Exhibit 2.1
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of May 26,
2004, by and among ROO Group, Inc., a Delaware corporation ("Buyer"); Undercover
Holdings Pty Ltd, a Victorian, Australian corporation and wholly owned
subsidiary of Buyer ("Designated Subsidiary"); and Undercover Media Pty Ltd., a
Victorian Australian corporation and trustee ("Seller" or "Trustee") for the
Cashmere Family Trust ("the"Trust")and Haylee Cashmere, Xxxx Cashmere, Ros
Cashmere and Xxx Cashmere each a beneficiary of the Trust (the "Beneficiaries").
WITNESSETH
WHEREAS, Seller owns certain assets utilized for providing content
pertaining to the music industry;
WHEREAS, the Trust owns all of the issued and outstanding shares of
Seller;
WHEREAS, Buyer through its Designated Subsidiary desires to acquire, and
Seller desires to transfer, substantially all of the assets, properties, rights,
business and goodwill of Seller upon the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants set forth herein, the parties agree as follows:
SECTION 1
TRANSFER OF ASSETS; PURCHASE PRICE
1.1 PURCHASE AND SALE OF ASSETS. Based upon and subject to the
representations, warranties, covenants, agreements and other terms and
conditions set forth in this Agreement, Seller hereby sells, conveys, transfers,
assigns, and delivers, and Designated Subsidiary hereby purchases, acquires, and
accepts, as provided herein, all of the assets, properties, rights, business and
goodwill of Seller of every kind and description, wherever located, including,
without limitation, (a) all assets and properties, tangible or intangible, real,
personal or mixed, (b) computer, and other equipment utilized to maintain and
service Seller's business, (d) all content, including text, print, photo, audio
and video, (e) claims and rights under contracts, agreements, leases, and
commitments of Seller of whatever nature, (f) all intellectual property,
including all names, trade names, trademarks, and applications therefor used by
Seller in connection with Seller's business (including the name "Undercover
Media Pty Ltd.") and all copyrights, licenses, and permits and applications
therefor, (g) all domain names and websites, (h) all computer programs, email,
contact and other data bases, records, systems, and processes and all know how,
information, and trade secrets relating thereto, (i) all client, customer lists
and contacts for content, syndication and all other areas of the Seller's
business, and (j) copy of all books and records of Seller relating to Seller's
business. The assets, properties, rights, business and goodwill conveyed,
transferred, assigned, and delivered by Seller are sometimes herein called the
"Transferred Assets" and shall include, without limitation, all of the assets
and properties shown on or reflected in the attached Schedule 1.
1.2 NO ASSUMPTION OF LIABILITIES. Buyer shall not assume or be
responsible at any time for any liability, obligation, debt or commitment of the
Seller, whether absolute or contingent, accrued or unaccrued, asserted or
unasserted, or otherwise, including but not limited to any liabilities,
obligations, debts or commitments of the Seller incident to, arising out of or
incurred with respect to, this Agreement and the transactions contemplated
hereby (including any and all sales, income or other taxes arising out of the
transactions contemplated hereby). Without limiting the generality of the
foregoing, the Seller expressly acknowledges and agrees that the Seller shall
retain, and that Buyer shall not assume or
otherwise be obligated to pay, perform, defend or discharge, any (i) liability
of the Seller for taxes, whether measured by income or otherwise, (ii) liability
of the Seller in connection with any material employee benefit (including,
without limitation, any non-qualified plans), bonus, deferred compensation,
incentive, stock option (or other equity-based), severance, change-in-control,
medical insurance and fringe benefit plans maintained for the benefit of, or
contributed to by the Seller or any trade or business of the Seller, whether or
not incorporated, for the benefit of any employee or former employee of the
Seller (the "PLANS"), (iii) liability of any kind with respect to any employee
of the Seller, (iv) third-party payor liability of the Seller, including,
without limitation, estimated third-party payor settlements and repayment,
overpayment or other such liabilities in respect of previously paid
reimbursements for home health services rendered by the Seller, or (v) liability
of the Seller under any federal, state local or foreign law, rule, regulation,
ordinance, program, permit, or other legal requirement relating to health,
safety, hazardous materials and environmental matters applicable to the Seller's
business or the facilities used by the Seller (whether or not owned by the
Seller).
1.3 PURCHASE PRICE. The purchase price ("Purchase Price") for
the Transferred Assets acquired pursuant to Section 1.1 shall consist of and be
paid in the following manner: (a) upon the execution of this Agreement, the
issuance to Seller of One Million (1,000,000) shares of Buyer's common stock
(the "Shares"); (b) subsequent to the closing upon the Buyer's or Designated
Subsidiary's commercial launch of a broadband music portal suitable for
operation as a stand alone site that is capable of worldwide syndication, the
issuance to Seller of that number of Shares that is the quotient of (X)
US$75,000 divided by (Y) the average closing sale price of the Shares for the
previous five trading days (the "Closing Sale Price") prior to such commercial
launch; (c) upon the execution of an agreement for the supply and worldwide
syndication of music videos with an aggregate of four mutually acceptable major
music labels, the issuance to Seller of that number of Shares that is the
quotient of (X) US$75,000 divided by (Y) the Closing Sale Price prior to the
execution of the last of the four said agreements; (d) upon the generation of at
least US$30,000 per month in revenues for three consecutive months attributable
to the Buyer's music subdivision, the issuance to Seller of that number of
Shares that is the quotient of (X) US$75,000 divided by (Y) the Closing Sale
Price prior to the determination that such revenues have been achieved; and (e)
upon obtaining an aggregate of thirty video interviews with mutually acceptable
recognized artists, the issuance of that number of Shares that is the quotient
of (X) US$75,000 divided by (Y) the Closing Sale Price prior to the last of the
thirty interviews.
1.4 RESTRICTED SHARES. The Shares of Buyer issued to Seller
will not be registered under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, and absent an exemption
from registration contained in such laws, cannot be transferred, hypothecated,
sold or otherwise disposed of until (i) a registration statement with respect to
such securities is declared effective under the Securities Act, or (ii) Seller
receives an opinion of counsel for Buyer that an exemption from the registration
requirements of the Securities Act is available.
The certificate representing the Shares shall contain a legend
substantially as follows:
"THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNTIL A REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED
EFFECTIVE UNDER SUCH ACT, OR THE COMPANY RECEIVES AN OPINION OF
COUNSEL FOR THE COMPANY THAT AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT IS AVAILABLE."
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SECTION 2
CLOSING
2.1 Closing. Subject to the conditions set forth in this
Agreement, the closing of the transactions contemplated hereby (the "Closing")
shall be held at 10:00 a.m., New York time, on June 1, 2004, or, if the
conditions set forth in Section 4 hereof have not been satisfied or waived on
such date, on the fifth (5th) business day after all such conditions shall have
been satisfied or waived, at the offices of Xxxxxxx, Savage, Kaplowitz, Wolf &
Marcus, LLP, counsel for the Buyer. The date upon which the Closing occurs is
hereinafter referred to as the "Closing Date".
2.2 Deliveries by the Seller. At or prior to the Closing, the
Seller shall deliver to Buyer:
(a) the Conveyance Documents (as hereinafter defined);
(b) possession of all originals and copies of
agreements, instruments, documents, deeds, books, records, files and other data
and information within the possession of the Seller pertaining to the Seller
(collectively, the "Records"); provided, however, that the Seller may retain (1)
copies of any tax returns and copies of Records relating thereto; (2) copies of
any Records that the Seller is reasonably likely to need for complying with
requirements of law; and (3) copies of any Records that in the reasonable
opinion of the Seller will be required in connection with the performance of its
obligations under this Agreement; and
2.3 Deliveries by Buyer. At or prior to the Closing, Buyer
shall deliver to the Seller:
(a) the amount and form of Purchase Price required to be
paid at Closing pursuant to Section 1.3 hereof.
2.4 Termination in Absence of Closing.
(a) Subject to the provisions of Section 2.4(b), if by
the close of business on June 30, 2004, the Closing has not occurred, then
either the Seller or the Buyer may thereafter terminate this Agreement by
written notice to such effect, to the other parties hereto, without liability of
or to any party to this Agreement or any shareholder, director, officer,
employee or representative of such party unless the reason for Closing having
not occurred is (i) such party's willful breach of the provisions of this
Agreement, or (ii) if all of the conditions to such party's obligations set
forth herein have been satisfied or waived in writing by the date scheduled for
the Closing pursuant to Section 2.1, the failure of such party to perform its
obligations under this Section 2 on such date.
(b) Buyer shall also have the right to terminate this
Agreement without liability to any party by so notifying the Seller at any time
within fifteen (15) days after the date of this Agreement if, in Buyer's sole
discretion, any schedule (or any Conveyance Document) that was not furnished to
Buyer at least ten (10) business days prior to the date of this Agreement
contains or refers to any matter that, or may cause or lead to any result that,
in Buyer's sole discretion and judgment, is adverse to Buyer in any way.
(c) Notwithstanding the approval of the Board of
Directors of Buyer, this Agreement and the transactions contemplated herein may
be terminated and abandoned at any time on or prior to the Closing Date by the
Buyer if:
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(i) any representation or warranty made herein
for the benefit of Buyer, or any certificate, schedule or document
furnished to Buyer pursuant to this Agreement is untrue in any material
respect; or
(ii) The Seller, Trust or the Beneficiaries shall
have defaulted in any material respect in the performance of any material
obligation under this Agreement.
SECTION 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents
and warrants to Buyer and Designated Subsidiary as follows:
(a) DUE INCORPORATION, GOOD STANDING, AND QUALIFICATION.
Seller is a corporation duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation with all requisite
corporate power and authority to own, operate, and lease its assets and
properties and to carry on its business as now being conducted. Seller is not
subject to any material disability by reason of the failure to be duly qualified
as a foreign corporation for the transaction of business or to be in good
standing under the laws of any jurisdiction.
(b) CORPORATE AUTHORITY. Seller has the corporate power
and authority to enter into this Agreement and to carry out the transactions
contemplated hereby. The Board of Directors and shareholders of Seller have duly
authorized the execution, delivery, and performance of this Agreement. No other
corporate proceedings on the part of Seller are necessary to authorize the
execution and delivery by Seller of this Agreement or the consummation by Seller
of the transactions contemplated hereby. This Agreement has been duly executed
and delivered by, and constitutes a legal, valid, and binding agreement of
Seller, enforceable against Seller in accordance with its terms, except that (i)
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium, or other similar laws now or hereafter in effect relating to
creditors' rights, and (ii) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefore may be
brought.
(c) NO MATERIAL CHANGE. Since 1 May, 2004 there has not
been and there is not threatened (i) any material adverse change in the
business, assets, properties, financial condition, or operating results of
Seller, (ii) any loss or damage (whether or not covered by insurance) to any of
the assets or properties of Seller, which materially affects or impairs its
ability to conduct its business, (iii) any mortgage or pledge of any assets or
properties of Seller, or any indebtedness incurred by Seller or any of its
subsidiaries, other than indebtedness, not material in the aggregate, incurred
in the ordinary course of business, or (iv) any material adverse change in the
Seller's sales patterns, pricing policies, accounts receivable or accounts
payable. Furthermore, since 1 May, 2004 the Seller has not done any of the
following: (i) merged into or with or consolidated with, any other corporation
or acquired the business or assets of any Person; (ii) entered into, amended or
terminated any material agreement; (iii) sold, transferred, leased, mortgaged,
encumbered or otherwise disposed of, or agreed to sell, transfer, lease,
mortgage, encumber or otherwise dispose of, any Transferred Assets except in the
ordinary course of business; (iv) settled any claim or litigation, or filed any
motions, orders, briefs or settlement agreements in any proceeding before any
governmental authority or any arbitrator; (v) incurred or approved, or entered
into any agreement or commitment to make, any expenditures in excess of $5,000
(other than those arising in the ordinary course of business); (vi) maintained
its books of account other than in the usual, regular and ordinary manner in
accordance with generally accepted accounting principles and on a basis
consistent with prior periods or made any change in any of its accounting
methods or practices that would be required to be disclosed under generally
accepted accounting
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principles; (vii) adopted any Plan, or granted any increase in the compensation
payable or to become payable to directors, officers or employees (including,
without limitation, any such increase pursuant to any bonus, profit-sharing or
other plan or commitment), other than merit increases to non-officer employees
in the ordinary course of business and consistent with past practice; (viii)
suffered any extraordinary losses or waived any rights of material value; (ix)
made any payment to any affiliate or forgiven any indebtedness due or owing from
any affiliate to the Seller; (x) delayed payables or changed in any material
respect the Seller's practices in connection with the payment of payables and/or
the collection of receivables; (xi) declared, set aside or paid any dividends,
or made any distributions or other payments in respect of its equity securities,
or repurchased, redeemed or otherwise acquired any such securities; (xii)
amended its charter or bylaws; (xiii) issued any capital stock or other
securities, or granted, or entered into any agreement to grant, any options,
convertible rights, other rights, warrants, calls or agreements relating to its
capital stock; or (xiv) committed to do any of the foregoing.
(d) TITLE TO PROPERTIES. Seller has good and marketable
title to all of its real and personal assets and properties, including all
assets and properties reflected in the attached Schedule 1. Such assets and
properties are subject to no mortgage, indenture, pledge, lien, claim,
encumbrance, charge, security interest, or title retention or other security
arrangement, except for liens for the payment of federal, state, and other
taxes, including any foreign taxes, the payment of which is neither delinquent
nor subject to penalties, and except for other liens and encumbrances incidental
to the conduct of the business of Seller and its subsidiaries, if any, or the
ownership of their assets or properties, which were not incurred in connection
with the borrowing of money or the obtaining of advances, and which do not in
the aggregate materially detract from the value of the assets or properties of
Seller and its subsidiaries, if any, taken as a whole or materially impair the
use thereof in the operation of their respective businesses. Seller owns or has
the right to use all assets and properties necessary to conduct its business as
currently conducted.
(e) LITIGATION. There are no actions, suits,
proceedings, or other litigation pending or, to the knowledge of Seller,
threatened against Seller, at law or in equity, or before or by any federal,
state, municipal, or other governmental department, commission, board, bureau,
agency, or instrumentality that, if determined adversely to Seller, would
individually or in the aggregate have an adverse effect on the business, assets,
properties, operating results, prospects, or condition, financial or otherwise,
of Seller.
(f) RIGHTS AND LICENSES. Seller is not subject to any
material disability or liability by reason of its failure to possess any
trademark, trademark right, trade name, trade name right, or license.
(g) NO VIOLATION. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby will not
violate or result in a breach by Seller of, or constitute a default under, or
conflict with, or cause any acceleration of any obligation with respect to, (i)
any provision or restriction of any charter, bylaw, loan, indenture, or mortgage
of Seller, or (ii) any provision or restriction of any lien, lease agreement,
contract, instrument, order, judgment, award, decree, ordinance, or regulation
or any other restriction of any kind or character to which any assets or
properties of Seller is subject or by which Seller is bound.
(h) TAXES. Seller has duly filed in correct form all Tax
Returns relating to the activities of Seller and its subsidiaries, if any,
required or due to be filed (with regard to applicable extensions) on or prior
to the Closing Date. All such Tax Returns are accurate and complete in all
material respects, and Seller has paid or made provision for the payment of all
Taxes that have been incurred or are due or claimed to be due from it by
federal, state, local or foreign taxing authorities for
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all periods ending on or before the Closing Date, other than Taxes or other
charges that are not delinquent or are being contested in good faith and have
not been finally determined and have been disclosed to Seller. The amounts set
up as reserves for Taxes on the books of Seller and its subsidiaries are
sufficient in the aggregate for the payment of all unpaid Taxes (including any
interest or penalties thereon), whether or not disputed, accrued, or applicable.
No claims for taxes or assessments are being asserted or threatened against
Seller or any of its subsidiaries. For purposes of this Agreement, the term
"Taxes" shall mean all taxes, charges, fees, levies, or other assessments,
including, without limitation, income, gross receipts, excise, property, sales,
transfer, license, payroll, and franchise taxes, imposed by any federal, state,
local or foreign government or subdivision or agency thereof and any interest,
penalties or additions attributable thereto, and the term "Tax Return" shall
mean any report, return, or other information required to be supplied to a
taxing authority or required by a taxing authority to be supplied to any other
person.
(i) CONTRACTS. Seller is not a party to (i) any plan or
contract providing for bonuses, pensions, options, stock purchases, deferred
compensation, retirement payments, or profit sharing, (ii) any collective
bargaining or other contract or agreement with any labor union, (iii) any lease,
installment purchase agreement, or other contract with respect to any real or
personal property used or proposed to be used in its operations, excepting, in
each case, items included within aggregate amounts disclosed or reflected in the
attached schedules, (iv) any employment agreement or other similar arrangement
not terminable by it upon 30 days or less notice without penalty to it, (v) any
contract or agreement for the purchase of any commodity, material, fixed asset,
or equipment in excess of $100,000, (vi) any contract or agreement creating an
obligation of $100,000 or more, (vii) any contract or agreement that by its
terms does not terminate or is not terminable by it upon 30 days or less notice
without penalty to it, (viii) any loan agreement, indenture, promissory note,
conditional sales agreement, or other similar type of arrangement, (ix) any
material license agreement, or (x) any contract that may result in a material
loss or obligation to it. All material contracts, agreements, and other
arrangements to which Seller is a party are valid and enforceable in accordance
with their terms; Seller and all other parties to each of the foregoing have
performed all obligations required to be performed to date; neither Seller nor
any such other party is in default or in arrears under the terms of any of the
foregoing; and no condition exists or event has occurred that, with the giving
of notice or lapse of time or both, would constitute a default under any of
them.
(j) COMPLIANCE WITH LAW AND OTHER REGULATIONS. Seller is
not subject to or has been threatened with any material fine, penalty,
liability, or disability as the result of its failure to comply with any
requirement of federal, state, local, or foreign law or regulation or any
requirement of any governmental body or agency having jurisdiction over it, the
conduct of its business, the use of its assets and properties, or any premises
occupied by it.
(k) INSURANCE. Seller maintains in full force and effect
insurance coverage on its assets, properties, premises, operations, and
personnel in such amounts as Seller deems appropriate, all as set forth on
Seller's Disclosure Schedule.
(l) ARTICLES, BYLAWS, AND MINUTE BOOKS. Seller has
heretofore delivered to Buyer true and complete copies of the Articles of
Incorporation and Bylaws (or their equivalents) of Seller as currently in
effect. The minute books of Seller contain complete and accurate records of all
meetings and other corporate actions held or taken by the Boards of Directors
(or committees of the Boards of Directors) and shareholders of Seller since its
incorporation.
(m) ACCURACY OF STATEMENTS. Neither this Agreement nor
any statement, list, certificate, or other information furnished by Seller to
Buyer in connection with this Agreement or any of the transactions contemplated
hereby contains an untrue statement of a material fact or omits to state
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a material fact necessary to make the statements contained herein or therein, in
light of circumstances in which they are made, not misleading.
(n) INTELLECTUAL PROPERTY. Set forth in Schedule 1 is a
list and description of all material foreign and domestic patents, patent
rights, trademarks, service marks, trade names, brands and copyrights (whether
or not registered and, if applicable, including pending applications for
registration) owned, used, licensed or controlled by the Seller and all goodwill
associated therewith. The Seller owns or has the right to use and shall as of
the Closing Date own or have the right to use any and all information, know-how,
trade secrets, patents, copyrights, trademarks, tradenames, software, formulae,
methods, processes and other intangible properties that are necessary or
customarily used by the Seller for the ownership, management or operation of its
business (the "Intangible Rights"). The Seller is the sole and exclusive owner
of all right, title and interest in and to all of the Intangible Rights, and has
the exclusive right to use and license the same, free and clear of any claim or
conflict with the Intangible Rights of others. No royalties, honorariums or fees
are payable by the Seller to any person by reason of the ownership or use of any
of the Intangible Rights. There have been no claims made against the Seller
asserting the invalidity, abuse, misuse, or unenforceability of any of the
Intangible Rights and no grounds for any such claims exist, and the Seller has
not made any claim of any violation or infringement by others of any of its
Intangible Rights or interests therein and, to the knowledge of the Seller, no
grounds for any such claims exist. The Seller has not received any notice that
it is in conflict with or infringing upon the asserted intellectual property
rights of others in connection with the Intangible Rights, and neither the use
of the Intangible Rights nor the operation of the Seller's businesses is
infringing or has infringed upon any intellectual property rights of others. The
Intangible Rights are sufficient and include all intellectual property rights
necessary for the Seller to lawfully conduct its business as presently being
conducted. No interest in any of the Seller's Intangible Rights has been
assigned, transferred, licensed or sublicensed by the Seller to any person other
than the Buyer pursuant to this Agreement. To the extent that any item
constituting part of the Intangible Rights has been registered with, filed in or
issued by, any governmental authority, such registrations, filings or issuances
were duly made and remain in full force and effect. To the knowledge of the
Seller, there has not been any act or failure to act by the Seller or any of its
directors, officers, employees, attorneys or agents during the prosecution or
registration of, or any other proceeding relating to, any of the Intangible
Rights or of any other fact which could render invalid or unenforceable, or
negate the right to issuance of any of the Intangible Rights. To the extent any
of the Intangible Rights constitutes proprietary or confidential information,
the Seller has adequately safeguarded such information from disclosure. All of
the Seller's current Intangible Rights will remain in full force and effect
following the Closing without alteration or impairment.
(o) SELLER'S AUTHORITY AND COMPLIANCE AS TRUSTEE.
Seller, as Trustee to the Trust, has all power and authority under the Trust to
enter into and perform its obligations contemplated by this Agreement and is in
compliance with all provisions contained in the Trust documents. The Trustee has
duly authorized the execution, delivery, and performance of this Agreement. No
other action on the part of the Trustee is necessary to authorize the execution
and delivery of this Agreement or the consummation by Trustee of the
transactions contemplated hereby.
(p) INTENT AND ACCESS. The Seller is acquiring the
Shares without a view to the public distribution or resale in violation of any
applicable United State federal or state securities laws. The Seller
acknowledges that the Shares are not registered under the Securities Act of
1933, as amended, or any state securities laws and cannot be sold publicly
without registration thereunder or an exemption from such registration. The
Seller understands that certificates for such Shares will contain a legend with
respect to the restrictions on transfer under United States federal and
applicable state securities laws as well as the fact that the Shares are
"restricted securities" under such United States federal and state laws. The
Seller has been furnished with such information, both financial and
non-financial, with respect to the
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operations, business, capital structure, and financial position of Buyer and its
subsidiaries as they believe necessary and have been given the opportunity to
ask questions of and receive answers from Buyer and its subsidiaries and their
officers concerning Buyer and its subsidiaries. Without limiting the foregoing,
the Seller has reviewed certain of Buyer's reports filed with the Securities and
Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934, as
amended ("1934 Act"), which were made available to the Seller at xxx.xxx.xxx.
3.3 REPRESENTATIONS AND WARRANTIES OF TRUST. The Trust
represents and warrants to Buyer and Designated Subsidiary as follows:
(a) DUE FORMATION AND VALIDLY EXISTING. The Trust is a
trust duly organized and validly existing under the laws of the jurisdiction of
its formation with all requisite trust power and authority to own, operate, and
lease its assets and properties. The copy of the trust deed delivered to Buyer
and Designated Subsidiary is a true, correct and current copy of such trust deed
and has not been changed, amended or altered in any way.
(b) CORPORATE AUTHORITY. The Trust has the trust power
and authority to enter into this Agreement and carry out the transactions
contemplated hereby. The Trust has duly authorized the execution, delivery, and
performance of this Agreement. No other trust proceedings on the part of the
Trust is necessary to authorize the execution and delivery by the Trust of this
Agreement or the consummation by the Trust of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by, and constitutes
a legal, valid, and binding agreement of the Trust, enforceable against it in
accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or
hereafter in effect relating to creditors' rights, and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefore may be brought.
(c) LITIGATION. There are no actions, suits,
proceedings, or other litigation pending or, to the knowledge of the Trust,
threatened against the Trust, at law or in equity, or before or by any foreign,
United States federal, state, municipal, or other governmental department,
commission, board, bureau, agency, or instrumentality that, if determined
adversely to the Trust, would individually or in the aggregate have an adverse
effect on the business, assets, properties, operating results, prospects, or
condition, financial or otherwise, of the Trust.
3.4 REPRESENTATIONS AND WARRANTIES OF BENEFICIARIES. The
Beneficiaries represent and warrant to the Buyer and Designated Subsidiary as
follows:
(a) CONSENT. The Beneficiaries consent to the
transactions as contemplated by this Agreement and acknowledge and agree that
the transaction is in the best interests of the Trust and the Beneficiaries.
3.5 REPRESENTATIONS AND WARRANTIES OF BUYER. Except as
otherwise disclosed in any document heretofore filed by Buyer with the SEC
pursuant to the 1934 Act, Buyer represents and warrants to Seller, Trust and the
Beneficiaries as follows:
(a) DUE INCORPORATION, GOOD STANDING, AND QUALIFICATION.
Buyer and each of its subsidiaries are corporations duly organized, validly
existing, and in good standing under the laws of their jurisdictions of
incorporation with all requisite corporate power and authority to own,
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operate, and lease their assets and properties and to carry on their business as
now being conducted. Neither Buyer nor any of its subsidiaries is subject to any
material disability by reason of the failure to be duly qualified as a foreign
corporation for the transaction of business or to be in good standing under the
laws of any jurisdiction. As used in this Agreement with reference to Buyer, the
term "subsidiaries" shall include all direct or indirect subsidiaries of Buyer
including Designated Subsidiary.
(b) CORPORATE AUTHORITY. Buyer and Designated Subsidiary
have the corporate power and authority to enter into this Agreement and carry
out the transactions contemplated hereby. The Boards of Directors of Buyer and
Designated Subsidiary have duly authorized the execution, delivery, and
performance of this Agreement. No other corporate proceedings on the part of
Buyer or Designated Subsidiary, including a meeting of Buyer's shareholders, are
necessary to authorize the execution and delivery by Buyer of this Agreement or
the consummation by Buyer or Designated Subsidiary of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by, and
constitutes a legal, valid, and binding agreement of, Buyer and Designated
Subsidiary, enforceable against them in accordance with its terms, except that
(i) such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium, or other similar laws now or hereafter in effect relating to
creditors' rights, and (ii) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefore may be
brought.
(c) CAPITAL STOCK. As of the date hereof, Buyer has
authorized capital stock consisting of 500,000,000 shares of Common Stock,
$.0001 par value, of which 172,131,877 shares are issued and outstanding, and no
shares of Preferred Stock. As of such date, 18,700,000 shares of Buyer's common
stock were reserved for issuance upon the exercise of outstanding stock options.
All of the issued and outstanding shares of capital stock of Buyer and each of
its subsidiaries have been validly authorized and issued and are fully paid and
nonassessable.
(d) OPTIONS, WARRANTS, AND RIGHTS. Neither Buyer nor any
of its subsidiaries has outstanding any options, warrants, or other rights to
purchase, or securities or other obligations convertible into or exchangeable
for, or contracts, commitments, agreements, arrangements or understandings to
issue, any shares of their capital stock or other securities, other than those
referred to in Section 3.2(c).
3.6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties contained in this Agreement shall survive the
consummation of the transactions contemplated by this Agreement irrespective of
any investigations or inquiries made by any party or any knowledge that any
party may possess, and each party shall be entitled to rely upon such
representations and warranties irrespective of any investigations, inquiries, or
knowledge.
SECTION 4
CONDITIONS PRECEDENT
4.1 Conditions Precedent of Seller. The obligations of the
Seller to carry out the transactions contemplated by this Agreement are subject,
at the option of the Seller, to the satisfaction or waiver of the following
conditions:
(a) Buyer and Designated Subsidiary shall have furnished
the Seller with a certified copy of all necessary corporate action on its behalf
approving its execution, delivery and performance of this Agreement.
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(b) All representations and warranties of Buyer
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing, and Buyer shall have performed and satisfied in all
material respects all covenants and agreements required by this Agreement to be
performed and satisfied by Buyer at or prior to the Closing.
(c) As of the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by or on behalf of the Seller)
shall be pending or threatened before any governmental authority seeking to
restrain the Seller or prohibit the Closing or seeking damages against the
Seller as a result of the consummation of this Agreement.
(d) Xxxx Cashmere being given the principal executive
position overseeing the music business of the Buyer.
4.2 Conditions Precedent of Buyer. The obligations of Buyer to
carry out the transactions contemplated by this Agreement are subject, at the
option of Buyer, to the satisfaction, or waiver by Buyer, of the following
conditions:
(a) All representations and warranties of the Seller,
the Trust and Beneficiaries contained in this Agreement shall be true and
correct in all material respects at and as of the Closing, and the Seller, the
Trust and Beneficiaries shall have performed and satisfied in all material
respects all agreements and covenants required by this Agreement to be performed
and satisfied by them at or prior to the Closing.
(b) As of the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by or on behalf of Buyer) shall
be pending or threatened before any court or governmental agency seeking to
restrain Buyer or prohibit the Closing or seeking damages against Buyer or the
Seller or its properties as a result of the consummation of this Agreement.
(c) Up to and including the Closing, there shall not
have been any event, circumstance, change or effect that, individually or in the
aggregate, had or might have a material adverse effect on the Seller's business,
operations, prospects, business, properties or financial condition. The Seller
shall have kept Buyer advised as to all material operations and proposed
material operations relating to the Seller. The Seller shall have (a) conducted
its business in the ordinary course, (b) kept available the services of present
employees, (c) maintained and operated its properties in a good and workmanlike
manner, (d) paid or caused to be paid all costs and expenses (including but not
limited to insurance premiums) incurred in connection therewith in a timely
manner, (e) complied with all of the covenants contained in all such material
contracts, (f) maintained in force until the Closing Date insurance policies
equivalent to those in effect on the date hereof, (g) complied in all material
respects with all applicable legal requirements, and (h) used its best efforts
to preserve the present relationships of the Seller with persons having
significant business relations therewith.
(d) The Seller and Trust shall have furnished Buyer with
a certified copy of all necessary corporate and trust action on their behalf
approving the execution, delivery and performance of this Agreement.
(e) Buyer shall have completed its due diligence
investigation, and the results thereof shall not have revealed that any of the
representations of the Seller set forth herein are untrue or incorrect in any
respect or otherwise be unsatisfactory to Buyer.
(f) All proceedings to be taken by the Seller and the
Trust in connection with the transactions contemplated hereby and all documents
incident thereto shall be satisfactory in form
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and substance to Buyer and its counsel, and Buyer and said counsel shall have
received all such counterpart originals or certified or other copies of such
documents as it or they may reasonably request. The Seller and the Trust shall
have executed and delivered to the Buyer of one or more Bills of Sale and other
conveyance instruments with respect to the Seller's transfer of the Transferred
Assets in form and scope reasonably satisfactory to Buyer (collectively the
"Conveyance Documents"), and transferred, conveyed, assigned and delivered good,
valid and marketable title to all of the Transferred Assets from the Seller to
the Buyer pursuant to the Conveyance Documents, free and clear of any and all
liens, encumbrances, mortgages, security interests, pledges, claims, equities
and other restrictions or charges of any kind or nature whatsoever.
(g) The Board of Directors of Buyer shall have approved
this Agreement and Buyer's acquisition of the Transferred Assets contemplated
hereby.
(h) The Seller shall have caused each of Xxxx Cashmere,
Ros Cashmere, Haylee Cashmere, and Xxx Cashmere (collectively, the "Employees")
to enter into one-year employment agreements with the Designated Subsidiary
including confidentiality and restraint provisions on terms mutually acceptable
to the Buyer and each Employee.
SECTION 5
COVENANTS
5.1 COVENANTS OF SELLER. Seller further agrees, unless Buyer
otherwise agrees in writing, that:
(a) Seller shall promptly change its corporate name to a
name that does not include the words "Undercover Media Pty Ltd."
(b) From the date of this Agreement until the earlier of
(i) the Closing Date, or (ii) the termination of this Agreement, the Seller
shall not, and the Seller shall cause the Seller's shareholders, officers,
directors, employees and other agents not to, directly or indirectly, take any
action to solicit, initiate or encourage any offer or proposal or indication of
interest in a merger, consolidation or other business combination involving any
equity interest in, or a substantial portion of the assets of the Seller, other
than in connection with the transactions contemplated by this Agreement. The
Seller shall immediately advise the Buyer of the terms of any offer, proposal or
indication of interest that it receives or otherwise becomes aware of.
(c) In consideration of the payment of the Purchase
Price, and in order to induce the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, the Seller, the Trust and
Beneficiaries hereby covenant and agree as follows:
(i) Without the prior written consent of the
Buyer, the Seller, the Trust shall not for a period of five (5) years from and
after the Closing Date (A) directly or indirectly acquire or own in any manner
any interest in any person, firm, partnership, corporation, association or other
entity which engages or plans to engage in any facet of the business of the
Buyer or which competes or plans to compete in any way with the Buyer or any of
its subsidiaries, anywhere in the world (the "Territory"), or (B) utilize its
special knowledge of the business of the Buyer and its relationships with
customers, suppliers and others to compete with Buyer and/or any of its
subsidiaries in any business which engages or plans to engage in the
provisioning of music media over the internet; PROVIDED, HOWEVER, that nothing
herein shall be deemed to prevent Seller, the Trust or Beneficiaries from
acquiring through market purchases and owning, solely as an investment, less
than three percent in the aggregate of the equity securities of any class of any
issuer whose shares are registered under ss.12(b) or 12(g) of the
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Securities Exchange Act of 1934, as amended, and are listed or admitted for
trading on any United States national securities exchange or are quoted on the
National Association of Securities Dealers Automated Quotation System, or any
similar system of automated dissemination of quotations of securities prices in
common use, so long as Seller, the Trust and Beneficiaries are not a member of
any "control group" (within the meaning of the rules and regulations of the
United States Securities and Exchange Commission) of any such issuer. Seller,
the Trust and Beneficiaries acknowledge and agree that the covenants provided
for in this Section are reasonable and necessary in terms of time, area and line
of business to protect the Buyer's trade secrets and legitimate business
interests, which include its interests in protecting the Buyer's (i) valuable
confidential business information, (ii) substantial relationships with
customers, and (iii) customer goodwill associated with the ongoing business.
Seller, the Trust and Beneficiaries expressly authorize the enforcement of the
covenants provided for in this Section by (A) the Buyer and its subsidiaries,
(B) the Buyer's permitted assigns, and (C) any successors to the Buyer's
business. To the extent that the covenants provided for in this Section may
later be deemed by a court to be too broad to be enforced with respect to its
duration or with respect to any particular activity or geographic area, the
court making such determination shall have the power to reduce the duration or
scope of the provision, and to add or delete specific words or phrases to or
from the provision. The provision as modified shall then be enforced.
(ii) Without the prior consent of Buyer, Seller,
the Trust and Beneficiaries shall not for a period of five (5) years from the
Closing Date, directly or indirectly, for itself or for any other person, firm,
corporation, partnership, association or other entity (including Seller), (i)
attempt to employ or enter into any contractual arrangement with any employee or
former employee of the business transferred to Buyer hereunder, unless such
employee or former employee has not been employed by the Buyer for a period in
excess of nine months, and/or (ii) call on or solicit any of the actual or
targeted prospective customers or clients of the business transferred to Buyer
hereunder, nor shall Seller, the Trust and Beneficiaries make known the names
and addresses of such customers or any information relating in any manner to
Seller's trade or business relationships with such customers.
(iii) Seller, the Trust and Beneficiaries shall not
at any time divulge, communicate, use to the detriment of the Buyer or for the
benefit of any other person or persons, or misuse in any way, any Confidential
Information pertaining to the business transferred to Buyer hereunder. Any
confidential information or data now known or hereafter acquired by Seller, the
Trust and Beneficiaries with respect to the business transferred to the Buyer
hereunder shall be deemed a valuable, special and unique asset of the Buyer that
is received by Seller, the Trust and Beneficiaries in confidence and as a
fiduciary, and Seller, the Trust and Beneficiaries shall remain a fiduciary to
the Buyer with respect to all of such information.
(iv) It is recognized and hereby acknowledged by
the parties hereto that a breach or violation by Seller, the Trust or
Beneficiaries of any or all of the covenants and agreements contained in this
Section 4.1(d) may cause irreparable harm and damage to Buyer in a monetary
amount which may be virtually impossible to ascertain. As a result, Seller, the
Trust and Beneficiaries recognizes and hereby acknowledges that Buyer shall be
entitled to an injunction from any court of competent jurisdiction enjoining and
restraining any breach or violation of any or all of the covenants and
agreements contained in this Section 4.1(d) by Seller, the Trust and
Beneficiaries and/or their associates, affiliates, partners or agents, either
directly or indirectly, and that such right to injunction shall be cumulative
and in addition to whatever other rights or remedies the Buyer may possess
hereunder, at law or in equity. Nothing contained in this Section 4.1(d) shall
be construed to prevent Buyer from seeking and recovering from Seller, the Trust
and Beneficiaries damages sustained by it as a result of any breach or violation
by Seller, the Trust and Beneficiaries of any of the covenants or agreements
contained herein.
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(d) From and after the Closing, the Seller, the Trust
and Beneficiaries shall indemnify and hold harmless Buyer and the Designated
Subsidiary and their affiliates, directors, officers and employees from and
against any and all damages arising out of, resulting from or in any way related
to (i) a breach of, or the failure to perform or satisfy any of, the
representations, warranties, covenants and agreements made by the Seller, the
Trust and Beneficiaries in this Agreement or in any document or certificate
delivered by the Seller and the Trust at the Closing pursuant hereto, (ii) the
occurrence of any event on or prior to the date of Closing that is (or would be,
but for any deductible thereunder) covered by individual policies of insurance,
blanket insurance policies or self insurance programs maintained by the Seller,
or (iii) the existence of any liabilities or obligations of the Seller (whether
accrued, absolute, contingent, known or unknown, or otherwise, and whether or
not of a nature appropriate for inclusion in a balance sheet in accordance with
GAAP).
(e) From and after the Closing, Buyer shall have the
right and authority to collect, for the account of Buyer, all receivables and
other items which shall be transferred or are intended to be transferred to
Buyer as part of the Transferred Assets as provided in this Agreement, and to
endorse with the name of the Seller any checks or drafts received on account of
any such receivables or other Transferred Assets. The Seller and the Trust
agrees that it will transfer or deliver to Buyer, promptly after the receipt
thereof, any cash or other property which the Seller and Trust receive after the
Closing Date in respect of any claims, contracts, licenses, leases, commitments,
sales orders, purchase orders, receivables of any character or any other items
transferred or intended to be transferred to Buyer as part of the Transferred
Assets under this Agreement.
(f) Effective at the Closing Date, the Seller and Trust
hereby constitute and appoint Buyer, and Buyer's successors and assigns, its
true and lawful attorney, in the name of either Buyer or the Seller (as Buyer
shall determine in its sole discretion) but for the benefit and at the expense
of Buyer (except as otherwise herein provided), (a) to institute and prosecute
all proceedings which Buyer may deem proper in order to collect, assert or
enforce any claim, right or title of any kind in or to the Transferred Assets as
provided for in this Agreement; (b) to defend or compromise any and all actions,
suits or proceedings in respect of any of the Transferred Assets, and to do all
such acts and things in relation thereto as Buyer shall reasonably deem
advisable; and (c) to take all action which Buyer may reasonably deem proper in
order to provide for Buyer the benefits under any of the Transferred Assets
where any required consent of another party to the sale or assignment thereof to
Buyer pursuant to this Agreement shall not have been obtained. The Seller and
Trust acknowledge that the foregoing powers are coupled with an interest and
shall be irrevocable. Buyer shall be entitled to retain for its own account any
amounts respecting the Transferred Assets collected pursuant to the foregoing
powers, including any amounts payable as interest in respect thereof.
(g) At the option of Buyer, and notwithstanding anything
in this Agreement to the contrary, this Agreement shall not constitute an
assignment of any claim, contract, license, franchise, lease, commitment, sales
order, sales contract, supply contract, service agreement, purchase order or
purchase commitment if an attempted assignment thereof without the consent of a
third party thereto would constitute a breach thereof or in any way adversely
affect the rights of Buyer thereunder. If such consent is not obtained, or if
any attempt at an assignment thereof would be ineffective or would affect the
rights of the Seller thereunder so that Buyer would not in fact receive all such
rights, the Seller and the Trust shall cooperate with Buyer to the extent
necessary to provide for Buyer the benefits under such claim, contract, license,
franchise, lease, commitment, sales order, sales contract, supply contract,
service agreement, purchase order or purchase commitment, including enforcement
for the benefit of Buyer of any and all rights of the Seller against a third
party thereto arising out of the breach or cancellation by such third party or
otherwise.
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5.2 COVENANTS OF BUYER AND DESIGNATED SUBSIDIARY
(a) Buyer and Designated Subsidiary shall cause the
music section of its business to operate as a separate subdivision or individual
profit center of Designated Subsidiary.
(b) During the first year after the closing twenty
percent (20%) of the profit generated by the music business shall be pro ratably
distributed to those employees of Buyer who devote at least eighty percent (80%)
of their time to the development and maintenance of the music business ("Profit
Payout"). After the initial 12 month period and each subsequent 12 month period
the Buyer shall review the Profit Payout and determine the Profit Payout, if
any, for the next 12 month period.
5.3 COVENANTS OF SELLER, THE TRUST, BENEFICIARIES, BUYER AND
DESIGNATED SUBSIDIARY
(a) If within twelve months after the execution of this
Agreement, the Buyer undergoes a voluntary or involuntary dissolution,
liquidation or winding up, then the following shall occur:
(i) the Transferred Assets shall revert back to
the Seller;
(ii) the Shares shall revert back to the Buyer;
(iii) the employment agreements with the Employees
shall automatically terminate; and
(iv) the noncompete provisions set forth in
Section 5.1(c) shall be waived by the Buyer and the Designated
Subsidiary.
5.4 FURTHER ASSURANCES. From time to time, on and after the
Closing Date, as and when requested by Buyer or Designated Subsidiary, the
proper officers and directors of Seller as of the Closing Date shall, for and on
behalf and in the name of Seller or otherwise, execute and deliver all such
deeds, bills of sale, assignments, and other instruments and shall take or cause
to be taken such further or other actions as Buyer or Designated Subsidiary may
deem necessary or desirable in order to confirm of record or otherwise to Buyer
or Designated Subsidiary title to and possession of all of the Transferred
Assets and otherwise to carry out fully the provisions and purposes of this
Agreement. In addition, Seller shall give Buyer access to all records of Seller
not purchased hereunder.
SECTION 6
GENERAL
6.1 COSTS AND INDEMNITY AGAINST FINDERS. Each party hereto
shall be responsible for its own costs and expenses in negotiating and
performing this Agreement and hereby indemnifies and holds the other parties
harmless against any claim for finders' fees based on alleged retention of a
finder by it.
6.2 CONTROLLING LAW. This Agreement and all questions relating
to its validity, interpretation, performance, and enforcement shall be governed
by and construed in accordance with the laws of the state of New York,
notwithstanding any New York or other conflict-of-law provisions to the
contrary.
6.3 NOTICES. All notices, requests, demands, and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made
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and received when delivered against receipt or when deposited in the United
States mails, first class postage prepaid, addressed as set forth below:
If to Buyer or Designated Subsidiary: If to Seller, Trust and the
Beneficiaries:
00 Xxxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 --------------------------------
Attention: Xxxxxx Xxxxx
--------------------------------
with a copy given in the manner Attention:
prescribed above, to: ----------------------
Xxxxxxx, Savage, Kaplowitz, with a copy given in the manner
Wolf & Marcus, LLP prescribed above, to:
000 X. 00 Xxxxxx
9th Floor --------------------------------
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq. --------------------------------
Phone: (000) 000-0000
Fax: (000) 000-0000 --------------------------------
Attention:
----------------------
Any party may alter the address to which communications or copies
are to be sent by giving notice to such other parties of change of address in
conformity with the provisions of this paragraph for the giving of notice.
6.4 BINDING NATURE OF AGREEMENT; NO ASSIGNMENT. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, successors, and assigns, except that no party may assign,
delegate, or transfer its rights or obligations under this Agreement without the
prior written consent of the other parties hereto. Any assignment, delegation,
or transfer made in violation of this Section 5.4 shall be null and void.
6.5 ENTIRE AGREEMENT. This Agreement contains the entire
understanding among the parties hereto with respect to the subject matter hereof
and supersedes all prior and contemporaneous agreements, understandings,
inducements, and conditions, express or implied, oral or written, except as
herein contained. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms hereof.
This Agreement may not be modified or amended other than by an agreement in
writing.
6.6 PARAGRAPH HEADINGS. The paragraph headings in this
Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.
6.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
6.8 SURVIVAL. Any provision of this Agreement which
contemplates performance or the existence of obligations after the Closing Date,
and any and all representations and warranties set forth in this Agreement,
shall not be deemed to be merged into or waived by the execution and delivery of
the instruments executed at the Closing, but shall expressly survive Closing and
shall be binding upon the party or parties obligated thereby in accordance with
the terms of this Agreement, subject to any limitations expressly set forth in
this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
ROO GROUP, INC.
By: /s/ Xxxxx Xxxxx
--------------------------------------
Name: Xxxxx Xxxxx
Title: Director
UNDERCOVER HOLDINGS PTY LTD
By: /s/ Xxxxx Xxxxx
--------------------------------------
Name: Xxxxx Xxxxx
Title: Director
UNDERCOVER MEDIA PTY LTD.
By: /s/ Xxxx Cashmere
--------------------------------------
Name:
Title:
Cashmere Family Trust
By: Undercover Media Pty Ltd., As Trustee
By: /s/ Xxxx Cashmere
--------------------------------------
Name:
Title:
BENEFICIARIES
/s/ Haylee Cashmere
-----------------------------------------
Name: Haylee Cashmere
/s/ Xxxx Cashmere
-----------------------------------------
Name: Xxxx Cashmere
/s/ Ros Cashmere
-----------------------------------------
Name: Ros Cashmere
/s/ Xxx Cashmere
-----------------------------------------
Name: Xxx Cashmere
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