ASSET PURCHASE AGREEMENT
Exhibit 10.1
This Asset Purchase Agreement (this "Agreement"), dated as of 1st day of September, 2017, is entered into between RWJ ADVANCED MARKETING, LLC, a Georgia limited liability company ("Seller"), whose principal address is 0000 Xxxxx Xxxxx Xxxx, Xxxxx 000, Xxx 00, Xxxxxxxx, Xxxxxxx 00000, and GOPHER PROTOCOL INC., a Nevada corporation ("Buyer"), whose principal address is 0000 Xxxxxxxx Xxxx., Xxxxx 000X, Xxxxx Xxxxxx, XX 00000.
Recitals
WHEREAS, Seller wishes to sell and assign to Buyer, and Buyer wishes to purchase and assume from Seller, substantially all the assets, and certain specified liabilities, of the Business, subject to the terms and conditions set forth herein. (Purchase and sale of the assets and all related transactions, are referred to herein as the “Transaction”).
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Purchase and Sale of Assets. Subject to the terms and conditions of this Agreement, Seller agrees to sell, transfer, assign and deliver to Buyer, and Buyer agrees to purchase, acquire and take assignment and delivery of the properties and assets hereinafter set forth vested under designated corporation in formation - as wholly own subsidiary of Buyer (the “Assets”), as more particularly described on Exhibit “A”, attached hereto and incorporated herein by this reference:
(a) Inventory. All of the inventory of the Seller, wherever located, including all finished goods, work in process, raw materials, spare parts and all other materials and supplies to be used or consumed by Seller in the production of finished goods and in the operation of the Assets, (collectively, the “Inventory”).
(b) Contracts. All of the rights, titles, interests and benefits accruing to Seller under those rental, sales, supply, purchase order, service, sign, maintenance, equipment, any and all telephone and other contracts or leases relating to the Assets, all of Seller’s rights accruing under any so-called Non-Compete Agreements in favor of Seller, and any other contracts or leases relating to the operation of the Assets (“Contracts”);
(c) Licenses and Permits. Any and all transferable consents, authorizations, variances or waivers, licenses, permits, registrations, certificates, approvals and similar rights from any governmental or quasi-governmental agency, department, board, commission, bureau or other entity or instrumentality with respect to the Assets (collectively, the “Licenses”) held by or granted to Seller;
(d) Intangible Assets. All of Seller’s goodwill associated with the Assets, including the telephone number, domain name and web page, if any, customer lists, employee lists, supplier lists, and prospect lists associated with Sellers’ Assets, all trademarks, service marks and their associated goodwill, trade secrets and confidential information, to the extent transferable (collectively the “Intangible Assets”).
(e) Intentionally Deleted.
2. Purchase Price; Payment; Assumed Liabilities; Allocations.
(a) Purchase Price; Payment and Other Consideration. The purchase price for the Assets shall be THREE MILLION and 00/100 DOLLARS ($3,000,000.00) as follows, subject to proration as set forth herein (the “Purchase Price”). Payment of the Purchase Price and other consideration shall be made as follows:
A. At Closing, Buyer shall pay Seller cash in the sum of FOUR HUNDRED THOUSAND and 00/100 DOLLARS ($400,000.00);
B. At Closing, Buyer shall execute a secured promissory note in favor of the Seller in the amount of TWO MILLION SIX HUNDRED THOUSAND and 00/100 DOLLARs ($2,600,000.00) in favor of the Seller (the “Note”);
C. At Closing, Buyer shall issue the equivalent of THREE MILLION (3,000,000.00) of shares of common stock at the then trading value at Closing to Xxxxxx Xxxxxx Xxxxxxx;
D. At Closing, Buyer shall execute a stock warrant agreement to issue FIVE MILLION (5,000,000.00) shares of common stock to vest immediately to Xxxxxx Xxxxxx Xxxxxxx with a term of five (5) years with a strike price to be agreed upon at Closing;
E. At Closing, Buyer shall issue the equivalent of TWO MILLION and (2,000,000.00) of shares of common stock at the then trading value at Closing to Xxxxxxx Xxxxx as described in his Employment Agreement; and
F. At Closing, Buyer shall execute a stock warrant agreement to issue FOUR MILLION (4,000,000.00) shares of common stock to vest immediately to Xxxxxxx Xxxxx with a term of five (5) years with a strike price to be agreed upon at Closing, as described in his Employment Agreement.
(b) Assumption of Liabilities. At Closing, in addition to payment of the Purchase Price, Buyer shall assume and agree to pay, discharge, and perform the following, and only the following and no other, obligations and liabilities of Seller (the “Assumed Liabilities”):
Seller’s liabilities incurred after the “Effective Date” (hereafter defined) by Buyer pursuant to the Assumed Contracts, but only to the extent such obligations and liabilities accrue and arise after the Effective Date and are not caused by or related to any action or inaction by Sellers, or any other party occurring prior to the Effective Date.
Except for the specific Assumed Liabilities as defined above, Buyer shall not assume, pay or otherwise be liable for any other obligations, liabilities or debts of Seller of any nature whatsoever.
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(c) Retained Liabilities. The “Retained Liabilities” as set forth in this section (d) shall remain the sole responsibility of and shall be retained, paid, performed and discharged solely by Seller. “Retained Liabilities” shall mean every obligation and liability of Seller other than the Assumed Liabilities, including, without limitation:
A. any obligation or liability of any nature whatsoever arising out of or relating to products sold or distributed by Seller to the extent manufactured, sold, or distributed sold prior to the Effective Date;
B. any obligation or liability of any nature whatsoever under any Contract that arises after the Effective Date but that arises out of or relates to any breach that occurred prior to the Effective Date;
C. any obligation or liability of any nature whatsoever for taxes, fees, or assessments of any nature, whether deferred or not, (A) arising as a result of Seller’s operation of its Business or ownership of the Assets prior to the Effective Date, (B) that will arise as a result of the sale of the Assets pursuant to this Agreement;
D. any obligation or liability of any nature whatsoever under any employee benefit plans of Seller or relating to payroll, vacation, sick leave, workers’ compensation, unemployment benefits, pension benefits, employee stock option or profit-sharing plans, health care plans or benefits or any other employee plans or benefits of any kind for Seller’s employees or former employees or both;
E. any obligation or liability of any nature whatsoever under any employment, severance, retention or termination agreement with any employee of Seller;
F. any obligation or liability of any nature whatsoever arising out of or relating to any employee grievance whether or not the affected employees are hired by Buyer;
G. any obligation or liability of any nature whatsoever arising out of any litigation, action, arbitration, audit, hearing, investigation, or suit pending as of the Effective Date;
H. any obligation or liability of any nature whatsoever arising out of any litigation, action, arbitration, audit, hearing, investigation, or suit involving Seller’s operation of the Business or ownership of the Assets commenced after the Effective Date and arising out of or relating to any occurrence or event happening prior to the Effective Date;
I. any obligation or liability of any nature whatsoever arising out of or resulting from Seller’s compliance or noncompliance with any legal requirement or order of any governmental body;
J. any obligation or liability of any nature whatsoever of Seller under this Agreement or any other document executed in connection herewith.
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(d) Allocation. At the Closing, Purchase Price shall be allocated, for federal and state tax purposes consistent with Section 1060 of the Internal Revenue Code and applicable regulations, which allocation shall, when agreed to by Buyer and Seller as described in Section 8(a) hereof, be set forth on Exhibit “B”, attached hereto. Buyer and Seller shall prepare and deliver IRS Form 8594, consistent in all respects with the terms of this Section, and Buyer and Seller shall file such Form with the IRS after the Closing Date. In any proceeding, investigation, inquiry, hearing, audit or other action related to the determination of any tax.
(e) At Closing, Buyer and Seller shall execute an executive employee agreement hiring Xxxxxxx Xxxxx in the substantially in the same form as set forth on Exhibit “C”, attached hereto, with (i) an initial term of three (3) years, (ii) provide for an annual salary of TWO HUNDRED FIFTY THOUSAND and 00/100 ($250,000.00) and (iii) provide for a quarterly bonus in the amount of ten percent (10%) of the net profit of the Buyer’s business based on the Assets being purchased hereto (the “Executive Employment Agreement.”)
(f) At Closing, Buyer shall deposit ONE HUNDRED THOUSAND and 00/100 DOLLARS ($100,000.00) in working capital into bank account of the designated corporation vesting the acquired assets (in formation as wholly own subsidiary of Buyer), that Xxxxxxx Xxxxx and Xxxxxx Xxxxxx Xxxxxxx shall control for the purposes of operation of the Buyer’s business based on the Assets being purchased herewith.
(g) Closing Date. The consummation of the transaction contemplated under this Agreement (herein referred to as the “Closing”) shall occur on or before September 1, 2017 (the “Closing Date”); provided, however, that the Parties may mutually agree to extend the Closing Date. On or before September 1, 2017 by 11:59 PM (or such other date if the Closing Date is extended), the Buyer shall cause a wire in the amount of FOUR HUNDRED THOUSAND and 00/100 DOLLARS ($400,000.00) to be made to a bank account designated by the Seller. Notwithstanding anything to the contrary contained herein, the Closing shall be effective as of 11:59 PM on the Closing Date (the “Effective Date”).
(h) Preparation of Closing Documents. Counsel for Seller shall prepare the documents to be executed and delivered at the Closing (the “Closing Documents”), including the Xxxx of Sale (as hereinafter defined), and other Assignments (as hereinafter defined), all of which must be satisfactory to Buyer and its legal counsel.
3. Delivery of Documents.
(a) Seller’s Deliveries. At Closing, upon payment of the Purchase Price by Buyer, Seller shall deliver to Buyer the following:
A. such good and sufficient instruments of sale, conveyance, transfer and assignment as shall be required or as may be appropriate to effectively vest in Buyer good title to the Assets, free and clear of all liens, security interests and encumbrances of whatever nature, properly executed and acknowledged, including a limited warranty xxxx of sale (the “Xxxx of Sale”), and assignment and assumption instruments (the “Assignments”);
B. a fully executed Assignment of Shared Services Agreement;
C. physical possession of all Assets including all Records, keys and items of entry to the Business and the Assets;
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D. all required or necessary consents, waivers and approvals with respect to the Contracts, and assignment thereof, in such form as is satisfactory to Buyer and its counsel;
E. such other instruments and documents as may be reasonably required by Buyer or its counsel as to the performance of all covenants and satisfaction of all conditions required of Seller, or as to any other matter required or necessitated by this Agreement, including evidence reasonably satisfactory to Buyer that the person(s) executing the Closing Documents for Seller has full right, power and authority to do so; and
(b) Buyer’s Deliveries. At Closing, Buyer shall deliver to Seller, as applicable:
A. payment of the cash portion of the Purchase Price in cash to Seller pursuant to Section 2 hereof,
B. the fully executed promissory note in favor of the Seller;
C. a fully executed Executive Employment Agreement;
D. a fully executed Stock Warrant Agreement in favor of Xxxxxx Xxxxxx Xxxxxxx;
E. a fully executed Stock Warrant Agreement in favor of Xxxxxxx Xxxxx, as described in the Employment Agreement;
F. fully executed Stock Certificate issuing THREE MILLION (3,000,000.00) shares of common stock to Xxxxxx Warrant Xxxxxxx (irrevocable instructions to Buyer transfer agent of issuance will be sufficient);
G. fully executed Stock Certificate issuing TWO MILLION (2,000,000.00) shares of common stock to Xxxxxxx Xxxxx (irrevocable instructions to Buyer transfer agent of issuance will be sufficient), as described in the Employment Agreement;
H. a fully executed Assignment of Shared Services Agreement;
I. copies of the resolutions by of the board of directors of Buyer (as applicable) approving the Transaction, together with a certificate of good standing from Buyer’s jurisdiction of organization and each jurisdiction in which Buyer is required to be qualified to do business;
J. such other instruments and documents as may be reasonably required by Seller or their counsel as to the performance of all covenants and satisfaction of all conditions required of Buyer, or as to any other matter required or necessitated by this Agreement, including evidence reasonably satisfactory to Seller that the person(s) executing the Closing Documents for Buyer has full right, power and authority to do so;
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4. Warranties and Representations.
(a) Warranties and Representations to Buyer. As an inducement to Buyer entering into this Agreement, Seller hereby covenants, represents and warrants to Buyer as follows:
A. Good Standing. Seller is a duly organized and validly existing limited liability company and is in good standing under the laws of the State of Georgia.
B. Authority. Seller has all requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and the execution, delivery and performance of this Agreement by Seller does not and will not violate any provisions of Seller’s governing corporate instruments, or any order, judgment or award of any court or administrative agency or any contract to which Seller is a party or require the consent of any third party, or violate any law or governmental or regulatory rule or regulation.
C. Authorization and Execution. This Agreement has been duly authorized by all necessary action on the part of Seller, has been duly executed and delivered by Seller, constitutes the valid and binding agreement of Seller and is enforceable in accordance with its terms. The person executing this Agreement on behalf of Seller has the authority to do so.
D. Warranty of Title. Seller is the lawful owner of the Assets, and has the full right, power, and authority to sell, transfer and convey the Assets to Buyer and that the Assets are not subject to any liens, claims, security interests, encumbrances, taxes, or assessments, however described or denominated.
E. Actions or Proceedings. There is no action, suit or proceeding pending against Seller or known to Seller to be threatened against or affecting Seller in any court, before any arbitrator or before or by any governmental authority. Seller has not been cited, fined, held liable or in violation of, or otherwise received notification of any asserted past or present failure or alleged failure to comply with any federal, state or local laws, and is not aware of any action or occurrence which would give rise to a violation.
F. Payment of Taxes. Seller has paid in full all applicable sales, occupancy, ad valorem, employment and other applicable taxes relating to the ownership and operation of all Business or otherwise relating to the Assets, except for accrued taxes not yet due.
G. Brokers; Finders. Buyer shall not be obligated to pay any broker or finder retained by Seller in connection with the Transaction.
(b) Buyer’s Warranties and Representations. Buyer covenants, warrants and represents as follows:
A. Good Standing. Buyer is a duly organized and validly existing corporation and is in good standing under the laws of the State of Nevada.
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B. Authority. Buyer has all requisite power and authority to execute and deliver this Agreement and to perform the obligations of Buyer hereunder. The execution, delivery and performance of this Agreement by Buyer does not and will not violate any provisions of Buyer’s governing corporate instruments, or any order, judgment or award of any court or administrative agency or any contract to which Buyer is a party or, except as otherwise acknowledged herein, require the consent of any third party, or to Buyer’s knowledge, violate any law or governmental or regulatory rule or regulation.
C. Authorization and Execution. This Agreement has been duly authorized by all necessary action on the part of Buyer, has been duly executed and delivered by Buyer, constitutes the valid and binding agreement of Buyer and is enforceable in accordance with its terms. The person executing this Agreement on behalf of Buyer has the authority to do so.
D. Brokers; Finders. Seller has no obligation to pay any broker or finder in connection with the Transaction.
(c) Effect of Representations and Warranties. The foregoing representations of the parties hereto set forth in this Section are true, and the foregoing warranties and covenants are in full force and effect and binding on same, as of the date hereof, and shall be in full force and effect and deemed to have been automatically reaffirmed and restated by the parties hereto in their entirety as of the date and time of Closing.
5. Further Acts. In addition to the acts and deeds stated herein and contemplated to be performed, executed and delivered by the respective parties hereto, each of the parties hereto agrees to perform, execute and deliver or cause to be performed, executed and delivered at Closing and after Closing any and all such further acts, deeds and assurances as may be reasonably necessary to consummate the Transaction.
6. Confidentiality; Publicity. Except as may be required by law, no party hereto or their respective affiliates, employees, agents or representatives shall disclose to any third party the subject matter or terms of this Agreement without the prior written consent of the other parties; provided however, that any party may discuss the same with its legal counsel and other engaged professionals. No press release or other public announcement related to this Agreement or the transaction contemplated hereby will be issued by any party without the prior written approval of the Seller and Buyer. Buyer and Seller understand that after Closing, Buyer is obligated by law to file within 4 days immediate report in form 8-K with the Security and Exchange Committee along with copies of all agreements with Seller and their respective exhibits.
7. Option of the Buyer. For a period of twelve (12) months following the Closing (the “Option Period”), the Buyer shall have the option to cancel the Note in the event that the there is an operating net loss from the Buyer’s business related to the Assets for three (3) consecutive months during such twelve (12) month period (the “Option to Unwind the Note”). To exercise the Option to Unwind the Note, the Buyer shall provide the Seller with a thirty (30) day written notice of its intent to unwind the Note. If during such thirty (30) day period, the Buyer’s business related to the Assets generates a net operating profit then the Buyer’s thirty (30) day notice shall be of no force and effect. The Option to Unwind the Note shall continue until the expiration of the Option Period at which time the Option to unwind the Note shall terminate and be on no longer any force and effect. In the event that the Buyer exercises its Option to Unwind the Note and during the thirty (30) day notice period, the Buyer’s business related to the Assets does not generates a net operating profit then the remaining sums due under the Note shall be cancelled and the Buyer shall cooperate with the Seller and take all steps necessary to make the Note balance void and return the Assets to the Seller, provided, however with the exception of the cancellation of the sums due under the Note and return of the Assets, Seller shall not be required to return any other consideration to the Buyer and the stock and stock warrants issued to Xxxxxx Xxxxxx Xxxxxxx and Xxxxxxx Xxxxx shall remain in full force and effect.
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8. The parties acknowledge that the Seller is simultaneously purchasing the Assets from X.X. Xxxxxx Whole Sale, Inc., an Alabama corporation (“WLP”). In the event that the sale and purchase of Assets does not occur for any reason whatsoever then the Seller may terminate this Agreement, refund any sums paid by Buyer at the time of such termination and neither party shall have any further obligations to the other party under the Agreement and this Agreement shall be deemed null and void.
9. Advisory Board Appointment. At Closing, Xxxxxx Xxxxxx Xxxxxxx shall be appointed to the Buyer’s advisory board and shall provide consultation and advice to the Buyer’s and provide oversight to the Buyer’s current board of directors in an advisory capacity.
10. Survival. All representations, warranties, covenants and agreements set forth in this Agreement shall survive the Closing of the Transaction indefinitely.
11. Notices. All notices permitted or required to be given hereunder shall be in writing and sent by registered or certified mail, return receipt requested, postage prepaid, by overnight courier (such as Federal Express) or hand delivered, addressed as follows:
| To Seller: | RWJ Advanced Marketing, LLC |
| 0000 Xxxxx Xxxxx Xxxx, Xxxxx 000 | |
| Xxx 00, Xxxxxxxx, Xxxxxxx 00000 | |
| Attention: Xxxxxxx Xxxxx | |
| With Copy to: | Ehrenclou & Xxxxxx LLC |
| 0000 Xxxxxxxxx Xxxx, Xxxxx 0000 | |
| Xxxxxxx, Xxxxxxx 00000 | |
| Attention: Xxxxxx Ehrenclou, Esq. | |
| To Buyer: | Gopher, Inc. |
| 0000 Xxxxxxxx Xxxx., Xxxxx 000X | |
| Xxxxx Xxxxxx, XX 00000 | |
| Attention: Xxxxxxx Xxxxxx |
Any party may designate a different address from time to time by notice given in accordance with the provisions of this paragraph. Any such notice shall be deemed given on the date of delivery.
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12. Miscellaneous. This Agreement shall be construed and interpreted under the laws of the State of Georgia. Seller, and Buyer hereby irrevocably submit in any suit, action or proceeding arising out of or related to this Agreement or to the Transaction contemplated hereby or thereby to the exclusive jurisdiction and venue of any state or federal court having jurisdiction over Gwinnett County, Georgia and waive any and all objections to jurisdiction and venue that they may have under the laws of the State of Georgia or the United States and any claim or objection that any such court is an inconvenient forum. If any provision of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Agreement or other affected document, and the application of such provisions to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, legal representatives, successors and permitted assigns, whether voluntary by act of the parties or involuntary by operation of law, as the case may be. This Agreement is solely for the benefit of the parties hereto and their respective successors and permitted assigns. There shall be no third party beneficiaries hereof, intended or otherwise. Neither Party may assign this Agreement without the written consent of the other party, provided, however, Buyer may assign this Agreement to a wholly owned subsidiary. In the event of such assignment by Buyer it shall remain obligated and liable under the terms and conditions of this Agreement. The titles of sections and subsections herein have been inserted as a matter of convenience of reference only and shall not control or affect the meaning or construction of any of the terms or provisions herein. All references herein to the singular shall include the plural, and vice versa. Should any provision of this Agreement require interpretation in any judicial, administrative or other proceeding or circumstance, it is agreed that the court, administrative body, or other entity interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against one party by reason of the rule of construction that a document is to be construed more strictly against the party who by itself or through its agents prepared the same, it being agreed that the agents of both parties hereto have fully participated in the preparation of this Agreement. Except as otherwise expressly provided herein, all rights, powers, and privileges conferred hereunder upon the parties hereto shall be cumulative and in addition to those other rights, powers, and remedies hereunder and those available at law or in equity. All such rights, powers, and remedies may be exercised separately or at once, and no exercise of any right, power, or remedy shall be construed to be an election of remedies or shall preclude the future exercise of any or all other rights, powers, and remedies granted hereunder or available at law or in equity, except as expressly provided herein. Neither the failure of either party to exercise any power given such party hereunder or to insist upon strict compliance by the other party with its obligations hereunder, nor any custom or practice of the parties at variance with the terms hereof shall constitute a waiver of either party’s right to demand exact compliance with the terms hereof. No amendment to this Agreement shall be binding on any of the parties hereto unless such amendment is in writing and is executed by the party against whom enforcement of such amendment is sought. Time is of the essence with respect to each and every covenant, agreement, and obligation of the parties hereto. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute one agreement, and the signatures of any party to any counterpart shall be deemed to be a signature to, and may be appended to, any other counterpart. This Agreement constitutes the entire agreement of the parties with respect to the subject matter contained herein and supersedes and/or revokes any prior agreements not included within this Agreement, including prior drafts of documents, prior proposals, counterproposals and correspondence, whether written or oral. As used in this Agreement, the term “including” will always be deemed to mean “including, without limitation”.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
| BUYER: | |
| GOPHER PROTOCOL INC., a Nevada corporation | |
| By: /s/Xxxxxxx Xxxxxx | |
| Name: Xxxxxxx Xxxxxx | |
| Title: CEO, President and Chairman as Authorized Signatory | |
| SELLER: | |
| RWJ ADVANCED MARKETING, LLC, a Georgia limited liability company | |
| By: /s/Xxxxxxx Xxxxx | |
| Name: Xxxxxxx Xxxxx | |
| Its: Authorized Signatory |
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EXHIBIT A
ASSETS
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EXHIBIT B
ALLOCATION OF PURCHASE PRICE
Inventory and Tangible Assets - $400,000.00
Goodwill - $2,600,000.00
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EXHIBIT C
EXECUTIVE EMPLOYMENT AGREEMENT
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