LIMITED ASSETS PURCHASE
AGREEMENT
THIS Limited Assets Purchase Agreement (the “
Agreement ”) dated as of December __, 2006 (the
“ Effective Date ”), is by and between
SysteamUS, Inc., a California corporation (“ SysteamUS
” or the “ Seller ”), Systeam Italy, SpA,
an Italian corporation (“ Systeam Italy” ), and
Merchandise Creations, Inc., a Nevada corporation (“
Merchandise Creations ” or “ Buyer
”). SysteamUS, Systeam Italy and Merchandise Creations are
hereinafter sometimes referred to collectively as the “
Parties ” and individually as a “ Party
.”
WHEREAS , the Seller wishes to sell certain of its
assets associated with its security business, including the source
codes, patents, trade marks, service marks, copy rights,
documentation and technical specifications and intellectual
property associated therewith, along with other written
descriptions of the security software (the “ Security
Software ”) to the Buyer under the terms and conditions
of this Agreement;
WHEREAS , SysteamUS owns the Security Software and
Systeam Italy has a license to sell the Security Software
throughout Europe;
WHEREAS , SysteamUS desires to sell the Security
Software (and no other assets) to the Buyer under the terms and
conditions of this Agreement; and
WHEREAS , the Buyer wishes to purchase from the Seller
the Security Software under the terms and conditions hereinafter
set forth.
NOW, THEREFORE
, in consideration of the premises
set forth above and the respective covenants, agreements,
representations and warranties hereinafter set forth, the Parties
hereby agree as follows:
ARTICLE I.
PURCHASE AND SALE OF CERTAIN ASSETS
1.1.
Security Software . Upon the terms and subject to
the conditions hereof, as of the Closing Date, as defined in
Article 2.1 below, Seller hereby sells, transfers, conveys, assigns
and delivers to the Buyer, and the Buyer hereby purchases and
accepts from Seller, all right, title and interest of Seller in and
to the Security Software, including without limitation the source
codes and any other intellectual property associated therewith.
Seller warrants and represents to Buyer that it will destroy all
copies of the Security Software that is not delivered to the Buyer
at the Closing. Such Security Software is listed on Exhibit
A , attached hereto and made a part hereof.
1.2.
Consideration . Subject to the terms and
conditions hereof, in consideration of the sale, transfer,
assignment and delivery of the Security Software by Seller to the
Buyer, the Buyer shall pay by wire transfer per the wiring
instructions set forth in Exhibit F , attached hereto and
made a part hereof, to Seller on or before the Closing Date
$5,850,000.00 (the “ Purchase Price ”). As part
of the consideration exchanged hereunder, the Parties agree that
they will negotiate in good faith a license for the Seller or its
designee to sell the Security Software in India (the “
Indian License ”).
1.3. “
As Is” Sale . The Parties agree and the
Buyer acknowledges that the sale of the Security Software hereunder
is “as is” subject to the terms and conditions and the
warranties and representations set forth herein.
1.4.
Sale of Security Software . The Parties agree and
the Seller acknowledges that it is the intent of the Parties that
all assets associated with the Security Software are being sold to
the Buyer by the Seller. The Seller agrees that, if it discovers
any assets associated with the Security Software after the Closing
Date, it will immediately notify the Buyer of such discovery and
transfer such assets as soon as reasonably possible
thereafter.
1.5.
License of the Security Software to the Seller for Sale in
India . The Parties agree to negotiate in good
faith the Indian License. The Parties agree to negotiate the Indian
License within 60 days of the Closing Date. The Parties agree that
the Indian License shall be exclusive and perpetual. The Parties
agree that the royalty fee for the Indian License shall not be
higher than the fees or royalties for the Security Software for any
other reseller, licensee or customer (collectively, “
Licensee ”) but in no event shall such fees exceed 30%
of the price list (net of taxes and duties) from sales of such
Indian License. The Parties agree and the Buyer acknowledges that
the Seller or its designee will be treated as a “most
favorable” customer. The Parties agree that the support and
maintenance for the Indian Software will be at least as good as the
support and maintenance for any Licensee and that the charges for
such support and maintenance will be no higher for the Indian
License than the charges to any Licensee for such support and
maintenance. The Buyer and Seller agree to provide and/or obtain
for the Seller’s or its designees’ use customer
certificates and testimonials for the Security Software. The Buyer
and Seller agree that as part the Indian License they will make a
core team available for support and maintenance of the Indian
License. The Buyer and Systeam Italy further agree to cooperate
with the Seller and its designees in setting up meetings with
customers in Italy for the Seller and/or its designees to
demonstrate the operability of the Security Software for potential
customers of the Seller or Seller designatees in India.
1.6.
Non-Solicitation . Each Party agrees not to
solicit directly or indirectly the employees or consultants of the
other Party to work for or consult with the Party without the prior
permission of such other Party for three years from the Effective
Date. The Seller agrees not to solicit directly or indirectly the
employees or consultants of Seller to work for or consult with the
Seller without the prior permission of the Buyer or
Seller.
1.7.
Buyer’s Sales Taxes . The Seller shall bear
and pay, and shall reimburse the Buyer and the Buyer’s
affiliates for, any sales taxes, use taxes, transfer taxes,
documentary charges, recording fees or similar taxes, charges, fees
or expenses that may become payable in connection with the sale of
the Security Software to the Buyer.
ARTICLE II.
CLOSING
2.1.
Closing Date . The closing of the transactions
contemplated by this Agreement, (the “ Closing
”) shall take place on December __, 2006 (the “
Closing Date ”), unless another time or place shall be
agreed to by the Parties. All transactions provided for herein to
occur on and as of the Closing Date should be deemed to have
occurred simultaneously and to be effective as of the close of
business on the Closing Date.
2.2.
Delivery by the Buyer . At the Closing, the Buyer will
deliver or cause to be delivered to the Sellers the
following:
(a) Payment
of the Purchase Price in the manner specified in Article 1.2
hereof; and
(b) A
certificate in substantially the form set forth in Exhibit C
, attached hereto, dated the Closing Date and executed by a duly
authorized officer of the Buyer stating that all representations
and warranties of the Buyer contained in this Agreement are true
and correct in all material respects on and as of the Closing Date
as though given on and as of such date and Buyer has performed all
agreements and covenants required by this Agreement to be performed
by it prior to or on the Closing Date, except where the failure of
any representations and warranties to be true and correct,
individually or in the aggregate, will not have an adverse material
effect.
2.3.
Delivery by the Seller . At the Closing, the Seller will
deliver or cause to be delivered to the Buyer the
following:
(a) a
bill of sale substantially in the form of Exhibit B hereto
(the “ Bill of Sale ”), duly executed by the
Sellers, effectively vesting in the Buyer all right, title and
interest of the Seller in and to the Security Software;
and
(b) certificates
in substantially the forms set forth in Exhibits D and
E , attached hereto, dated the Closing Date and executed by
a duly authorized officer of SysteamUS and Systeam Italy stating
that all its representations and warranties contained in this
Agreement are true and correct in all material respects on and as
of the Closing Date as though given on and as of such date and
SysteamUS and Systeam Italy has performed all agreements and
covenants required by this Agreement to be performed by it prior to
or on the Closing Date, except where the failure of any
representations and warranties to be true and correct, individually
or in the aggregate, will not have an adverse effect.
2.4.
Further Action . Each of the Parties agrees to
execute and deliver after the Closing Date such other documents,
certificates, agreements and other writings and to take such other
actions as may be necessary, in the opinion of counsel, in order to
consummate or implement expeditiously the transactions contemplated
hereby. In addition, the Seller agrees, promptly upon the request
of the Buyer, and at no additional expense to the Sellers, other
than the expenses associated with the preparation of appropriate
instruments of assignment, to take all
actions reasonably requested by the Buyer to
perfect the transfer to the Buyer of the Security
Software.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE
BUYER
The Buyer hereby represents and
warrants to the Seller as follows:
3.1.
Corporate Status . The Buyer is a duly organized
and validly existing corporation under the laws of Nevada, with all
requisite power and authority to own its properties and conduct its
business.
3.2.
Authority . The Buyer has the requisite power
and authority to execute and deliver this Agreement, and to perform
its obligations thereunder. This Agreement has been duly and
validly authorized, executed and delivered by the Buyer and
constitutes the valid and binding agreement of the Buyer in
accordance with its respective terms. No other proceedings on the
part of the Buyer are necessary to authorize this Agreement and the
transactions contemplated by any of the foregoing.
3.3.
No Conflict . The execution and delivery by the
Buyer of this Agreement, does not, and the performance of its
obligations hereunder, will not:
(a) conflict
with, or result in a breach of, any of the provisions of the
documentation setting up the corporation;
(b) breach,
violate or contravene any applicable law, rule or regulation of any
state or of the United States or any political subdivision thereof,
or any order, writ, judgment, injunction, decree, determination or
award, or create any right of termination or acceleration or
encumbrance that in the aggregate would have a material adverse
effect on its authority or ability to perform its obligations under
this Agreement; or
(c) conflict
in any respect with, or result in a breach of or default under, any
contract, license, franchise, permit or any other agreement or
instrument to which it is a party or by which it or any of its
properties may be affected or bound that in the aggregate would
have a material adverse effect on its authority or ability to
perform its obligations under this Agreement.
3.4.
Governmental Consents - the Buyer . No material
consent, approval or authorization of, or designation, declaration
or filing with, any governmental agency or authority on the part of
the Buyer is required in connection with the execution or delivery
by the Buyer of this Agreement or the consummation by the Buyer of
the transactions contemplated thereunder.
3.5.
No Broker . The Buyer has engaged no
corporation, firm or other person who is entitled to any fee or
commission as a finder or a broker in connection with the
negotiation of this Agreement or the consummation of the
transactions contemplated hereby, and the Buyer shall be
responsible for all liabilities and claims (including costs and
expenses of defending
against same) arising in connection with any
claim by a finder or broker that it acted on behalf of the Buyer in
connection with the transactions contemplated hereby.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE
SELLER
The Seller hereby represents and
warrants to the Buyer as follows:
4.1.
Incorporation . SysteamUS is a duly incorporated
and validly existing corporation in good standing under the laws of
the State of California, with all requisite corporate power and
authority to own its properties and conduct its business, and is
duly qualified in each jurisdiction in which its ownership of
property requires such qualification except where the failure to so
qualify would not have a material adverse effect upon the Security
Software or the ability of it to perform their obligations
hereunder.
4.2.
Authority . The Seller has the requisite
corporate power and authority to execute and deliver this
Agreement, and to perform its obligations thereunder. This
Agreement has been duly and validly authorized, executed and
delivered by the Seller and constitutes the valid and binding
agreement of the Seller in accordance with its respective terms. No
other corporate proceedings on the part of the Seller are necessary
to authorize this Agreement and the transactions contemplated by
any of the foregoing.
4.3.
No Conflict . The execution and delivery by the
Seller of this Agreement does not, and the performance by the
Seller of its obligations hereunder will not:
(a) conflict
with, or result in a breach of, any of the provisions of its
Certificate of Incorporation or Bylaws;
(b) breach,
violate or contravene any applicable law, rule or regulation of the
United States or any political subdivision thereof, or any order,
writ, judgment, injunction, decree, determination or award, or
create any right of termination or acceleration or encumbrance
that, in the aggregate would have a material adverse effect on the
Security Software; or
(c) conflict
in any respect with, or result in a breach of or default under, any
contract, license, franchise, permit or any other agreement or
instrument to which the Seller is a party or by which it may be
bound that in the aggregate would have a material adverse effect on
the transactions contemplated by this Agreement.
4.4.
Governmental Consents - the Seller . No material
consent, approval or authorization of, or designation, declaration
or filing with, any governmental agency or authority on the part of
the Seller is required in connection with the execution or delivery
by the Seller of this Agreement or the consummation by the Seller
of the transactions contemplated hereby.
4.5.
No Broker . The Seller has engaged no
corporation, firm or other person who is entitled to any fee or
commission as a finder or a broker in connection with the
negotiation of
this Agreement or the consummation of the
transactions contemplated hereby, and the Sellers shall be
responsible for all liabilities and claims (including costs and
expenses of defending against same) arising in connection with any
claim by a finder or broker that it acted on behalf of the Sellers
in connection with the transactions contemplated hereby.
4.6.
Title to Personal Property . The Seller has good
and marketable title to the Security Software, free and clear of
any material liens or encumbrances.
4.7.
Actions, Suits, Proceedings . There are no
actions, suits or proceedings pending or, to the Seller’s
knowledge, threatened against the Security Software, at law or in
equity, including any administrative proceedings with any
regulatory authority; and no third-party claims have been asserted
against the Seller with respect to the Security Software. Except
for the tax claims against Systeam Italy by the taxing authority in
Italy, which has been disclosed to the Buyer, there is no existing
default by the Seller with respect to any judgment, order, writ,
injunction or decree of any governmental authority or arbitrator
which materially adversely affects the Security
Software.
4.8.
No Rights in Others to the Security Software . The Seller is
not a party to any outstanding contracts or other arrangements
giving any person any present or future right to require the Seller
to transfer to any person any ownership or possessory interest in,
or to grant any lien on, any of the Security Software, other than
pursuant to this Agreement.
4.9.
Licenses and Permits . The Seller has all
required the licenses and permits and other governmental
authorizations and approvals. All such licenses and permits held by
the Seller, which are material to the use of the Security Software
are valid and in full force and effect. The Buyer has made its own
investigation of such matters and is responsible for obtaining such
regulatory approvals for its operations after the
Closing.
4.10.
Exclusive Warranties . Except for the express
representations and warranties made by the Seller in this Article
IV, the Seller makes no representation or warranty, express or
implied, concerning the Security Software, it being specifically
understood by the Buyer that, except for the express warranties set
forth in this Article IV, the Security Software is are being sold
“ AS IS ” in all respects.
SELLER SPECIFICALLY DISCLAIMS ANY WARRANTY OF
MERCHANTABILITY OR SUITABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE OF THE BUYER, WHETHER OR NOT SELLER HAS BEEN MADE AWARE OF
ANY SUCH PURPOSE. SELLER SHALL NOT BE RESPONSIBLE FOR ANY INDIRECT,
SPECIAL OR CONSEQUENTIAL DAMAGES OF THE BUYER W
