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EXHIBIT 2.1
Asset Purchase Agreement by & among Handheld Entertainment,
Inc.,
Aperio Technologies, Inc. and Mary Dunne
FUNMANSION.COM
ASSET PURCHASE AGREEMENT
BY & AMONG
HANDHELD ENTERTAINMENT, INC.,
A DELAWARE CORPORATION
APERIO TECHNOLOGIES, INC.,
A FLORIDA CORPORATION
AND
MARY DUNNE,
AN INDIVIDUAL
Dated as of December 1, 2006
ASSET PURCHASE
AGREEMENT
This Asset Purchase Agreement (
‘‘Agreement’’ ) is entered
into as of December 1, 2006 by and among HANDHELD ENTERTAINMENT,
INC., a Delaware corporation (‘‘ Handheld
’’), Aperio Technologies, Inc., a Florida corporation
(‘‘ Aperio ’’) and Mary
Dunne, an individual (the ‘‘ Dunne
’’).
RECITALS
WHEREAS, Aperio owns one hundred percent (100%) of the assets
and business interests (‘‘ Interest
’’) relating to Funmansion.com (‘‘
Funmansion ’’ or ‘‘
Business ’’); and
WHEREAS, Handheld desires to purchase the Interest from Aperio,
and Aperio desires to sell the Interest to Handheld, in each case
upon the terms and subject to the conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. [Reserved]
ARTICLE II.
SALE AND PURCHASE
Section 2.1. Agreement to Sell and to
Purchase.
On the terms and subject to the conditions set forth in this
Agreement, at the Closing, Handheld shall purchase from Aperio, and
Aperio shall sell, transfer, assign, convey and deliver to
Handheld, the Interest.
Section 2.2. Purchase Price.
(a) The purchase price (the ‘‘ Purchase
Price ’’) for the Interest shall consist of the
following:
(i) $350,000 United States Dollars (‘‘
USD ’’) (the ‘‘ Cash
Consideration ’’), via wire transfer in
immediately available funds as directed by Aperio, less the Escrow
Amount which will be deposited into Escrow pursuant to the terms of
the Escrow Agreement, attached as Exhibit A, (the
‘‘ Escrow Agreement ’’);
(ii) A five (5)-year, convertible promissory note in the amount
of $600,000 USD, in the form attached as Exhibit B
hereto, given by Handheld (the ‘‘ Promissory
Note ’’). The Promissory Note shall be
convertible on the terms provided in the Promissory Note.
(iii) $150,000 USD payable in 12 equal monthly installments of
$12,500 USD (each a ‘‘ Monthly Payment
’’). The first Monthly Payment shall be due and payable
January 1, 2007 and each remaining Monthly Payment shall be due and
payable on the first day of each calendar month thereafter.
Section 2.3. Nondisclosure;
Noncompetition; Non-solicitation.
(a) Except as required by law, from and
after the Closing Date, Aperio (acting through its agents,
including, without limitation, Dunne) shall not use, divulge,
furnish or make accessible to anyone any proprietary, non-public,
confidential or secret information to the extent relating to
HandHeld or the Business (including, without limitation, customer
lists, supplier lists and pricing and marketing arrangements with
customers or suppliers) and Aperio shall cooperate reasonably with
HandHeld in preserving such proprietary, confidential or secret
aspects of HandHeld and the Business.
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(b) From and after the
Closing Date, for a period of two (2) years from the Closing Date,
Aperio (acting through its agents, including, without limitation,
Dunne) shall not engage in Competitive Business Activities (as
defined below). For purposes of this Agreement, ‘‘
Competitive Business Activities ’’ means
the operation of a website, or other electronic system with similar
capabilities, that is, in whole or in part, devoted to hosting
user-generated, PG-13-like rated humor.
(c) The Company hereby acknowledges and
agrees that (acting through its agents, including, without
limitation, Dunne) shall continue to own and operate one or more
separate businesses and/or related websites (as applicable), as
listed on Schedule 2.3(c) to this Agreement (‘‘
Separate Businesses ’’) and shall
continue to own all inventions, creations, revenues, profits, or
other benefits generated by the Separate Businesses. In addition,
and notwithstanding anything to the contrary in this Agreement, or
the Employment Agreement, or as would otherwise be provided by
applicable State or Federal law, the Company waives any right to
claim any incidence of franchise, sharing or other right to
revenues, profits, or other benefits, whether created or generated
by Aperio or Dunne individually, or by any Separate Business.
Moreover, the Company waives any right to claim any incidence of
ownership to any intellectual property created or generated by
Aperio or Dunne individually, or by any Separate Business, except
such as directly relates to the intellectual property acquired by
the Company pursuant to this Agreement (e.g., intellectual property
of the Business, including the trademark
‘‘Funmansion.com’’, the domain name
Funmansion.com and any intellectual property residing on the server
which Aperio shall transfer to the Company at the Closing).
(d) Aperio (acting through its agents,
including, without limitation, Dunne) shall not, directly or
indirectly, after the Closing and for a period of two (2) years
from the Closing Date, (i) solicit for hire or enter into any
contractual arrangement with any employee or contractor of HandHeld
without the prior written consent of HandHeld unless such employee
or contractor has not been employed by HandHeld for a period of two
(2) years; or (ii) call on or solicit any of the customers or
suppliers of HandHeld or the Business or make known the names and
addresses of such customers or suppliers or any information
relating in any manner to HandHeld or the Business or
HandHeld’s or the Business’ relationships with such
customers or suppliers. Aperio and Dunne agree that a violation of
this Section will cause irreparable injury to HandHeld, and
HandHeld shall be entitled, in addition to any other rights and
remedies it may have at law or in equity, to an injunction
enjoining and restraining Aperio and/or Dunne from doing or
continuing to do any such violation and any other violations or
threatened violations of this Section.
(e) Aperio and Dunne acknowledge and
agree that the covenants set forth in this Section are reasonable
and valid in scope and in all other respects and are designed to
protect the goodwill associated with the assets and the Business
being purchased pursuant to this Agreement. If any of such
covenants is found to be invalid or unenforceable by a final
determination of a court of competent jurisdiction (i) the
remaining terms and provisions hereof shall be unimpaired and (ii)
the invalid or unenforceable term or provision shall be deemed
replaced by a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or
unenforceable term or provision. In the event that, any of the
provisions of this Section relating to scope of the covenants
contained therein or the nature of the business restricted thereby
shall be declared by a court of competent jurisdiction to exceed
the maximum restrictiveness such court deems enforceable, such
provision shall be deemed to be replaced herein by the maximum
restriction deemed enforceable by such court.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF APERIO AND DUNNE
Aperio and Dunne jointly and severally represent and warrant to
Handheld as set forth in this Article III :
Section 3.1. Organization and
Authority of Aperio
(a) Aperio is a Florida corporation duly organized as of
February 14, 2001 and validly existing in good standing under the
laws of Florida.
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(b) Aperio has full power and authority to
execute and deliver this Agreement and related documents, and the
execution and delivery by Aperio of this Agreement and such related
documents and the consummation of the transaction contemplated
thereby have been duly and validly authorized by all necessary
corporate action on the part of Aperio.
Section 3.2. Assets and Liabilities of
Funmansion.
As of the date hereof, the only assets and liabilities of
Funmansion are those listed on Schedule 3.2 hereof.
Section 3.3. Employees/Contractors of
Funmansion.
Except as set forth in Schedule 3.3 hereto, Funmansion has no,
and prior to the Closing will have no employees, contractual
relationships or other obligations, other than this Agreement.
Section 3.4. Status of Assets.
(a) As of the date hereof and at the
Closing, no person or entity other than Aperio has any interest in
or claim to any of the assets listed in Schedule 3.2.
(b) The transfer of the Interest, which
is listed in Schedule 3.2, from Aperio to HandHeld shall not
constitute a fraudulent transfer, distribution or violation of any
statutory provision relating to
(c) Neither the execution and delivery of
this Agreement (and related documents) nor the consummation or
performance of any of the transactions contemplated thereby will,
directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of any
provision of the Articles of Incorporation or Bylaws of Aperio or
any resolution adopted by the shareholder(s) of Aperio, or (ii)
contravene, conflict with, or result in a violation or breach of
any provision of, or give any person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify any material
agreement to which Aperio is a party.
(d) The transactions contemplated by this
Agreement (and related documents) are not violative of (i) any
shareholder distribution limitation provisions under Florida law,
or (ii) any fraudulent transfer provisions under Florida law.
(e) Handheld acknowledges and agrees that
neither Aperio nor Dunne warrant any right(s) to user-submitted
content which has or may appear on www.funmansion.com .
Aperio and Dunne represent and warrant to Handheld that, as of the
date of the Closing, neither Aperio nor Dunne has received any
unresolved notice of claim against them relating to a third
party’s alleged rights in user submitted content appearing on
www.funmansion.com .
Section 3.5. Traffic Statistics
Reports.
The funmansion.com website traffic statistic reports provided to
Handheld by Aperio are, to the best knowledge of Aperio and Dunne,
true and correct representations of actual results realized for the
periods covered by such reports, as reported by industry standard
website traffic reporting services and Funmansion’s internal
traffic statistics program.
ARTICLE IV.
CONDITIONS TO APERIO’S AND DUNNE’S OBLIGATIONS
The obligation of Aperio and Dunne to consummate the
transactions contemplated by this Agreement is subject to the
satisfaction (unless waived in writing by Aperio or Dunne) of each
of the following conditions on or prior to the Closing Date:
Section 4.1. Transaction
Documents.
Handheld shall have executed and delivered to Aperio this
Agreement, the Escrow Agreement, the Promissory Note, and the
Registration Rights Agreement in the form attached hereto as
Exhibit C (the ‘‘ Registration
Rights Agreement ’’).
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Section 4.2. Employment
Agreement.
Handheld shall have agreed to engage Dunne on substantially the
terms set forth in the Employment Agreement attached hereto as
Exhibit D (the ‘‘ Employment
Agreement ’’).
Section 4.3. Opinion of
Counsel.
Aperio shall have received an opinion of Niesar Curls Bartling
& Whyte LLP, counsel to Handheld, substantially in the form
attached hereto as Exhibit E ( ‘‘
Purchaser’s Opinion of Counsel
’’).
ARTICLE V.
CONDITIONS TO HANDHELD’S OBLIGATIONS
The obligation of Handheld to consummate the transactions
contemplated by this Agreement is subject to the satisfaction
(unless waived in writing by Handheld) of each of the following
conditions on or prior to the Closing Date:
Section 5.1 Corporate
Documents
HandHeld shall have received from Aperio certified copies of its
Articles of Incorporation, a copy of its Bylaws, a certificate of
good standing from the Secretary of State of the state of Florida
and written consents from the Board of Directors of Aperio and the
shareholders of Aperio (if Dunne is not the only shareholder
thereof) approving the execution and delivery of this Agreement
(and related documents) and the consummation of the transactions
contemplated hereby and thereby, and such resolutions shall be in
full force and effect as of the Closing Date.
Section 5.2. Employment.
Dunne shall have agreed to accept employment by Handheld on
substantially the terms set forth in the Employment Agreement.
Section 5.3. Opinion of
Counsel.
Handheld shall have received an opinion of Greenberg Traurig,
LLP, counsel to Aperio, substantially in the form attached hereto
as Exhibit F (‘‘ Aperio’s
Opinion of Counsel ’’).
Section 5.4. Bill of Sale.
Aperio shall have executed and delivered to HandHeld the Bill of
Sale in the form attached hereto as Exhibit G (the
‘‘ Bill of Sale ’’).
Section 5.5. Transaction
Documents.
Aperio and/or Dunne (as applicable) shall have executed and
delivered to Handheld this Agreement, the Escrow Agreement, the
Registration Rights Agreement, the Employment Agreement, and the
Bill of Sale.
ARTICLE VI.
THE CLOSING
Section 6.1. The Closing.
The Closing of the transactions contemplated hereby (the
‘‘ Closing ’’) shall be held
on December 1, 2006 (
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