EXHIBIT 2.1
Asset Purchase Agreement by & among Handheld Entertainment,
Inc.,
Aperio Technologies, Inc. and Mary Dunne
FUNMANSION.COM
ASSET PURCHASE AGREEMENT
BY & AMONG
HANDHELD ENTERTAINMENT, INC.,
A DELAWARE CORPORATION
APERIO TECHNOLOGIES, INC.,
A FLORIDA CORPORATION
AND
MARY DUNNE,
AN INDIVIDUAL
Dated as of December 1,
2006
ASSET PURCHASE
AGREEMENT
This Asset Purchase Agreement (
‘‘Agreement’’ ) is entered
into as of December 1, 2006 by and among HANDHELD ENTERTAINMENT,
INC., a Delaware corporation (‘‘ Handheld
’’), Aperio Technologies, Inc., a Florida corporation
(‘‘ Aperio ’’) and Mary
Dunne, an individual (the ‘‘ Dunne
’’).
RECITALS
WHEREAS, Aperio owns one hundred
percent (100%) of the assets and business interests (‘‘
Interest ’’) relating to Funmansion.com
(‘‘ Funmansion ’’ or
‘‘ Business ’’);
and
WHEREAS, Handheld desires to
purchase the Interest from Aperio, and Aperio desires to sell the
Interest to Handheld, in each case upon the terms and subject to
the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of
the premises, the mutual covenants and agreements contained herein
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I.
DEFINITIONS
Section
1.1. [Reserved]
ARTICLE II.
SALE AND PURCHASE
Section
2.1. Agreement to Sell and to
Purchase.
On the terms and subject to the
conditions set forth in this Agreement, at the Closing, Handheld
shall purchase from Aperio, and Aperio shall sell, transfer,
assign, convey and deliver to Handheld, the
Interest.
Section
2.2. Purchase Price.
(a) The purchase price (the
‘‘ Purchase Price ’’) for the
Interest shall consist of the following:
(i) $350,000 United States Dollars
(‘‘ USD ’’) (the
‘‘ Cash Consideration ’’),
via wire transfer in immediately available funds as directed by
Aperio, less the Escrow Amount which will be deposited into Escrow
pursuant to the terms of the Escrow Agreement, attached as
Exhibit A, (the ‘‘ Escrow
Agreement ’’);
(ii) A five (5)-year, convertible
promissory note in the amount of $600,000 USD, in the form attached
as Exhibit B hereto, given by Handheld (the
‘‘ Promissory Note ’’). The
Promissory Note shall be convertible on the terms provided in the
Promissory Note.
(iii) $150,000 USD payable in 12
equal monthly installments of $12,500 USD (each a ‘‘
Monthly Payment ’’). The first Monthly
Payment shall be due and payable January 1, 2007 and each remaining
Monthly Payment shall be due and payable on the first day of each
calendar month thereafter.
Section
2.3. Nondisclosure; Noncompetition;
Non-solicitation.
(a) Except
as required by law, from and after the Closing Date, Aperio (acting
through its agents, including, without limitation, Dunne) shall not
use, divulge, furnish or make accessible to anyone any proprietary,
non-public, confidential or secret information to the extent
relating to HandHeld or the Business (including, without
limitation, customer lists, supplier lists and pricing and
marketing arrangements with customers or suppliers) and Aperio
shall cooperate reasonably with HandHeld in preserving such
proprietary, confidential or secret aspects of HandHeld and the
Business.
2
(b) From and
after the Closing Date, for a period of two (2) years from the
Closing Date, Aperio (acting through its agents, including, without
limitation, Dunne) shall not engage in Competitive Business
Activities (as defined below). For purposes of this Agreement,
‘‘ Competitive Business Activities
’’ means the operation of a website, or other
electronic system with similar capabilities, that is, in whole or
in part, devoted to hosting user-generated, PG-13-like rated
humor.
(c) The
Company hereby acknowledges and agrees that (acting through its
agents, including, without limitation, Dunne) shall continue to own
and operate one or more separate businesses and/or related websites
(as applicable), as listed on Schedule 2.3(c) to this Agreement
(‘‘ Separate Businesses ’’)
and shall continue to own all inventions, creations, revenues,
profits, or other benefits generated by the Separate Businesses. In
addition, and notwithstanding anything to the contrary in this
Agreement, or the Employment Agreement, or as would otherwise be
provided by applicable State or Federal law, the Company waives any
right to claim any incidence of franchise, sharing or other right
to revenues, profits, or other benefits, whether created or
generated by Aperio or Dunne individually, or by any Separate
Business. Moreover, the Company waives any right to claim any
incidence of ownership to any intellectual property created or
generated by Aperio or Dunne individually, or by any Separate
Business, except such as directly relates to the intellectual
property acquired by the Company pursuant to this Agreement (e.g.,
intellectual property of the Business, including the trademark
‘‘Funmansion.com’’, the domain name
Funmansion.com and any intellectual property residing on the server
which Aperio shall transfer to the Company at the
Closing).
(d) Aperio
(acting through its agents, including, without limitation, Dunne)
shall not, directly or indirectly, after the Closing and for a
period of two (2) years from the Closing Date, (i) solicit for hire
or enter into any contractual arrangement with any employee or
contractor of HandHeld without the prior written consent of
HandHeld unless such employee or contractor has not been employed
by HandHeld for a period of two (2) years; or (ii) call on or
solicit any of the customers or suppliers of HandHeld or the
Business or make known the names and addresses of such customers or
suppliers or any information relating in any manner to HandHeld or
the Business or HandHeld’s or the Business’
relationships with such customers or suppliers. Aperio and Dunne
agree that a violation of this Section will cause irreparable
injury to HandHeld, and HandHeld shall be entitled, in addition to
any other rights and remedies it may have at law or in equity, to
an injunction enjoining and restraining Aperio and/or Dunne from
doing or continuing to do any such violation and any other
violations or threatened violations of this
Section.
(e) Aperio
and Dunne acknowledge and agree that the covenants set forth in
this Section are reasonable and valid in scope and in all other
respects and are designed to protect the goodwill associated with
the assets and the Business being purchased pursuant to this
Agreement. If any of such covenants is found to be invalid or
unenforceable by a final determination of a court of competent
jurisdiction (i) the remaining terms and provisions hereof shall be
unimpaired and (ii) the invalid or unenforceable term or provision
shall be deemed replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention of
the invalid or unenforceable term or provision. In the event that,
any of the provisions of this Section relating to scope of the
covenants contained therein or the nature of the business
restricted thereby shall be declared by a court of competent
jurisdiction to exceed the maximum restrictiveness such court deems
enforceable, such provision shall be deemed to be replaced herein
by the maximum restriction deemed enforceable by such
court.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF APERIO AND
DUNNE
Aperio and Dunne jointly and
severally represent and warrant to Handheld as set forth in this
Article III :
Section
3.1. Organization and Authority of
Aperio
(a) Aperio is a Florida corporation
duly organized as of February 14, 2001 and validly existing in good
standing under the laws of Florida.
3
(b) Aperio has full power and
authority to execute and deliver this Agreement and related
documents, and the execution and delivery by Aperio of this
Agreement and such related documents and the consummation of the
transaction contemplated thereby have been duly and validly
authorized by all necessary corporate action on the part of
Aperio.
Section
3.2. Assets and Liabilities of
Funmansion.
As of the date hereof, the only
assets and liabilities of Funmansion are those listed on Schedule
3.2 hereof.
Section
3.3. Employees/Contractors of
Funmansion.
Except as set forth in Schedule 3.3
hereto, Funmansion has no, and prior to the Closing will have no
employees, contractual relationships or other obligations, other
than this Agreement.
Section
3.4. Status of Assets.
(a) As of
the date hereof and at the Closing, no person or entity other than
Aperio has any interest in or claim to any of the assets listed in
Schedule 3.2.
(b) The
transfer of the Interest, which is listed in Schedule 3.2, from
Aperio to HandHeld shall not constitute a fraudulent transfer,
distribution or violation of any statutory provision relating
to
(c) Neither
the execution and delivery of this Agreement (and related
documents) nor the consummation or performance of any of the
transactions contemplated thereby will, directly or indirectly
(with or without notice or lapse of time): (i) contravene, conflict
with, or result in a violation of any provision of the Articles of
Incorporation or Bylaws of Aperio or any resolution adopted by the
shareholder(s) of Aperio, or (ii) contravene, conflict with, or
result in a violation or breach of 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 to cancel,
terminate, or modify any material agreement to which Aperio is a
party.
(d) The
transactions contemplated by this Agreement (and related documents)
are not violative of (i) any shareholder distribution limitation
provisions under Florida law, or (ii) any fraudulent transfer
provisions under Florida law.
(e) Handheld
acknowledges and agrees that neither Aperio nor Dunne warrant any
right(s) to user-submitted content which has or may appear on
www.funmansion.com . Aperio and Dunne represent and warrant
to Handheld that, as of the date of the Closing, neither Aperio nor
Dunne has received any unresolved notice of claim against them
relating to a third party’s alleged rights in user submitted
content appearing on www.funmansion.com .
Section
3.5. Traffic Statistics
Reports.
The funmansion.com website traffic
statistic reports provided to Handheld by Aperio are, to the best
knowledge of Aperio and Dunne, true and correct representations of
actual results realized for the periods covered by such reports, as
reported by industry standard website traffic reporting services
and Funmansion’s internal traffic statistics
program.
ARTICLE IV.
CONDITIONS TO APERIO’S AND DUNNE’S
OBLIGATIONS
The obligation of Aperio and Dunne
to consummate the transactions contemplated by this Agreement is
subject to the satisfaction (unless waived in writing by Aperio or
Dunne) of each of the following conditions on or prior to the
Closing Date:
Section
4.1. Transaction
Documents.
Handheld shall have executed and
delivered to Aperio this Agreement, the Escrow Agreement, the
Promissory Note, and the Registration Rights Agreement in the form
attached hereto as Exhibit C (the ‘‘
Registration Rights Agreement
’’).
4
Section
4.2. Employment
Agreement.
Handheld shall have agreed to
engage Dunne on substantially the terms set forth in the Employment
Agreement attached hereto as Exhibit D (the
‘‘ Employment Agreement
’’).
Section
4.3. Opinion of
Counsel.
Aperio shall have received an
opinion of Niesar Curls Bartling & Whyte LLP, counsel to
Handheld, substantially in the form attached hereto as
Exhibit E ( ‘‘ Purchaser’s
Opinion of Counsel ’’).
ARTICLE V.
CONDITIONS TO HANDHELD’S OBLIGATIONS
The obligation of Handheld to
consummate the transactions contemplated by this Agreement is
subject to the satisfaction (unless waived in writing by Handheld)
of each of the following conditions on or prior to the Closing
Date:
Section
5.1 Corporate
Documents
HandHeld shall have received from
Aperio certified copies of its Articles of Incorporation, a copy of
its Bylaws, a certificate of good standing from the Secretary of
State of the state of Florida and written consents from the Board
of Directors of Aperio and the shareholders of Aperio (if Dunne is
not the only shareholder thereof) approving the execution and
delivery of this Agreement (and related documents) and the
consummation of the transactions contemplated hereby and thereby,
and such resolutions shall be in full force and effect as of the
Closing Date.
Section
5.2. Employment.
Dunne shall have agreed to accept
employment by Handheld on substantially the terms set forth in the
Employment Agreement.
Section
5.3. Opinion of
Counsel.
Handheld shall have received an
opinion of Greenberg Traurig, LLP, counsel to Aperio, substantially
in the form attached hereto as Exhibit F
(‘‘ Aperio’s Opinion of Counsel
’’).
Section
5.4. Bill of Sale.
Aperio shall have executed and
delivered to HandHeld the Bill of Sale in the form attached hereto
as Exhibit G (the ‘‘ Bill of
Sale ’’).
Section
5.5. Transaction
Documents.
Aperio and/or Dunne (as applicable)
shall have executed and delivered to Handheld this Agreement, the
Escrow Agreement, the Registration Rights Agreement, the Employment
Agreement, and the Bill of Sale.
ARTICLE VI.
THE CLOSING
Section
6.1. The Closing.
The Closing of the transactions
contemplated hereby (the ‘‘ Closing
’’) shall be held on December 1, 2006 (the
‘‘ Closing Date ’’) or at
such other time as the parties may mutually agree. The
Clo
