EXHIBIT 10.4
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ASSET PURCHASE AGREEMENT
AMONG
iDVDBox, Inc.
AND
MediaBus Networks, Inc.
DATED AS OF
December 17, 2001
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II SALE AND TRANSFER OF ASSETS; CLOSING . . . . . . . . . . . . . . . .6
Section 2.1 Assets to Be Sold . . . . . . . . . . . . . . . . . . . . . . .6
Section 2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . .6
Section 2.3 Consideration. . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.4 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .7
Section 2.5 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 2.6 Closing Obligations . . . . . . . . . . . . . . . . . . . . . .8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . 9
Section 3.1 Organization and Good Standing. . . . . . . . . . . . . . . . 9
Section 3.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.3 Enforceability, Authority, No Conflict . . . . . . . . . . . .10
Section 3.4 Books and Records. . . . . . . . . . . . . . . . . . . . . . .10
Section 3.5 Sufficiency of Assets. . . . . . . . . . . . . . . . . . . . .10
Section 3.6 Intellectual Property. . . . . . . . . . . . . . . . . . . . .11
Section 3.7 Location of Tangible Personal Property. . . . . . . . . . . . 11
Section 3.8 Title to and Condition of Personal Property . . . . . . . . . 11
Section 3.9 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . 11
Section 3.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.11 No Material Adverse Change. . . . . . . . . . . . . . . . . . 12
Section 3.12 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.13 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.14 Compliance With Legal Requirements; Governmental
Authorizations . . . . . . . . . . . . . . . . . . . . . . . .12
Section 3.15 Legal Proceedings; Orders. . . . . . . . . . . . . . . . . . .12
Section 3.16 Absence of Certain Changes and Events. . . . . . . . . . . . .12
Section 3.17 Environmental Matters. . . . . . . . . . . . . . . . . . . . .13
Section 3.18 Brokers or Finders. . . . . . . . . . . . . . . . . . . . . . 13
Section 3.19 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . . . . . . . . 13
Section 4.1 Organization and Good Standing. . . . . . . . . . . . . . . . 13
Section 4.2 Authority, No Conflict. . . . . . . . . . . . . . . . . . . . 13
Section 4.3 Brokers or Finders. . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE V COVENANTS OF SELLER PRIOR TO CLOSING . . . . . . . . . . . . . . . .14
Section 5.1 Access and Investigation. . . . . . . . . . . . . . . . . . . 14
Section 5.2 Operation of the Business of Seller. . . . . . . . . . . . . .14
Section 5.3 Required Approvals. . . . . . . . . . . . . . . . . . . . . . 14
Section 5.4 No Negotiation. . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.5 Payment of Liabilities. . . . . . . . . . . . . . . . . . . . 15
Section 5.6 Key Personnel. . . . . . . . . . . . . . . . . . . . . . . . .15
ARTICLE VI COVENANTS OF BUYER PRIOR TO CLOSING. . . . . . . . . . . . . . . . 15
Section 6.1 Required Approvals. . . . . . . . . . . . . . . . . . . . . . 15
Section 6.2 Best Efforts. . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VII CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. . . . . . . .15
Section 7.1 Accuracy of Representations. . . . . . . . . . . . . . . . . .15
Section 7.2 Seller's Performance. . . . . . . . . . . . . . . . . . . . . 15
Section 7.3 No Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.4 Governmental Authorizations. . . . . . . . . . . . . . . . . .15
Section 7.5 Personnel. . . . . . . . . . . . . . . . . . . . . . . . . . .15
Section 7.6 Satisfactory Due Diligence . . . . . . . . . . . . . . . . . .15
Section 7.7 No Change in Business. . . . . . . . . . . . . . . . . . . . .15
Section 7.8 Authorization. . . . . . . . . . . . . . . . . . . . . . . . .16
ARTICLE VIII CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE . . . . . . 16
Section 8.1 Accuracy of Representations. . . . . . . . . . . . . . . . . .16
Section 8.2 Buyer's Performance . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IX TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Section 9.1 Termination Events . . . . . . . . . . . . . . . . . . . . . .17
Section 9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . 17
ARTICLE X SELLER'S ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . . 18
Section 10.1 Payment of All Taxes Resulting From Sale of Assets by Seller. 18
Section 10.2 Payment of Liabilities . . . . . . . . . . . . . . . . . . . .18
Section 10.3 Reports and Returns . . . . . . . . . . . . . . . . . . . . . 18
Section 10.4 Covenant of Seller Not to Compete . . . . . . . . . . . . . ..18
Section 10.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . .18
ARTICLE XI INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . .19
Section 11.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Section 11.2 Indemnification and Reimbursement By Seller . . . . . . . . . 19
ARTICLE XII GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . .20
Section 12.1 Confidentiality; Public Announcements . . . . . . . . . . . .20
Section 12.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 12.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Section 12.4 (Intentionally left blank). . . . . . . . . . . . . . . . . .21
Section 12.5 (Intentionally left blank).. . . . . . . . . . . . . . . . . 21
Section 12.6 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 12.7 Entire Agreement and Modification . . . . . . . . . . . . . .22
Section 12.8 Assignments, Successors, and No Third-Party Rights . . . . . 22
Section 12.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 12.10 Section Headings, Construction, Exhibits . . . . . . . . . . 22
Section 12.11 Time of Essence . . . . . . . . . . . . . . . . . . . . . . .23
Section 12.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . .23
Section 12.13 Joint and Several Obligations . . . . . . . . . . . . . . . .23
Section 12.14 Execution of Agreement, Counterparts . . . . . . . . . . . . 23
EXHIBITS
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Exhibit 1 List of Assets
Exhibit 2 List of Assumed Liabilities
Exhibit 3 List of Personnel
Exhibit 4 List of Key Personnel
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement"), made and entered into as
of December 7, 2001, is by and among MediaBus Networks, Inc., a Delaware
corporation ("Buyer"), iDVDBox, Inc., a Florida corporation ("Seller").
WHEREAS, Seller desires to sell, assign, convey, transfer and deliver and
Buyer desires to purchase, the assets (as defined below) and assume the
Liabilities of Seller (as defined herein); for the consideration and on
the terms set forth in this Agreement; and
WHEREAS, Seller wishes to execute and deliver this Agreement to carry out
the intent and purpose of the Agreement to sell to Buyer title to the
Assets, and to make certain representations with respect to the defense of
Seller's title to the Assets;
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 is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms and variations thereof
have the meanings specified or referred to in this Article I:
"Agreement" - as defined in the first paragraph of this Agreement.
"Assets" - as defined in Section 2.1.
"Business Day" - any day other than Saturday or Sunday or any other day on
which the New York Stock exchange is closed.
"Buyer" - as defined in the first paragraph of this Agreement.
"Buyer Indemnified Persons" - as defined in Section 11.2(a).
"Buyer's Closing Documents" - as defined in Section 4.2(a).
"Closing" - as defined in Section 2.6.
"Closing Date" - as defined in Section 2.6.
"Contract" - any agreement, contract, lease, consensual obligation,
promise, or undertaking (whether written or oral and whether express or
implied), including, but not limited to, any Seller Contract.
"Copyrights" - all rights arising under domestic and foreign copyright
laws, whether or not the subject of any copyrights registration or
copyright application.
"Employee Benefit Plan" - any plan, program or agreement which Seller has
maintained, sponsored or obligated itself under with respect to employees'
benefits or welfare, including without limitation pension or retirement
plans, medical or dental plans, life or long-term disability insurance,
bonus or incentive compensation, stock option or equity participation
plans.
"Encumbrance" - any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, mortgage,
right-of-way, easement, encroachment, servitude, right of first option,
right of first refusal or restriction of any kind, including any
restriction on use, voting (in the case of any security), transfer,
receipt of income, or exercise of any other attribute of ownership.
"Environmental, Health and Safety Liabilities" - any Losses, obligation,
or other responsibility arising from or under any Environmental Law or
Occupational Safety and Health Law.
"Environmental Law" - any Legal Requirement designed to minimize, prevent,
punish or remedy the consequences of actions that damage or threaten the
environment or public health and safety.
"Escrow Agreement" - the escrow agreement to be executed and delivered at
the Closing by Buyer, Seller and the Escrow Agent as contemplated by
Section 2.3(b) and in form reasonably acceptable to Buyer and Seller.
"Escrow Agent" - as defined in the Escrow Agreement.
"Governing Documents" - with respect to any particular entity: (a) the
articles or certificate of incorporation and the bylaws (or comparable
documents); (b) all equityholders' agreements, voting agreements, voting
trust agreements, joint venture agreements, registration rights agreements
or other agreements or documents relating to the organization, management
or operation of any Person, or relating to the rights, duties and
obligations of the equityholders of any Person; and (c) any amendment or
supplement to any of the foregoing.
"Governmental Authorization" - any Consent, license, or permit issued,
granted, given, or otherwise made available by or under the authority of
any Governmental Body or pursuant to any Legal Requirement, but
specifically excluding any general business license.
"Governmental Body" - any (a) domestic or foreign federal, state, local,
or municipal government; (b) domestic or foreign governmental or quasi-
governmental authority of any nature (including any agency, branch,
department, board, commission, court, tribunal or other entity exercising
governmental or quasi-governmental powers); (c) domestic or foreign body
exercising any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power; or (d) official of any of the
foregoing.
"Intellectual Property" - Patents, Copyrights, Marks, Trade Secrets and
other intangible property rights and all copies of software, data and
other tangible embodiments of the foregoing in whatever form or medium.
"IRS" - the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Key Personnel" - those employees, consultants or other personnel of a
Seller listed on Exhibit 5.6.
"Legal Requirement" - any applicable domestic or foreign federal, state,
local, or municipal law, ordinance, principle of common law, code,
regulation, statute, or treaty.
"Liability" - with respect to any Person, any liability or obligation of
such Person of any kind, character or description, whether known or
unknown, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become
due, vested or unvested, executory, determined, determinable or otherwise
and whether or not the same is required to be accrued on the financial
statements of such Person.
"Losses" - as defined in Section 11.2(a).
"Marks" - all names, assumed fictional business names, trade names, all
registered and unregistered domestic and foreign trademarks, registered
and unregistered domestic and foreign service marks, domain names,
applications for domestic and foreign service marks, and applications for
domestic and foreign trademarks.
"Occupational Safety and Health Law" - any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational
safety and health hazards, including the Occupational Safety and Health
Act, 29 U.S.C. Sec. 651 et seq., and any program whether governmental or
private (such as those promulgated or sponsored by industry associations
and insurance companies), designed to provide safe and healthful working
conditions.
"Order" - any order, injunction, judgment, decree, ruling, assessment or
arbitration award of any Governmental Body or arbitrator.
"Ordinary Course of Business" - an action taken by a Person will be deemed
to have been taken in the "Ordinary Course of Business" only if such
action: (a) is consistent in nature, scope and magnitude with the past
practices of such Person and is taken in the ordinary course of the normal
day-to-day operations of such Person; (b) does not require authorization
by the board of directors or shareholders of such Person (or by any Person
or group of Persons exercising similar authority) and does not require any
other separate or special authorization of any nature; and (c) is similar
in nature, scope and magnitude to actions customarily taken, without any
separate or special authorization, in the ordinary course of the normal
day-to-day operations of other Persons that are in the same line of
business as such Person.
"Patents" - all domestic and foreign patents, domestic and foreign patent
applications, and inventions and discoveries (whether patentable or
unpatentable and whether or not reduced to practice).
"Person" - an individual, partnership, corporation, business trust,
limited liability company or partnership, joint stock company, trust,
unincorporated association, joint venture or other entity, or a
Governmental Body.
"Personnel" - as defined in Section 3.13(a).
"Proceeding" - any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or private)
commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Purchase Price" - as defined in Section 2.3.
"Related Person" - is: (a) any Person that, directly or indirectly,
controls, is controlled by, or is under common control with a specified
Person; (b) any Person that holds a Material Interest in a specified
Person; (c) each Person that serves as a director, officer, partner,
executor, or trustee of a specified Person (or in a similar capacity); and
(d) any Person in which a specified Person holds a Material Interest. For
purposes of this definition, (a) "control" (including "controlling,"
"controlled by" and "under common control with") means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise; and (b) "Material Interest"
means direct or indirect beneficial ownership (defined as the power to
vote or to direct the voting of, or the power to dispose of, an equity
security) of voting securities or other voting interests representing at
least three percent (3%) of the outstanding voting power of a Person or
equity securities or other equity interests representing at least three
percent (3%) of the outstanding equity securities or equity interests in a
Person.
"Representative" - with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of
such Person, including legal counsel, accountants, and financial advisors.
"Seller" - as defined in the first paragraph of this Agreement.
"Seller' Closing Documents" - as defined in Section 3.3(a).
"Subsidiary" - with respect to any Person (the "Owner"), any corporation
or other Person of which securities or other interests having the power to
elect a majority of board of directors or similar governing body, or
otherwise having the power to direct its business and policies (other than
securities or other interests having such power only upon the happening of
a contingency that has not occurred) are held by Owner, directly or
indirectly.
"Tangible Personal Property" - all computer or telecommunications hardware
or equipment of every kind owned or leased by a Seller (wherever located
and whether or not carried on such Seller's books), including, but not
limited to, all such equipment used by Personnel, together with any
express or implied warranty by the manufacturers or sellers or lessors of
any item or component part thereof, and all maintenance records and other
documents relating thereto. "Tangible Personal Property", as used herein,
includes all CPUs and storage devices on which any of iDVDBox software and
data is stored in electronic form and, but shall not include any
furniture, photocopiers or other ordinary office equipment.
"Tax" - any income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental, windfall
profit, customs, vehicle, airplane, boat, vessel or other title or
registration, capital stock, franchise, employees' income withholding,
foreign or domestic withholding, social security, unemployment,
disability, real property, personal property, sales, use, transfer, value
added, alternative, add-on minimum, and other tax, fee, assessment, levy
tariff, charge or duty of any kind whatsoever, and any interest,
penalties, additions or additional amounts thereon, imposed, assessed,
collect by or under the authority of any Governmental Body or payable
under any tax-sharing agreement or any other Contract.
"Third Party Licenses-In" - all rights of a Seller as a licensee or
authorized user of the Intellectual Property of any third party that is
used in connection with iDVDBox.
"Third Party Licenses-Out" - all rights of a Seller as a licensor of
iDVDBox Intellectual Property to any third party.
"Trade Secrets" - all trade secrets and confidential information,
including, but not limited to, all ideas, research and development, know-
how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, software,
software-related developer and user documentation, supplier lists,
customer lists to the extent transferable by law, pricing and cost
information, business and marketing plans and proposals and other
information or material within the definition of a "trade secret" as set
forth in Section 1(4) of the Uniform Trade Secrets Act of 1985, as
amended.
"Assets" shall mean: All the properties and assets of Seller as a
going concern, including, without limitation, all items of personal
property and other assets used in connection with the business of the
Seller (the "Business"), whether or not any of such assets have any
value for accounting purposes and all goodwill associated therewith
(the "Assets"). Seller shall deliver custody or control of the Assets
to Buyer upon execution hereof. Without limiting the generality of the
foregoing, the Assets specifically include:
(a) All personal property, plant, furniture, fixtures and equipment
owned by Seller, including, but not limited to, all items identified on
Exhibit 1.
(b) All material contracts, leases, agreements and commitments of
Seller identified on Exhibit 1, and all other contracts, agreements and
commitments of Seller entered into prior to the Effective Date (but
excluding this Agreement and the agreements, instruments and documents
executed and delivered by Seller pursuant to this Agreement) and all
contract rights of Seller incident thereto, and all general intangibles
of Seller.
(c) All supplies and inventories maintained by Seller as of the
Effective Date as described in Exhibit 1.
(d) All accounts receivable of Seller, notes receivable and other
rights to receive payments owed to Seller in existence on the Effective
Date, and all cash arising from the collection of same from and after
the Effective Date.
(e) The books and records of Seller (other than the corporate
minute books and stock records).
(f) All transferable certifications, licenses and other regulatory
or performance approvals necessary for or incident to the use of the
Assets or the conduct of the Business including, without limitation,
such certifications, licenses and regulatory and performance approvals
identified on Exhibit 1.1(f).
(g) Any and all rights of Seller to the "iDVDBox" service ▇▇▇▇ and
its corresponding logo all other trade and service marks of the
Business and names and goodwill associated therewith (the "Name
Rights"), all "Intellectual Property" (as defined herein) rights
associated with the Business, and all customer lists, procedure and
user manuals, marketing and promotional materials (including
audiotapes, videotapes and printed materials) and all other property
rights required for or incident to the marketing of the products and
services of the Business, and all books and records relating thereto
including, without limitation, the patent applications, trademarks,
service marks and URLs identified on Exhibit 1.
(h) All of Seller' prepaid expenses, prepaid insurance, deposits
and similar items.
"Buyer Plan" shall mean any employee benefit plan, fund or program of Buyer,
including, but not limited to, those described in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
"Financial Statements" shall mean the income statement for the Seller for the
period beginning upon the formation of the Company and ending November 30,
2001, along with an accompanying balance sheet.
"Intellectual Property" shall mean patents, patent applications, software,
registered or unregistered trademarks and service marks and any applications
therefor, trade names, registered or unregistered copyrights, moral rights,
mask works, trade secrets, confidential and proprietary information, URLs,
compositions of matter, formulas, designs, proprietary rights, know-how,
processes, and the like.
"Liabilities" shall mean all obligations, liabilities security interests,
liens, claims and encumbrances whatsoever on the Assets or related to or with
any other aspect of the business of the Seller including trade payables,
equipment leases, and any notes payable except all other indebtedness for
barrowed money, and accrued employee compensation and severance.
ARTICLE II
SALE AND TRANSFER OF ASSETS; CLOSING
SECTION 2.1 ASSETS TO BE SOLD.
Upon the terms and subject to the conditions set forth in this Agreement,
at the Closing Seller shall sell, convey, assign, transfer and deliver to
Buyer, and Buyer shall purchase and acquire from Seller, free and clear of
any Encumbrances, all of Seller's right, title and interest in and to
iDVDBox, and all of the following property and assets, personal or mixed,
tangible and intangible, owned or leased, of every kind and description,
wherever located (but excluding the Excluded Assets):
(a) all rights of ownership in and to the iDVDBox Intellectual
Property on a worldwide basis, including, but not limited to,
all license rights in the Inprimis and the Box Engine technology
and other technology therein, and all source or object code
relating thereto;
(b) all of the other intangible rights and property of Seller
relating to iDVDBox or to the utilization of iDVDBox Intellectual
Property, including, but not limited to, going concern value,
goodwill, telephone, telecopy and e-mail addresses, websites, domain
names, and listings
(d) all data and records relating to iDVDBox, including, but
not limited to, end-user and customer lists and records, all
raw data, all data on client use and experience with iDVDBox,
research and development reports and records, production
reports and records, service and warranty records, equipment
logs, operating guides and manuals, financial and accounting
records, creative materials, advertising materials, promotional
materials, reports, correspondence and other similar documents
and records, and copies of all personnel records of Key
Personnel and copies of all records described in Section 2.2
which relate to such Key Personnel;
(e) all Tangible Personal Property, including, but not limited
to, the equipment listed in Exhibit 1 hereto;
(f) all Governmental Authorizations relating to iDVDBox and all pending
applications therefor or renewals thereof, in each case to the extent
transferable to Buyer; and
(h) all insurance benefits, including rights and proceeds, arising from or
relating to the Assets prior to the Closing Date, including all benefits
paid after the Closing Date for occurrences prior to the Closing Date.
All of the property and assets to be transferred to Buyer hereunder,
including, but not limited to, the items referred to in paragraphs (a)
through (h) above, but excluding the Excluded Assets, are herein referred
to collectively as the "Assets".
SECTION 2.2 EXCLUDED ASSETS.
Notwithstanding anything to the contrary contained in Section 2.1 or
elsewhere in this Agreement, the following items (collectively, the "Excluded
Assets") are not part of the sale and purchase contemplated hereunder, are
excluded from the Assets, and shall remain the property of Seller after the
Closing:
(a) all personnel Records and other Records relating to the iDVDBox
business that a Seller is required by law to retain in its possession; and
(b) all rights in connection with, and assets of, any Employee
Benefit Plans, compensation and severance obligations.
SECTION 2.3 CONSIDERATION.
(a) Purchase Price. The purchase price for the Assets is four hundred
thirty thousand, four hundred thirty-five (478,260) shares of MediaBus
restricted common stock consisting of 5% of the fully diluted amount of
the said common stock outstanding shall be deposited to the Escrow Agent
to be held in escrow and distributed in accordance with Escrow Agreement.
(b) Payments to Escrow Account. Four hundred -seventy-eight thousand, two
hundred sixty-two (478,262) shares of MediaBus restricted common stock
consisting of 5% of the fully diluted amount of the said common stock
outstanding shall be deposited to the Escrow Agent to be held in escrow
and distributed in accordance with Escrow Agreement.
SECTION 2.3.1 FUTURE ACQUISITION
(a) The total capitalization of the Company shall be nine million four
hundred fifteen thousand seven hundred ninety (9,415,790) shares at the
closing. Of the total outstanding shares up to 13% of the outstanding
shares may be reserved for future activities including capital raising
and/or acquisitions. The Seller will not be diluted unless the total
outstanding shares exceeds the number outstanding at the close which shall
include the shares being held in reserve.
SECTION 2.4 LIABILITIES.
(a) Except as otherwise expressly provided herein, as of the
Effective Date, Buyer shall assume and shall perform or discharge on or
after the Effective Date, only those Liabilities that are listed on
Exhibit 2, except to the extent that such Liabilities are excluded by
virtue of the operation of other provisions of this Agreement. Buyer
agrees to promptly pay and discharge these Liabilities as they become due
and payable or otherwise dischargeable. Specifically, this includes a
$500,000.00 Promissory Note From iDVDBox to Integrated Technologies &
Systems. Ltd.
(b) Notwithstanding any contrary provision contained in this
Agreement, Assignee shall not be deemed to have assumed any other
Liabilities of Assignor except as specifically set forth in Exhibit 2.
Without limiting the foregoing, Buyer shall not assume: (i) any liability
which may be incurred by reason of any uncured material breach of or any
monetary default under or in connection with a Liability which occurred
prior to the Effective Date; (ii) any liability for any employee benefits
payable to employees of Seller; nor (iii) any liability based upon or
arising out of any tortuous or wrongful actions of Seller or any person
associated with the Seller, or any liability for the payment of any taxes
imposed by law on Seller arising from or by reason of the transactions
contemplated by this Agreement.
SECTION 2.5 CLOSING.
The consummation of the purchase and sale provided for in this Agreement (the
"Closing") will take place at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ at 1:00 p.m. (local time) on the later of (i) December 17, 2001
or (ii) such other time and place as the parties may agree to (the "Closing
Date"). Subject to the provisions of Article IX, failure to consummate the
purchase and sale provided for in this Agreement on the date and time and at
the place determined pursuant to this Section 2.6 will not result in the
termination of this Agreement and will not relieve any party of any obligation
under this Agreement.
SECTION 2.6 CLOSING OBLIGATIONS.
In addition to any other documents to be delivered under other provisions
of this Agreement, at the Closing:
(i) a ▇▇▇▇ of sale and assignment agreement for all of the Assets
in form acceptable to Buyer (the "▇▇▇▇ of Sale"), executed by Seller;
(ii) such deeds, bills of sale, assignments, certificates of
title, documents and other instruments of transfer and conveyance as may
reasonably be requested by Buyer, each in form and substance satisfactory
to Buyer and its counsel and executed by Seller;
(iii) a certificate of the Secretary of each Seller certifying and
attaching all requisite resolutions or actions of such Seller's board of
directors approving the execution and delivery of this Agreement and the
consummation of the Contemplated Transactions and certifying to the
incumbency of the officers of such Seller executing this Agreement and any
other document relating to the Contemplated Transactions; and
(iv) a confirmation of the closing of the shell and an escrow account of
$1 million available.
(b) Buyer shall deliver to iDVDBox the following:
(i) 478,260 share certificate in the name of iDVDBox or such
other assignee as provided through the Escrow Agent in
accordance with the Escrow Agreement of MediaBus restricted
common stock consisting of 5% of the fully diluted amount of the
said common stock outstanding; and
(ii) 478,262 share certificate in the name of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, or
such other assignee as provided through the Escrow Agent in
accordance with the Escrow Agreement of MediaBus restricted
common stock consisting of 5% of the fully diluted amount of the
said common stock outstanding in full satisfaction of the
$750,000 note payable to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ from iDVDBox as detailed
in Exhibit 2.
(c) In the event that the Buyer does not raise any additional
amount of $1.5 million within 90 days after closing and the Seller
has performed according to the business plan of iDVDBox, the Seller
has the rights to unwind all transactions pertaining to this
Agreement and has the rights to all equipment, licenses, works,
assets, accumulated during the 90 days period as well as prior to
this transaction, without cost and liabilities to the Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represent and warrant to Buyer that:
SECTION 3.1 ORGANIZATION AND GOOD STANDING.
Seller is a corporation duly organized, validly existing, and in good standing
under the laws of its jurisdiction of incorporation, with full corporate power
and authority to conduct the iDVDBox business and utilize the iDVDBox
Intellectual Property as it is now being conducted and utilized, to own or use
the properties and assets that it purports to own or use in connection with the
iDVDBox business, and to perform all its obligations under all Seller
Contracts. Seller is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each state or other jurisdiction in
which either the ownership or use of the properties owned or used by it in
connection with the iDVDBox business, or the nature of the activities conducted
by it in connection with the iDVDBox business, requires such qualification.
SECTION 3.2 SUBSIDIARIES.
Seller has no Subsidiaries that conduct any portion of the iDVDBox or which
have any right, title or interest in or to any property or assets, tangible or
intangible, used or useful in the conduct of iDVDBox or necessary or desirable
for Buyer to use and exploit the iDVDBox intellectual property.
SECTION 3.3 ENFORCEABILITY, AUTHORITY, And NO CONFLICT.
(a) Each of this Agreement, the ▇▇▇▇ of Sale and each other document
or instrument to be executed or delivered by Seller at Closing
(collectively, the "Seller's Closing Documents") constitutes the
legal, valid, and binding obligation of Seller party thereto,
enforceable against it in accordance with its terms. Seller has the
power and authority to execute and deliver the Seller's Closing
Documents to which it is a party and to perform its obligations under
such Seller's Closing Documents, and such action has been duly
authorized by all necessary action by such Seller's shareholders and
board of directors.
(b) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions
will, directly or indirectly (with or without notice or lapse of time
or both):
(i) breach (A) any provision of any of the Governing Documents
of Seller, or (B) any resolution adopted by the board of
directors or the shareholders of Seller;
(ii) breach, or give any Governmental Body or other Person the
right to challenge any of the Contemplated Transactions or to
exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which Seller, or any of the Assets,
may be subject;
(iii) contravene, conflict with, or result in a violation or
breach of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend,
cancel, terminate, or modify, any Governmental Authorization
that is held by a Seller and used in or that relates to the
Assets or to the PhotoLoft Business;
(iv) cause Buyer to become subject to, or to become liable for,
the payment of any Tax;
(v) breach any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate
the maturity or performance of, or payment under, or to cancel,
terminate, or modify, any Seller Contract (except for any such
provision prohibiting the assignment of such Seller Contract to
Buyer without the consent of a party (other than a Seller) to
such Seller Contract); or
(vi) result in the imposition or creation of any Encumbrance
upon or with respect to any of the Assets.
SECTION 3.4 BOOKS AND RECORDS.
The books of account and other financial records of Seller relating to the
iDVDBox, all of which have been made available to Buyer, are complete and
correct and represent actual, bona fide transactions and have been maintained
in accordance with sound business practices including the maintenance of an
adequate system of internal controls.
SECTION 3.5 SUFFICIENCY OF ASSETS.
The Assets constitute all of the assets, tangible and intangible, of any nature
whatsoever, necessary to operate the iDVDBox in the manner presently operated
by Seller and to use and exploit the iDVDBox Intellectual Property.
SECTION 3.6 INTELLECTUAL PROPERTY.
(a) Seller is the owners of all right, title, and interest in, or
with respect to third party software programs included within the
iDVDBox Intellectual Property, have the right to use pursuant to the
Third Party Licenses-In, all of the iDVDBox Intellectual Property,
free and clear of all Encumbrances except pre-existing license
agreements. Seller has the right to use all the iDVDBox Intellectual
Property, including such Intellectual Property licensed pursuant to
the Third Party Licenses-In, without payment of royalties, fees or
other compensation to any Person (other than any such royalties, fees
or other compensation pursuant to pre-existing royalty agreements).
(b) No Person (other than Seller and its Executives, and other than
Buyer for purposes of its investigation of the Assets for purposes of
the Contemplated transactions) holds, or has access to, source code
that is part of the iDVDBox Intellectual Property (other than the
Intellectual Property in the Third Party Licenses-In).
(c) The operation of iDVDBox and the use of the its Intellectual
Property as presently used or under development by Seller does not
infringe, and has not been alleged to infringe, any Intellectual
Property of any other Person.
SECTION 3.7 LOCATION OF TANGIBLE PERSONAL PROPERTY.
All Tangible Personal Property is in the control of iDVDBox and is either
located at the iDVDBox facilities or is in the possession of the Key Personnel
of iDVDBox.
SECTION 3.8 TITLE TO AND CONDITION OF PERSONAL PROPERTY.
(a) Seller owns good and transferable title to all of the Assets
free and clear of any Encumbrances. At the time of Closing, all
Assets shall be free and clear of all Encumbrances other than those
identified on Exhibit 1 as acceptable to Buyer ("Permitted
Encumbrances").
(b) Each item of Tangible Personal Property is in good repair and
good operating condition, ordinary wear and tear excepted, is
suitable for immediate use in the Ordinary Course of Business, and is
free from material defects
SECTION 3.9 NO UNDISCLOSED LIABILITIES.
Except as set forth in Exhibit 2, Seller does not have any Liability relating
to the iDVDBox Business or the Assets except for current liabilities incurred
in the Ordinary Course of Business of Seller.
SECTION 3.10 TAXES.
(a) Seller has paid or made provision for the payment of, all
sales and use Taxes that have or may become due in connection with
the iDVDBox Business.
(b) There are no liens for Taxes (other than for current Taxes not
yet due and payable) on the Assets.
SECTION 3.11 NO MATERIAL ADVERSE CHANGE.
Since November 15, 2001, there has not been any material adverse change with
respect to the iDVDBox Business or the Assets, and no event has occurred or
circumstance exists that may result in such a material adverse change.
SECTION 3.12 PERSONNEL.
(a) Exhibit 3 sets forth a complete and accurate list, giving name,
job title, current compensation paid or payable and vacation accrued
for each employee, consultant or other personnel hired or retained by
the Seller who performs some or all of his or her services in
connection with the iDVDBox Business ("Personnel").
(b) With respect to all Personnel, Seller is in compliance in all
material respects with all applicable Legal Requirements regarding
employment and employment practices, terms and conditions of
employment, wages and hours, and Occupational Safety and Health Laws.
(c) To the knowledge of Seller, no Personnel intends to terminate
his employment with Seller or his or her provision of consulting
services to neither Seller, nor does Seller have a present intention
(other than in connection with the consummation or termination of the
transactions contemplated hereby) to terminate the employment or
consulting services of any of its Personnel. Except as set forth on
Exhibit 4 and subject to general principles related to wrongful
termination of employees, the employment or retention of each
Personnel is terminable at the will of the applicable Seller. No
member of Personnel is a party to, or is otherwise bound by, any
employment, confidentiality or noncompetition Contract with a Seller
or any other Person, or any other Contract that in any way adversely
affected, affects, or will affect the ability of Seller or Buyer to
conduct the iDVDBox Business as heretofore carried on by Seller.
SECTION 3.13 EMPLOYEE BENEFITS.
The Seller does not have any Liability with respect to Personnel under any
Employee Benefit Plan other than normal salary or wage accruals and paid
vacation, sick leave and holiday accruals in accordance with Seller's past
practice and policy. The Seller has performed all obligations required to be
performed under, and has complied with all Legal Requirements in connection
with, all such Employee Benefit Plans and is not in arrears under any of the
terms thereof.
SECTION 3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
The Seller is, and at all times has been, in full compliance with each Legal
Requirement and Governmental Authorization that is or was applicable to the
operation of the iDVDBox Business, or the ownership or use of any of the
Assets.
SECTION 3.15 LEGAL PROCEEDINGS; ORDERS.
(a) There are no Proceedings pending (i) by or against Seller that
may affect the iDVDBox Business, or the Assets, or (ii) that
challenge, or that may have the effect of preventing, delaying,
making illegal or otherwise interfering with, any of the Contemplated
Transactions. To the knowledge of Seller, no such Proceeding has
been threatened, and no event has occurred or circumstance exists
that may give rise to or serve as a basis for the commencement of any
such Proceeding.
(b) There are no Orders outstanding (i) against Seller that may
affect the iDVDBox Business or the Assets, or (ii) that challenge, or
that may have the effect of preventing, delaying, making illegal or
otherwise interfering with, any of the Contemplated Transactions. To
the knowledge of Seller, no such Order has been threatened, and no
event has occurred or circumstance exists that may give rise to or
serve as a basis for the commencement of any such Order. Each Seller
is, and at all times has been, in compliance with all of the terms
and requirements of each Order relating to the iDVDBox Business or
the Assets.
SECTION 3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS.
Since November 15, 2001, Seller has conducted the iDVDBox only in the ordinary
Course of Business and there has not been any:
(a) damage to or destruction or loss of any Asset, whether or not
covered by insurance;
(b) entry into, termination of, or receipt of notice of termination
in connection with the iDVDBox of (i) any license, distributorship,
dealer, sales representative, joint venture, credit, or similar
agreement to which a Seller is a party, or (ii) any Contract or
transaction involving a total remaining commitment by a Seller of at
least $10,000;
(c) sale, lease, or other disposition of any Asset other than in the
Ordinary Course of Business;
(d) mortgage, pledge, or imposition of any Encumbrance on any Asset;
(e) modification of any material Contract or Governmental
Authorization in connection with the iDVDBox;
(f) indication by any customer or supplier of an intention to
discontinue or change the terms of its relationship with Seller in
connection with the iDVDBox;
(l) material change in the accounting methods used by Seller; or
(m) agreement, whether oral or written, by a Seller to do any of the
foregoing.
SECTION 3.17 ENVIRONMENTAL MATTERS.
Seller is, and at all times has been, in compliance with, and has not been and
is not in violation of or liable under, any Environmental Law in connection
with the iDVDBox.
SECTION 3.18 BROKERS OR FINDERS.
Neither Seller nor any of its Related Persons have incurred any Liability for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with the Contemplated Transactions.
SECTION 3.19 DISCLOSURE.
(a) No representation or warranty or other statement made by Seller
in this Agreement or in connection with the Contemplated Transactions
omits to state a material fact necessary to make any of them, in
light of the circumstances in which it was made, not misleading.
(b) No notice given by a Seller pursuant to this Agreement will
contain any untrue statement or omit to state a material fact
necessary to make the statements in such notice or in this Agreement,
in light of the circumstances in which they were made, not
misleading.
(c) Seller does not have knowledge of any fact that has specific
application to Seller (other than general economic or industry
conditions) and that may materially adversely affect the Assets,
iDVDBox, prospects, financial condition, or results of operations of
Seller, that has not been set forth in this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
SECTION 4.1 ORGANIZATION AND GOOD STANDING.
Buyer is a corporation duly organized, validly existing, and in good standing
under the laws of Delaware, with full corporate power and authority to conduct
its business as it is now being conducted. SECTION 4.2 AUTHORITY, NO
CONFLICT.
This Agreement and each other agreement to be executed or delivered by Buyer at
Closing (collectively, the "Buyer's Closing Documents") constitutes the legal,
valid, and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms. Buyer has the power, and authority to execute and deliver the
Buyer's Closing Documents and to perform its obligations under the Buyer's
Closing Documents, and such action has been duly authorized by all necessary
corporate action.
SECTION 4.3 BROKERS OR FINDERS.
Neither Buyer nor any of its Related Persons have incurred any Liability for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with the Contemplated Transactions.
ARTICLE V
COVENANTS OF SELLER PRIOR TO CLOSING
SECTION 5.1 ACCESS AND INVESTIGATION.
Between the date of this Agreement and the Closing Date, and upon reasonable
advance notice received from Buyer, Seller shall (a) afford Buyer and its
Representatives (collectively, "Buyer's Advisors") full and free access, during
regular business hours, to, with respect to the iDVDBox.
SECTION 5.2 OPERATION OF THE BUSINESS OF SELLER.
Between the date of this Agreement and the Closing Date, Seller shall:
(a) conduct the iDVDBox only in the Ordinary Course of
Business;
(b) iDVDBox, use their best efforts to preserve intact its
current business organization, keep available the services of
its officers, Personnel, and agents, not sell, transfer or
encumber any assets or grant any licenses to any Person to use
any iDVDBox Intellectual Property and maintain its relations and
good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with
it;
(c) otherwise report periodically to Buyer concerning the
status of their operations and finances.
SECTION 5.3 REQUIRED APPROVALS.
As promptly as practicable after the date of this Agreement, Seller shall
make all filings, if any, required by Legal Requirements to be made by it in
order to consummate the Contemplated Transactions. Seller also shall cooperate
with Buyer and its Representatives with respect to all filings that Buyer elects
to make, or pursuant to Legal Requirements shall be required to make, in
connection with the Contemplated Transactions.
SECTION 5.4 NO NEGOTIATION.
Until such time as this Agreement shall be terminated pursuant to Section
9.1, Seller shall not directly or indirectly solicit, initiate, encourage or
entertain any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any inquiries or
proposals from, any Person (other than Buyer) relating to any business
combination transaction involving the sale of the Assets.
SECTION 5.5 (Intentionally left blank).
SECTION 5.6 KEY PERSONNEL.
Seller shall terminate, effective as of the Closing Date, its employment or
retention of the Key Personnel listed on Exhibit 3, and shall use its best
efforts to cause all such Key Personnel to become, effective as of the Closing
Date, full-time employees of or consultant to Buyer (as elected by Buyer),
pursuant to employment or consulting agreements containing non-compete and
work-for-hire provisions and such other provisions as Buyer may require. Key
Personnel hired or otherwise retained by Buyer shall be entitled to such
benefits as Buyer generally makes available to its employees from time to time,
with such Key Personnel receiving credit for his or her service time with
Seller or its predecessor-in-interest. Other than the Key Personnel listed on
Exhibit 3, Buyer shall not be required to hire or retain the services of any of
the individuals currently employed or retained by Seller primarily or
substantially in connection with iDVDBox, and to the extent that it does elect
to hire such Persons or retain their services, the terms thereof shall be in
Buyer's sole discretion.
ARTICLE VI
COVENANTS OF BUYER PRIOR TO CLOSING
SECTION 6.1 REQUIRED APPROVALS.
As promptly as practicable after the date of this Agreement, Buyer shall make,
or cause to be made, all filings, if any, required by Legal Requirements to be
made by it to consummate the Contemplated Transactions. Buyer also shall fully
cooperate, and cause any Related Person to cooperate, with Seller (a) with
respect to all filings Requirements to make.
SECTION 6.2 BEST EFFORTS.
Buyer shall use its best efforts to cause the conditions in Article VIII to be
satisfied.
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Assets and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
SECTION 7.1 ACCURACY OF REPRESENTATIONS.
All of Seller's representations and warranties in this Agreement must have been
accurate in all material respects as of the date of this Agreement, and must be
accurate in all material respects as of the Closing Date as if made on the
Closing Date.
SECTION 7.2 SELLER'S PERFORMANCE.
(a) All of the covenants and obligations that Seller is required to
perform or to comply with pursuant to this Agreement at or prior to
the Closing must have been duly performed and complied with in all
material respects.
(b) Seller shall have delivered each of the documents required to be
delivered by it pursuant to Section 2.6(a).
SECTION 7.3 NO PROCEEDINGS.
There shall not have been commenced or threatened against Buyer, or against any
Related Person of Buyer, any Proceeding (a) involving any challenge to, or
resulting in Losses or other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing, enjoining,
delaying, making illegal, imposing limitations or conditions on, or otherwise
interfering, with any of the Contemplated Transactions.
SECTION 7.4 GOVERNMENTAL AUTHORIZATIONS.
Buyer shall have received such Governmental Authorizations as are necessary
or desirable to allow Buyer to operate the Assets from and after the Closing.
SECTION 7.5 PERSONNEL.
(a) Each of the Key Personnel shall have signed employment,
consultancy or such other services agreements with Buyer at or prior
to the Closing Date as Buyer may have required, each such agreement
to be on terms satisfactory to Buyer. Seller shall terminated the
employment, consultancy or services of all Key Personnel effective as
of the Closing Date.
(b) Each of the Key Personnel and/or Seller, as appropriate, shall
have signed an assignment of rights in works made for hire and all
other works created in the course of their duties and assignments
covering future works to be created at Buyer's direction, such
assignment to be in form and substance acceptable to Buyer, i.e. as
part of their employment, consultancy or service agreements.
SECTION 7.6 SATISFACTORY DUE DILIGENCE.
Buyer shall have completed a due diligence investigation of Seller, the iDVDBox
Intellectual Property and the other Assets and the results thereof shall have
been satisfactory to Buyer in Buyer's sole discretion.
SECTION 7.7 NO CHANGE IN BUSINESS.
Between November 15, 2001 and the Closing Date, there shall have been no
material adverse change in the Assets, liabilities, properties, earnings,
prospects or business of the iDVDBox.
SECTION 7.8 AUTHORIZATION.
All actions necessary on the part of Seller to authorize the
execution, delivery and performance to this Agreement and the consummation of
the Contemplated Transactions shall have been duly and validly taken (including
approval by the board of directors of Seller).
ARTICLE VIII
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Assets and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions:
SECTION 8.1 ACCURACY OF REPRESENTATIONS.
All of Buyer's representations and warranties in this Agreement must have
been accurate in all material respects as of the date of this Agreement and must
be accurate in all material respects as of the Closing Date as if made on the
Closing Date.
SECTION 8.2 BUYER'S PERFORMANCE.
(a) All of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior to
the Closing must have been performed and complied with in all
material respects.
(b) Buyer shall have delivered each of the documents required to be
delivered, and made each of the payments required to be made, by it
pursuant to Section 2.6(b).
ARTICLE IX
TERMINATION
SECTION 9.1 TERMINATION EVENTS.
By notice given prior to or at the Closing, subject to Section 9.2, this
Agreement may be terminated as follows:
(a) by Buyer if a material breach of any provision of this Agreement
has been committed by Seller and such breach has not been waived by
Buyer;
(b) by Buyer if prior to Closing a Seller delivers to Buyer an
update to any Exhibit disclosing any fact which is unacceptable to
Buyer in its sole discretion;
(c) by mutual consent of Buyer and Seller; or
(d) by Buyer if the Closing has not occurred on or before December
15, 2001 or such later date as the parties may agree upon, unless
Buyer is in material breach of this Agreement.
SECTION 9.2 EFFECT OF TERMINATION.
Each party's right of termination under Section 9.1 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
such right of termination will not be an election of remedies. If the Agreement
is terminated pursuant to Section 9.1, all obligations of the parties under this
Agreement will terminate, except that the obligations of the parties in this
Section 9.2 and Articles XII will survive; provided, that if this Agreement is
terminated because of a breach of this Agreement by the non-terminating party or
because one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of the party's failure to
comply with its obligations under this Agreement, the terminating party's right
to pursue all legal remedies will survive such termination unimpaired.
ARTICLE X
SELLER'S ADDITIONAL COVENANTS
From and after the Closing Date, the Seller shall:
SECTION 10.1 PAYMENT OF ALL TAXES RESULTING FROM SALE OF ASSETS BY SELLER.
Seller shall pay in a timely manner all Taxes resulting from or payable in
connection with the sale of the Assets pursuant to this Agreement, regardless of
the Person on whom such Taxes are imposed by Legal Requirements.
SECTION 10.2 PAYMENT OF LIABILITIES.
In addition to payment of Taxes pursuant to Section 10.1, Seller shall pay, or
make adequate provision for the payment, in full of all of the Liabilities
relating to iDVDBox not assumed by Buyer.
SECTION 10.3 REPORTS AND RETURNS.
Seller shall promptly after the Closing prepare and file all reports and
returns required by applicable Legal Requirements relating to iDVDBox.
SECTION 10.4 COVENANT OF SELLER NOT TO COMPETE.
(a) Seller acknowledges that the agreements and covenants contained
in this Section 10.4 are essential to protect the business and
goodwill being purchased by Buyer, and Buyer would not purchase the
Assets but for the agreements and covenants of Seller contained in
this Section 10.4.
(b) For a period of two (2) years following the Closing Date,
neither Seller shall nor any of its Related Persons shall engage in a
business similar to or competitive with iDVDBox, with the exception
of non-competitive relationship of Cavaco Sales, Inc, either directly
or indirectly, or enter the employ of, or render any services to, any
Person engaged, directly or indirectly, in such activities; or become
interested in any Person engaged in such business, directly or
indirectly, as a partner, lender, member, shareholder, agent,
trustee, consultant or in any other relationship or capacity;
provided that each such party may own, directly or indirectly, solely
as an investment, securities of any Person which are traded on any
national securities exchange if such party is not a controlling
person of, or a member of a group which controls, such Person or does
not, directly or indirectly, own 1% or more of any class of
securities of such Person.
SECTION 10.5 FURTHER ASSURANCES.
The parties shall cooperate reasonably with each other and with their
respective Representatives in connection with any steps required to be taken as
part of their respective obligations under this Agreement, and the parties agree
(a) to furnish upon request to each other such further information, (b) to
execute and deliver to each other such other documents, and (c) to do such other
acts and things, all as the other party may reasonably request for the purpose
of carrying out the intent of this Agreement and the Contemplated Transactions.
ARTICLE XI
INDEMNIFICATION
SECTION 11.1 SURVIVAL.
All representations, warranties, covenants, and obligations in this
Agreement, the Exhibits attached hereto, and the other Seller's Closing
Documents shall survive the Closing and the consummation of the Contemplated
Transactions. The right to indemnification, reimbursement, or other remedy
based on such representations, warranties, covenants and obligations shall not
be affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) about, the accuracy or inaccuracy of or
compliance with, any such representation, warranty, covenant or obligation.
SECTION 11.2 INDEMNIFICATION AND REIMBURSEMENT BY SELLER.
(a) Seller shall indemnify and hold harmless Buyer, its
Representatives and shareholders, and its Related Persons
(collectively, the "Buyer Indemnified Persons"), and shall reimburse
the Buyer Indemnified Persons, for any and all damages, fines,
penalties, deficiencies, losses and expenses (including interest,
court costs, reasonable fees of attorneys, accountants and other
experts or other reasonable expenses of litigation or other
proceedings or of any claim, default or assessment) (collectively,
"Losses"), arising from or in connection with:
(i) any breach of any representation or warranty made by a
Seller in this Agreement;
(ii) any breach of any covenant or obligation of Seller in this
Agreement, Seller's Closing Documents in any other document,
writing or instrument delivered by a Seller pursuant to this
Agreement;
(iii) any noncompliance with any bulk sales law or fraudulent
transfer law in respect of the Contemplated Transactions;
(iv) any other Liability of a Seller; or
(v) arising out of the actions or inactions of a Seller with
respect to iDVDBox at any time on or prior to the Closing Date.
(b) Seller's liability under this Article XI shall be limited as
follows: (i) The aggregate amount of Seller's liability under this
Article XI, other than for liabilities resulting from breach of its
representations and warranties contained in Section 3.6 or any other
representation, warranty or covenant in any Seller's Closing Document
relating to Intellectual Property rights in iDVDBox Intellectual
Property and the Assets, shall be limited to an amount equal to the
Purchase Price; Seller's liability under this Article XI for breach
of its representations and warranties contained in Section 3.6 or any
other representation, warranty or covenant in any Seller's Closing
Document relating to Intellectual Property rights in iDVDBox
Intellectual Property and the Assets shall not be limited.
(ii) Seller's indemnification obligation under this Article XI
shall be limited to Losses that are asserted, whether by notice,
filing of a Proceeding or otherwise, no later than 30 months
following the Closing Date and which relate to or arise out of,
whether in whole or in part, facts, stated events or
circumstances that occurred prior to the Closing Date.
Notwithstanding the foregoing, the limitations under this paragraph (b) shall
not apply to any breach by Seller of any of its representations, warranties,
covenants or other obligations under the Inprimis Retained License and License
Agreement, and shall not be construed to be in limitation of any rights Buyer
may have hereunder or under any other Seller's Closing Document to specific
performance, injunctive relief or other equitable remedies in the event of
breach by Seller of any of its obligations hereunder or thereunder,
ARTICLE XII
GENERAL PROVISIONS
SECTION 12.1 CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS.
(a) Information obtained in confidence by either party in connection
with this Agreement or the Contemplated Transactions, shall be
confidential. The obligations of Buyer's confidentiality shall
terminate and be of no force or effect upon the occurrence of the
Closing.
SECTION 12.2 EXPENSES.
The Seller shall reimburse the Buyer for all costs incurred by the Buyer and or
its affiliates in for the transaction contemplated herein. Notwithstanding the
foregoing, the maximum reimbursement available to the Buyer from the Seller
shall not exceed Twenty Five Thousand Dollars ($25,000 US). Or
The Seller and Buyer shall be individually responsible for all of their own
expenses related to the transaction contemplated herein.
SECTION 12.3 NOTICES.
All notices, Consents, waivers, and other communications under this
Agreement must be in writing and are deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by facsimile
or with confirmation of transmission by the transmitting equipment, (c) five (5)
days after delivery, if sent by certified mail, return receipt requested, or (d)
one (1) day after delivery, if sent by a nationally recognized overnight
delivery service, return receipt requested, in each case to the appropriate
addresses, facsimile numbers or email addresses set forth below (or to such
other addresses, facsimile numbers or as a party may designate by notice to the
other parties):
Buyer: MediaBus Networks, Inc.
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Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
Chairman & CEO
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
And with copies to:
MMDS Capital
Seller: iDVDBox, Inc.
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President & Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 12.4 (Intentionally Left Blank)
SECTION 12.5 (Intentionally Left Blank)
SECTION 12.6 WAIVER.
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right under this Agreement or the documents referred to in this Agreement
operates as a waiver of such right, and no single or partial exercise of any
such right precludes any other or further exercise of such right or the
exercise of any other right. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement or the documents referred
to in this Agreement can be discharged by one party, in whole or in part, by a
waiver or renunciation of the claim or right unless in writing signed by the
other party; (b) no waiver that may be given by a party will be applicable
except in the specific instance for which it is given; and (c) no notice to or
demand on one party will be deemed to be a waiver of any obligation of such
party or of the right of the party giving such notice or demand to take further
action without notice or demand as provided in this Agreement or the documents
referred to in this Agreement.
SECTION 12.7 ENTIRE AGREEMENT AND MODIFICATION.
This Agreement supersedes all prior agreements, whether written or oral,
between the parties with respect to its subject matter and constitutes (along
with the Exhibits and other documents delivered pursuant to this Agreement) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be amended
except by a written agreement signed on behalf of each of the parties hereto.
SECTION 12.8 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.
No party may assign any of its rights or delegate any of its obligations under
this Agreement without the prior written consent of the other parties, except
that Buyer may assign any of its rights and delegate any of its obligations
under this Agreement to any Subsidiary of Buyer, provided that no such
assignment or delegation shall relieve Buyer from any of its obligations
hereunder. Subject to the preceding sentence, this Agreement applies to, is
binding in all respects upon, and inures to the benefit of the successors and
permitted assigns of the parties. Nothing in this Agreement is to be construed
to give any Person other than the parties to this Agreement any legal or
equitable right under or with respect to this Agreement or any provision of
this Agreement, except such rights as shall inure to a successor or permitted
assignee pursuant to this Section 12.8.
SECTION 12.9 SEVERABILITY.
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement remain
in full force and effect. The parties further agree that if any provision
contained herein is, to any extent, held invalid or unenforceable in any respect
under the laws governing this Agreement, they shall take any actions necessary
to render the remaining provisions of this Agreement valid and enforceable to
the fullest extent permitted by law and, to the extent necessary, shall amend or
otherwise modify this Agreement to replace any provision contained herein that
is held invalid or unenforceable with a valid and enforceable provision giving
effect to the intent of the parties.
SECTION 12.10 SECTION HEADINGS, CONSTRUCTION, EXHIBITS.
The headings of Articles and Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
Exhibits of this Agreement are incorporated into and constitute an integral
part of this Agreement as if fully set forth herein. Each Exhibit shall be
applied and enforceable in accordance with its terms. The statements in the
Exhibits, and those in any supplement thereto, relate only to the
representations and warranties in the Section of the Agreement to which they
expressly relate and not to any other representation or warranty in this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the context requires. All references to documents,
instruments or agreements shall be deemed to refer as well to all addenda,
exhibits, Exhibits or amendments thereto. The language used in the Agreement
shall be construed, in all cases, according to its fair meaning, and not for or
against any party hereto. The parties acknowledge that each party has reviewed
this Agreement and that rules of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be
available in the interpretation of this Agreement.
SECTION 12.11 TIME OF ESSENCE.
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
SECTION 12.12 GOVERNING LAW.
This Agreement will be governed by and construed under the laws of the
State of Florida without regard to conflicts of laws principles that would
require the application of any other law.
SECTION 12.13 JOINT AND SEVERAL OBLIGATIONS.
All covenants, representations, warranties and other obligations of Seller
under this Agreement and the other Seller's Closing Documents shall be joint
and several, except for covenants, representations, warranties and other
obligations, which are expressly provided, to be several and not joint
obligations of iDVDBox.
SECTION 12.14 EXECUTION OF AGREEMENT, COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement. The exchange
of copies of this Agreement and of signature pages by facsimile transmission
shall constitute effective execution and delivery of this Agreement as to the
parties and may be used in lieu of the original Agreement for all purposes.
Signatures of the parties transmitted by facsimile shall be deemed to be their
original signatures for any purpose whatsoever.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
BUYER:
MediaBus Network, Inc.
By: ---------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇
Its: Chairman & CEO
SELLER:
iDVDBox, Inc.
By: ---------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its: President & CEO
Exhibit 1
List of Assets
No. Item
Intellectual Property and Trademarks
1 IP- BoxEngine (Worldwide Patent Pending) technology
2 Trademark "i2DVD"
3 Trademark "BoxEngine"
Servers Hardware and Software
1 Dell PowerEdge 1400SC, 933Mhz Server (CCS01)
2 Dell PowerEdge 1400SC, 933Mhz Server (ORACLE01)
3 MultiTech RASFinder Remorte Access Device
4 APC Smart-UPS
5 Windows NT Server 4.0 (CCS01)
6 Windows NT Server 4.0 (ORACLE01)
7 Veritas Backup Exec Server v8.5
8 Veritas Backup Exec Remote Agent
9 Veritas Backup Exec Oracle Agent
PC Software
1 Adobe Photoshop 6.0
2 Adobe Illustrator 9.0
3 Adobe GoLive 5.0
4 Adobe LiveMotion
5 Macromedia Dreamweaver UltraDev 4
6 Macromedia Flash 5
7 ColdFusion Studio 4.5.2
8 ColdFusion Server 4.5
9 Borland C++ Builder 5 Standard
10 Adobe Acrobat 4.0
11 McAfee VirusScan
12 McAfee Firewall
13 StarOffice 5.2
14 Corel Gallery Clipart
Lab Equipment
1 PC Doctor Diagnostics Service Center 2000 v2.2
2 CHIPhERASER
3 Linksys EtherFast Cable/DSL Router
4 ▇▇▇▇▇▇ WES50 Soldering Iron
5 WaveTek Electronic Measuring Instrument
6 DirectTV Digital Satellite Receiver
7 DirectTV Digital Satellite Receiver
8 SurfReady Internet DVD Player
9 Cambridge Soundworks Speaker System
EXHIBIT 1 - Page 2
Others
1 Computer Monitor - KDS
2 TV - Panasonic
3 TV -Zenith
4 TV - Hitachi
5 Pioneer Receiver (USX-0409)
6 Speaker Set (Surround Sound & Woofer)
7 DVD Format & Logo License, DVD-ROM/Video Books
8 Inventory i2DVD Players (170 pieces)
9 Office Furniture
10 File Cabinets
Grand Total
Exhibit 2
A. Monthly Liabilities
Gateway - Servers/Computer Lease (▇▇▇▇▇ Fargo) $1,041.87
Lab Equipment Lease (▇▇▇▇▇ Fargo) $227.91
Office Lease $2,500.00
Office Insurances - Equipment & Product Liability $900.00
Auto Leases (4 cars) $1,400.00
Auto Insurances (Progressive) $1,000.00
Engineers' House Lease (+FPL & PBCWVD) $2,800.00
MCI-WorldCom Broadband Service $772.50
Telephone/Server/Fax (10 Lines) $1,000.00
Brinks Security System and Monitoring $52.00
Copy Machine Lease (Crown Bank Leasing) $157.73
B. Other Liabilities
Inprimis Engineering Fee $154,200.00
Loan (10% Minority Investors) $500,000.00
Buyers Shopping Network - Balance for Infomercial $15,000.00
Legal Fees Related to Patent and Trademarks $5,000.00
Certified Audit Balance $7,000.00
Connect Server and Software $88,000.00
Outstanding Renumeration $50,000.00
Exhibit 3
List of Personnel
KOH ▇▇▇ ▇▇▇
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SIAH Eng Kiat
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Exhibit 4
List of Key Personnel
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