ASSET PURCHASE
AGREEMENT
THIS AGREEMENT
is made as of the 27th day of December, 2006, by and between MIGO
SOFTWARE, INC., a Delaware corporation (the “
Buyer ”) and STOMPSOFT, INC., a California
corporation (the “ Seller
”).
RECITALS
The Seller is
engaged in the business of developing Internet security and privacy
software titles, including software solutions for home and
business users for (i) Internet security and privacy;
(ii) data protection and disaster recovery; and (iii) PC
performance and reliability utilities (the “Stomp
Business”). The Buyer wishes to purchase, and the Seller
wishes to sell, substantially all of the assets of the Seller,
including the Stomp Business as a going concern, upon the terms and
conditions herein set forth (the “ Asset
Sale ”).
NOW, THEREFORE,
in consideration of the mutual promises herein made, and intending
to be legally bound hereby, the parties agree as
follows;
ARTICLE 1
PURCHASE AND SALE OF
ASSETS
1.1
Purchased Assets
. Subject to the terms and
conditions herein set forth, the Buyer shall purchase on the
Closing Date (as hereinafter defined), and the Seller shall sell
and transfer to the Buyer, all of the Seller’s assets and
properties of every kind and description, real, personal and mixed,
tangible and intangible, and wherever situated, but expressly
excluding the Excluded Assets described in Section 1.2 hereof, all
as the foregoing may exist as of the Closing Date (hereinafter, all
of such assets and properties are referred to as the “
Purchased Assets ”). The Purchased Assets
shall include, without limitation, the following assets of the
Seller:
(a) All inventories of whatever kind, including,
without limitation, finished goods, supplies, work-in-process and
raw materials, but excluding any consigned inventory as described
in Schedule 1.2 (the “Inventory”
);
(b) All customer contracts of Seller, including but
not limited to those described on Schedule 1.1(b)
(the “ Customer Contracts
”);
(c) All prepaid expenses listed on Schedule
1.1(c) ;
(d) All equipment, furniture, computer systems,
assets held under capitalized leases, fixtures and fixed assets,
including those items listed on Schedule 1.1(d)
attached hereto;
(e) All rights of the Seller pursuant to equipment
leases, contracts, purchase orders, sales orders, supplier
relationships, and other agreements whatsoever relating to the
Business;
(f) All right, title and interest (including the
right to sue for past infringements) in and to intellectual
property, including all patents and applications therefor,
unpatented inventions, trademarks, corporate names (including the
name “StompSoft, Inc.” or all variations thereof),
trade names, domain names, service marks, copyrights, applications
for and registrations of any of the foregoing, software, operating
systems, know-how, trade secrets, formulas and technical
information and the goodwill associated with any and all of the
foregoing throughout the world (collectively, “
Intellectual Property Rights ”) and all
rights of Seller to enforce its Intellectual Property Rights
against others;
(g) All governmental and nongovernmental licenses,
permits, authorizations, consents and indulgences to the extent the
Seller has the right to transfer and assign the same to the
Buyer;
(h) All computer, office and other
supplies;
(i) All warranty rights, guaranty rights, causes of
actions, judgments and claims and similar rights against vendors,
suppliers, designers, architects, engineers or other third
parties;
(j) All rights of Seller under confidentiality,
noncompetition and invention assignment agreements with employees,
contractors or others;
(k) All lists of the Seller’s customers,
suppliers, vendors and sources; all books, records, journals,
computer software and files; all information, blueprints,
engineering data, drawings, sales and promotional materials,
telephone and telecopier numbers and listings; and
(l) The goodwill associated with the Stomp
Business.
1.2
Excluded Assets
. The Purchased Assets shall not
include, and the Seller shall retain, the following assets (the
“ Excluded Assets ”):
(a) The Seller’s bank accounts and all cash
and cash equivalents;
(b) all employee agreements (other than agreements
relating to the intellectual property of Seller, inventions or
discoveries by employees or restrictions on competition or
confidential information, all of which shall constitute part of the
Purchased Assets), employee benefit plans, programs and
arrangements and other commitments of the Seller relating to
employees, whether written or oral, express or implied;
(c) any claims, rights and interest in and to any
refunds of income and any other taxes or fees of any nature
whatsoever which relate solely to the period up to and including
the Closing Date;
(d) All claims for refunds including, without
limitation, insurance claims;
(e) All insurance policies;
(f) The Seller’s accounts receivable for
products sold or services performed on or before Closing and all
claims and contract rights relating thereto;
(g) The Seller’s rights under the lease of
Seller’s office space at 2811 McGaw, Suite A, Irvine,
California 92614 (the “ Office Lease
”);
(h) The Seller’s rights under this
Agreement;
(i) The Seller’s corporate record books,
minute books, stock record books and corporate franchise and tax
returns and reports, and employee records;
(j) The assets listed in Schedule
1.2 attached hereto; and
(k) The Seller’s records relating to the items
described in the foregoing clauses (a) through (i).
1.3
Closing . The closing (the “
Closing ” or “Closing Date”) of
the purchase and sale of the Stomp Business and the Purchased
Assets shall take place at 1:00 p.m., Pacific Standard Time, on
December 27, 2006, at the offices of the Seller, or at such other
time and place as may be mutually agreed by the Buyer and the
Seller. The effective time of the “ Closing
Date ” and the effective date of the transactions
described herein shall be the close of business on the date
immediately preceding the Closing Date, unless otherwise agreed by
the parties. All transactions relating to the Stomp Business
occurring on or after the Closing Date shall be for the Buyer's
account.
1.4
Taking of Necessary Action;
Further Action . If, at any time after the Closing, any further
action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Buyer with full right, title and
possession to the Purchased Assets and the Stomp Business,
Seller shall, at Buyer’s expense, use commercially
reasonable efforts to take such lawful and necessary
actions.
ARTICLE 2
CONSIDERATION FOR
TRANSFER
2.1
Purchase Price
. The purchase price (the
“Purchase Price”) shall consist of the following
consideration: (i) Six Hundred Fifty Thousand Dollars ($650,000.00)
payable by satisfaction of that certain promissory note dated on or
about December 20, 2006 from Seller to Buyer and the balance
payable in cash at Closing; and (ii) twenty million (20,000,000)
shares of the Common Stock, $.0001 par value per share, of Buyer
(the “ Buyer Shares ”).
2.2
Conveyance of Assets
. At the Closing, the parties shall
execute a Bill of Sale, General Conveyance, Assignment and
Assumption Agreement substantially in the form attached hereto as
Exhibit 2.2 (the “ Conveyance
Agreement ”).
2.3
Website and Other
Rights . Effective upon
the Closing and during the Website Term (as defined below), the
Buyer shall, without cost or expense to Seller or the
Seller’s customers that previously purchased the Software
Product (as defined below): (i) maintain and support on
Buyer’s website (the “ Website
”) prominent links (“ Links ”)
with words that are reasonably prominently displayed on the website
to the effect that make clear such link is for a free backup
MyPC upgrade to version 6 for “backup
my pc” and which allow, without cost to Seller or
Seller’s customers and former customers who previously bought
“backup my pc” software products and which Software
Products are part of the Excluded Assets (the “
Software Products ”) the right, through such
link, to download certain updates and corrections to such Software
Products, which updates and corrections shall be provided by
Seller’s licensor or Seller (collectively, the “
Downloads ”) ; (ii) maintain and support the
websites and other infrastructure such as servers to allow for the
downloading of the Updates to the Software Products; (iii) provide
for a reasonable location of such down link on the Buyer’s
website so that customers and former customers who purchased the
Software Products will be able to readily locate and utilize such
link; (iv) allow for the StompSoft domain name to be linked to such
Website; (v) reasonably maintain and support a StompSoft.com web
page that will provide for the Downloads as described in this
paragraph 2.3; and (vi) assist Seller in conducting email blasts to
customers and former customers of the Software Products as required
by Seller from time to time and Seller will pay for the out of
pocket costs of conducting such email blasts that Seller desires to
do during the Website Term. The Website Term means
the period from the Closing Date and ending on the later of July 1,
2007 or until the Seller no longer has any legal obligation to make
available the Downloads as described herein. In addition, effective
on the Closing, Buyer hereby grants to Seller an irrevocable
royalty free non exclusive license (“
License ”) to use the name
“StompSoft” and all other trade names and marks that
are part of the Purchased Assets for the following limited
purposes: marketing and selling the consigned inventory that Seller
owns as of the Closing; selling of Seller’s consigned
inventory by Seller’s retailers and distributors and brokers;
and collection of Seller’s accounts receivable existing from
time to time. Such License shall end when all of the Seller’s
consigned inventory has been sold or returned; and all of its
accounts receivable have been collected or reasonably expected to
be collected, but no later than December 31, 2007. Further,
notwithstanding any term in this Agreement or any exhibits to the
contrary, Seller may, after the Closing, continue to sell all of
its existing consigned inventory through its retailers and
distributors and other marketing channels, and collect all of its
current and future accounts receivable and Seller may conduct such
activities using the License on a royalty free basis as described
above. The terms of this Section 2.3 and the terms of Section 2.4
below shall survive the Closing.
2.4
Purchase Price
Allocation. The parties
agree to allocate the Purchase Price among the Purchased Assets and
the non-competition covenants set forth in Section 10.4 of this
Agreement as mutually agreed upon and to execute a memorandum
(“Memo”) to confirm such allocation on or before
February 28, 2007, subject to the following: (i) Each of the
parties shall report the income tax consequences of the
transactions called for in this Agreement in a manner consistent
with the allocation set forth in such Memo; (ii) such allocation
shall be followed in all tax returns of the Buyer and the Seller
for the taxable year that includes the Closing Date; (iii) neither
the Buyer nor the Seller will take any position inconsistent with
such allocation unless otherwise required by applicable law; and
(iv) for purposes of this Section 2.4, the determination of the
Purchase Price and the consideration to be allocated on all
required IRS forms and as reflected in the Memo shall be determined
by Kelly & Co.(who will be retained by Seller and Seller shall
pay for Kelly & Co’s fees for such determination) and
such determination of Purchase Price by Kelly & Co. shall be
binding on the parties hereto.
ARTICLE 3
LIABILITIES
3.1
Assumed Liabilities
. The Buyer agrees to assume, pay
and discharge as and when due the following liabilities of the
Seller (the “ Assumed Liabilities
”):
(a) Liabilities and obligations of the Seller under
those quotes, bids, proposals, awards, customer orders,
work-in-process, pending projects, contracts and purchase orders
with customers given, entered into and accepted by the Seller and
remaining uncompleted or outstanding on the Closing Date that are
listed on Schedule 3.1(a) ;
(b) Liabilities and obligations under the contracts
listed on Schedule 3.1(b) but only to the extent
such liabilities and obligations are to be performed on and after
the Closing.
(c) All product warranty obligations of Seller but
only to the extent of the warranties described on Schedule
3.1(c) ; provided, however, that Buyer shall have no
obligation to honor any rebate or refund claims of Seller’s
customers;
(d) All liabilities listed on Schedule
3.1(d) attached hereto;
(e) All rent, percentage rent, utilities, common
area charges, pass through charges, real property taxes and
insurance payable under that certain lease of space at the
Seller’s current location that accrue commencing on the
Closing Date and ending on the earlier of: (i) four months
thereafter; or (ii) the vacating of such location by Seller if
Seller vacates such location prior to the end of such four (4)month
period; and
(f) Liabilities and obligations with respect to all
Purchased Assets to the extent such liabilities and obligations
accrue on and after the Closing.
3.2
Non-Assumption of
Liabilities . With the
exception of the Assumed Liabilities, the Buyer shall not assume,
pay, perform, discharge, accept, or be responsible for any
liabilities, accounts payable, debts or obligations of the Seller
of any kind whatsoever, whether actual, contingent, accrued, known
or unknown, including, without limitation, any relating to taxes,
contracts, loans, breach of warranty claims, liabilities resulting
from breach of contract, torts, illegal activity, unlawful business
practice or any other liability or obligation whatsoever. All such
non-assumed liabilities, debts and obligations shall remain the
responsibility of the Seller, and Seller shall discharge all such
liabilities in full or otherwise fully satisfy such liabilities.
The Buyer hereby waives compliance by the Seller with the
provisions of all applicable state bulk sales laws.
3.3
Employee Liabilities
. The Buyer shall not assume, honor
or accept any agreement relating to the Seller’s employees,
leased employees or contractors, or any employee benefit plan of
the Seller. Except for accrued vacation obligations of
Seller’s employees, which are described in Schedule 3.1.(d)
and which obligations shall be assumed by Buyer, the Seller shall
be solely responsible for satisfying all obligations (whether
arising under federal, state or local law, or pursuant to contract)
which may arise or which may have arisen or accrued prior to the
Closing Date in connection with the Seller’s employees,
leased employees or contractors, the creation, funding or operation
of any employee benefit plan, or which may arise in any claims by
Seller’s employees, leased employees or contractors in
connection with the termination of their employment or relationship
with the Seller or the transactions described in this Agreement.
Notwithstanding any provision in this Agreement to the contrary, in
addition to any other obligation of Buyer, the Buyer shall pay for
all compensation, benefits and payroll costs associated with
Seller’s employees for the time period commencing December
15, 2006 and through December 31, 2006.
3.4 Further Cooperation;
Consents to Assignment . Each of the Seller and the Buyer shall
cooperate, and use commercially reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement. With respect to those agreements
identified on Schedule 3.4 for which
consents or approvals are not provided at Closing, from and after
the Closing the Seller shall use commercially reasonable efforts to
obtain the consent of the other party to each such agreement to the
assignment thereof to Buyer. If such consent is not obtained with
respect to any such agreement, such agreement shall not be
assigned, but the Seller will cooperate with the Buyer in any
reasonable arrangement designed to provide to the Buyer the
benefits thereof and the Buyer's assumption of the obligations and
liabilities of the Seller under any such agreement.
ARTICLE 4
REPRESENTATIONS AND
WARRANTIES
OF THE SELLER
In order to
induce the Buyer to enter into this Agreement, the Seller makes the
representations and warranties set forth in this Article 4, each of
which shall be deemed to be independently material and relied upon
by the Buyer, regardless of any investigation made by, or
information known to, the Buyer.
4.1
Organization and
Qualification .
(a) The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State
of California. The Seller is qualified to transact business as a
foreign corporation in the jurisdictions set forth on
Schedule 4.1 attached hereto, and the Seller is
not required to be so qualified in any other jurisdiction except
where failure to be so qualified would not have a “Material
Adverse Effect” on Seller. For purposes of this Agreement,
“ Material Adverse Effect
” means a material adverse effect on the
financial condition, results of operations of the Stomp
Business, taken as a whole, or on the ability of Seller to
consummate timely the transactions contemplated hereby, or on the
future sales of StompSoft products by the five largest customers of
Seller.
(b) The Seller has delivered to the Buyer complete
and correct copies of the Seller's Articles of Incorporation and
By-laws, as amended to the date hereof, certified by the Secretary
of State of California and the Secretary of the Seller,
respectively. The Articles of Incorporation and Bylaws are in full
force and effect. Seller is not in violation of any of
the provisions of its Articles of Incorporation or
Bylaws.
4.2
Ownership of Shares
. Schedule 4.2
lists all the stockholders of the Seller and the shares owned by
each. There are no outstanding options, warrants, calls,
subscriptions, commitments, agreements, or other rights to purchase
or dispose of any of the stock of the Seller, or other securities
outstanding which are convertible into the stock of the Seller, and
no other party has any right or option to acquire any equity
interest in the Seller.
4.3
No Subsidiaries;
Investments . The Seller
has no subsidiaries, nor does it own any stock, bonds or other
securities of, have any proprietary interest in, or control the
management or policies (by means of a management contract or
otherwise) of any other corporation, firm, association or business
organization. No corporation, firm, association or business
organization controls the management or policies (by means of a
management contract or otherwise) of the Seller.
“Control” in the preceding sentences means the power,
by means of ownership of securities, contract or otherwise, to
elect or designate a majority of the board of directors or other
management policies of a corporation, firm, association or business
organization. Except as disclosed on Schedule 4.3
, Seller does not rely on any single vendor, service provider or
distributor which reliance could reasonably have a material adverse
effect on Seller or the Business.
4.4
Conflicting Obligations;
Consents . Except as set
forth in Schedule 4.4 , the execution and delivery
of this Agreement do not, and the consummation of the sale and
purchase of the Purchased Assets and the Stomp Business
contemplated hereby will not: (a) conflict with or violate any
provisions of the Articles of Incorporation or Bylaws of the
Seller; or (b) conflict with or violate any provisions of, or
result in the maturation or acceleration of, or termination right
under, any obligations under any contract (including customer
contracts), agreement, instrument, document, lease, license,
permit, indenture, or obligation, or any law, statute, ordinance,
rule, regulation, code, guideline, order, arbitration award,
judgment or decree, to which the Seller is subject or to which the
Seller is a party, except where any such violation, maturation or
acceleration would not have a Material Adverse Effect on the
operation of the Stomp Business by Buyer after the Closing. Except
as set forth on Schedule 4.4 , no third-party
consents, approvals or authorizations are necessary for the
execution and consummation of the transactions contemplated hereby,
nor are any such consents, approvals or authorizations required in
order to enable the Buyer to enjoy the benefits of any contracts,
agreements, instruments, documents, leases, licenses, permits,
indentures or rights of the Seller in accordance with their
existing terms.
4.5
Enforceability
. This Agreement and all other
agreements of the Seller contemplated hereby or to be delivered in
connection herewith are or, upon the execution and delivery
thereof, will be valid and binding obligations of the Seller,
enforceable against it in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting enforcement of
creditors’ rights generally, or general principles of
equity.
4.6
Authorization
. The Seller has all necessary power
and authority to enter into and perform the transactions
contemplated hereby in accordance with the terms and conditions
hereof. The execution, delivery and performance of this Agreement
by the Seller have been duly authorized and approved by the
Seller’s Board of Directors and by its stockholders and no
other corporate proceedings on the part of Seller are necessary to
authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed
and delivered by Seller.
4.7
Financial Statements; No
Undisclosed Liabilities .
Attached as Schedule 4.7A are true and complete
copies of the financial statements (including balance sheets,
statements of income and retained earnings, statements of cash
flow, and any notes pertaining thereto of the Seller for its fiscal
years ending December 31, 2004 and December 31, 2005, and interim
financial statements for the period ending September 30, 2006
(collectively, the “ Financial Statements
”). The balance sheet as of September 30, 2006 is hereinafter
referred to as the “ Latest Balance Sheet
.” The Seller’s books and records of accounts
accurately reflect all of the assets, liabilities, transactions and
results of operations of the Seller in all material respects, and
the Financial Statements have been prepared based upon and in
conformity therewith. Except as set forth in Schedule
4.7B , the Financial Statements have been prepared in
accordance with generally accepted accounting principles in the
United States (“ GAAP ”) maintained
and applied on a consistent basis throughout the indicated periods,
and fairly present the financial condition and results of operation
of the Seller in all material respects at the dates and for the
relevant periods indicated. (except as may be indicated in the
footnotes to the Financial Statements and that the interim
financial statements may not have notes thereto and other
presentation items that may be required by GAAP and are subject to
normal and recurring year-end adjustments that are not reasonably
expected to be material in amount). Except as set forth on
the Financial Statements or on the Liabilities Schedule
attached as Schedule 4.7 , Seller has no
liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that are, individually or in the
aggregate, material to the Stomp Business and that would be
required to be reflected on a balance sheet or in notes thereto
prepared in accordance with GAAP, except for immaterial
liabilities or obligations incurred in the ordinary course of
business consistent with past practice since the Latest
Balance Sheet. All reserves established by Seller and set
forth in the Financial Statements are in accordance
with GAAP. As of the date of the Latest Balance
Sheet, there were no material loss contingencies (as such term is
used in Statement of Financial Accounting Standard No. 5) that are
not adequately provided for in the Latest Balance
Sheet.
(a)
To the extent failure to do so
would materially adversely affect the Stomp Business or
Buyer’s ownership or operation of the Stomp
Business, Seller has timely filed all material Tax Returns
that it was required to file. All such Tax Returns have been
true and complete in all material respects. All Taxes owed by
Seller (whether or not shown or required to be shown on any Tax
Return) have been paid to the extent failure to do so would
materially adversely affect the Stomp Business or
Buyer’s ownership or operation of the Stomp
Business. No claim has ever been made in writing by an
authority in a jurisdiction where Seller does not file Tax Returns
that Seller is or may be subject to taxation in such
jurisdiction. To the extent failure to do so would
materially adversely affect the Stomp Business or
Buyer’s ownership or operation of the Stomp Business,
Seller has withheld and paid all material Taxes required to have
been withheld and paid in connection with any amounts paid or owing
to any employee, independent contractor, creditor, or stockholder
or other third party, and all Forms W-2 and 1099 required with
respect thereto have been properly completed and timely filed in
all material respects. There is no material dispute or claim
concerning any Tax liability of Seller (A) raised by any authority
in writing or (B) of which Seller has
knowledge.
(b)
For purposes of this
Section:
(i)
“Tax” means any federal, state, local or foreign
income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, windfall profits, custom duties,
ownership interests, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property,
personal property, sales, use, transfer, registration, value-added,
alternative, or other tax of any kind whatsoever, whether computed
on a separate or consolidated, unitary, or combined basis or in any
other manner, including any interest, penalty, or addition thereto,
whether disputed or not and including any obligation to indemnify
or otherwise assume or succeed to the Tax liability of any other
Person.
(ii) “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.
(c) There are no waivers of the applicable statutes
of limitations for such taxes for any period and no deficiency
assessment or proposed adjustment of the Seller’s income
taxes is pending.
(a)
No Owned Real Property
. Seller does not own any interest
in any real property.
(b)
No Leased Real Property to be
Assumed . Seller does not
lease any real property to be assumed by Buyer.
4.10 Personal
Property; Good Title; Condition . Except for such personal
property as has been disposed of in the ordinary course of the
Seller’s businesses since the date of the Latest Balance
Sheet, the Seller owns good and marketable title to all property
which it purports to own (including, but not limited to, that
reflected on the Latest Balance Sheet), as well as all property
acquired by the Seller since the date of the Latest Balance Sheet.
All tangible personal property reflected on the Latest Balance
Sheet is actually on hand, increased and decreased by acquisitions
and dispositions of such property in the ordinary course of
business since the date of the Latest Balance Sheet. Seller’s
equipment in regular use has been reasonably maintained, is in good
condition and repair (normal wear and tear excepted), and, as of
the Closing, will be owned by the Seller free and clear of all
security interests (including any conditional sale or other title
retention agreements), liens, claims, charges, pledges, exceptions,
and defects of title and other encumbrances of any kind, except as
otherwise set forth on Schedule 4.10. Schedule
4.10 lists all leases of tangible personal property under
which the Seller is the lessee, and the Seller has delivered to the
Buyer true and complete copies of each such lease. No default
exists under any such lease, as to the payment of rent or
otherwise. All tangible personal property owned or leased by the
Seller is located upon the Seller's premises, except as otherwise
set forth on Schedule 4.10 . The Purchased Assets
and Excluded Assets consist of all assets and rights used in, or
useful to, Seller in the operation of the Stomp
Business.
4.11 Inventory .
The Inventory consists solely of raw materials, supplies,
work-in-process and finished goods and has been valued as reflected
in the Financial Statements.. The Inventory is usable and generally
salable at normal profit margins and within customary time periods
in the ordinary course of the Stomp Business and contains no
material amount of slow-moving, obsolete or damaged items. The
value at which Inventory is reflected on the Financial Statements
reflects appropriate writedowns for slow-moving, obsolete and
damaged merchandise. Except as noted in the Financial Statements
and as disclosed in Schedule 4.11 herein, no
Inventory has been consigned to others, nor is any
Inventory consigned to the Seller.
4.12
Authorizations . Seller is in possession of all permits
necessary for Seller to own, lease and operate its properties or to
produce, store, distribute and market its products or otherwise to
carry on the Stomp Business as it is now being conducted (the
“ Permits ”), and, as of the date of
this Agreement, none of the Permits has been suspended or cancelled
nor is any such suspension or cancellation pending or, to the
knowledge of Seller, threatened, except for such Permits for which
the failure to possess or the suspension or termination of which
would not, individually or in the aggregate, have a Material
Adverse Effect. All of Seller’s Permits are listed on
Schedule 4.12 . The operation of the Stomp
Business by Seller is not in conflict with, or in default or
violation of, any Permits, except for such conflict, default or
violation of which would not have a Material Adverse
Effect.
4.13 Litigation .
Except as set forth on Schedule 4.13 , there is no
litigation, claim, proceeding or investigation pending, or, to the
Seller’s knowledge, threatened against or relating to the
Seller, its properties or business, or the transactions
contemplated herein. Schedule 4.13 discloses, with
respect to each item described thereon, the name or title of the
action (and parties or potential parties thereto), a description of
the nature of the action or claim, and an estimate of the maximum
liability of the Seller in the event of an adverse result. Except
as so described, the Seller knows of no state of facts or
circumstances which reasonably could be expected to ripen into
litigation, proceeding or investigation or have a material adverse
effect on the properties or business of the Seller. Except as
described on Schedule 4.13 , there is no
outstanding order, decree or stipulation issued by any federal,
state or local authority to which the Seller is a party or subject
and which has or may have a Material Adverse Effect. No injunction,
judgment, or other order has been issued by any court or
governmental authority in any legal action or proceeding instituted
by a third party against Seller or any of its assets arising by
reason of the acquisition of the Stomp Business pursuant to this
Agreement, which restrains, prohibits or invalidates or seeks to
restrain, prohibit or invalidate, the consummation of the
transactions contemplated by this Agreement, or seeks damages
related thereto.
4.14 Compliance With
Law . The conduct of the Stomp Business does not violate, nor
is Seller in default under, any law, statute, ordinance, rule,
regulation, code, license, permit, guideline, order, arbitration
award, judgment or decree, including, without limitation, civil
rights legislation, equal employment opportunity legislation,
occupational safety and health legislation, legislation pertaining
to illegal bribes or kickbacks except for any such violation that
would not have a Material Adverse Effect on the conduct of the
Stomp Business. No investigation or review by any
Governmental Entity is pending or, to Seller’s knowledge, has
been threatened in a writing delivered to Seller against
Seller, nor, to Seller’s knowledge, has any Governmental
Entity indicated an intention to conduct an investigation of
Seller. There is no agreement, judgment, injunction, order or
decree binding upon Seller which has or could reasonably be
expected to have the effect of prohibiting or materially impairing
any business practice of Buyer as the successor to the Stomp
Business.
4.15 Environmental
Laws . Except as could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, to the
knowledge of Seller (i) Seller is in compliance with all
federal, state, local and foreign statutes, codes, laws,
ordinances, regulations, rules, guidance, notices, permits,
judgments, orders and decrees applicable to it or any of its
properties, assets, operations and businesses relating to pollution
or the protection of human health or the environment (“
Environmental Laws ”); (ii) all past
noncompliance of Seller with Environmental Laws has been resolved
without any pending, ongoing or future obligation, cost or
liability; and (iii) Seller has not released a Hazardous
Waste, Hazardous Material or Hazardous Substance (as defined in any
Environmental Law) at, or transported a Hazardous Material to or
from, any real property leased or occupied by Seller, in violation
of any Environmental Law.
(a)
Schedule
4.16 lists all
individuals currently employed by the Seller or engaged as
independent contractors in connection with the Stomp Business
(excluding all attorneys, accountants, consultants and other
advisors engaged for purposes of this transaction), the current pay
arrangement for each such person, and a description of any written
or oral agreements with such individuals that are not terminable by
the Seller at will. All payments to the Seller’s employees
which would have been paid in the ordinary course of business
consistent with the Seller’s past practices on or before the
Closing Date shall have been paid as of the Closing with respect to
any of Seller’s employees whose employment with Seller is
terminated as of the Closing. No promises or representations have
been made by the Seller to any employee of the Seller with respect
to his employment by the Buyer after the Closing, or the terms
thereof.
(b)
Seller is not a party to any
collective bargaining or other labor union contract applicable to
persons employed by Seller, and no collective bargaining agreement
is being negotiated by Seller. As of the date of this
Agreement, there is no labor dispute, strike or work stoppage
against Seller pending or, to the knowledge of Seller, threatened
that may interfere with the business activities of the Stomp
Business. As of the date of this Agreement, to the knowledge
of Seller, neither Seller nor any of its representatives or
employees has committed any unfair labor practice in connection
with the operation of the Stomp Business, and to Seller’s
knowledge, there is no charge or complaint against Seller by the
National Labor Relations Board or any comparable governmental
entity pending or threatened in writing.
(c)
Except as could not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect, Seller is in compliance with all currently
applicable laws and regulations respecting employment,
discrimination in employment, terms and conditions of employment,
wages, hours and occupational safety and health and employment
practices. There are no controversies pending or, to the
knowledge of Seller, threatened, between Seller and any of its
employees, which controversies have or could reasonably be expected
to result in an action, suit, proceeding, claim, arbitration or
investigation before any agency, court or tribunal, foreign or
domestic, and to Seller’s knowledge, there are no existing
factors or circumstances that could reasonably be expected to
result in such an action, suit, proceeding, claim, arbitration or
investigation. To the knowledge of Seller, no employees of
Seller are in violation of any material term of any employment
Contract, patent disclosure agreement, noncompetition agreement, or
any restrictive covenant to a former employer relating to the right
of any such employee to be employed by Seller because of the nature
of the business conducted or presently proposed to be conducted by
Seller or to the use of trade secrets or proprietary information of
others. Seller has not received since June 30, 2006, any
written or, to Seller's knowledge, oral notice that any such
employee intends to terminate his or her employment with the Stomp
Business.
(d)
Schedule
4.16 lists all
proposed or anticipated bonuses to be paid to any employee,
representative or agent of the Stomp Business through or relating
to activities performed prior to the Closing Date.
(e)
Foreign Employees . There are no officers or employees,
current or former, of the Seller working outside the United
States.
(a)
Schedule
4.17 to this
Agreement is a list of all Seller’s current employment
contracts, collective bargaining agreements, and pension, bonus,
profit-sharing, stock option, or other agreements providing for
employee remuneration and benefits, and the Seller has provided the
Buyer with true and complete copies of each. Seller and its
transferees shall remain responsible for all compensation and
benefits claimed by Seller’s employees with respect to
employment by Seller, including any claims resulting from their
termination of employment as a result of the transaction
contemplated hereby. Buyer shall not have any responsibility
therefor.
(b)
Exclusivity
. The Seller has no material
responsibility or liability, contingent or otherwise, with respect
to any employee benefits for or on behalf of its employees other
than under the Plans listed on Schedule 4.17 . The
Seller has the right to amend or terminate, without the consent of
any other person, any Plan, except as prohibited by law. None of
the Plans is (i) a multiemployer plan (as such term is defined in
Section 3(37) of ERISA), or (ii) an arrangement providing medical
or other welfare benefits to retirees or other former employees or
their beneficiaries, except as required under COBRA and similar
state statutes.
4.18
Intellectual Property .
(a) “ Intellectual Property
Rights ” shall mean any and all of the following
which are used and/or owned by Seller, along with all income,
royalties, damages and payments due or payable after the Closing,
including, without limitation, damages and payments for
infringements or misappropriations thereof occurring after Closing,
the right to sue and recover for past infringements or
misappropriations thereof and any and all corresponding rights
that, now or hereafter, may be secured throughout the world:
patents, patent applications, patent disclosures and inventions
(whether or not patentable and whether or not reduced to practice)
and any reissue, continuation, continuation-in-part, division,
revision, extension or reexamination thereof, utility model
registrations and applications; design registrations and
applications; trademarks, service marks, trade dress, logos, trade
names, Internet sites, email domain names, email addresses and
corporate names together with all goodwill associated therewith,
copyrights registered or unregistered and copyrightable works; mask
works; and all registrations, applications, and renewals for any of
the foregoing; trade secrets and confidential information
(including without limitation, ideas, formulae, compositions,
manufacturing and production processes and techniques, research and
developmental information, drawings, specifications, designs,
plans, proposals, technical data, financial, business and marketing
plans, and customer and supplier lists and related information);
computer software and software systems (including, without
limitation, data, databases, object code, source code, executable
code and firmware and related documentation); licenses or other
agreements including but not limited to those assigning, waiving or
relating to rights of publicity, moral rights or neighboring rights
to or from third parties; and all copies and tangible embodiments
of the foregoing (in whatever form or medium), in each case
including, without limitation, the items set forth on
Schedule 4.18 .
(b)
Schedule
4.18 sets forth a
complete and correct list of (i) all patents, trademark and service
mark registrations, copyright registrations and other Intellectual
Property Rights registered by Seller as well as all pending
applications therefor; (ii) all business names, trade names and
material unregistered trademarks used by Seller (to the extent not
reflected on other schedules attached hereto) as its own marks;
(iii) all material computer software owned or used by Seller (other
than commercial software products generally available to
users); (iv) all other material licenses or similar agreements
for the Intellectual Property Rights to which Seller is a party, in
each case identifying the subject Intellectual Property Rights; and
(v) all Internet sites and email domain names owned or used by
Seller in the Stomp Business.
(c) Except as set forth on Schedule
4.18 , (i) Seller owns, free and clear of any security
interests and has a valid and enforceable right to, each of the
Intellectual Property Rights as described on Schedule
4.18 other than the Intellectual Property Rights that
Seller licenses from others, as to which Seller has a valid and
enforceable right to use such licensed Intellectual Property
Rights, and no claim by any third party contesting the validity,
enforceability, use or ownership of any of the Intellectual
Property Rights has been made, is currently outstanding or, to
Seller's knowledge, is threatened; (ii) the Intellectual Property
Rights comprise all material intellectual property rights which are
currently being used by Seller or which are necessary for the
operation of the Stomp Business as currently conducted by Seller;
(iii) to Seller's knowledge, no present or former member,
shareholder, officer, director, manager, agent, consultant or
independent contractor of Seller owns or has any other right in or
to, or has claimed any ownership or other right in or to, any
Intellectual Property Rights which are necessary or desirable in
connection with the Stomp Business as now conducted; (iv) no loss
or expiration of any Intellectual Property Right or related group
of Intellectual Property Rights is, to Seller’s knowledge,
threatened, or is pending, except for those which could not
reasonably be expected, individually or in the aggregate, to cause
a Material Adverse Effect on the Stomp Business; (v)
Seller has not received any notices of, nor is Seller aware of any
facts which indicate a likelihood of any infringement or
misappropriation by, or conflict with, any third party with respect
to any of the Intellectual Property Rights including, without
limitation, any demand or request by Seller that such third party
license any of the Intellectual Property Rights from Seller or to
Seller; (vi) to Seller’s knowledge, Seller has not
infringed, misappropriated or otherwise conflicted with any rights,
including intellectual property rights of any third parties,
and Seller is not aware of any infringement, misappropriation
or conflict by Seller of any third-party patent, trademark,
copyright or other intellectual property right or of any such
infringement, misappropriation or conflict which shall occur as a
result of the continued operation of the Stomp Business, as
currently conducted, and there is no demand or request from a third
party that Seller take a license under any intellectual property
right; and (vii) none of the Intellectual Property Rights owned or
used by Seller are, to Seller’s knowledge, being infringed,
misappropriated or conflicted by any third party.
(d) Seller has taken commercially reasonable and
practical steps to protect its trade secrets and other confidential
information.
(e) Seller represents that the Intellectual Property
Rights being transferred to Buyer include all of Seller's rights,
if any, in and to the relevant source and executable codes for
Seller's software along with all of Seller's rights, if any, in and
to any existing modifications, bug fixes and enhancements that have
been developed by or for Seller for use with Seller’s
software.
(f) All personnel, including employees, officers,
directors, agents, consultants and contractors, who have
contributed to or participated in the conception, use or
development of the Intellectual Property Rights have executed
agreements that require such personnel to assign any and all
interest in the Intellectual Property Rights to Seller and to keep
confidential all trade secrets, proprietary data, customer
information or other business information of Seller. No such
personnel is a party to any Contract with any Person other than
Seller that requires such personnel to assign interest in any
Intellectual Property Rights to any Person other than
Seller.
(g) Except for escrow agreements executed in the
ordinary course of business with persons listed on
Schedule 4.18 , and persons listed on
Schedule 4.18 who are bound by an
appropriate confidentiality Contract, the source code and system
documentation relating to Seller's software programs (i) have
been disclosed by Seller only to personnel who have a
“need to know” the contents thereof in connection with
the performance of their duties to Seller, and (ii) have not
been disclosed to any third party.
4.19 Customers and
Suppliers .
(a)
Schedule
4.19A lists all the
customers of the Seller during the period January 1, 2005 to the
date hereof. Except as described on Schedule 4.19A
, Seller is not aware of any adverse change in its relationships
with respect to customers with which it is currently doing business
or of any intention of any customer with which it is currently
doing business to terminate or reduce its business relationship
with the Seller prior to the Closing or fail to continue such
relationship with the Buyer. The Seller has delivered to the Buyer
true and complete copies of all existing Customer Contracts. For
these purposes, Seller shall be considered to be currently doing
business with all customers identified on Schedule
4.19A .
(b) For purposes of this Agreement, “Material
Customer” shall mean Seller’s top ten (10) customers
during the twelve (12) month period ended December 31, 2005, and
top ten (10) customers during the nine (9) month period ended
September 30, 2006, based upon total dollars invoiced in such
period. The Material Customers for each such period are listed on
Schedule 4.19B . To Seller’s knowledge, the
consummation of the transactions contemplated hereunder will not
have any Material Adverse Effect on the business relationship of
Seller with any Material Customer.
(c) Seller has received no written, or to the
knowledge of Seller, oral notice from any material customer or
supplier of Seller that such customer does not intend to pay for
services rendered or products purchased, such customer is
dissatisfied with any service or product of Seller in any material
respect, such supplier does not intend to continue to supply goods
or services to Seller or there exists any breach or event of
default under any Contract with such customer or supplier, no
material customer or supplier has cancelled or otherwise
terminated, or to Seller's knowledge, threatened to cancel or
otherwise terminate, its relationship with the Stomp
Business since December 31, 2005. Seller has no
agreements or arrangements establishing, creating or relating to
any rebate, promotion or other allowance that involves any
obligation or liability to any customer that is
material.
4.20 Contracts .
Set forth on Schedule 4.20 is a list of the
following Contracts to which Seller is a party or by which or to
which any of the assets of Seller is bound or subject, in effect on
the date hereof (collectively, the “ Material
Contracts ”), true and complete copies of which have
been provided or made available to Buyer:
(a) distributor, sales, marketing, vendor,
advertising, financial advisory, broker-dealer, agency or
manufacturer’s representative Contracts involving more than
$25,000;
(b) continuing Contracts for the purchase or
provision of materials, supplies, equipment or services involving
in the case of any such Contract more than $25,000 over the life of
the Contract;
(c) Contracts that expire, or may be renewed at the
option of any Person (as defined herein) other than Seller so as to
expire, more than one year after the date of this Agreement and
involving more than $25,000 in the aggregate;
(d) trust indentures, mortgages, promissory notes,
loan agreements or other Contracts for the borrowing of money, any
currency exchange, commodities or other hedging arrangement or any
leasing transaction of the type required to be capitalized in
accordance with GAAP;
(e) Contracts for capital expenditures in excess of
$25,000 in the aggregate;
(f) Contracts currently in effect that were entered
into in the ordinary course of business and that involve the
payment or receipt of consideration in excess of
$25,000;
(g) Contracts for the sale, lease or sublease of
real property;
(h) Contracts for the sale of any material assets or
properties of Seller or for the grant to any Person any
preferential rights to purchase any material assets or properties
of Seller, other than in the ordinary course of
business;
(i) Contracts establishing joint ventures or
partnerships;
(j) Contracts containing any material obligations or
liabilities of any kind to holders of ownership interests of Seller
except for contracts for the sale or purchase of such ownership
interests which have been fully performed;
(k) Contracts relating to the acquisition by Seller
of any operating business or any capital stock of any other
Person;
(l) Contracts requiring the payment to any Person of
any material override or simi
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