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ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

ASSET PURCHASE AGREEMENT | Document Parties: LATERAL MEDIA, INC. | ASIANADA, INC | eNom, Inc | GRUPO GRANDIOSO, LLC You are currently viewing:
This Asset Purchase Agreement involves

LATERAL MEDIA, INC. | ASIANADA, INC | eNom, Inc | GRUPO GRANDIOSO, LLC

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Title: ASSET PURCHASE AGREEMENT
Governing Law: Delaware     Date: 12/8/2008
Law Firm: Mintz Levin    

ASSET PURCHASE AGREEMENT, Parties: lateral media  inc. , asianada  inc , enom  inc , grupo grandioso  llc
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ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (the "Agreement") is executed as of December 2, 2008, by and among GRUPO GRANDIOSO, LLC , a limited liability company organized in California ("Seller"), Jeffrey Alan Schwartz , the managing member of Seller ("JAS"), and ASIANADA, INC. , a Delaware corporation ("Buyer") (collectively, the "Parties").

 

RECITALS

 

WHEREAS, the Seller is the owner and operator of various sites currently accessible at the information resource locations set forth on Schedule 1B attached hereto (the “Sites”) on the World Wide Web (as defined below) part of the Internet and certain software programs related to the operation of such Sites as more particularly described herein; and

 

WHEREAS, the Seller has the current registrations with eNom, Inc. (“eNom”) to the domain names of the Sites reflected on Schedule 1B attached hereto (the “Domain Names”); and

 

WHEREAS, the Seller desires to sell and the Buyer desires to purchase the Purchased Assets (as defined below) and Seller desires to transfer its rights to the Purchased Assets to the Buyer and Buyer desires to acquire such rights from Seller upon the terms and conditions set forth herein; and

 

WHEREAS, in order to induce Buyer to purchase such assets, properties and rights of Seller, JAS, who has served as the principal manager of Seller and who will receive a direct, tangible and material benefit from the transactions contemplated by this Agreement by virtue of the fact that JAS, and/or a revocable trust established by JAS for the benefit of his family, owns all of the issued and outstanding membership or other equity interests of Seller, and is willing to be party to this Agreement as set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter set forth, the Parties hereto agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

For purposes of this Agreement, the following terms shall have the following meanings:

 

"Accounts Receivable" shall mean the amounts owing to Seller as of the Closing Date for goods sold or services provided prior to Closing, whether or not Seller has submitted an invoice for such goods or services, or for goods to be sold or services to be provided after the Closing for which Seller has submitted an invoice.

 

 

 


 

 

"Assumed Liabilities" shall mean only the duties, liabilities or obligations of Seller, if any, arising after the Closing Date in connection with the items identified on Schedule 1A , except as otherwise noted on Schedule 1A , and shall specifically exclude, among other things, (i) any liabilities for employment, income, sales, property or other Taxes incurred or accrued by Seller or JAS, including without limitation as a result of this transaction; (ii) any fees or expenses incurred by Seller or JAS in connection with this transaction; (iii) any liabilities for sums borrowed from banks or other Persons (other than term notes for trade payables), including any interest thereon or expenses related thereto; (iv) any debt, payables or other liabilities to Related Persons other than as set forth on Schedule 1A ; (v) any liabilities related to any employee benefit plan, including, without limitation, any 401(k), profit sharing or pension plan, whether or not sponsored by Seller; and (vi) any litigation pending against Seller.

 

"Closing" shall mean the consummation of the purchase and sale transaction described herein.

 

"Closing Date" shall mean the date on which the Closing occurs, as specified in Section 2.4.

 

"Customer List" shall mean the list of the names and addresses of the customers of the Seller.

 

"Governmental Entity" shall mean any court, administrative agency, commission, state, municipality or other governmental authority or instrumentality, domestic or foreign, national or international.

 

"Liens" shall mean, with respect to the Purchased Assets, all liabilities, claims, liens, charges, pledges, security interests, options, restrictions or other encumbrances of any kind.

 

"Material Adverse Effect" shall mean a material adverse effect on the results of operations, financial condition or prospects of the Seller or the Purchased Assets.

 

"Person" shall be construed broadly and shall include an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a Governmental Entity (or any department, agency or political subdivision thereof).

 

"Purchased Assets" shall mean the Domain Names and all of the other assets, if any, identified on Schedule 1B , including, but not limited to (i) the Vendor List; (ii) all uniform resource locators associated with the Domain Names of the Seller, including, without limitation, the Sites together with all content of such Sites; (iii) all right, title and interest of Seller in and to all intellectual property rights relating to the Purchased Assets, including without limitation patents, patent applications, patent rights, trademarks, trademark applications, trade names, service marks, service mark applications, copyrights, copyright applications, franchises, licenses, databases, domain names, pages on the World Wide Web, computer programs and other computer software, including the software program further described on Schedule 1B (the “Software Program”), secrets, customer lists, proprietary technology, processes and formulae, source code, object code, algorithms, architecture, structure, display screens, layouts, development tools, instructions, templates, marketing materials, inventions, trade dress, logos and designs, and all documentation and all media constituting, describing or relating to the foregoing including but not limited to recommended product features; (iii) all books, payment records; accounts; correspondence; production records; technical, accounting and procedural manuals; development and design data; and other useful business records utilized in the conduct of or relating to the Purchased Assets (collectively “Records”).

 

 

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"Related Person" shall mean any officer, director, manager, member, employee or consultant of Seller, or any holder of five percent (5%) or more of any class of capital stock of Seller, or any member of the immediate family of any such officer, director, manager, member employee, consultant, owner or shareholder, or any entity controlled by any such officer, director, manager, member, employee, consultant, owner or shareholder, or a member of the immediate family of any such officer, director, manager, member, employee, consultant, owner or shareholder.

 

"Taxes" (or "Tax" where the context requires) shall mean all federal, state, county, city, local, foreign and other taxes ( including , without limitation, premium, excise, value added, sales, use, occupancy, gross receipts, franchise, ad valorem, severance, capital levy, production, transfer, withholding, employment, unemployment compensation, payroll-related and property taxes, import duties and other governmental charges and assessments), whether or not measured in whole or in part by net income, including deficiencies, interest, additions to tax or interest or penalties with respect thereto.

 

“Vendor List” shall mean those vendors set forth on Schedule 1C.

 

“World Wide Web” means the specific part of the Internet that contains, among other things, documents written in HTML and from which a World Wide Web document can provide links to other documents on the Internet.

 

ARTICLE 2

 

SALE OF ASSETS; CLOSING

 

Section 2.1 . Sale of Assets . At the Closing, Seller shall sell, assign, transfer, convey and deliver to Buyer, free and clear of all Liens, good and marketable title to all of the Purchased Assets.

 

Section 2.2 . Consideration . In addition to the assumption of the Assumed Liabilities, the aggregate consideration to be paid by Buyer to Seller at Closing will be (a) a warrant to purchase 1,800,000 shares of common stock of Buyer at an exercise price of $1.25 per share, which warrant shall be in substantially the form attached hereto as Exhibit A (the “Warrant”) and (b) an unsecured contingent promissory note of Seller, with an initial principal balance of $1,000,000, in substantially the form attached hereto as Exhibit B (the “Note”).

 

Section 2.3 . Buyer's Assumption of Liabilities . On the terms and subject to the conditions set forth in this Agreement, and in further consideration of the transfer of the Purchased Assets, at the Closing Buyer shall assume only those duties, liabilities or obligations of Seller included in the Assumed Liabilities, if any.

 

 

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Section 2.4 . Closing . The Closing shall take place (via facsimile, telephone, mail and other mutually acceptable means of communication and delivery) on the date hereof or at such other time and location as the Parties hereto shall agree in writing.

 

Section 2.5 . Deliveries by Seller and JAS at Closing . At the Closing, Seller shall convey, transfer, assign and deliver to Buyer all of the Purchased Assets, including good and merchantable title to all personal property included therein, free and clear of all Liens. Seller and JAS shall deliver to Buyer:

 

(a)   A certificate of Seller and JAS, dated as of the Closing Date, certifying in such detail as Buyer may specify to the fulfillment of the conditions specified in Section 6.1;

 

(b)   Evidence of the assignment of the name “Recycler Publishing Network” to Buyer and documents sufficient to effectuate such change and to convey all rights in such name to Buyer;

 

(c)   Bill of Sale in the form of Exhibit C , and such assignments and other instruments of transfer as may be reasonably satisfactory to Buyer's counsel, and with such consents to the conveyance, transfer and assignment thereof as may be necessary to effect the conveyance, transfer, assignment and delivery of the Purchased Assets and to vest in Buyer the title specified in this Section and to assure to Buyer the full benefit of the Purchased Assets, including without limitation:

 

(i)   the transfer of all registered Intellectual Property rights (as the term Intellectual Property is defined in Section 3.12 hereof) and applications therefor,

 

(ii)   the transfer of the Domain Names to the Buyer, by execution and delivery to the Buyer of an Assignment of Domain Names, Trademarks and Related Rights, substantially in the form attached hereto as Exhibit D , and any other documents necessary to facilitate the transfer of the Domain Names to the Buyer, and

 

(iii)   the proper notification to eNom with respect to the transfer of the Domain Names to the Buyer, and delivery to the Buyer of evidence of eNom’s receipt of such notification;

 

(d)   Assignment of the d/b/a Recycler Publishing Network;

 

(e)   An employment agreement between JAS and Buyer, in the form attached hereto as Exhibit E (the “Employment Agreement”);

 

(f)   Good Standing Certificates of recent date for Seller from the Secretary of State of the State of California; and

 

(g)   The lock-up agreement referred to in Section 6.10 hereof.

 

Simultaneously with the delivery referred to in this Section, Seller and JAS shall take or cause to be taken all such actions as may reasonably be required to put Buyer in actual possession and operating control of the Purchased Assets.

 

 

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Section 2.6 . Deliveries by Buyer at Closing . At the Closing, Buyer shall deliver to Seller:

 

(a)   the Assumption Agreement in the form attached hereto as Exhibit F , fully executed by Buyer, pursuant to which Buyer assumes, as of the Closing Date, the future payment and performance of the Assumed Liabilities;

 

(b)   the Warrant;

 

(c)   the Note; and

 

(d)   the Employment Agreement.

 

ARTICLE 3

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

AND JAS

 

Seller and JAS hereby jointly and severally represent and warrant to Buyer as follows:

 

Section 3.1 . Organization and Power . Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of California. Seller has full power and authority to own its properties and conduct the business presently being conducted by it. Seller and JAS have full legal power, authority and capacity to execute this Agreement and to consummate the transactions contemplated by this Agreement.

 

Section 3.2 . Authorization . The execution, delivery and performance of this Agreement by Seller have been duly authorized and approved by all requisite action on the part of its managers or Board of Directors, as applicable, and members. This Agreement constitutes the valid and binding obligation of Seller and JAS and is enforceable against Seller and JAS in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws relating to or limiting creditors' rights generally and by equitable principles.

 

Section 3.3 . No Conflict . The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby and the compliance with the terms hereof will not, (a) violate any law, judgment, order, decree, statute, ordinance, rule or regulation applicable to Seller or JAS, or any permit, license or approval of any Governmental Entity, (b) conflict with any provision of Seller's articles of organization or operating agreement, (c) result in any violation of, and will not conflict with, or result in a breach of any terms of, or constitute a default under, any mortgage, instrument or agreement to which any of JAS or Seller is a party or by which Seller or any of the Purchased Assets is bound, or create any Lien upon any of the Purchased Assets, or (d) require any notice to, or consent, approval, order or authorization of, or the registration, declaration or filing with, any Governmental Entity or other third party, except as set forth on Schedule 3.3 .

 

 

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Section 3.4 . Title to Purchased Assets . Except as stated on Schedule 3.4 , Seller has good, valid and marketable title to all of the Purchased Assets, free and clear of all Liens. No other party has any rights or claims to possession of any of the Purchased Assets. None of the Purchased Assets are subject to any option, contract, arrangement or understanding that would restrict Seller's ability to transfer the Purchased Assets to Buyer as contemplated herein. Seller has a valid registration with eNom to the Domain Name free and clear of any liens, claims or encumbrances and such registrations are in full force and effect. None of the Seller’s registration and use of the Domain Names has been disturbed or placed “on hold” by eNom and no claim (oral or written) has been asserted against the Seller adverse to its rights to such Domain Names.

 

Section 3.5 . Condition of Purchased Assets . All of the Purchased Assets are in good operating condition and repair, ordinary wear and tear excepted, and in the state of maintenance, repair and operating condition required for the proper operation and use thereof.

 

Section 3.6 . Litigation . There is no suit, action or proceeding pending against or affecting Seller or JAS or the employees of Seller relating to the Purchased Assets, or the transactions contemplated hereby, nor is there any such suit, action or proceeding threatened against Seller, JAS or any of the employees of Seller. Seller is not subject to any order of a Governmental Entity.

 

Section 3.7 . Insurance . The Purchased Assets are insured for Seller's benefit and will continue to be so insured through the Closing, in amounts and against risks that are commercially reasonable.

 

Section 3.8 . Brokers . There are no claims for brokerage commissions, finder's fees or similar compensation arising out of or due to any act of or on behalf of Seller or JAS in connection with the transactions contemplated by this Agreement.

 

Section 3.9 . Compliance: Business Practices . Seller has all necessary licenses, permits and other approvals of Governmental Entities necessary to own and operate the Purchased Assets as now conducted, each of which is in good standing, and Seller has owned and operated the Purchased Assets and properly filed all necessary reports in accordance with applicable laws and regulations.

 

Section 3.10 . Absence of Undisclosed Liabilities . Seller does not have any liabilities or obligations, either accrued, contingent or otherwise, which are not reflected in this Agreement or the Schedules hereto. All liabilities of Seller at the Closing Date are listed on Schedule 3.10 hereto.

 

Section 3.11 . Pre-Bill . Seller has not pre-billed or received prepayment for products to be sold, services to be rendered, or expenses to be incurred subsequent to the Closing Date.

 

 

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Section 3.12 . Intellectual Property . (a) Schedule 3.12 attached hereto contains a description of all U.S. and foreign patents, pending patent applications, trademarks, trademark registrations, pending applications for trademark registration, service marks, service mark registrations, pending applications for service mark registration, trade names, copyrights, pending copyright applications and any other intellectual property rights or licenses (collectively, the "Intellectual Property") owned or used by Seller in connection with the Purchased Assets. !Schedule 3.12 separately discloses all Intellectual Property under license, all of which licenses are assignable to Buyer. No Intellectual Property rights not described on Schedule 3.12 are necessary in connection with the ownership or operation of the Purchased Assets. Seller owns the entire right, title and interest in and to, and has the exclusive perpetual royalty-free right to use, the Intellectual Property, free and clear of all Liens. There are no pending or, to the knowledge of Seller and JAS, threatened claims against Seller or JAS by any Person with respect to any of the items, or their use, listed on Schedule 3.12 . No Person is infringing upon nor has any Person misappropriated the Intellectual Property and Seller is not infringing upon the Intellectual Property rights of any other Person.

 

(b)   Seller employs procedures to maintain the proprietary nature of, and owns and has the unrestricted right to use all, trade secrets, including know-how, inventions, designs, processes, computer software and documentation for such software and technical data required for or incident to the development, manufacture, operation and sale of all products and services sold or proposed to be sold by Seller, free and clear of any Liens, including without limitation, all claims of current and former employees, consultants, officers, directors, owners and shareholders of Seller. Each employee and officer of Seller has executed an agreement with Seller regarding confidentiality and proprietary information. Seller and JAS, after reasonable investigation, are not aware that any of Seller’s employees are in violation thereof, and Seller and JAS will use their best efforts to prevent any such violation.

 

(c)   Schedule 3.12 contains a complete and accurate list of all computer software owned by Seller (the "Owned Software"), and identifies all contracts and agreements pursuant to which computer programming services for Seller were performed. Seller has exclusive title to the Owned Software, free and clear of all claims, including claims or rights of employees, agents, consultants, customers, licensees or other parties involved in the development, creation, marketing, maintenance, enhancement or licensing of such computer software. The Owned Software is not dependent on any Licensed Software (as defined in paragraph (d) below) in order to fully operate in the manner in which it is intended. No Owned Software has been published or disclosed to any other parties, except pursuant to contracts requiring such other parties to keep the Owned Software confidential. No such other party has breached any such obligation of confidentiality.

 

(d)   Schedule 3.12 contains a complete and accurate list of all software under which Seller is a licensee, lessee or otherwise has obtained the right to use such software (the "Licensed Software"). Schedule 3.12 also sets forth a list of all license fees, rents, royalties or other charges that Seller is required or obligated to pay with respect to the Licensed Software. Seller is in full compliance with all provisions of any license, lease or other similar agreement pursuant to which it has rights to use the Licensed Software. None of the Licensed Software has been incorporated into or made a part of any Owned Software or any other Licensed Software. Seller has not published or disclosed any Licensed Software to any other party.

 

 

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(e)   The Owned Software and Licensed Software constitute all software currently used in or necessary for the ownership and operation of the Purchased Assets (the "Seller Software"). The transactions contemplated herein will not cause a breach or default under any licenses, leases or similar agreements relating to the Seller Software or impair Buyer's ability to use the Seller Software in the same manner as such computer software is currently used by Seller. Seller is not infringing any intellectual property rights of any other Person with respect to the Seller Software, and no other Person is infringing any intellectual property rights of Seller with respect to the Seller Software or is claiming any right, title or interest in the Seller Software or any infringement by Seller of any intellectual property right which such other Person may possess.

 

(f)   Seller has not taken or failed to take any actions under the law of any applicable foreign jurisdictions where Seller has marketed or licensed the Seller Software that would restrict or limit the ability of Seller to protect, or prevent it from protecting, its ownership interests in, confidentiality rights of, and rights to market, license, modify or enhance, the Seller Software.

 

Section 3.13 . Contracts .   Schedule 3.13 lists all of the contracts, leases, arrangements and understandings including, without limitation, sales orders, purchase orders and distribution agreements, which relate to the Purchased Assets (the "Contracts"), each of which was entered into, arrived at or conducted on behalf of Seller with appropriate authority and in accordance with Seller's customary practices. None of the sales orders has been pre-billed to, or prepaid by, the customer, except in the ordinary course of business and consistent with Seller's past practices, nor does any sales order contain or entitle the customer to any discount, credit, rebate or allowance of any kind or nature that reflects prepayment made by a customer. Neither Seller nor the other parties to such Contracts, arrangements and understandings are in default thereof and all Contracts are valid and in effect. Neither Seller nor JAS has received notice of default under any Contract, and neither Seller nor JAS know of any event that has occurred or that is expected to occur which (after notice and lapse of time or both) would become a breach or default under, or otherwise permit unilateral modification, cancellation, acceleration or termination of any such Contract. No customer, supplier or vendor of Seller has given any notice or made any threat or otherwise revealed an intent to cancel or otherwise terminate its relationship with Seller, to materially and adversely change the relationship, to substantially reduce the volume of business it currently does with Seller or to refuse to renew any Contract when it expires.

 

Section 3.14 . Labor . Seller has no employees and, except as set forth on Schedule 3.14 , Seller is not, and, as of the Closing Date will not be, a party to any employment or consulting agreement or to any collective bargaining agreement.

 

 

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Section 3.15 . Taxes .

 

(a)   Seller has prepared and filed all federal, state, local and foreign returns, estimates, information statements and reports ("Returns") relating to any and all Taxes concerning or attributable to Seller or the Purchased Assets which Seller is required to file on or before the Closing and such Returns were true and accurate and were completed in accordance with applicable law when filed.

 

(b)   Seller has (i) paid all Taxes it is required to pay and (ii) withheld wi


 
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