ASSET PURCHASE AGREEMENT AMONG INNOVATIVE SOFTWARE TECHNOLOGIES, INC. AND THE WEB CHANNEL NETWORK, INC. AND THE WEB CHANNEL NETWORK, LLC. AND ROBERT W. SINGERMAN JUNE 17, 2009
Exhibit 2.01
AMONG
INNOVATIVE
SOFTWARE TECHNOLOGIES, INC.
AND
THE
WEB CHANNEL NETWORK, INC.
AND
THE
WEB CHANNEL NETWORK, LLC.
AND
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
JUNE
17, 2009
TABLE OF CONTENTS
EXHIBIT A
: PROMISSORY NOTE
EXHIBIT B
: SECURITY AGREEMENT
EXHIBIT C
: WARRANT AGREEMENT
EXHIBIT D
: EMPLOYMENT AGREEMENT
EXHIBIT E
: NON-DISCLOSURE, NON-COMPETITION, NON-SOLICITATION AND INVENTION
AGREEMENT
EXHIBIT F
: SCHEDULE OF PURCHASED ASSETS
ASSET PURCHASE AGREEMENT
This
Asset Purchase Agreement (“this
Agreement”) is made as of June 17, 2009, by and among Innovative Software
Technologies, Inc., a Delaware corporation (the “Company”),
the Company’s wholly owned subsidiary The WEB Channel Network, Inc., a Florida
corporation (“Buyer”), The WEB Channel Network,
LLC., a Florida limited liability company (“Seller”),and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, a Florida resident and the principal manager of Seller
(“Manager”). (The Company,
Buyer, Seller, and Manager also are referred to herein separately as a “Party”
and collectively as the “Parties.”)
Recitals:
WHEREAS, Seller has agreed to
sell to Buyer substantially all of its assets on the terms and conditions
provided herein;
WHEREAS, Manager has agreed to
sell to Buyer the Manager’s assets related to Seller’s business (which together
with Seller’s assets being sold to Buyer are referred to herein as the “Purchased Purchased
Assets”) on the terms and conditions provided herein;
WHEREAS, Manager has agreed to
enter into an Employment Agreement with Buyer and a Non-Disclosure,
Non-Competition, Non-Solicitation and Invention Agreement with the Company and
Buyer, all on the terms and conditions provided herein;
WHEREAS, Buyer has agreed to
buy the Purchased Assets from Seller and Manager on the terms and conditions
provided herein;
WHEREAS, Buyer has agreed to
enter into an Employment Agreement with Manager and the Company and Buyer have
agreed to enter into a Non-Disclosure, Non-Competition, Non-Solicitation and
Invention Agreement with Manager all on the terms and conditions provided
herein;
Agreement:
NOW, THEREFORE, in
consideration of the above recitals which are incorporated in this Agreement and
made a part hereof, and the mutual representations, warranties, covenants, and
promises herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Parties agree as
follows.
1. Definitions.
“Adverse
Consequences” means all payments, costs, expenses, damages and losses
resulting from any actions, suits, proceedings, hearings, investigations,
charges, complaints, claims, demands, injunctions, judgments, orders, decrees,
rulings, dues, penalties, fines, costs, amounts paid in settlement, Liabilities,
obligations, Taxes, liens, fees, and court costs, and reasonable attorneys’ fees
and expenses.
“Affiliate”
has the meaning set forth in Rule 12b-2 of the regulations promulgated under the
Securities Exchange Act of 1934
“Affiliated
Entities” means any or all of the limited liability companies in which
Manager has an equity interest which relate to the business of Seller, which are
included in Exhibit
F hereto.
“Buyer”
has the meaning set forth in the preamble above.
“Closing” has the meaning set
forth in §2(c) below.
“Closing
Date” has
the meaning set forth in §2(c) below.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Common
Stock” means the common stock, no par value, of the Company.
“Confidential
Information” means any information
concerning Buyer, Seller, the Purchased Assets and Manager that is not already
generally available to the public.
“Intellectual
Property” means (a) all inventions (whether patentable or unpatentable
and whether or not reduced to practice), all improvements thereto, and all
patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations- in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
“Liability” or “Liabilities”
mean any liabilities (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liabilities for Taxes.
“Party” has the meaning set
forth in the preface above.
“Person”
means an individual, a partnership, a corporation, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization, or a
governmental entity (or any department, agency, or political subdivision
thereof).
“Purchase
Price” has the meaning set forth in §2(b) below.
“Purchased
Assets” means substantially all of the assets of Seller, including
(without limitation) its Intellectual Property
as defined below, its signed and pending production agreements, and Manager’s
equity positions in several limited liability companies, including various web
channels, all as set forth in Exhibit
F hereto.
“Securities
Act” means the Securities Act of 1933, as amended.
“Security
Interest” means any mortgage,
pledge, lien, encumbrance, charge, or other security interest, other than (a)
mechanic’s, materialmen’s, and similar liens, (b) liens for Taxes not yet due
and payable or for Taxes that the taxpayer is contesting in good faith through
appropriate proceedings, (c) purchase money liens and liens securing rental
payments under capital lease arrangements, and (d) other liens arising in the
ordinary course of business and not incurred in connection with the borrowing of
money.
“Seller”
has the meaning set forth in the preface above.
“Tax” and “Taxes”
mean any federal, state, local, or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Code Sec. 59A), customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, other ad valorem,
sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
“Tax
Return” means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
2. Purchase
and Sale of the Purchased Assets.
(a) Assets
to be Purchased by Buyer.
Subject to the terms and conditions of this Agreement, Seller and Manager
agree to sell to Buyer, all of the Purchased Assets. On the Closing
Date, Seller and Manager shall grant, sell, convey, transfer, deliver and assign
to Buyer, by ▇▇▇▇
of sale or other appropriate instruments of assignment and transfer (“Transfer
Document”), free and clear of all liens, encumbrances, options, pledges,
charges, security interests, equitable interests, easements or rights of third
parties (collectively, “Encumbrances”)
the Purchased Assets, and Buyer shall purchase, all right, title and interest in
and to the Purchased Assets, free and clear of all Encumbrances.
(b) Purchase
Price.
The purchase price to be paid by Buyer for the Purchased Assets (the
"Purchase
Price") shall be an amount equal to six hundred thousand dollars
($600,000) and stock purchase warrants of the Company, to be paid (i) by a first cash
installment of $25,000 to be paid to Seller and Manager jointly within fifteen (15) days
of Closing, (ii) by a second cash installment of $75,000 to be paid to Seller
and Manager jointly prior to September 30,
2009, (iii) by the delivery to Seller at the Closing of a promissory note in
substantially the form of Exhibit A hereto in the principal amount of $500,000,
which shall be secured by all of the Purchased Assets pursuant to a Security
Agreement in substantially the form of Exhibit B hereto, and (iv) by the grant to Seller of
five million (5,000,000) share purchase warrants of the Company in substantially
the form of Exhibit C hereto (the “Warrant
Agreement”) to be delivered at the Closing.
(c) The
Closing.
The closing of the transactions contemplated by this Agreement (the “Closing”)
shall take place at the offices of the Company in Tampa, Florida, on June 17,
2009 or such other date as the Buyer and Seller may mutually determine (the
“Closing
Date”).
(d) Deliveries
at the Closing. At the
Closing, (i) Seller will deliver to Buyer the various certificates, instruments,
and documents referred to in this Agreement, (ii) Buyer will deliver to Seller
the various certificates, instruments, and documents referred to in this
Agreement, (iii) Buyer will deliver to Seller the consideration specified in
§2(b) above.
3. Representations and
Warranties Concerning the Transaction.
(a) Representations
and Warranties of Seller and Manager. Seller and Manager jointly
and severally represent and warrant to Buyer that the statements contained in
this §3(a) are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date.
(i)
Organization
and Standing of Seller. Seller
and the Affiliated Entities are duly organized, validly existing, and in good
standing under the laws of the Florida.
(ii) Authorization
of Transaction and Change of Seller’s Name. Seller
and Manager have full power and authority to execute and deliver this Agreement
and to perform their obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of Seller and Manager,
enforceable in accordance with its terms and conditions. Within three
business days following the Closing Date, Seller and Manager shall cause an
amendment to Seller’s Articles of Organization to be filed with the State of
Florida to change its name to a name distinguishable from that of
Buyer. Other than such filing of a name change amendment to Seller’s
Articles of Organization within three business days following the Closing Date,
neither Seller nor Manager is required to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency or any other third party in order to consummate the
transactions contemplated by this Agreement.
(iii) Noncontravention. Neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Seller or
Manager is subject or the articles of organization or operating agreement of
Seller or any of the Affiliated Entities (B) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under, any agreement, contract, lease, license, instrument, or other
arrangement to which Seller is a party or by which he or it is bound or to which
any of his or its assets is subject.
(iv) Complete,
Valid and Authentic Documents. The
Amended and Restated Operating Agreement of Seller and the other operating
agreements of entities in which Seller or Manager may have an interest which
constitute a part of the Purchased Assets and all other agreements, instruments,
written evidence of action or authority which Seller or Manager have delivered
to the Company and Buyer with respect to the Purchased Assets and the
transactions contemplated hereby are complete, valid and authentic, and have not
been amended beyond any amending documents provided, and have not been
rescinded, terminated, nullified or annulled. No membership
certificates have ever been issued to Manager or any other Person by Seller or
any of the Affiliated Entities to evidence ownership of a member interest in
Seller or any of the Affiliated Entities.
(v) Compliance
with Laws.
Seller, Manager and the Affiliated Entities each have conducted their
business and operated the Purchased Assets in compliance with all laws,
statutes, ordinances, rules, regulations or orders of any governmental authority
(collectively, “Laws”),
including without limitation all Laws pertaining to environmental protection,
occupational health and safety, employee benefits and employment
practices. Seller and the Affiliated Entities have all permits,
licenses, orders, approvals, authorizations, concessions and franchises
(collectively, “Permits”)
of any governmental authority that are necessary in the conduct of their
business or that are required under any Law. All such Permits are in
full force and effect, and may be assigned or transferred, as applicable, to
Buyer for use with the Purchased Assets, and no proceeding is pending or, to the
knowledge of Seller or Manager, threatened, to revoke or limit any of
them. In addition, to the knowledge of Seller or Manager, there is no
state of facts or events that could reasonably be expected to form the basis for
the revocation or limitation of any Permit or other imposition of conditions or
obligations on the possession of transfer of any Permit. To the
knowledge of Seller or Manager, Seller and the Affiliated Entities are not
required to make, and Seller and Manager does not have any reasonable
expectation that Buyer will be required to make after the Closing, any
expenditures to achieve or maintain compliance with any Law, except in amounts
similar to those reflected in Seller’s financial statements.
(vi) No
Infringement of Intellectual Property Rights.
Seller and Manager each have conducted their business and operated the
Purchased Assets without infringing upon or otherwise violating any other
person’s Intellectual Property; and none of the Purchased Assets include or are
constituted of any element that would be an infringement of or otherwise violate
any other person’s Intellectual Property.
(vii) Financial
Statements.
Each of the financial statements of Seller and the Affiliated
Entities: (A)
is true, accurate and complete in all material respects, (B) fairly presents the
financial condition and the results of operations of Seller or the
applicable entity as of the date or for the period specified, and (C) has been prepared from the
books and records of Seller or the applicable entity in accordance with Seller’s
or the applicable entity’s past practices. The books of account of
Seller and the applicable entities as delivered to the Company and
Buyer accurately reflect all items of income and expense (including, without
limitation, accruals) and all assets and Liabilities of Seller.
(viii) Undisclosed
Liabilities.
Seller, Manager and the Affiliated Entities do not have any Liabilities
of any kind whatsoever (whether secured or unsecured, accrued or un-accrued,
fixed or contingent, matured or un-matured, and whether due or to become due),
including without limitation any Liabilities which may become known or which may
arise only after the Closing resulting from acts, omissions or occurrences prior
to the Closing, other than: (A) Liabilities which have
arisen in the ordinary course of business consistent with past practice and are
fully reflected or reserved for in the books and records of Seller and the
applicable entities as delivered to the Company and Buyer, and (B) express contractual
obligations (other than any obligations that might arise due to any default or
other failure of performance by Seller or the applicable entities prior to the
Closing Date) under contracts to which Seller or any of the applicable entities
is a party.
(ix) Title
to and Status of the Purchased Assets.
Seller and Manager hold of record and owns beneficially the Purchased
Assets free and clear of any restrictions on transfer (other than any
restrictions under the Securities Act and state securities laws), Taxes,
Security Interests, options, warrants, purchase rights, contracts, commitments,
equities, claims, demands, and Encumbrances, including (without limitation) any
Encumbrance affecting Seller’s or Manager’s ability to use or transfer any of
the Purchased Assets. Neither Seller, Manager nor any of the
Affiliated Entities is a party to any option, warrant, purchase right, or other
contract or commitment that could require Seller, Manager or any of the
Affiliated Entities to sell, transfer, or otherwise dispose of any Purchased
Assets (other than this Agreement). Neither Seller, Manager nor any
of the Affiliated Entities is a party to any voting trust, proxy, or other
agreement.
(x) No
Litigation. There
has not been (and there is not now) any action, suit or proceeding pending or
threatened against or affecting Seller, the Affiliated Entities, or Manager, at
law, in equity, by way of arbitration or before any Governmental
Authority. There has not been (and there is not now) any default by
Seller, the Affiliated Entities, or Manager with respect to any order,
injunction or decree of any governmental authority, and neither Seller, nor any
of the Affiliated Entities, nor Manager, nor any Purchased Assets are bound by
or subject to any such order, injunction or decree. There are no
existing facts or conditions which might give rise to any charge, claim,
litigation, proceeding or investigation by any third party, nor to the knowledge
of Seller, any of the Affiliated Entities, or Manager are there any facts or
conditions which might give rise to any such charge, claim, litigation,
proceeding or investigation.
(xi) Taxes. All
Tax Returns required by any governmental authority to be filed in connection
with the properties, business, income, expenses, net worth and franchises of
Seller, Manager and the Affiliated Entities have been timely filed by Seller,
Manager and the Affiliated Entities. All Taxes due in connection with
the properties, business, income, expenses, net worth and franchises of Seller,
Manager and the Affiliated Entities have been paid by Seller, Manager and the
Affiliated Entities, other than Taxes which are not yet due or which, if due,
are not yet delinquent or are being contested in good faith, and for which, in
all cases, reserves have been established in the books and records of Seller
consistent with past practice. There are no Tax claims, audits or
proceedings pending in connection with the properties, business, income,
expenses, net worth or franchises of Seller, Manager and the Affiliated
Entities, and to their knowledge, there are no such threatened claims, audits or
proceedings. There are not currently in force any extensions of time
with respect to the dates on which any Tax Return was or is due to be filed by
Seller, Manager and the Affiliated Entities or any waivers or agreements for the
extension of time for the assessment or payment of any Tax.
(xii) No
Brokers or Finders Fees. Neither
Seller, nor any of the Affiliated Entities, nor Manager has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which the Company
or Buyer could become liable or obligated.
(xiii) Access
to All Material Information. Seller
and Manager have had access to all available corporate records of the Company
and the very recent organization of Buyer, have been afforded the opportunity to
ask questions to and obtain answers from the senior management of the Company
and Buyer, and are aware of the extensive amount of reports by the Company and
others concerning the Company and the details in those reports that are
accessible online on the website of the U.S. Securities and Exchange Commission
(the “SEC”). Seller
and Manager further acknowledge that they have received certain confidential
information from the Company and agree to maintain and preserve that
confidentiality and not to engage in any purchases or sales of securities of the
Company while in possession of any material non-public information about the
Company.
(xiv) Review
of Risk Factors and Perils . Seller
and Manager have read the Company’s most recent Quarterly Report on Form 10-Q
for the third quarter ended December 31, 2008, including the litigation
discussion in Footnote 10(b) thereof, and the Company’s Annual Report on Form
10-KSB for the year ended March 31, 2008, including the details therein as to
the substantial risk factors affecting the Company and its securities, and the
qualified auditor opinion as to the substantial doubt about the Company’s
ability to continue as a going concern.
(xv) No
Misrepresentations. To
the knowledge of Seller and Manager, no representation or warranty made by
Seller or Manager in this Agreement or in any other agreements, instruments and
documents relating hereto contains any untrue statement of a material fact or
omits to state a fact necessary to make the statements and facts contained
herein or therein, in light of the circumstances under which they are made, not
false or misleading. To the knowledge of Seller and Manager, copies
of all documents delivered or made available to the Company and Buyer by Seller
and Manager were complete and accurate copies of such documents.
(b) Representations
and Warranties of the Company and Buyer.
The Company and Buyer jointly and severally represent and warrant to
Seller and Manager that the statements contained in this §3(b) are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date.
(i)
Authorization
of Transaction. The
Company and Buyer each have full power and authority (including full corporate
power and authority) to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Company and Buyer, enforceable in
accordance with its terms and conditions. Other than the requirement
that the Company report the transaction contemplated herein on Form 8-K to be
filed with the SEC within four business days following the Closing Date, neither
the Company nor Buyer need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this
Agreement.
(ii) Noncontravention.
Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will: (A) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Company or Buyer is subject or any provision of their
respective charter or bylaws or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which the Company or Buyer is a party or by which it is bound or to which any
of its assets is subject.
(iii) No
Brokers or Finders Fees. Neither
the Company, nor Buyer, has any liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Seller or Manager could become liable
or obligated.
(xiii) No
Misrepresentations. To the
knowledge of Seller and Manager, no representation or warranty made by Seller or
Manager in this Agreement or in any other agreements, instruments and documents
relating hereto contains any untrue statement of a material fact or omits to
state a fact necessary to make the statements and facts contained herein or
therein, in light of the circumstances under which they are made, not false or
misleading. To the knowledge of Seller and Manager, copies of all
documents delivered or made available to the Company and Buyer by Seller and
Manager were complete and accurate copies of such documents.
4. Conditions
to Obligation to Close.
(a) Conditions
to Obligation of the Company and Buyer.
The obligations of the Company and Buyer to consummate the transactions
to be performed by them in connection with the Closing are subject to
satisfaction of the following conditions:
(i)
The representations and warranties set forth in §3(a) above shall be true and
correct in all material respects at and as of the Closing Date;
(ii) No
action, suit, or proceeding shall be pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation
of any of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) affect adversely the
right of the Company or Buyer to own the Purchased Assets; and
(iii) Seller
and Manager shall have delivered to the Company and Buyer a certificate to the
effect that each of the conditions specified above in §4(a)(i)-(ii) is satisfied
in all respects.
The
Company and Buyer may waive any condition specified in this §4(a) by executing a
writing so stating at or prior to the Closing.
(b) Conditions
to Obligation of Seller and Manager. The
obligations of Seller and Manager to consummate the transactions to be performed
by Seller and Manager in connection with the Closing are subject to satisfaction
of the following conditions:
(i)
The representations and warranties set forth in §3(b) above shall be true
and correct in all material respects at and as of the Closing Date;
(ii) The
Company and Buyer shall have performed and complied with all of their covenants
hereunder in all material respects through the Closing;
(iii) No
action, suit, or proceeding shall be pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation; and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect;
(iv)
The Company and Buyer shall have delivered to Seller and Manager a
certificate to the effect that each of the conditions specified above in
§4(b)(i)-(iii) is satisfied in all respects;
(v)
All actions to be taken by the Company and Buyer in connection with consummation
of the transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Seller and Manager.
Seller
and Manager may waive any condition specified in this §4(b) if they execute a
writing so stating at or prior to the Closing.
5. Remedies for Breaches of
This Agreement.
(a) Survival
of Representations and Warranties. All
of the representations and warranties of the Parties contained in §3(a) and
§3(b) hereof shall survive the Closing hereunder and continue in full force and
effect for a period of twelve months thereafter.
(b) Indemnification
Provisions for Benefit of the Company and Buyer. In the
event Seller or Manager breaches (or in the event any third party alleges facts
that, if true, would mean Seller or Manager has breached) any of their
representations, warranties, and covenants contained herein, and the Company or
Buyer makes a written claim for indemnification against Seller within the §5(a)
survival period, then Seller and Manager shall indemnify the Company and Buyer
from and against the entirety of any Adverse Consequences that Buyer may suffer
through and after the date of the claim for indemnification resulting from,
arising out of, relating to, in the nature of, or caused by the breach (or the
alleged breach). However, no such indemnification shall be required
unless and until the Company and Buyer shall have suffered Adverse Consequences
by reason of all such breaches (or alleged breaches) in excess of a $20,000
aggregate, at which point Seller and Manager will be obligated to indemnify the
Company and Buyer from and against all such Adverse Consequences relating back
to the first dollar thereof. Further, in no event shall Seller or
Manager be obligated to indemnify the Company or Buyer hereunder for any amount
in excess of the aggregate cash consideration payable to Seller or Manager for
the Purchased Assets hereunder (the “Maximum
Indemnification”).
(c) Indemnification
Provisions for Benefit of Seller and Manager. In the event the
Company or Buyer breaches (or in the event any third party alleges facts that,
if true, would mean the Company or Buyer has breached) any of their
representations, warranties, and covenants contained herein, and Seller or
Manager makes a written claim for indemnification against the Company or Buyer
within the §5(a) survival period, then the Company or Buyer shall indemnify
Seller or Manager from and against the entirety of any Adverse Consequences that
Seller or Manager may suffer through and after the date of the claim for
indemnification resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach). However, no such
indemnification shall be required unless and until Seller and Manager shall have
suffered Adverse Consequences by reason of all such breaches (or alleged
breaches) in excess of a $20,000 aggregate, at which point the Company and Buyer
will be obligated to indemnify Seller and Manager from and against all such
Adverse Consequences relating back to the first dollar
thereof. Further, in no event shall the Company or Buyer be obligated
to indemnify Seller or Manager hereunder for any amount in excess of the Maximum
Indemnification.
(d) Matters Involving Third
Parties.
(i)
If any Party is informed or otherwise made aware of a matter
(a “Third Party
Claim”) that may result in an indemnification claim by such Party
(the “Indemnified
Party”) against any other Party (the “Indemnifying
Party”), then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; provided, however, no delay by the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party is prejudiced by such delay.
(ii) Any
Indemnifying Party will have the right to defend the Indemnified Party against
the Third Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as: (A) the Indemnifying Party
notifies the Indemnified Party in writing within 15 days after the Indemnified
Party has given notice of the Third Party Claim that the Indemnifying Party will
indemnify the Indemnified Party from and against the entirety of any Adverse
Consequences that the Indemnified Party may suffer resulting from, arising out
of, relating to, in the nature of, or caused by the Third Party Claim; (B) the Indemnifying Party
provides the Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the financial resources
to defend against the Third Party Claim and fulfill its indemnification
obligations hereunder; (C) the Third Party Claim
involves only money damages and does not seek an injunction or other equitable
relief; (D) settlement
of, or an adverse judgment with respect to, the Third Party Claim is not, in the
good faith judgment of the Indemnified Party, likely to establish a precedential
custom or practice materially adverse to the continuing business interests of
the Indemnified Party; and (E) the Indemnifying Party
conducts the defense of the Third Party Claim actively and
diligently.
(iii) So
long as the Indemnifying Party is conducting the defense of the Third Party
Claim in accordance with §5(d)(ii) above: (A) the Indemnified Party may
retain separate co-counsel at its sole cost and expense and participate in the
defense of the Third Party Claim; (B) the Indemnified Party will
not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (C) the Indemnifying Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(iv) In
the event any of the conditions in §5(d)(ii) above is or becomes unsatisfied:
(A) the Indemnified
Party may defend against, and consent to the entry of any judgment or enter into
any settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not consult
with, or obtain any consent from, any Indemnifying Party in connection
therewith); (B) the
Indemnifying Parties will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim (including
reasonable attorneys’ fees and expenses); and (C) the Indemnifying Parties
will remain responsible for any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim to the fullest extent provided in this §5.
(e) Determination
of Adverse Consequences. The
Parties shall take into account the time cost of money using the then applicable
predominant prime rate of interest published in The Wall Street Journal plus
4% as the discount rate in determining Adverse Consequences for purposes of this
§5. All indemnification payments under this §5 shall be deemed
adjustments to the Purchase Price.
(f)
Other
Indemnification Provisions. Subject
to §6(n) hereof, the foregoing indemnification provisions are the sole and
exclusive remedy any party may have for breach of representation, warranty, or
covenant set forth in this Agreement.
6.
Miscellaneous.
(a) Press
Releases and Public Announcements. No
Party shall issue any press release or make any public announcement relating to
the subject matter of this Agreement without the prior written approval of all
other Parties; provided, however, that any Party may make any public disclosure
it believes in good faith is required by applicable law or any listing or
trading agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its best efforts to advise the other Parties prior to
making the disclosure).
(b) No
Third-Party Beneficiaries. This
Agreement shall not confer any rights or remedies upon any Person other than the
Parties and their respective successors and permitted assigns.
(c) Entire
Agreement. This
Agreement (including the documents referred to herein) constitutes the entire
agreement among the Parties with respect to the subject matter hereof, and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(d) Succession
and Assignment. This
Agreement shall be binding upon and inure to the benefit of the Parties named
herein and their respective successors and permitted assigns. No
Party may assign either this Agreement or any of his or its rights, interests,
or obligations hereunder without the prior written approval each of the other
Parties; provided, however, that Buyer may (i) assign any or all of its
rights and interests hereunder to one or more of its Affiliates and (ii) designate one or more of
its Affiliates to perform its obligations hereunder (in any or all of which
cases Buyer nonetheless shall remain responsible for the performance of all of
its obligations hereunder).
(e) Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which together will constitute one and the same
instrument.
(f)
Headings. The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.
(g) Notices. All notices, requests,
demands, claims, and other communications hereunder shall be in
writing. Any notice, request, demand, claim, or other communication
hereunder shall be deemed duly given if (and then two business days after) it is
sent by registered or certified mail, return receipt requested, postage prepaid,
and addressed to the intended recipient as set forth below:
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If
to the Company:
Innovative
Software Technologies, Inc.
▇▇▇▇
▇. ▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇▇▇▇▇▇
|
With
a copy to:
▇▇▇▇▇▇▇
▇. ▇▇▇▇
Mechanik
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
|
If
to Buyer:
The
WEB Channel Network, Inc.
▇▇▇▇
▇. ▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇▇▇▇▇▇
|
With
a copy to:
▇▇▇▇▇▇▇
▇. ▇▇▇▇
Mechanik
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
|
If
to Seller:
The
WEB Channel Network, LLC.
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
|
With
a copy to:
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
|
|
If
to Manager:
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
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Any Party
may send any notice, request, demand, claim, or other communication hereunder to
the intended recipient at the address set forth above using any other means
(including personal delivery, expedited courier, messenger service, telecopy,
telex, ordinary mail, or electronic mail), but no such notice, request, demand,
claim, or other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
(h) Governing
Law.
This Agreement shall be governed by and construed in accordance with the
domestic laws of the State of Florida without giving effect to any choice or
conflict of law provision or rule (whether of the State of Florida or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Florida.
(i) Amendments
and Waivers. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by each of the Parties. No waiver by
any Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
(j) Severability. Any term
or provision of this Agreement that is invalid or unenforceable in any situation
in any jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any other
jurisdiction.
(k) Expenses. Each of
the Parties shall bear his or its own costs and expenses (including legal fees
and expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.
(l) Construction. The
Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by each of the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires
otherwise. The word “including” as used herein
shall mean “including without limitation.” The Parties intend that
each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any
representation, warranty, or covenant contained herein in any respect, the fact
that there exists another representation, warranty, or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or
covenant.
(m) Incorporation
of Exhibits. The
Exhibits identified in this Agreement are incorporated herein by reference and
made a part hereof.
(n) Specific
Performance.
Each of the Parties acknowledges and agrees that the other Parties
would be damaged irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms or otherwise
are breached. Accordingly, each of the Parties agrees that the other
Parties shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and the
matter in addition to any other remedy to which they may be entitled, at law or
in equity.
(o) Submission
to Jurisdiction. Each of
the Parties submits to the jurisdiction of any state or federal court sitting in
Hillsborough County, Florida, having the appropriate venue in accordance with
applicable law, in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding may
be heard and determined in any such court. Each Party also agrees not
to bring any action or proceeding arising out of or relating to this Agreement
in any other court. Each of the Parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and
waives any bond, surety, or other security that might be required of any other
Party with respect thereto.
IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement on as of the
date first above written.
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“the
Company”
Innovative
Software Technologies, Inc.
By: /s/ ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, President
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“Buyer”
The
WEB Channel Network, Inc.
By:
/s/
▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, President
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|
“Seller”
The
WEB Channel Network, LLC
By: /s/ ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, Operating Manager
|
“Manager”
/s/ ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
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EXHIBIT
F
SCHEDULE
OF PURCHASED ASSETS
The
“Purchased Assets” constitute substantially all of the assets of Seller,
including (without limitation) its Intellectual
Property as specified below, its signed and pending production agreements, and
all of Manager’s equity positions in several limited liability companies and
various web channels, all as set forth below.
INTELLECTUAL
PROPERTY
All of
Seller’s intellectual property consisting of (a) all inventions (whether
patentable or un--patentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all re-issuances, continuations, continuations-
in-part, revisions, extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate names, together
with all translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including data and related documentation), (g) all
other proprietary rights, and (h) all copies and tangible embodiments thereof
(in whatever form or medium).
Such
intellectual property includes, without limitation, that which Seller has used
and will use in the development, use and application with standard definition
video integrated with internet protocol television with web design; with
high-definition video integrated with internet protocol television with web
design; with the encoding process of FLASH video with internet protocol
television; of audio digital recording for internet protocol radio and
television; of a Content Management System for internet protocol television; of
acquiring, formatting, programming, encoding, testing and
deploying licensed previously produced broadcast video; of PODCASTS with
internet protocol television; and, the unencumbered ownership of over 100
strategic web domain names.
PRODUCTION
AGREEMENTS
3-year
production agreements of Seller, which were renewed as of June 10, 2009 for
the:
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·
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The Celiac
Channel - ▇▇▇.▇▇▇▇▇▇.▇▇
|
|
·
|
The
Celiac Cooking Channel - ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
·
|
Autistic
TV -
▇▇▇.▇▇▇▇▇▇▇▇.▇▇
|
|
·
|
The Smart
Shopping Crazy Money Channel - ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇
|
|
·
|
Countdown
to the Big Game Channel - ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇
|
|
·
|
Know it in
a Minute Channel - ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
ALL
OF THE EQUITY INTERESTS OF ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ IN THE FOLLOWING EXISTING WEB
CHANNELS AND THE FOLLOWING LIMITED LIABILITY COMPANIES:
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·
|
Countdown
to The Big Game (100%)
|
|
·
|
The
Green Earth Channel (100%)
|
|
·
|
Smart
Shopping Crazy Money Channel (50%)
|
|
·
|
The
Celiac Channel (49%)
|
|
·
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The
Celiac Cooking Channel (49%)
|
|
·
|
Hot
Sexy Products Channel (50%)
|
|
·
|
Art
by ▇▇▇▇ ▇▇▇▇▇ TV (20%)
|
|
·
|
Veterans
Life Channel (100%)
|
|
·
|
The
Rock School Channel (100%)
|
|
·
|
The
Cancer Channel (100%)
|
|
·
|
The
Recruiting Channel (100%)
|
|
·
|
The
Gifting Channel (100%)
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