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ASSET PURCHASE AGREEMENT
This
ASSET PURCHASE AGREEMENT dated as of August
31, 2007 (the "Agreement") is entered into by and between
247MGI, Inc. (“ 247MGI
”) a publicly traded corporation organized under the
laws of, and domiciled in, the State of Florida,
Sovereign Research, LLC
(“Sovereign”), a Florida limited
liability company and a wholly-owned subsidiary of Sovereign
(" Buyer "), and 247 Media Holdings,
LLC, a Florida limited liability company (“
Seller ”).
PREAMBLE
WHEREAS, Seller owns and/or has acquired rights to certain
assets that may be used to broadcast audio and video over the
internet (the “ Assets ”);
and
WHEREAS, the Assets are more particularly described on
Schedule 1.1; and
WHEREAS, Seller desires to convey, sell and assign to
Buyer all of Seller’ right, title and interest in and to the
Assets, upon the terms and conditions contained in this Agreement;
and
WHEREAS, Buyer desires to purchase the Assets upon the
terms and conditions contained in this Agreement.
NOW THEREFORE, in consideration of the mutual promises and
other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties agree as follows:
1.
Sale and Purchase of Assets .
1.1
Sale and Purchase of Assets . Subject to the terms
and conditions of this Agreement, at the closing described in
Section 6 (the " Closing "), Seller shall sell,
assign and convey the Assets to Buyer, and Buyer shall purchase the
Assets from Seller.
1.2
Liabilities Excluded . In connection with
Buyer’s purchase of the Assets, Buyer shall not assume or
become responsible for any indebtedness, liabilities or obligations
of Seller (the “ Liabilities ”),
except that Buyer shall assume the obligations of Seller accruing
from and after the Closing Date under all contracts, agreements and
understandings included in the Assets.
2.
Purchase Price; Payment; Allocation .
2.1
Purchase Price . The purchase price for the Assets
shall be the sum of $80,000 (the “ Purchase
Price ”), which the parties agree and acknowledge is
equal to Seller’s historic development cost of the
Assets. The Purchase Price shall be paid by delivery to
Seller or its designee(s), at the Closing, of one or more
certificates evidencing an aggregate of Two Million Five Hundred
Thousand shares (2,500,000) of the authorized but
unissued common stock of 247MGI (the “ 247MGI
Shares ”).
2.2
The 247MGI Shares . The 247MGI Shares have not been
registered under the Securities Act of 1933, as amended (the
“ Act ”), and such securities may not
be sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of absent registration under the Act or the availability
of an applicable exemption therefrom. Each certificate
evidencing any of the 247MGI Shares shall bear the following or
substantially legend:
These
securities have not been registered under the Securities Act
of 1933, as amended, or any state securities laws and may not
be sold or otherwise transferred or disposed of except
pursuant to an effective registration statement under any
applicable federal and state securities laws, or an
opinion of counsel satisfactory to the Company that an
exemption from registration is available.
3.
Representations and Warranties of Seller . Except as
otherwise set forth in a disclosure schedule delivered by the
Seller at the time this Agreement is executed and delivered (the
“ Seller Disclosure Schedule ”),
Seller, hereby represents and warrants to 247MGI and Buyer, as of
the date hereof and as of the Closing Date, as
follows.
3.1
Authority and Enforcement . Seller has all requisite
power and authority to execute and deliver this Agreement, and to
consummate the transactions contemplated hereby. Seller
has taken all action necessary for the execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby, and this Agreement constitutes the valid and
binding obligation of Seller, enforceable against Seller in
accordance with its terms, except as may be affected by bankruptcy,
insolvency, moratoria or other similar laws affecting the
enforcement of creditors’ rights generally and subject to the
qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding
therefore may be brought.
3.2
No Conflicts or Defaults . The execution and
delivery of this Agreement by Seller and the consummation of the
transactions contemplated hereby do not and shall not (a) with
or without the giving of notice or the passage of time (i) violate,
conflict with the articles of organization, bylaws or corresponding
organizational documents of Seller, or result in a material breach
of, or a material default or loss of rights under, any covenant,
agreement, mortgage, indenture, lease, instrument, permit or
license to which Seller is a party or by which Seller is bound, or
any judgment, order or decree, or any law, rule or regulation to
which Seller is subject, (ii) result in the creation of, or give
any party the right to create, any lien, charge, encumbrance,
security interest or any other right or adverse interest (“
Liens ”) upon any of the Assets, (iii)
terminate or give any party the right to terminate, amend, abandon
or refuse to perform, any material agreement, arrangement or
commitment relating to the Assets, or (iv) have a material adverse
effect on ownership of the Assets by Buyer or consummation of the
transactions contemplated hereby (a “ Seller Material
Adverse Effect ”).
3.3
Consents of Third Parties . The execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated hereby by
3.4
Seller
does not require the consent of any person, or such consent has or
will be obtained, in writing, prior to the Closing.
3.5
No Litigation . There are no legal, equitable, administrative,
arbitration, governmental, regulatory or other
proceedings pending against Seller, or, to the best knowledge of
Seller, threatened against it, an adverse determination to which
would be likely to result in a Seller Material Adverse
Effect.
3.6
No Options or Other Agreements . There are no
options or agreements of any character relating to the
Assets to which Seller are a party, or by which Seller are bound
that, if exercised or consummated, would be likely to result in a
Seller Material Adverse Effect.
3.7
Title to Assets . Seller is the owner of the Assets,
free and clear of all Liens. Upon consummation of the
transactions contemplated hereby, Buyer will acquire good and
marketable title to the Assets.
3.8
Contract Rights . Each of the agreements, contracts
or contract rights included in the Assets is in full force and
effect, and no party to any such agreement, contract or right is in
material breach of any provision thereof. Each
agreement, contract or contract right included in the Assets may be
assigned to Buyer without the consent or approval of any third
party, or, if such consent or approval is required, it has or will
be obtained at or prior to the Closing.
3.9
Intellectual Property . To the extent that the
Assets include any trademarks, copyrights, trade names, service
marks, trade secrets, license agreements, proprietary processes,
business methods or similar tangible or intangible property
(“ Intellectual Property ”), such
Intellectual Property is owned by Seller, free and clear of all
Liens. To the best of Seller’s knowledge, such
Intellectual Property does not infringe upon or otherwise violate
the rights of any third person, and Seller has received no notice
of any such infringement or violation. To the extent
that any such Intellectual Property is licensed by Seller to any
third party, the license is in full force and effect, the licensee
is not in breach or violation of the license agreement and Seller
have no knowledge that any such Intellectual Property is being used
in violation of Seller’ proprietary rights.
3.10
Securities Laws . Seller is an accredited investor
within the meaning of Rule 501 of Regulation D under the
Act. Seller is acquiring the 247MGI Shares for its own
account, for investment purposes only, and without a view towards
the distribution or resale thereof, except in compliance with
applicable Federal and State securities law.
3.11
Acknowledgment of Risks . Seller is the sole
executive officer and director of 247MGI and Buyer and, as such, is
fully familiar with the business, assets, liabilities and financial
conditions of 247MGI and Buyer. Seller recognizes and
acknowledges that the transactions contemplated by this Agreement
are speculative and involve a high degree of risk. Such
risks include, but are not limited to, the following:
(1)
the
business of 247MGI is a un-marketed business enterprise,
subject to all of the risks inherent of a new
business;
(2)
247MGI
has not generated any revenues from operations, or obtained any
orders for its services, and there is no assurance that 247MGI will
operate profitably;
(3)
there
is currently a limited trading market for 247MGI’s securities
and there is no assurance that a trading market will
develop;
(4)
unless
an active market develops for 247MGI’s securities, Seller may
have difficulty reselling the 247MGI Shares, at a profit or at
all;
(5)
247MGI
will require additional financing in order to implement its
business plans - there is no assurance that required financing will
be available to 247MGI on acceptable terms;
(6)
future
financings will dilute the relative ownership of 247MGI by its
existing shareholders, and depending on the price at which
additional shares are issued, may dilute the book value per share
of 247MGI’s common stock;
(7)
247MGI
will have to overcome the challenges of marketing, on-line commerce
and introduction of a new product in order to succeed, and there is
no assurance that it will be able to do so;
(8)
247MGI
will face competition from many entities, most of whom have greater
financial and physical resources than does 247MGI;
(9)
as
its business develops, 247MGI may have difficulty attracting and
retaining qualified personnel.
3.12
Disclosure . The representations, warranties and
acknowledgments of Seller set forth herein are true, complete and
accurate in all material respects, do not omit to state any
material fact, or omit any fact necessary to make such
representations, warranties and acknowledgments, in light of the
circumstances under which they are made, not
misleading.
4.
Representations and Warranties of 247MGI and Buyer
. Except as otherwise set forth in a disclosure schedule
delivered by 247MGI and Buyer at the time this Agreement is
executed and delivered (the “ Buyer/247MGI Disclosure
Schedule ”), 247MGI and Buyer hereby make the
following representations and warranties to Seller, as of the date
hereof and as of the Closing Date.
4.1
Organization and Good Standing . 247MGI and Buyer is
each a business entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation, with full
power and authority to own, lease and operate its business and
properties and to carry on its business in the places and in the
manner as presently conducted or proposed to be
conducted. 247MGI and Buyer are each in good standing as
a foreign corporation in each jurisdiction in which the properties
owned, leased or operated, or the business conducted, by it
requires such qualification, except where the failure to so qualify
would not have a material adverse effect on the business of 247MGI
or Buyer, as the case may be, or consummation of the transactions
contemplated hereby (a “ Buyer Material Adverse
Effect ”).
4.2
Authority and Enforcement . 247MGI and Buyer have
all requisite power and authority to execute and deliver this
Agreement, and to consummate the transactions contemplated
hereby. 247MGI and Buyer have each taken all action
necessary for the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and this
Agreement constitutes the valid and binding obligation of 247MGI
and Buyer, enforceable against each in accordance with its terms,
except as may be affected by bankruptcy, insolvency, moratoria or
other similar laws affecting the enforcement of creditors’
rights generally and subject to the qualification that the
availability of equitable remedies is subject to the discretion of
the court before which any proceeding therefore may be
brought.
4.3
No Conflicts or Defaults . The execution and
delivery of this Agreement by 247MGI and Buyer and the consummation
of the transactions contemplated hereby do not and shall not
(a) contravene the articles of organization, bylaws or
corresponding organizational documents of 247MGI or Buyer or (b)
with or without the giving of notice or the passage of time (i)
violate, conflict with, or result in a material breach of, or a
material default or loss of rights under, any covenant, agreement,
mortgage, indenture, lease, instrument, permit or license to which
247MGI or Buyer is a party or by which 247MGI or Buyer is bound, or
any judgment, order or decree, or any law, rule or regulation to
which 247MGI or Buyer is subject, (ii) result in the creation of,
or give any party the right to create, any Lien upon any assets or
properties of 247MGI or Buyer, (iii) terminate or give any party
the right to terminate, amend, abandon or refuse to perform, any
material agreement, arrangement or commitment relating to which
247MGI or Buyer a party, or (iv) result in a Buyer Material Adverse
Effect.
4.4
Consents of Third Parties . The execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated hereby by 247MGI or Buyer does not
require the consent of any person, or such consent has been or will
be obtained, in writing, prior to the Closing.
4.5
Buyers Capitalization . 247MGI is authorized to
issue (a) 500,000,000 shares of common stock, $01 par value per
share, of which 29,915,471 shares are issued and outstanding and
(b) 5,000,000 shares of preferred stock, $.01 par value per share,
none of which are issued or outstanding. Subject to
update prior to the Closing, there are 2,016,000 options, no
warrants or other securities convertible into common stock of
247MGI.
4.6
Securities . The 247MGI Shares have been duly
authorized, and upon issuance pursuant to the provisions hereof,
will be validly issued, fully paid and non-assessable.
4.7
Disclosure . The representations, warranties and
acknowledgments of Buyers set forth herein are true, complete and
accurate in all material respects and do not omit any fact
necessary to make such representations, warranties and
acknowledgments not misleading.
5.
Conditions to Closing .
5.1
Conditions Precedent to 247MGI and Buyer’s Obligation to
Close . The obligation of 247MGI and Buyer to
consummate the transactions contemplated by this Agreement is
subject to satisfaction of the following conditions on or prior to
the Closing Date:
(1)
The
representations and warranties of Seller set forth in
S
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