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ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

ASSET PURCHASE AGREEMENT | Document Parties: MPLC, INC. | New Motion, Inc., | Index Visual & Games Ltd., You are currently viewing:
This Asset Purchase Agreement involves

MPLC, INC. | New Motion, Inc., | Index Visual & Games Ltd.,

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Title: ASSET PURCHASE AGREEMENT
Governing Law: California     Date: 2/13/2007
Industry: Printing and Publishing     Sector: Services

ASSET PURCHASE AGREEMENT, Parties: mplc  inc. , new motion  inc.  , index visual & games ltd.
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ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (this “ Agreement ”) is made and entered into as of the 19th day of January, 2007 (the “ Effective Date ”), by and between Index Visual & Games Ltd., a corporation organized under the laws of Japan (“ Seller ”), and New Motion, Inc., a Delaware corporation (“ Buyer ”).

 

R E C I T A L S

 

A.   Seller and Mobliss, Inc., a Washington corporation (“ Mobliss ”) have entered into that certain Asset Purchase Agreement dated as of November 17, 2006 (the “ Mobliss Agreement ”), pursuant to which Mobliss has agreed to sell to Seller all right, title and interest in certain assets, including without limitation, all assets included in the Mobliss billing system and the carrier contracts listed on Exhibit A hereto (the “ Carrier Contracts ”); and

 

B.   Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the Purchased Assets (as defined below), upon the terms and subject to the conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual premises set forth below and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

A G R E E M E N T

 

1.   Purchase and Sale of Assets.

 

(a)   Purchased Assets . On the terms and subject to the conditions set forth in this Agreement, Seller agrees to sell and deliver to Buyer, and Buyer agrees to purchase and acquire from Seller, free and clear of any and all liens, claims and encumbrances of any kind, the assets set forth on Exhibits A, B, C, D and E hereto (collectively the “ Purchased Assets ”).

 

(b)   Consents to Assignment . This Agreement shall not constitute an agreement to assign any interest in any instrument, contract, lease, permit or other agreement or arrangement or any claim, right or benefit arising thereunder or resulting therefrom, if an attempted assignment thereof without the consent required or necessary of a third party would constitute a breach or violation thereof or affect adversely the rights of Buyer thereto. If such a consent of a third party which is required to assign any such interest is not obtained prior to the Closing Date (as hereafter defined), or if an attempted assignment would be ineffective or would adversely affect Seller’s ability to convey its interest to Buyer, Seller and Buyer shall cooperate in any lawful arrangement to provide that Buyer shall receive Seller’s entire interest in the benefits under any such instrument, contract, lease, permit or other agreement or arrangement including, without limitation, enforcement for the benefit of Buyer of any and all rights of Seller against any other party thereto arising out of the breach or cancellation thereof by such party or otherwise; provided, however, that nothing contained in this Section 1(b) shall affect the liability, if any, of Seller pursuant to this Agreement for failing to have disclosed the need for such consent or approval.

 

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2.   Purchase Price . The Purchased Assets shall be purchased by Buyer from Seller for an aggregate purchase price (the “ Purchase Price ”) of up to Two Million Three Hundred Twenty Thousand U.S. Dollars (US$2,320,000) payable as follows:

 

(i)   Five Hundred Thousand U.S. Dollars (US$500,000) shall be paid by Buyer to Seller on the Initial Closing Date by delivery of a convertible promissory note in the form of Exhibit H hereto (the “ Note ”); and

 

(ii)   Upon each assignment of a Carrier Contract, either at the Initial Closing or a Subsequent Closing, Buyer shall pay to Seller, by increasing the principal balance of the Note by an amount equal to that portion of the remaining Purchase Price, up to One Million Eight Hundred Twenty Thousand US Dollars (US$ 1,820,000), which is associated with the assigned Carrier Contract as set forth on Exhibit A .

 

3.   The Closing.

 

(a)   Initial Closing . The initial closing (the “ Initial Closing ”) of the purchase and sale of the Purchased Assets shall take place on that date which is five business days following the date on which all conditions to the Initial Closing have been satisfied or waived, at the offices of Buyer’s counsel, which offices are located at Stubbs, Alderton & Markiles LLP, 15260 Ventura Blvd., 20 th Floor, Sherman Oaks, CA 91403, or such other date as agreed between the parties. On or before the Initial Closing, Seller shall deliver or assign to Buyer the Purchased Assets (other than the Carrier Contracts) and the Carrier Contracts with Cingular. The date of the Initial Closing shall be referred to herein as the “ Initial Closing Date .”

 

(b)   Subsequent Closings . The parties shall use all commercially reasonable efforts to obtain the consents and any other actions required to assign all of the Carrier Contracts to Buyer. Any Carrier Contracts that are not assigned to Buyer on or before the Initial Closing, shall be assigned, along with any software related to such Carrier Contract, to Buyer promptly following receipt of all required consents, and Buyer shall pay to Seller, by increasing the principal balance of the Note: (i) on January 26, 2007, the portion of the Purchase Price associated with all such Carrier Contracts assigned to Buyer following the Initial Closing and prior to January 26, 2007; and (ii) on March 7, 2007, the portion of the Purchase Price associated with all such Carrier Contracts assigned to Buyer from January 26, 2007 and by February 28, 2007. Unless such assignment is requested by Buyer pursuant to Section 3(d) below, Buyer shall have no obligation hereunder to purchase any Carrier Contract that is not assigned to Buyer on or before February 28, 2007. Each assignment of a Carrier Contract under this Section 3(b) shall be referred to as a “ Subsequent Closing ” and the date thereof, a “ Subsequent Closing Date .” The Initial Closing and each Subsequent Closing shall be referred to herein as a “ Closing ” and the Initial Closing Date and each Subsequent Closing Date shall be referred to herein as a “ Closing Date .”

 

(c)   Closing Deliverables . At each Closing, Seller shall deliver to Buyer (or cause Mobliss to deliver to Buyer) a Bill of Sale and Assignment of Contract Rights, in a customary form reasonably acceptable Buyer and Seller, and such other documents as Buyer may reasonably request in order to vest in Buyer, good title in and to the Purchased Assets to be transferred to Buyer on such Closing Date, free and clear of any and all liens, claims, encumbrances or restrictions of any and every kind.

 

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(d)   Unassigned Carrier Contracts . If any Carrier Contract has not been assigned prior to February 28, 2007, and the respective carrier has not affirmatively stated that it will not agree to such assignment to Buyer, then Buyer may request that Seller and/or Mobliss use commercially reasonable efforts to cause such carrier to consent to the assignment, provided that Buyer shall pay all costs of Seller and/or Mobliss to maintain such Carrier Contract after February 28, 2007 until the earliest of (i) the date of the assignment of such Carrier Contract; (ii) the date the carrier affirmative refuses to allow the assignment of such Carrier Contract; or (iii) the date Buyer requests Seller and/or Mobliss to cease pursuing such assignment. If any such Carrier Contract is assigned to Buyer under this Section 3(d), then the portion of the Purchase Price associated with such Carrier Contracts shall be paid to Seller immediately upon such assignment. Seller’s and Buyer’s (and Mobliss’) obligations under this Section 3(d) shall expire on March 31, 2007.

 

4.   Assumption of Liabilities . Except with respect to the contractual obligations under agreements included among the Purchased Assets to be performed from and after the Closing Date (the “ Assumed Liabilities ”), Buyer shall not, and expressly does not, assume any liabilities, obligations or commitments (including, but not limited to trade payables, bank or other debt, accrued payroll, vacation and other liabilities, and capitalized leases) of Seller, known or unknown, contingent or otherwise, of whatsoever kind or nature.

 

5.   Intentionally Omitted.

 

6.   Representations and Warranties of Seller . Seller represents and warrants to Buyer, as of the Closing Date, as follows:

 

(a)   Organization and Standing . Seller is a corporation duly organized, validly existing and in good standing under the laws of Japan. Seller has all requisite power and authority and all requisite licenses, permits and franchises necessary to own, lease and operate its properties and assets and to carry on its business in the manner and in the locations as presently conducted.

 

 

(c)   Title . Seller will transfer, or cause Mobliss to transfer, to Buyer at each Closing, good title to all of the Purchased Assets transferred at such Closing, which to Seller’s actual knowledge shall be free and clear of all mortgages, pledges, liens (including, without limitation, tax liens), charges, security interests, claims of infringement, conditions, restrictions, encumbrances and obligations, of any type, kind or nature whatsoever (except those expressly assumed by Buyer as part of the Assumed Liabilities). The agreements or instruments under which Seller and/or, to Seller’s actual knowledge, Mobliss holds, leases or is otherwise entitled to the use of any Purchased Assets are in full force and effect and all rentals, royalties or other payments due thereunder prior to the applicable Closing Date have been fully paid. All of the fixed assets and equipment included in the Purchased Assets are purchased “as is” and “where is”.

 

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(d)   Trade Rights . Seller has not granted to any person or entity any licenses and other rights to use any of copyrights or common law rights and licenses owned, possessed by Seller or, used or held by Seller which are part of the Purchased Assets (the “ Trade Rights ”). Seller owns, or will own on upon the Initial Closing, all right, title and interest in and to each Trade Right, and is not obligated to pay any royalty, fee or commission to any person for use of any Trade Right. Seller has not agreed to indemnify or hold any person or entity harmless from or against any losses or claims resulting from any infringement of any Trade Right.

 

(e)   Effect of Agreement . The execution and delivery by Seller of this Agreement, the sale by Seller of the Purchased Assets to Buyer at each respective Closing, the performance by Seller of its obligations pursuant to the terms of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not, in any respect material to Seller, with or without the giving of notice or lapse of time, or both:

 

(i)   violate any provision of law, statute, rule, regulation or executive order to which Seller is subject;

 

(ii)   violate any judgment, order, writ or decree of any court or administrative body applicable to Seller;

 

(iii)   accelerate or constitute an event entitling the holder of any indebtedness of Seller to accelerate the maturity of any such indebtedness or increase the rate of interest presently in effect with respect to such indebtedness; or

 

(iv)   result in the breach of, constitute a default under, constitute an event which with notice or lapse of time, or both, would become a default under, or result in the creation of any mortgage, lien, security interest, charge or encumbrance upon any other properties of Seller under, any contract, agreement, commitment (written or oral) or other instrument to which Seller is a party, or by which the other properties of Seller are bound or affected.

 

(f)   Powers of Attorney . No person has been granted and currently holds any power of attorney to act on behalf of Seller in respect of any of the Purchased Assets.

 

(g)   No Finder’s Fee . Seller has not retained any finder, broker, agent or other party or incurred any liability or is otherwise obligated for any brokerage fees, commissions, finder’s fees or investment banking fees in connection with this Agreement or the transactions contemplated hereby.

 

(h)   Investor Representations.

 

(i)   Access to Information . Seller has had an opportunity to receive and review all documents and information that Seller considers material to Seller’s acquisition of the Note and the shares of common stock into which such Note is convertible (collectively, the “ Securities ”) and to ask questions of and receive answers from Buyer, or a person or persons acting on Buyer’s behalf, concerning Buyer and the terms and conditions of the acquisition of the Securities, and all such questions have been answered to the full satisfaction of Seller.

 

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(ii)   Knowledgeable and Sophisticated Investor . Seller is a sophisticated investor with such knowledge and experience in financial and business matters and investments in restricted securities of early stage companies that Seller is capable of evaluating the merits and risks of acquiring the Securities.

 

(iii)   Accredited Investor . Seller is an “accredited investor” as defined in Regulation D under the Securities Act of 1933, as amended (the “ Securities Act ”).

 

(iv)   Investment Intent . Seller understands that the Securities have not been registered under the Securities Act, or any other applicable state or federal securities statutes (together with the Securities Act, the “ Acts ”). Seller is acquiring the Securities for investment, for Seller's own account, and not with a view to or for sale in connection with any distribution of the Securities. Seller understands that the Securities are subject to restrictions on transfer and that Seller may bear the economic risk of acquiring the Securities for an indefinite period of time, unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available.

 

(v)   No General Solicitation . Seller acknowledges that the Securities were not offered to Seller by means of general solicitations, publicly disseminated advertisements or sales literature.

 

(vi)   Legend . Seller acknowledges that a legend substantially as follows will be placed on the certificates representing the Securities:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.

 

(vii)   No Recommendation . Seller acknowledges that no federal or state agency has made any finding or determination relating to the fairness for investment in the Securities and no federal or state agency has recommended or endorsed the Securities.

 

(viii)   Reliance . Seller understands that the Securities are being offered and sold to it in reliance on specific provisions of federal and state securities laws and that Buyer is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgements and understandings of Seller set forth herein to determine the applicability of such provisions.

 

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(i) Disclosure . No representation or warranty made by Seller in this Agreement or in any writing furnished by Seller to Buyer pursuant to or in connection with this Agreement, to Seller’s actual knowledge, contains any untrue statement of a material fact, or omits to state any material fact required to make the statements herein or therein contained not misleading.

 

(j)   Disclaimer of Other Warranties.   THE ABOVE REPRESENTATIONS AND WARRANTIES ARE THE ONLY REPRESENTATIONS AND WARRANTIES MADE BY SELLER TO BUYER WITH RESPECT TO THE PURCHASED ASSETS. SELLER SHALL NOT HAVE ANY LIABILITY FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, ARISING OUT OF OR IN CONNECTION WITH THE SALE, USE OR PERFORMANCE OF THE PURCHASED PRODUCTS. SELLER DISCLAIMS ALL OTHER WARRANTIES WITH REGARD TO THE PURCHASED ASSETS SOLD PURSUANT TO THIS AGREEMENT, INCLUDING ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR USE OR PURPOSE.

 

7.   Representations and Warranties of Buyer . Buyer represents and warrants to Seller, as of the Closing Date, as follows:

 

(a)   Organization and Standing . Buyer is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware. Buyer shall deliver to Seller at the Initial Closing a certificate of good standing from the appropriate government agency. Buyer has all requisite power and authority and all requisite licenses, permits and franchises necessary to own, lease and operate its properties and assets and to carry on its business in the manner and in the locations as presently conducted.

 

(b)   Authorization . Buyer has all requisite corporate power and authority to enter into and carry out the terms and conditions of this Agreement and all the transactions contemplated hereunder. All proceedings have been taken and all authorizations have been secured which are necessary to authorize the execution, delivery and performance by Buyer of this Agreement. This Agreement has been duly and validly executed and delivered by Buyer and constitutes the valid and binding obligations of Buyer enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting creditors’ rights generally from time to time in effect.

 

(c)   Effect of Agreement . The execution and delivery by Buyer of this Agreement, the purchase by Buyer of the Purchased Assets at each Closing, the performance by Buyer of its obligations pursuant to the terms of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not, with or without the giving of notice or lapse of time, or both:

 

(i)   violate any provision of law, statute, rule, regulation or executive order to which Buyer is subject or by which the Purchased Assets are bound or affected;

 

(ii)   violate any judgment, order, writ or decree of any court or administrative body applicable to Buyer or by which the Purchased Assets are bound or affected; or

 

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(iii)   result in the breach of, constitute a default under, constitute an event which with notice or lapse of time, or both, would become a default under any material agreement, commitment, contract (written or oral) or other instrument to which Buyer is a party.

 

(d)   Access to Information . Buyer acknowledges that Seller has not conducted any due diligence with respect to the Purchased Assets. Buyer has conducted a due diligence review of the Purchased Assets.

 

(e)   No Violation . Buyer is not in violation of any order of any court, arbitrator or governmental, body material laws, ordinances or governmental rules or regulations (domestic or foreign) to which it is subject, or with respect to any material loan agreement, debt instrument or contract with a supplier or customer of Buyer or other agreement to which it is a party and has not failed to obtain or apply for any licenses, permits, franchises or other governmental authorizations necessary to the ownership of its property or to the conduct of its business.

 

(f)   No Litigation . There are no suits or proceedings pending or, to the knowledge of Buyer, threatened in any court or before any regulatory commission, board or other governmental administrative agency against or affecting Buyer which if determined adversely to Buyer could reasonably be expected to materially adversely affect Buyer’s business as presently conducted or its ability to perform its obligations hereunder or under the Note.

 

(g)   Capitalization and Voting Rights.

 

(i)   The authorized and issued and outstanding capital of Buyer consists, and will consist immediately prior to the Closing, solely of 10,000,000 shares of common stock, par value $0.001 per share (“Common Stock”), of which 5,000,000 shares are issued and outstanding. The outstanding shares of Common Stock are all duly and validly authorized and issued, fully paid and nonassessable, and were issued in accordance with the registration or qualification provisions of the Securities Act of 1933, as amended (the “Act”) and any relevant state securities laws, or pursuant to valid exemptions therefrom. All of the shares of Common Stock are held of record by the persons set forth on Schedule 7(g)(i) attached hereto.

 

(ii)   Except for options to purchase 1,195,200 shares of Common Stock that have been granted by the Buyer, there are not outstanding any options, warrants, preferred stock or other securities convertible into or exercisable for capital stock or other rights (including conversion or preemptive rights) or agreements for the purchase or acquisition from Buyer of any shares of its capital stock. Buyer is not a party or subject to any agreement or understanding, and to Buyer’s knowledge, there is no agreement or understanding between any persons and/or entities that affects or relates to the voting or giving of written consents with respect to any security by a director of Buyer.

 

(h)   Indebtedness . Attached as Schedule 7(h) is a Schedule of Indebtedness of Buyer and its subsidiaries. “Indebtedness” means, without duplication all (a) indebtedness for borrowed money, (b) notes payable, whether or not representing obligations for borrowed money, (c) obligations representing the deferred purchase price for property or services, (d) obligations secured by any mortgage or lien on property owned or acquired subject to such mortgage or lien, whether or not the liability secured thereby shall have been assumed, (e) all guaranties, endorsements and other contingent obligations, in respect of Indebtedness of others, whether or not the same are or should be so reflected in Buyer’s balance sheet, except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business and (f) that portion of any lease payments due under leases required to be capitalized in accordance with generally accepted accounting principles consistently applied.

 

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(i)   Disclosure . A true and correct copy of the Certificate of Incorporation of Buyer, as amended, has been delivered to Seller’s counsel. Buyer has made available to Seller all the information reasonably available to Buyer that Seller has requested for deciding whether to accept the Note and Conversion Shares (as defined in the Note), including certain of Buyer’s projections and business plans (the “Business Plan”). The Business Plan was prepared in good faith; however, Buyer does not warrant that it will achieve any results projected in the Business Plan. No representation or warranty of Buyer contained in this Agreement or the Note or any schedule, exhibit or other written statement furnished to Seller by or on behalf of Buyer in connection with this Agreement or the Note (including with respect to any Conversion Shares as defined in the Note) contains or will contain any untrue statement of a material fact or omits a material fact necessary to make the statements contained therein not misleading.

 

8.   Pre Closing Covenants.

 

(a)   Investigations . Between the date of this Agreement and the final Closing Date, Mobliss shall and Seller shall use commercially reasonable efforts to cause Mobliss to give B


 
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