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Exhibit 10.1
ASSET PURCHASE
AGREEMENT
by and between
MEDIAG3, INC.
and
ADML HOLDINGS, LTD.
November 16, 2007
TABLE OF CONTENTS
Page
ARTICLE 1
PURCHASE OF ASSETS
1
1.1
Purchase of Assets
1
1.2
No Assumption of Liabilities
1
1.3
Purchase Price
1
1.4
Closing
1
1.5
Valuation and Allocation of Purchase Price
1
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
2
2.1
Organization and Good Standing
2
2.2
Authorization and Binding Effect of Documents
2
2.3
Absence of Conflicts
2
2.4
Consents and Notices
2
2.5
No Subsidiaries
2
2.6
Capitalization and Ownership
2
2.7
Title to Purchased Assets
3
2.8
Condition Purchased Assets
3
2.9
Contracts
3
2.10
Intellectual Property
4
2.11
Real Property
6
2.12
Financial Statements
6
2.13
Absence of Certain Changes or Events
7
2.14
Tax Matters
7
2.15
Inventory
7
2.16
Insurance
7
2.17
Employee Matters
7
2.18
Employee Benefit Plans
7
2.19
Environmental Matters
7
2.20
Export Laws
8
2.21
Litigation
8
2.22
Certain Payments
8
2.23
Compliance with Law
8
2.24
Insolvency; Conveyance
8
2.25
Broker’s or Finder’s Fees
9
2.26
Investment Representations
9
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
10
3.1
Organization and Good Standing
10
3.2
Authorization and Binding Effect of Documents
10
3.3
Absence of Conflicts
10
3.4
Consents and Notices
10
ARTICLE 4
ADDITIONAL COVENANTS
10
4.1
Conduct of Business
10
TABLE OF CONTENTS
(continued)
Page
4.2
No Other Negotiations
11
4.3
Access and Information
11
4.4
Bill of Sale
11
4.5
Publicity
11
4.6
Further Assurances
11
4.7
Power of Attorney
11
4.8
Payment of Taxes
11
4.9
Transaction Costs
12
4.10
Bulk Sale Laws
12
ARTICLE 5
CONDITIONS TO CLOSE
12
5.1
Conditions for Buyer to Close
12
5.2
Conditions for Seller to Close
12
ARTICLE 6
INDEMNIFICATION AND TERMINATION
13
6.1
Survival of Representations and Warranties
13
6.2
Indemnification Procedures
13
6.3
Termination of Agreement
14
6.4
Effect of Termination
14
ARTICLE 7
GENERAL PROVISIONS
14
7.1
Attorneys’ Fees
14
7.2
Entire Agreement
14
7.3
Amendments and Waivers
14
7.4
Notices
15
7.5
Binding Effect; Third Party Benefits
15
7.6
Assignment
15
7.7
Severability
15
7.8
References and Construction
15
7.9
Governing Law
16
7.10
Counterparts
16
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the
“Agreement”) is made effective as of November 16,
2007 by and between MediaG3, Inc., a Delaware corporation
(“Buyer”), and ADML Holdings, Ltd., a Cayman Islands
corporation (“Seller”).
RECITAL
Buyer wishes to acquire from Seller certain
assets and Seller wishes to convey such assets to Buyer, under
the terms and conditions of this Agreement.
Now, therefore, in consideration of the mutual
representations, warranties, covenants and agreements contained
herein, and for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE 1
PURCHASE OF ASSETS
1.1
Purchase of Assets . At the Closing
(as defined below) Seller will sell, assign, convey and transfer
to Buyer, and Buyer will acquire from Seller, all of
Seller’s right, title and interest in and to all Seller
Intellectual Property (as defined in Section 2.10) and the
assets listed on Exhibit A attached hereto (collectively,
the “Purchased Assets”). Except for the Purchased
Assets, Seller will not sell, assign, convey or transfer any
other assets of Seller.
1.2
No Assumption of Liabilities .
Buyer shall not assume or agree to pay, discharge, or
otherwise be responsible for any debt, liability, commitment,
tax, undertaking or any other obligation of Seller, whether
known, unknown, absolute, contingent or otherwise, of any
nature, kind or description whatsoever, and whether arising
before or after the Closing (as defined below).
1.3
Purchase Price . At the Closing and
as consideration for the acquisition of the Purchased Assets,
Buyer agrees to issue to Seller an aggregate of six million
(6,000,000) shares of restricted common stock of Buyer (the
“Shares”).
1.4
Closing . The closing of the
transactions contemplated by this Agreement (the
“Closing”) shall take place by mail or facsimile at
the offices of Hopkins & Carley, A Law Corporation, 70 S.
First Street, San Jose, California, 95113 on November 19, 2007,
or at such other time and place as the parties may agree.
1.5
Valuation and Allocation of Purchase
Price . The value of the consideration will be
allocated among the Purchased Assets as indicated on a schedule
(the “Tax Allocation Schedule”) to be prepared
jointly by Buyer and Seller and delivered at the Closing.
The Tax Allocation Schedule will be binding upon Buyer and
Seller. The parties agree that each will not take any position
inconsistent with this Section 1.5 in any return, report or
other document submitted to any taxing authority.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer
that the statements contained in this Article 2 are correct
and complete as of the date hereof and will be correct and
complete as of the Closing, except as specified to the contrary
in the disclosure schedule prepared by Seller and attached
hereto (the “Disclosure Schedule”). The Disclosure
Schedule is arranged in Sections corresponding to the numbered
and lettered Sections contained in this Article 2.
2.1
Organization and Good Standing .
Seller is a corporation duly organized, validly existing
and in good standing under the laws of the Cayman Islands.
Seller is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction in which the
nature of its business makes such qualification necessary,
except for such failures to be so duly qualified and in good
standing that are not reasonably expected to result in a
material adverse affect on the business or assets of Seller.
Section 2.1 of the Disclosure Schedule sets forth each
jurisdiction where Seller is qualified to do business.
2.2
Authorization and Binding Effect of
Documents . Seller has the full right, power and
authority to enter into this Agreement and to perform its
obligations hereunder. Seller has full corporate power and
authority to own, use, license and lease its assets and
properties and to carry on its business as now conducted and as
will be conducted up to the Closing. This Agreement has been
duly authorized, executed and delivered by Seller and, subject
to the due authorization, execution and delivery by Buyer,
constitutes a legal, valid and binding obligation of Seller,
except to the extent that such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement or creditors rights
generally and by general principles of equity (whether applied
in a proceeding at law or in equity).
2.3
Absence of Conflicts . The
execution, delivery and performance of this Agreement by Seller
does not conflict with or violate any law, regulation, judgment,
order, or decree, or Seller’s organizational and charter
documents.
2.4
Consents and Notices . The
execution, delivery and performance of this Agreement by Seller
does not require the consent, waiver, approval, permit, license,
clearance or authorization of, or any declaration or filing
with, any court or public agency or other government authority,
or the consent of or notice to any third party under any
contract, arrangement or commitment to which Seller is
bound.
2.5
No Subsidiaries . Seller has no
subsidiaries and does not otherwise directly or indirectly hold
any equity, membership, partnership, joint venture or other
ownership interest in any person or entity.
2.6
Capitalization and Ownership .
Section 2.6 of the Disclosure Schedule lists
(i) the authorized capital stock and the issued and
outstanding shares of capital stock of Seller, and (ii) all
shareholders of Seller and the number of shares held by each
such shareholder. All of the outstanding shares of Seller are
duly authorized, validly issued, fully paid and non-assessable.
All of the outstanding shares of Seller are free and clear of
all liens, encumbrances, security agreements, options, claims,
charges, and restrictions. There are no outstanding options,
warrants, convertible securities, or other rights, agreements,
arrangements, or commitments obligating Seller, its
shareholders, or any other person or entity to issue or sell any
securities or ownership interests in Seller.
2.7
Title to Purchased Assets . Seller
has good and marketable title to the Purchased Assets. The
Purchased Assets are free and clear of restrictions on or
conditions to transfer or sale, and free and clear of liens,
pledges, charges, security interests, conditional sales
agreements, encumbrances, equities, claims, or other adverse
claims or interests of any nature whatsoever.
2.8
Condition Purchased Assets . The
Purchased Assets are in good condition and repair (except for
normal wear and tear) and have been maintained in accordance
with reasonably prudent maintenance practices.
2.9
Contracts . Section 2.9 of the
Disclosure Schedule contains a true and complete list of each of
the following contracts or other arrangements to which Seller is
a party or by which any of the Purchased Assets are bound:
(a)
customer agreements;
(b)
supplier agreements;
(c)
distributor, sales representative and similar
agreements that are not already included in (a) or (b)
above;
(d)
agreements, promissory notes or other
instruments relating to the borrowing of money, or the guaranty
of any such obligation for the borrowing of money;
(e)
lease or rental agreements related to real
property;
(f)
lease or rental agreements related to personal
property;
(g)
employment, independent contractor or labor
union agreements;
(h)
noncompetition agreements and any other
agreements containing provisions prohibiting or limiting the
ability of Seller to engage in any business activity;
(i)
advertising, marketing and promotional
agreements;
(j)
agreements related to Seller Intellectual
Property (as defined in Section 2.10); or
(k)
contracts, arrangements or commitments between
Seller, on the one hand, and any current or former director,
officer, shareholder, or affiliate of Seller, on the other
hand;
(l)
any other material agreements affecting or
related to Seller’s business or the Purchased Assets.
Each agreement listed in Section 2.9 of the
Disclosure Schedule is in full force and effect and constitutes
a legal, valid and binding agreement, enforceable in accordance
with its terms. Seller and, to the knowledge of Seller, the
other parties to such agreements have performed all of their
respective obligations and conditions under such agreements.
True and complete copies of such agreements, or summaries in the
case of oral arrangements, have been delivered to Buyer.
2.10
Intellectual Property .
(a)
As used in this Agreement, “Intellectual
Property Rights” means worldwide all intellectual
property, proprietary, or similar rights, including any or all
of the following and all rights in, arising out of, or
associated therewith: (i) all utility and design patents and
applications therefor and all reissued divisions, renewals,
extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all registered and
unregistered copyrights, and copyright registrations and
applications; (iii) all registered and unregistered common law
trademarks, trade names, trademark applications and
registrations, and other trade symbols; and (iv) all inventions
(whether patentable or not), invention disclosures,
improvements, trade secrets, proprietary information, know how,
technology and technical data, and all documentation relating to
any of the foregoing.
(b)
As used in this Agreement, “Seller
Intellectual Property” means any and all intellectual
property listed on Section 2.10(c) of the Disclosure Schedule,
together with all Intellectual Property Rights contained therein
and all other Intellectual Property Rights of Seller.
(c)
Section 2.10(c) of the Disclosure Schedule (i)
lists (A) all United States, international and foreign patents
and applications therefor; (B) all registered and unregistered
copyrights, and copyright registrations and applications; (C)
all registered and unregistered common law trademarks, trade
names, fictitious business names, trademark applications and
registrations, and other trade symbols, that are owned or used
by Seller; and (D) all domain names registered in Seller’s
name and applications and registrations therefore; and (ii)
lists any proceedings or actions before any court of tribunal
(including the United States Patent and Trademark Office (the
“PTO”) or equivalent authority anywhere in the
world) to which Seller or any subsidiary is a party and in which
claims are raised relating to the validity, enforceability,
scope, ownership or infringement of any of the Seller
Intellectual Property.
(d)
To the best knowledge of Seller, except as set
forth in Section 2.10(d) of the Disclosure Schedule, each item
of Seller Intellectual Property is valid and subsisting, other
than any registered trademarks indicated on Section 2.10(d) of
the Disclosure Schedule as no longer being used by Seller or any
subsidiary. All necessary registration, maintenance and
renewal fees in connection with such Seller Intellectual
Property that are or will be due for payment on or before the
Closing have been or will be timely paid and all necessary
documents and certificates in connection with such Seller
Intellectual Property that are or will be due for filing on or
before the Closing have been or will be timely filed with the
relevant patent, copyright, trademark or other authorities in
the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Seller Intellectual
Property. Section 2.10(d) of the Disclosure Schedule lists
all actions that must be taken by Seller within 60 days of the
Closing, including the payment of any registration, maintenance
or renewal fees or the filing of any documents, for the purposes
of maintaining or renewing any Seller Intellectual Property.
(e)
There are no agreements to which Seller or any
subsidiary is a party that would restrict the ability of Buyer
to transfer or license Seller Intellectual Property without
restriction and without payment of any kind to any third party
immediately following the Closing.
(f)
Seller has all requisite right, title and
interest in and to all of the Seller Intellectual Property. Each
item of Seller Intellectual Property is owned exclusively by
Seller and is free and clear of liens, pledges, charges,
security interests, conditional sales agreements, encumbrances,
licenses, equities, claims, or other adverse claims or interests
of any nature whatsoever.
(g)
Except for trade secrets that lost their status
as trade secrets upon the release of a new product or service,
upon the issuance of a patent or publication of a patent
application, or as a result of a good faith business decision to
disclose such trade secret, and except for trademarks, service
marks, slogans or similar designations that Seller or a
subsidiary made a good faith business decision to stop using,
neither Seller nor any subsidiary has (i) transferred ownership
of, or granted any exclusive license with respect to, any Seller
Intellectual Property that is, or as of the time of such
transfer or exclusive license was, material to Seller or to any
other person, or (ii) permitted Seller’s or any
subsidiary’s rights in any Seller Intellectual Property
that is or was at the time material to Seller to enter into the
public domain.
(h)
Seller is the exclusive owner of all Seller
Intellectual Property. The Seller Intellectual Property
includes all of the Intellectual Property Rights that are used
in or necessary to the conduct of Seller’s business as
currently conducted, and Seller possesses all technology that is
used in or necessary to the conduct of Seller’s business
as currently conducted.
(i)
Other than (i) licenses for the public or open
source technology listed in Section 2.10(i) of the Disclosure
Schedule and (ii) licenses for shrink-wrap code, Section 2.10(i)
lists all of the agreements under which Seller or any subsidiary
receives a license from any person of any Intellectual Property
Rights of such person or a third party, other than agreements
that are not substantially focused on the license of
Intellectual Property Rights, such as service, lease, sales or
nondisclosure agreements in which the license of Intellectual
Property rights is incidental to the primary purposes of such
agreement.
(j)
Section 2.10(j) of the Disclosure Schedule lists
all contracts, licenses and agreements to which Seller or any
subsidiary is a party under which Seller or any subsidiary has
granted rights under any Seller Intellectual Property to third
parties (other than rights granted to contractors or vendors to
use Seller Intellectual Property for the sole benefit of
Seller).
(k)
No third party that has licensed Intellectual
Property Rights to Seller or any subsidiary has retained sole
ownership of or exclusive license rights under any Intellectual
Property Rights in any material improvements or derivative works
made solely or jointly by Seller or any subsidiary under such
license.
(l)
The operation of the business of Seller as it is
currently conducted does not infringe or misappropriate any
Intellectual Property Rights of any person. Neither Seller
nor any subsidiary has received notice from any person claiming
that Seller’s business or any of Seller Intellectual
Property infringes or misappropriates any Intellectual Property
Rights of any person (nor does Seller have knowledge of any
facts that constitute a reasonable basis for any good faith
claim of such infringement or misappropriation).
(m)
To the best knowledge of Seller, no person is
infringing or misappropriating any Seller Intellectual
Property.
(n)
Seller has taken reasonable steps to protect
Seller’s rights in confidential information and trade
secrets of Seller or provided by any other person to Seller.
(o)
No Seller Intellectual Property is subject to
any outstanding decree, order, judgment, settlement agreement,
or similar obligation binding on Seller that restricts in any
manner the use, transfer or licensing thereof by Seller or that
affects the validity, use or enforceability of such Seller
Intellectual Property.
2.11
Real Property . Section 2.11
of the Disclosure Schedule lists all real property owned by,
leased to or leased by Seller. The zoning of each such property
permits the presently existing improvements and the continuation
of the business presently being conducted on such property.
Seller has not commenced, nor has it received notice of the
commencement of, any proceeding that would affect the present
zoning classification of any such property.
2.12
Financial Statements .
Section 2.12 of the Disclosure Schedule contains an
unaudited balance sheet and income statement at December 31,
2006 and for the year then ended and are collectively
referred to as the “Seller Financial
Statements”.
(a)
Seller Financial Statements accurately reflect
the books and records of Seller and fairly summarizes, in all
respects, the results of operations of Seller business for the
periods indicated (except as may be indicated in the notes
thereto and, in the case of any interim period financial
statements, subject to normal year-end adjustments, which
adjustments will not be material in amount or significance). The
Seller Financial Statements have been prepared in accordance
with United States Generally Accepted Accounting Principles
consistently applied throughout the period indicated.
(b)
Seller has no debt, liability or obligation of
any nature, whether accrued, absolute, contingent or otherwise,
and whether due or to become due, that is not reflected or
reserved against in the Seller Financial Statements. Seller is
not directly or indirectly liable to or obligated to provide
funds in respect of or to guaranty or assume any obligation of
any person except to the extent reflected and fully reserved
against in the Seller Financial Statements.
(c)
Seller maintains accurate books and records and
internal accounting controls which provide reasonable assurance
that (i) all transactions to which Seller is a party or by which
its properties are bound are executed with management’s
authorization, (ii) the reported accountability of
Seller’s assets is compared with existing assets at
regular intervals, (iii) access to Seller’s assets is
permitted only in accordance with management’s
authorization, and (iv) all transactions to which Seller is a
party, or by which its properties are bound, are recorded as
necessary to permit preparation of the Financial Statements in
accordance with United States Generally Accepted Accounting
Principles consistently applied.
2.13
Absence of Certain Changes or Events .
Since December 31, 2006, there has not been any material
adverse change in the Purchased Assets (contingent or otherwise)
and Seller has not entered into or agreed to enter into any
transaction, contract or commitment or taken or agreed to take
any action which would result in a material adverse effect on
the Purchased Assets.
2.14
Tax Matters . Seller has filed all
federal, state and local tax returns which are required to be
filed unless extensions have been obtained, and has paid all
taxes and all assessments to the extent that such taxes and
assessments have become due. Seller has made adequate provision
for all accrued and unpaid taxes, assessments, penalties and
other governmental charges, whether or not disputed, and Seller
has made and will continue to make adequate provision for such
taxes on its books and records.
2.15
Inventory . All inventory reflected
in the Seller Financial Statements consisted, and all such
inventory acquired since the Seller Financial Statements
consists, of a quality and quantity usable and salable in the
ordinary course of
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