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.
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 .
(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.
(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”.
(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.
(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.
(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
(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.
(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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