to ▇▇▇▇ ▇▇▇▇▇'▇ Intellectual Property and, where applicable, to
preserve the confidentiality ▇▇▇▇ ▇▇▇▇▇'▇ Intellectual Property.
3.7 Operational Elements. ▇▇▇▇ ▇▇▇▇▇'▇ Intellectual Property includes
any and all rights (whether by ownership or license under the License
Agreements) for software programs, modules, routines, data, text or graphic
files, source or object codes and other components of the Systems and such
operational elements include all written or electronic documentation applicable
thereto.
3.8 Permits. All Business Permits are in full force and effect and in
good standing. ▇▇▇▇ ▇▇▇▇▇ has not received notice of any claim of
revocation of any Business Permits and, to ▇▇▇▇ ▇▇▇▇▇ 's knowledge, there are
no events that might give rise to such a claim.
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3.9 Taxes.
(1) All federal, state, local and foreign tax returns,
reports, statements and other similar filings required to be filed by ▇▇▇▇
▇▇▇▇▇ with respect to any federal, state, local or foreign taxes, assessments,
fees and other governmental charges or impositions (including without limitation
all income tax, social security, payroll, sales and use, excise, privilege,
property, ad valorem, franchise, license, school, and any other tax or similar
governmental charge or imposition under the laws of the United States or any
state or municipal or political subdivision thereof ) (the "Tax Returns") have
been timely filed with the appropriate governmental agencies in all
jurisdictions in which such Tax Returns are required to be filed, and all such
Tax Returns properly reflect the liabilities of ▇▇▇▇ ▇▇▇▇▇ for taxes for the
periods, property or events covered thereby. All taxes required to be paid, or
withheld by ▇▇▇▇ ▇▇▇▇▇ and any deficiency assessments, penalties and interest
have been timely paid or withheld. ▇▇▇▇ ▇▇▇▇▇ has not received any
notice of assessment or proposed assessments in connection with any Tax Returns
and, to ▇▇▇▇ ▇▇▇▇▇ 's knowledge, there are not any pending tax examinations of
or tax claims asserted against ▇▇▇▇ ▇▇▇▇▇ or any of its assets or properties.
(2) All federal, state or local income, profit, franchise or
other taxes, fees, assessments or charges whatsoever, together with any interest
and any penalties, additions to tax or additional amounts with respect thereto,
for any period or portion thereof ending on or before the Closing Date, (i) due
as of the Closing Date have been fully paid by ▇▇▇▇ ▇▇▇▇▇ or (ii) due after the
Closing Date shall be fully paid by ▇▇▇▇ ▇▇▇▇▇ after the Closing Date.
3.10 Transactions with Affiliates. Neither ▇▇▇▇ ▇▇▇▇▇ nor
any affiliate of ▇▇▇▇ ▇▇▇▇▇ nor any member of ▇▇▇▇ ▇▇▇▇▇ 's family, owns or
has a controlling ownership interest in these assets or other entity that
is a party to any agreement, commitment or other arrangement with ▇▇▇▇ ▇▇▇▇▇ in
connection with the Systems.
3.11 Financial Statements. ▇▇▇▇ ▇▇▇▇▇ has provided Immediatek with
complete and correct copies of financial statements with regards to these
assets.
3.12 Undisclosed Liabilities. ▇▇▇▇ ▇▇▇▇▇, with respect to
his Assets and the Systems, is not liable for or subject to, and,
to ▇▇▇▇ ▇▇▇▇▇ 's knowledge, there is no basis for assertion against it with
respect to his Assets and the Systems, any liabilities that are not adequately
reflected, reserved against or given effect to in the Financial Statements.
3.13 Absence of Certain Changes or Events. With respect to the
Systems, and the Assets of ▇▇▇▇ ▇▇▇▇▇, since December 31, 2002, there has not
been: (i) any Material Adverse Effect, (ii) any damage, destruction or
casualty loss, whether or not covered by insurance, (iii) any agreement,
commitment or transaction entered into by the Seller that is material to the
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ownership or operation of the Assets, and (iv) any sale or disposition of any
fixed assets. For purposes of this Agreement, "Material Adverse Affect" shall
mean any change (or changes taken together) in, or effect on, the Assets, the
Systems or the business of the Seller that is materially adverse to the
operations or condition (financial or otherwise) of the Assets, the Systems or
the business of the Seller taken as a whole.
3.14 Inventory. The Inventory (i) was acquired and has been maintained
in accordance with the regular business practices of ▇▇▇▇ ▇▇▇▇▇, (ii) subject
to the reserves on the books of ▇▇▇▇ ▇▇▇▇▇, which have been disclosed to the
Purchaser, consists of new and unused items of a quality and quantity useable or
saleable in the ordinary course of business consistent with past practice, (iii)
is owned by ▇▇▇▇ ▇▇▇▇▇ free and clear of all Liens, (iv) subject
to the reserves on the books of ▇▇▇▇ ▇▇▇▇▇, which have been disclosed to the
Purchaser, and (v) subject to the reserves on the books of ▇▇▇▇ ▇▇▇▇▇, is not
obsolete, unusable, damaged, slow moving or unsaleable in the ordinary course
of business.
3.15 Insurance. All policies of fire, liability, workers' compensation
and other forms of insurance owned or held by ▇▇▇▇ ▇▇▇▇▇ and insuring the Assets
or the Systems are in full force and effect, all premiums with respect thereto
covering all periods up to and including the date hereof, if due, have been
paid in full and no notice of cancellation or termination has been received
with respect to any such policy.
3.16 Environmental Matters:
(1) ▇▇▇▇ ▇▇▇▇▇ holds and is, and has been, in
compliance with all permits, certificates, licenses and governmental approvals,
consents and authorizations required under applicable environmental laws for
▇▇▇▇ ▇▇▇▇▇ to own and operate the Assets and the Systems ("Environmental
Permits");
(2) ▇▇▇▇ ▇▇▇▇▇ is in compliance with applicable
environmental laws;
(3) ▇▇▇▇ ▇▇▇▇▇ has not been notified by any governmental
authority or third party of any pending or threatened claim under any
environmental law against ▇▇▇▇ ▇▇▇▇▇ in connection with the Assets or the
Systems and, to ▇▇▇▇ ▇▇▇▇▇ 's knowledge, there is no event, condition or
circumstance which could give rise to any claim under any environmental law;
(4) ▇▇▇▇ ▇▇▇▇▇ has not been notified by any governmental
authority or any third party that ▇▇▇▇ ▇▇▇▇▇ in connection with
its business, the Assets or the Systems may be a potentially responsible party
for environmental contamination or any release or remediation of hazardous
substances and, to ▇▇▇▇ ▇▇▇▇▇'▇ knowledge, there is no event, condition or
circumstance which could give rise to such potential responsibility;
(5) ▇▇▇▇ ▇▇▇▇▇ has not in connection with its
business entered into or agreed to any settlement agreement, consent decree
or order with respect to or affecting the Assets or the Systems relating to
compliance with any environmental law or to investigation, remediation or
cleanup of hazardous substances under any environmental law;
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(6) there are no aboveground or underground storage tanks,
lagoons, pits or surface impoundments located on, in or under any properties
currently or formerly owned, operated or leased by ▇▇▇▇ ▇▇▇▇▇ in connection
with its business or any predecessor of ▇▇▇▇ ▇▇▇▇▇;
(7) no releases of hazardous substances have occurred at,
from, in, on, to or under any property currently or formerly owned, operated or
leased by ▇▇▇▇ ▇▇▇▇▇ in connection with its business, the Assets or the Systems
or any predecessor of ▇▇▇▇ ▇▇▇▇▇, and no hazardous substances are present in,
on or about or are migrating to or from any such property that could give rise
to a claim under environmental laws by a governmental authority or third party
against ▇▇▇▇ ▇▇▇▇▇, its business, the Assets or the Systems;
(8) ▇▇▇▇ ▇▇▇▇▇ has not in connection with his Assets or the
Systems nor has any predecessor of ▇▇▇▇ ▇▇▇▇▇ transported, treated, stored,
handled or disposed of nor arranged for the treatment, storage, handling,
disposal or transportation of any hazardous substance to any location that could
result in a claim under environmental laws by a governmental authority or third
party against ▇▇▇▇ ▇▇▇▇▇, its business, the Assets or the Systems; and
(9) There have been no environmental investigations, studies,
audits or tests conducted by, on behalf of or which are in the possession of
▇▇▇▇ ▇▇▇▇▇ with respect to any property currently or formerly owned, leased or
operated by ▇▇▇▇ ▇▇▇▇▇ in connection with its business, the Assets or the
Systems which have not been delivered to the Purchaser prior to execution of
this Agreement.
3.17 Tangible Personal Property. All Tangible Personal Property is in
good operating condition and repair (ordinary wear and tear excepted) in all
material respects and is useable in the ordinary course of ▇▇▇▇ ▇▇▇▇▇ 's
business consistent with past practice. Except for items subject to the License
Agreement, the Personal Property Leases and the Real Property Lease, no person
other than ▇▇▇▇ ▇▇▇▇▇ owns any equipment or other property described herein.
3.18 Litigation; Warranty Claims. There is no claim, action,
proceeding or investigation pending or, to ▇▇▇▇ ▇▇▇▇▇ 's knowledge,
threatened against ▇▇▇▇ ▇▇▇▇▇ with respect the Systems or the Assets,
and to ▇▇▇▇ ▇▇▇▇▇ 's knowledge, no event has occurred that provides a reasonable
basis for a material claim, action, proceeding or investigation against
▇▇▇▇ ▇▇▇▇▇ with respect to its business, the Systems or the Assets.
3.19 Systems. The sale of the Assets to be sold by ▇▇▇▇ ▇▇▇▇▇ to the
Purchaser pursuant to this Agreement will effectively convey to the Purchaser
all of the Systems and all of the tangible and intangible property used by ▇▇▇▇
▇▇▇▇▇ (whether owned, leased or held under license by ▇▇▇▇ ▇▇▇▇▇) in connection
with the Assets or Systems. There are no material facilities, services, assets
or properties, including any Intellectual Property, shared with any other
person, which are used by ▇▇▇▇ ▇▇▇▇▇ in connection with the Systems.
10
3.20 Shares.
(1) Investment Representations. ▇▇▇▇ ▇▇▇▇▇ acknowledges and
understand that (i) the Shares have not been registered with the Securities
and Exchange Commission (the "SEC") or with any state official or agency and
is being offered and issued pursuant to an exemption from the registration
requirements set forth in the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state blue sky or securities laws, and that
no governmental agency has recommended or endorsed the Shares or made any
finding or determination relating to the fairness of the transaction set forth
herein and (ii) ▇▇▇▇ ▇▇▇▇▇ is acquiring the Shares issuable to it hereunder
for his own account for investment, with no present intention of reselling or
otherwise distributing the same, except (x) pursuant to an offering of shares
duly registered under the Securities Act or (y) under other circumstances which
do not require registration under the Securities Act and applicable state
securities laws.
(2) Information Related to Immediatek. ▇▇▇▇ ▇▇▇▇▇
has received and had an opportunity to review for a reasonable time preceding
the Closing Date certain filings made by Immediatek with the SEC under the
Securities Exchange Act of 1934 (excluding exhibits, unless requested by ▇▇▇▇
▇▇▇▇▇) (the "SEC Filings"). ▇▇▇▇ ▇▇▇▇▇ acknowledges that the Purchaser has made
available to him the opportunity to ask questions and receive answers concerning
the Purchaser and the Shares and to obtain any additional information which the
Purchaser possess or can acquire without unreasonable effort or expense that is
necessary to verify the accuracy of such additional information and/or the
Purchaser's SEC filings. ▇▇▇▇ ▇▇▇▇▇ possesses such knowledge and experience in
financial and business matters or have been advised by such persons who do
possess such knowledge that each is capable of evaluating the merits and risks
of the investment in the Shares contemplated by this Agreement.
3.21 Disclosure. No representations or warranty of ▇▇▇▇ ▇▇▇▇▇
contained in this Agreement, and no statement contained in the Schedules
attached hereto or in any certificate, list or other writing furnished to the
Purchaser pursuant to any provision of this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading.
4. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to ▇▇▇▇ ▇▇▇▇▇ as follows:
4.1 Selling Individual. The Seller is an individual who is selling
his personal assets. The Seller has full power and authority to sell his
personal assets and properties.
11
4.2 Power and Authority. The Purchaser has the power and authority to
execute and deliver the Transaction Agreement(s) and to consummate and perform
the transactions contemplated hereby and thereby. The execution and delivery of
the Transaction Agreement(s) and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action required on the part of the Purchaser, and no other
corporate proceedings on the part of the Purchaser are necessary to authorize
the Transaction Agreement(s) or to consummate the transactions contemplated
hereby and thereby. The Transaction Agreement(s) have been duly executed and
delivered by or on behalf of the Purchaser. The Transaction Agreement(s)
constitute the legal, valid and binding obligations of the Purchaser,
enforceable against the Purchaser in accordance with their respective terms,
except as enforceability may be limited by laws of general application relating
to bankruptcy, reorganization, moratorium, insolvency and debtors' relief and
similar laws affecting the enforcement of creditors' rights, and by general
principles of equity.
4.3 Conflicts; Consents. The execution, delivery and performance of
the Transaction Agreement(s) by the Purchaser will not violate or conflict with
the organizational documents of the Purchaser.
4.4 Valid Issuance of the Shares. The Shares when issued and delivered
in accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid and nonassessable and will
be free of restrictions on transfer, other than restrictions on transfer under
this Agreement and under applicable state and federal securities laws.
4.5 Purchaser's SEC Filings. The Purchaser's SEC Filings were complete
and accurate in all material respects as of the date of the filings and there
were no material misstatements therein as of such dates.
4.6 Material Changes. There has not been, since September 30, 2002,
any material adverse change in the financial condition or in the results of
operations, business or properties of Parent.
5. Other Agreements.
5.1 Assignment of Contracts. If any required consent to the assignment
of any of the Contracts is not obtained or if an attempted assignment thereof
would be ineffective, ▇▇▇▇ ▇▇▇▇▇ shall cooperate with the Purchaser to provide
the Purchaser with the benefits and obligations thereunder in accordance with
such agreement until such consent or effective assignment can be obtained or
until a replacement contract is in place. To the extent the assignment of any
of the Contracts is not obtained, ▇▇▇▇ ▇▇▇▇▇ shall, to the extent legally
permissible without risk of penalty or loss to ▇▇▇▇ ▇▇▇▇▇, terminate such
contract at the request of the Purchaser.
12
5.2 Transition of the Assets; Audit of Financial Statements. ▇▇▇▇
▇▇▇▇▇ and the Purchaser shall use commercially reasonable efforts to
cooperate in an orderly transfer of the Assets to the Purchaser. ▇▇▇▇ ▇▇▇▇▇
will cooperate with the Purchaser and its accountants in connection with an
audit of the financial statements of ▇▇▇▇ ▇▇▇▇▇ at December 31, 2002 and for
up to a two year period then ended and provide to the auditor such information
and customary management representation letters as the auditor may reasonably
request in connection with such audit.
5.3 Access to Facilities. On a week to week basis following the
Closing Date, ▇▇▇▇ ▇▇▇▇▇ shall permit the Purchaser to have access to and use
of the premises used by ▇▇▇▇ ▇▇▇▇▇ located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ for the purposes of completing any production work and/or
transferring production to the Purchaser's facilities, if applicable.
5.4 Legends. ▇▇▇▇ ▇▇▇▇▇ acknowledges that the following legend may be
placed by Immediatek upon the certificates representing the Shares delivered to
▇▇▇▇ ▇▇▇▇▇ hereunder:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 BUT HAVE BEEN ACQUIRED FOR INVESTMENT
BY THE REGISTERED OWNER. NO SALE, PLEDGE OR OTHER TRANSFER MAY BE MADE
UNLESS THE ISSUER IS FURNISHED WITH AN OPINION OF COUNSEL FOR THE
SHAREHOLDER IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT SUCH
SALE IS IN COMPLIANCE WITH THE SECURITIES ACT OF 1933 AND APPLICABLE
STATE SECURITIES LAWS.
5.5 Further Assurances. From and after the Closing, ▇▇▇▇ ▇▇▇▇▇ agrees
to execute and deliver such further documents and instruments and to do such
other acts and things as may reasonably be requested of such party in order to
effectuate the transactions contemplated by this Agreement.
5.6 Operation of the Seller.
(1) Following the Closing Date, ▇▇▇▇ ▇▇▇▇▇ shall pay all
Accounts Payable and its other creditors in existence as of the Closing Date on
a timely basis, but in no event, later than the day such Accounts Payable or
other amounts are due.
(2) At the request of ▇▇▇▇ ▇▇▇▇▇, the Purchaser shall use
commercially reasonable efforts to cooperate in the collection of ▇▇▇▇ ▇▇▇▇▇ 's
Accounts Receivables.
(3) ▇▇▇▇ ▇▇▇▇▇ shall not commence any legal action, of any
form whatsoever, against any customers of its business (as of the Closing Date
or within the last 2 years prior to the Closing Date) without the Purchaser's
prior written consent, which consent shall not be unreasonably withheld.
13
5.7 Website Operations. Following the Closing, operation of the
▇▇▇▇ ▇▇▇▇▇ 's website will transfer to the Purchaser, and ▇▇▇▇ ▇▇▇▇▇ 's website
will be modified so as to direct all persons accessing ▇▇▇▇ ▇▇▇▇▇ 's website to
the Purchaser's website.
6. Non-Competition and Confidentiality. During the period beginning on
the Closing Date and for sixty (60) months thereafter (the "Non-Competition
Period") and in the Geographic Area (as defined below) ▇▇▇▇ ▇▇▇▇▇ agrees not to
in any capacity, engage or have a financial interest in any Competing Business
(as defined below) or provide managerial, supervisory, administrative, financial
or consulting services relating to the business of any Competing Business,
including making available any information or funding to any such Competing
Business; provided that the foregoing restrictions shall not restrict ▇▇▇▇
▇▇▇▇▇ from owning up to five percent (5%) of any entity whose equity securities
are traded on Nasdaq or other public trading market. If a court determines that
the foregoing restrictions are too broad or otherwise unreasonable under
applicable law, including with respect to time or space, the court is hereby
requested and authorized by the parties to revise the foregoing restrictions to
include the maximum restrictions allowable under applicable law. Each of the
▇▇▇▇ ▇▇▇▇▇ acknowledges, however, that the parties have negotiated
this Section 6 and that the time limitations, the limitation on activities and
the geographic limitations are reasonable in light of the circumstances
pertaining to the Seller, the Systems and this transaction.
▇▇▇▇ ▇▇▇▇▇ recognizes and acknowledges that by reason of involvement he has had
access to Trade Secrets (as defined below) relating to the Systems. ▇▇▇▇ ▇▇▇▇▇
acknowledges that such Trade Secrets are a valuable and unique asset and
agree to take all reasonable measures to preserve the confidentiality of the
Trade Secrets and covenant that they will not knowingly allow the disclosure of
any such Trade Secrets to any person for any reason whatsoever, unless such
information is in the public domain through no wrongful act of ▇▇▇▇ ▇▇▇▇▇ or
such disclosure is required by law. For purposes of this Agreement, "Trade
Secrets" means all know-how, trade secrets, confidential information, subscriber
and visitor lists, business and product plans, hardware and software designs and
code, product specifications and documentation, technical information, data,
process technology, plans, drawings, and blue prints, owned, used or licensed
(as licensor or licensee) by ▇▇▇▇ ▇▇▇▇▇.
In the event of any breach or threatened breach by ▇▇▇▇ ▇▇▇▇▇ of any provision
of this Section 6, the Purchaser shall be entitled to injunctive or other
equitable relief, restraining such party from engaging in conduct that would
constitute a breach of the obligations of ▇▇▇▇ ▇▇▇▇▇ under this Section. Such
relief shall be in addition to and not in lieu of any other remedies that may
be available, including an action for the recovery of damages.
14
7. Indemnification.
7.1 Survival. All of the representations, warranties, covenants and
obligations contained in this Agreement or in any instrument or document
delivered pursuant to this Agreement shall survive the execution of this
Agreement and the Closing.
7.2 Indemnification by ▇▇▇▇ ▇▇▇▇▇. ▇▇▇▇ ▇▇▇▇▇ shall jointly and
severally reimburse and indemnify and hold Purchaser and its officers,
directors, employees, affiliates and agents (collectively, the "Purchaser
Parties") harmless against and in respect of any and all damage, loss,
liability, deficiency, settlement payments, costs, levies, expenses or
obligations, whether or not the result of a third party claim (collectively,
"Damages"), in connection with, resulting from or relating to:
(1) any and all Unassumed Liabilities;
(2) any misrepresentation, breach of representation or
warranty or nonfulfillment of any covenant or agreement on the part of ▇▇▇▇
▇▇▇▇▇ under this Agreement;
(3) any claim that any Intellectual Property used in the
Systems constitutes an infringement of any intellectual property right of any
third party;
(4) noncompliance with the provisions of the bulk sales law of
any state that may be applicable to the transactions contemplated hereby;
(5) any and all actions, suits, claims, allegations,
proceedings, investigations, audits, demands, assessments, fines, judgments,
settlements, levies, costs and other expenses (including without limitation
reasonable audit and legal fees) incident to any of the foregoing or the
enforcement of this Section 7.2.
7.3 Indemnification by the Purchaser. The Purchaser shall reimburse
and indemnify and hold ▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇ ▇▇▇▇▇ Parties") harmless against
and in respect of any Damages in connection with, resulting from or relating to:
(1) any and all Assumed Liabilities (except for those
liabilities and obligations for which ▇▇▇▇ ▇▇▇▇▇ is required to indemnify the
Purchaser under Section 7.2);
(2) any misrepresentation, breach of representation or
warranty or nonfulfillment of any covenant or agreement on the part of the
Purchaser under this Agreement; and
15
(3) any and all actions, suits, claims, allegations,
proceedings, investigations, audits, demands, assessments, fines, judgments,
settlements, levies, costs and other expenses (including without limitation
reasonable audit and legal fees) incident to the foregoing or the enforcement of
this Section 7.3.
7.4 Procedure for Indemnification.
(1) Third Party Claims. If any claim is made against a party
(an "Indemnified Party") that, if sustained, would give rise to a liability of
another party (the "Indemnifying Party") under this Agreement (a "Third Party
Claim"), the Indemnified Party shall promptly, and in any case within ten (10)
business days of its receipt of notice of such Third Party Claim, cause notice
of the Third Party Claim to be delivered to the Indemnifying Party along with
all of the facts, information or materials relating to such claim of which the
Indemnified Party is aware (the "Claim Notice"), provided however, that failure
to give such notification shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party shall have been actually
prejudiced as a result of such failure.
(i) The Indemnifying Party shall have ten (10) calendar days
after delivery thereof to elect, in writing to the Indemnified Party,
to defend or settle the Third Party Claim, at its own expense. Until
written notice electing to defend or settle any Third Party Claim, the
Indemnified Party may take, at the expense of the Indemnifying Party,
any action it reasonably believes necessary to preserve its rights with
respect to such Third Party Claim. If the Indemnifying Party does not
assume the defense of any claim, then the Indemnified Party may defend
against such Third Party Claim in such manner as it deems appropriate
at the expense of the Indemnifying Party.
(ii) If a Third Party Claim is made against an Indemnified
Party, the Indemnifying Party shall be entitled to participate in the
defense thereof and, if it so chooses, to assume the defense thereof
with counsel selected by the Indemnifying Party, which counsel must be
reasonably satisfactory to the Indemnified Party, provided that all
Indemnifying Parties with respect to such Third Party Claim jointly
acknowledge to the Indemnified Party its right to indemnity pursuant
hereto in respect of the entirety of such claim and provide assurances
reasonably satisfactory to the Indemnified Party that the Indemnifying
Parties will be financially able to satisfy such claim in full if it is
decided adversely. Should the Indemnifying Party so elect to assume the
defense of a Third Party Claim, the Indemnifying Party shall not be
liable to the Indemnified Party for legal expenses subsequently
incurred by the Indemnified Party in connection with the defense
thereof (except as hereinafter provided), but shall continue to pay for
any expenses of investigation or any Damage suffered. If the
16
Indemnifying Party assumes such defense, the Indemnified Party shall
have the right to participate in the defense thereof and to employ
counsel, at its own expense (except as hereinafter provided), separate
from the counsel employed by the Indemnifying Party. Notwithstanding
the foregoing, if (a) the Indemnifying Party shall not assume the
defense of a Third Party Claim with counsel reasonably satisfactory to
the Indemnified Party within ten (10) business days of any Claim
Notice, or (b) legal counsel for the Indemnified Party notifies the
Indemnifying Party that there are or may be legal defenses available to
the Indemnified Party or to other Indemnified Parties which are
different from or additional to those available to the Indemnifying
Party, which, if the Indemnified Party and the Indemnifying Party were
to be represented by the same counsel, would constitute a conflict of
interest for such counsel or prejudice prosecution of the defenses
available to such Indemnified Party, or (c) if the Indemnifying Party
shall assume the defense of a Third Party Claim and fails to diligently
and vigorously prosecute such defense in a timely manner after due
notice, then in each such case the Indemnified Party, by notice to the
Indemnifying Party, may employ its own counsel and control the defense
of the Third Party Claim and the Indemnifying Party shall be liable for
the reasonable fees, charges and disbursements of counsel employed by
the Indemnified Party and the Indemnified Party shall be promptly
reimbursed for any such fees, charges and disbursements, as and when
incurred. Whether the Indemnifying Party or the Indemnified Party
control the defense of any Third Party Claim, the parties hereto shall
cooperate in the defense thereof. Such cooperation shall include the
retention and provision to the counsel of the controlling party of
records and information that are reasonably relevant to such Third
Party Claim, and making employees available on a mutually convenient
basis to provide additional information and explanation of any material
provided hereunder. The Indemnifying Party shall have the right to
settle, compromise or discharge a Third Party Claim (other than any
such Third Party Claim in which criminal conduct is alleged) without
the Indemnified Party's consent if such settlement, compromise or
discharge (x) constitutes a complete and unconditional discharge and
release of all Indemnified Parties, and (y) provides for no relief
other than the payment of monetary damages and such monetary damages
are paid in full by the Indemnifying Party, and in all other cases may
not so settle without the prior written consent of the Indemnified
Party.
(2) Claims by the Purchaser or Claims by the Seller. In the
event the Indemnified Party should have a claim against the Indemnifying Party
that does not involve a Third Party Claim, the Indemnified Party shall promptly
cause notice of such claim to be delivered to the Indemnifying Party. If the
Indemnifying Party (i) does not notify the Indemnified Party within fifteen (15)
calendar days after the Indemnified Party's notice that it disputes such claim
17
or (ii) notifies the Indemnified Party that it does not dispute such claim, the
amount of such claim shall be conclusively deemed as a liability of the
Indemnifying Party under Section 7.1. If the Indemnifying Party has timely
disputed its liability with respect to such claim, the parties will proceed in
good faith to negotiate a resolution to such dispute, and if not resolved within
twenty (20) business days, shall be resolved by confidential binding arbitration
in accordance with the rules of the American Arbitration Association. The
decision of the arbitrator shall be final, conclusive and binding on the parties
to the arbitration. Judgment may be entered on the arbitrator's
decision in any court having jurisdiction.
8. Miscellaneous.
8.1 Broker's Fees. Each of the parties hereto represents and warrants
that it has not taken and will not take any action that would cause any other
party hereto to have any obligation or liability to any person for a finder's or
broker's fee and agrees to indemnify the other parties hereto for breach of the
foregoing representation and warranty.
8.2 Expenses. Each party hereto shall pay its own expenses, including
without limitation the reasonable fees and expenses of its, his or her counsel,
incurred in connection with this Agreement and the transactions contemplated
hereby.
8.3 Bulk Sales Compliance. The Purchaser hereby waives compliance by
▇▇▇▇ ▇▇▇▇▇ with the provisions of the bulk sales law of any state that may be
applicable to this transaction. In consideration of such waiver, ▇▇▇▇ ▇▇▇▇▇,
agree to defend and indemnify the Purchaser against and hold it harmless from
any and all loss, liability, claims, damage or expense (including reasonable
attorneys' fees) arising out of or resulting from such noncompliance, as
provided in Section 7.
8.4 Contents of Agreement; Amendment; Parties in Interest; Assignment;
Etc. This Agreement sets forth the entire understanding of the parties hereto
with respect to the subject matter hereof. There are no restrictions, promises,
representations, warranties, covenants or undertakings other than those
expressly set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties, including, without
limitation, entered into by ▇▇▇▇ ▇▇▇▇▇ and the Purchaser. This Agreement may
be amended, modified or supplemented only by written instrument duly executed by
each of the parties hereto. All representations, warranties, covenants, terms
and conditions of this Agreement shall be binding upon and inure to the benefit
of and be enforceable by the respective heirs, legal representatives, successors
and permitted assigns of the parties hereto. No party hereto shall assign this
Agreement or any right, benefit or obligation hereunder to any other party
without obtaining the prior written consent of the other party; provided,
however, that (i) the Purchaser may assign its rights and benefits hereunder,
including without limitation the benefit of any
18
representation, warranty or covenant, to any affiliated entity and (ii) the
Seller may, with notice to the Purchaser, assign its rights hereunder in whole
or in part to ▇▇▇▇ ▇▇▇▇▇. Any term or provision of this Agreement may
be waived at any time by the party entitled to the benefit thereof by a written
instrument duly executed by such party.
8.5 Notices. All notices and other communications hereunder shall be in
writing (including wire, telefax or similar writing) and shall be delivered,
addressed, or telefaxed as follows:
If to the Purchaser:
Immediatek, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇, President and CEO
with a required copy to (which copy shall not constitute notice):
▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇ & Associates, Ltd.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇ ▇▇▇▇▇:
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Each such notice, request or other communication shall be given by hand
delivery, by nationally recognized courier service or by telefax, receipt
confirmed. Each such notice, request or communication shall be effective (i) if
delivered by hand or by nationally recognized courier service, when delivered at
the address specified in this Section 8.5 (or in accordance with the latest
unrevoked written direction from such party); and (ii) if given by telefax, when
such telefax is transmitted to the telefax number specified in this Section 8.5
(or in accordance with the latest unrevoked written direction from such party),
and the appropriate confirmation is received.
8.6 Severability. The invalidity of any provision of this Agreement or
portion of a provision shall not affect the validity of any other provision of
this Agreement or the remaining portion of the applicable provision.
8.7 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ITS
PROVISIONS CONCERNING CONFLICTS OF LAWS.
19
8.8 Public Announcements. ▇▇▇▇ ▇▇▇▇▇ shall not make any public
statements, including without limitation, any press releases, with respect
to this Agreement and the transactions contemplated hereby without the prior
consent of the Purchaser, except as may be required by
law.
8.9 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be considered an original and all of which
together shall constitute the same instrument. It shall not be necessary in
making proof of this Agreement or any counterpart hereof to produce or account
for any of the other counterparts.
8.10 Incorporation of Exhibits and Schedules. The exhibits and
schedules identified in this Agreement are incorporated herein by reference and
made a part hereof. The term "Agreement" shall include all such exhibits,
schedules, certificates, and writings.
8.11 Rights of Third Parties. Nothing in this Agreement shall be
construed as giving any person, firm, corporation, or other entity, other than
the parties who are signatory hereto and their respective successors and
permitted assigns, any right, remedy, or claim under or in respect of this
Agreement or any provision hereof.
IN WITNESS WHEREOF, this Asset Purchase Agreement has been executed by
the parties hereto as of the day and year first written above.
IMMEDIATEK, INC.
Purchaser
By: /s/ ▇▇▇▇ ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇
Title: President and Chief Executive Officer
▇▇▇▇ ▇▇▇▇▇
Seller
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
20
SCHEDULE I
The Assets, pursuant to this Asset Purchase Agreement include, without
limitation, all of the right, title and interest of the following:
(1) "TwoBigToes Website & Name" assets include company
name, logo and website. This includes name, logo,
domain name, graphic images and existing website,
e-commerce system, back-end application programming,
management utilities, and sales reporting utilities,
(includes both ▇▇▇▇▇▇▇▇▇▇.▇▇▇ & ▇▇▇▇▇▇▇▇.▇▇▇ domains)
(2) "Sequel Server Database", complex database with over 70
unique tables and over 145 unique store procedures,
plus SQL 7.0 license intact.
(3) "Dedicated Server", One SuperMicro server, P4 1.6Ghz,
512MB RAM, ▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇ expandable to 300 GB on
existing server. Leased from "The Planet."
(4) "E-commerce" comprehensive integrated functionality
for capturing and purchasing CD purchases by track,
CD or subscription on the existing TwoBigToes site.
(5) "Digital Music Library" consisting of 26,000 MP3 files
encoded at 128Kbps, all cataloged by label ID, artist ID,
CD product ID, and track ID.
(6) "Digital CD Cover Art". Over 2,000 scanned 200x200
(300 dpi) JPEG files complete with cataloging.
(7) "Content License Agreements" comprise an aggregate of
331 record labels, 1,317 artists, over 2,000 CDs, and
26,000 tracks.
(8) "Artist Subscription Base" artists charged monthly fees
for posting his music to TwoBigToes.
(9) "Consumer Subscription Base" music fans charged monthly
fees for accessing music from TwoBigToes.
(10) All express and implied warranties and guarantees from
third parties with respect to any property constituting
part of the Assets;
(11) Rights of ▇▇▇▇ ▇▇▇▇▇ under any liability insurance
policies now or heretofore in effect to the extent any
claim is made against the Purchaser with respect to
liabilities and obligations of ▇▇▇▇ ▇▇▇▇▇ that are not
assumed liabilities.
(12) All rights in any action against third parties relating
to the Systems.
SCHEDULE II
The undersigned hereby represents that ▇▇▇▇ ▇▇▇▇▇ has paid all liabilities
and/or monies (the "Liabilities") on the Assets it intends to sell to
Immediatek, Inc., pursuant to the Asset Purchase Agreement, dated March 17,
2003. Further, ▇▇▇▇ ▇▇▇▇▇ will indemnify Immediatek, against any future
direct or indirect liabilities with regards to the sales of these Assets his
indebtedness, obligation (including, but not limited to, accounts payable, tax
liability, expense, claim, loss, damage, deficiency, guaranty or endorsement
of, related to, or arising out of in any manner whatsoever, whether absolute
or contingent, accrued or unaccrued, due or to become due, liquidated or
unliquidated
DATED: March 17, 2003
▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇
SCHEDULE III
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is made as of the 17 day
of March, 2003, by and between Immediatek, Inc., a Nevada corporation ("Buyer"),
and ▇▇▇▇ ▇▇▇▇▇, an individual ("Seller").
RECITALS
A. Buyer and Seller have entered into an Asset Purchase Agreement dated
March 17, 2003 (the "Purchase Agreement") under the terms of which Buyer has
agreed to purchase certain technologies of Seller, all as more fully set forth
and described in the Purchase Agreement.
B. Seller's delivery to Buyer of this Agreement is a condition to Buyer
consummating the transactions contemplated by the Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein and in the Purchase Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby covenant and agree as follows:
1. Noncompetition.
1.1 Seller covenants and agrees that for a period of five (5) years
from the date hereof, Seller will not engage in or carry on, directly or
indirectly, any business in competition with the business of Buyer relating to
the technologies that are the subject of the Purchase Agreement but only for as
long as such like business is carried on by (i) Buyer or any subsidiary or
affiliate of Buyer or (ii) any person or entity deriving title from Buyer of
the technologies, in any county in which Buyer or any of its subsidiaries or
affiliates conduct business, or in any other county or state of the United
States, or in any country or political subdivision of the world.
1.2 The term of the covenants contained in Section 1.1 hereof shall be
tolled for the period commencing on the date any successful action is filed for
injunctive relief or damages arising out of a breach by Seller of Section 1.1
hereof and ending upon final adjudication (including appeals) of such action.
1.3 If, in any judicial proceeding, the court shall refuse to enforce
all of the covenants contained in Section 1.1 hereof because the time limit is
excessive, it is expressly understood and agreed between the parties hereto
that for purposes of such proceeding such time limitation shall be deemed
reduced to the extent necessary to permit enforcement of such covenants. If,
in any judicial proceeding, the court shall refuse to enforce all of the
covenants contained in Section 1.1 hereof because it is more extensive than
necessary to protect the business and goodwill of Buyer, it is expressly
understood and agreed between the parties hereto that for purposes of such
proceeding the geographic area, scope of business or other aspect shall be
deemed reduced to the extent necessary to permit enforcement of such covenants.
1.4 Seller covenants and represents that Seller has no interest in,
or claim to, any of the procedures, written technical data, computer software
and related documentation, patents, copyrights, formulas, methods, practices,
statistics, trade secrets, trademarks, trade names, or service marks relating
to the technologies that are the subject of the Purchase Agreement, and all
knowledge or information of a confidential nature acquired at or before the
date hereof with respect to said technologies will be held in confidence by
Seller and will not be disclosed or made public or, except for the benefit of
Buyer, made use of, by or through Seller, directly or indirectly.
2 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEVADA. THE PARTIES AGREE THAT ANY LITIGATION RELATING
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT MUST BE BROUGHT BEFORE AND DETERMINED
BY A COURT OF COMPETENT JURISDICTION WITHIN THE STATE OF TEXAS.
3 Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
4 Agreement Binding. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
5. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effecting during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore,
in lieu of such illegal, invalid and unenforceable provision, there shall be
added automatically as part of this Agreement a provision as similar in nature
in its terms to such illegal, invalid or unenforceable provision as may be
possible and be legal, valid and enforceable.
IN WITNESS WHEREOF, the parties hereto have set their hands this 17th day
of March, 2003.
IMMEDIATEK, INC. ▇▇▇▇ ▇▇▇▇▇
A Nevada Corporation (Buyer) An individual (Seller)
By: /s/ ▇▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇
------------------------- ------------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Title: President and
Chief Executive Officer
SCHEDULE IV
▇▇▇▇ OF SALE
STATE OF TEXAS )
)ss.
COUNTY OF DALLAS )
KNOW ALL MEN BY THESE PRESENTS, that ▇▇▇▇ ▇▇▇▇▇, an individual ("Seller")
located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, for and in
consideration of the sums set forth in that certain Asset Purchase Agreement
dated March 17, 2003 (the "Agreement"), by and between Seller and Immediatek,
Inc., a Nevada corporation ("Buyer"), the receipt and sufficiency of which are
hereby acknowledged, has BARGAINED, SOLD, TRANSFERRED AND DELIVERED unto Buyer
the assets more particularly described in Schedule I attached hereto and
incorporated herein by reference for all purposes (the "Assets"). All defined
terms used but not defined herein or in Schedule I shall have the same meaning
as when used in the Agreement.
TO HAVE AND TO HOLD the Assets unto Buyer and its heirs, devisees, personal
representatives, executors, administrators, successors, and assigns, forever,
and Seller hereby covenants to and with Buyer and its heirs, devisees, personal
representatives, executors, administrators, successors and assigns that Seller
is the lawful owner of the Assets and has hereby transferred to Buyer good and
marketable title to the Assets free and clear of all liens, mortgages, pledges,
security interests, restrictions, prior assignments, encumbrances and any other
similar claims and that Seller will warrant and defend the title to the Assets
unto Buyer and its heirs, devisees, personal representatives, executors,
administrators, successors, and assigns against every person whomsoever
lawfully claiming, or to claim the same or any part thereof, by, through or
under Seller, but not otherwise.
EXECUTED this 17th day of March, 2003.
IMMEDIATEK, INC. ▇▇▇▇ ▇▇▇▇▇ (Seller)
A Nevada Corporation (Purchaser)
By: /s/ ▇▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Title: President and
Chief Executive Officer