ASSET EXCHANGE AGREEMENT
Exhibit
10.2
This Agreement, with an “effective date” of June 30, 2009, by and
between NEW MILLENNIUM
CONSULTANTS, LLC (hereinafter referred to as “NMC”) and FREE FOR ALL, INC.
(hereinafter referred to as “FFA”.)
BACKGROUND
Prior to February 2008, NMC was a dormant LLC owned by Xx. Xxxxxx Xxxxx.
NMC is a company which offers discounted prescription cards, along with
discounted dental, lab, imaging and related health benefits. NMC
earns its fees on a per transaction basis for the discount prescription cards,
lab and imaging benefits. For the other related discounts on health benefits,
revenue is generated from a monthly membership fee that entitles members to
discounted services. NMC began “active business operations” on February 1, 2008
to market and distribute its discount prescription services and health benefits
memberships. As part of its operations, NMC applied for certain copyrights
and trademarks to protect its business interests. As of February of 2008,
NMC was a very small “start up company” with limited assets and
liabilities.
FFA was
formed by a group of investors led by Xx. Xxxxxx Xxxxx for the purpose of
expanding operations and raising additional capital. This asset exchange
agreement is entered into so that FFA may achieve this goal by acquiring all of
NMC’s assets, cash on hand and certain liabilities from NMC’s “ongoing business
operations” in exchange for FFA stock.
The
specific list of assets and liabilities acquired in the exchange is set forth in
the attached Schedule “A”. The manner of acquisition is designed to
constitute a tax-free exchange under IRC § 351 between FFA and NMC as NMC and
FFA are owned by the same group of investors.
NOW, THEREFORE, in
consideration of the mutual agreements and covenants contained herein and
intending to be legally bound, the parties agree as follows:
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1.
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ACQUISITION
OF ASSETS
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1.1. NMC’s Assets. Subject
to the audit by X.X. Xxxxxxx, P.C. (auditors for FFA and NMC) and upon the terms
and conditions set forth in this Agreement, NMC agrees to exchange and assign to
FFA all of the assets used in connection with NMC’s business (collectively the
“Exchanged Assets”) including the specific assets listed on schedule “A” which
includes all cash deposits in the name of NMC that shall now become the property
of FFA.
1.1.1. Intangible
Assets. All rights, title and interest in all trademarks, trademark
applications, developed software, copyrights, goodwill, know how, client lists,
accounts receivable, and other intangible business assets used by NMC in its
operations listed in Schedule “A”.
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2.
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ASSUMPTION
OF CERTAIN LIABILITIES
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2.1.
FFA shall Only Assume
the Liabilities of NMC Listed on Schedule “A” but no other Liabilities.
FFA does not and will not assume, undertake or accept any liabilities or
obligations of NMC other than specified in this agreement. NMC represents it has
fully disclosed all assets and liabilities to FFA. NMC agrees to fully
indemnify FFA from any omissions or misrepresentations regarding assets or
liabilities.
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3.
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TERMS
OF ASSET EXCHANGE
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3.1.
The Owners of NMC
Shall Receive Stock In FFA Totaling 7.5 Million Shares of Common Stock in
exchange for the assets listed in Schedule “A.”
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4.
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EXISTING
LEASES
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FFA shall
not assume any existing leases other than the two Dell leases referenced in
Schedule “A” hereto.
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5.
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COVENANTS
AND AGREEMENTS OF NMC
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NMC
covenants and agrees, except as otherwise consented to in writing by FFA after
the date of this Agreement:
5.1.
Conduct of
Business. After the date of this Agreement and continuing until effective
date of June 30, 2009, NMC will conduct and operate the Business in the ordinary
and usual course. NMC will neither take nor omit to take any action, the taking
or omission of which would impair or adversely affect the ability of FFA to
operate the Business after Closing.
5.2.
Information.
NMC will give to FFA and FFA’s accountants, counsel and other representatives,
full access to all the properties, books, contracts commitments and records of
NMC related to the Exchanged Assets and assumed liabilities. NMC will continue
to furnish FFA during that period with all of the information concerning the
affairs of NMC as FFA may reasonably request.
5.3.
Maintenance of Books
and Records. NMC will maintain its books, accounts and records consistent
with its past practices and will make such records available to
FFA.
5.4.
Computers, Programs
and Software. It is specifically agreed that all computers and software
in use by NMC as of June 17, 2008 shall be transferred to the FFA.
5.5.
Consents. NMC
will use its best efforts to obtain any requisite consents, releases or
approvals to the transactions contemplated by this Agreement from any persons or
companies whose consents or approvals, in the reasonable opinion of FFA or its
counsel, are necessary.
5.6.
Full
Cooperation. NMC will fully cooperate with FFA and its representatives in
connection with any steps required to be taken under this Agreement. NMC will
instruct its accountants and employees to allow FFA and its representatives full
access to any and all work papers and to confer with any and all persons in
connection with FFA’s investigation of NMC and its business
operations.
5.7.
Further Acts.
NMC shall, at any time after the Closing Date, as hereinafter defined, upon
request of FFA, do, execute, acknowledge, and deliver, or cause to be done,
executed, acknowledged and delivered, all such further acts, deeds, assignments,
transfers and conveyances, as may be required in conformity with this Agreement
for the assigning, transferring, granting, conveying, assuring and confirming to
FFA, or to its successors or assigns, all of NMC’s rights, title and interests
in and to the Exchanged Assets and the limited liability assumed as set forth
herein.
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6.
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NMC’S
REPRESENTATIONS AND
WARRANTIES
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NMC
represents, warrants and covenants to FFA, as follows, which covenants and
warranties shall survive the Closing:
6.1.
Organization and Good
Standing. NMC is a Limited Liability Company, duly organized, validly
existing and in good standing under the laws of the State of New Jersey and has
the power and authority to own and transfer the Exchanged Assets.
6.2.
Due Execution.
NMC has the power and authority to execute, deliver and perform this Agreement
and the transactions contemplated hereunder.
6.3.
No Breach of Existing
Agreements. The execution and delivery of this Agreement by NMC,
compliance by NMC with the provisions hereof and the consummation of the
transactions contemplated herein will not violate or conflict with any provision
of the Members Agreement of NMC.
6.4.
Valid and Binding
Obligation. This Agreement and the other Instruments and documents to be
delivered by NMC, constitute the valid and binding obligations of NMC
enforceable in accordance with their respective terms.
6.5.
No Litigation and No
Liens. No litigation, liens or claims of any nature whatsoever are
pending or threatened against NMC affecting its assets and NMC does not know nor
has reasonable grounds to know of any basis for any such action.
6.6.
Government
Notices. NMC has received no notice from any federal, state or local
government authority advising NMC, its agents or representatives of any
violation of any federal or state law or local ordinance relating to the
Business or its assets.
6.7.
Compliance with
Law. To the best of NMC and Shareholder’s knowledge, NMC has complied
with all of the laws applicable to its operations.
6.8.
Taxes. NMC has
paid all applicable taxes and other claims arising out of the ownership and/or
operation of the Business and Exchanged Assets. This representation and warranty
shall survive closing.
6.9.
Financial
Information. The financial information and statements provided by NMC to
FFA are true and correct and to the best of NMC’s knowledge fairly represent the
financial position of the Business and the results of operations and cash flows,
and are based upon financial statements prepared in accordance with GAAP
standards consistently applied.
6.10. Employees and Labor
Disputes. NMC is not a party to any collective bargaining agreement or
employment agreement. NMC has no knowledge of any threatened grievances,
arbitrations, suits or unfair labor practices or discrimination arising from or
in connection with the employment relationship of any employees employed at the
Business. NMC has no knowledge of any violation of applicable federal, state and
local laws relating to the employment of labor which will impose any liability
on FFA, including, but not limited to, the provisions thereof relative to wages,
hours, collective bargaining, and the payment of social security and withholding
taxes, and NMC is not liable for any arrears of wages or any taxes or penalties
for failure to comply with any of the foregoing.
6.11. No Bankruptcy. No
petition in bankruptcy or other insolvency proceeding has been filed by or
against NMC, nor has NMC made an assignment for the benefit of
creditors.
6.12. All Records Complete.
All lists, accounts and corporate records supplied by NMC to FFA relating to the
Business and the Acquired Assets are materially complete and correct and have
been maintained in accordance with good business practices and, set forth all
material transactions relating to the operation of the Business, including, but
not limited to, all sales made, cash or other consideration received and
payments made to all suppliers.
6.13. Events of Breach. In
the event NMC breaches any of the representations and warranties set forth in
this Paragraph, FFA shall give NMC notice of said breach and three (3) days (the
cure period) from the date of said notice to cure said breach. If said breach is
not cured during said cure period, FFA shall be entitled to pursue all remedies
it may have at law or equity, plus all legal fees, court costs and expenses
incurred in enforcing his rights hereunder and in resolving the matter
underlying the breach by NMC.
6.14. All Information. NMC
has not omitted to state to FFA any material fact relating to the Business or
the Exchanged Assets which may adversely affect the Business or the Exchanged
Assets or which is necessary in order to make the specific representations,
warranties or covenants made to FFA in this agreement, not
misleading.
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7.
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SURVIVAL
OF REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION
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The
representations, undertakings, warranties and indemnifications made by the
parties hereto in this Agreement shall survive the closing hereunder, regardless
of any investigation made by any party hereto. However, no representation,
undertaking, warranty or indemnity shall survive beyond any applicable statute
of limitations.
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8.
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INDEMNIFICATION
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8.1. Indemnification by
NMC. NMC shall indemnify, defend and hold FFA harmless from and against
any and all (i) claims, demands, losses, costs, expenses, obligations,
liabilities, damages, recoveries, including interest, penalties and reasonable
attorneys’ fees, that FFA shall incur or suffer, which arise, result from or
relate to any misrepresentation, breach or warranty or nonfulfillment of any
covenant, agreement, representation, indemnity or warranty on the part of NMC
under this Agreement.
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9.
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DELIVERY
OF DOCUMENTS
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9.1. Assignment and Assumption
of Leases. The Assignment and Assumption of Lease, in substantially the
form attached hereto as Exhibit “B”, if any.
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10.
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EXPENSES
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Except as
otherwise provided in this Agreement, each party shall bear all expenses
incurred on its behalf in connection with this Agreement and the transactions
contemplated herein.
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11.
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ENTIRE
AGREEMENT
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This
Agreement and the Exhibits prepared and attached hereto constitute the entire
understanding of the parties. No change, modification or amendment of this
agreement shall be valid unless in writing duly signed by the parties. There
shall be no representations or warranties binding upon the parties except as are
contained and included in this agreement.
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12.
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VALIDITY
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If any
provision of this Agreement is construed to be invalid, illegal or
unenforceable, the remaining provisions hereof will not be affected and will
remain enforceable.
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13.
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GOVERNING
LAW
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This
Agreement is made under and will be construed and enforced in accordance with
the laws of the State of New Jersey.
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14.
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COUNTERPARTS
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This
Agreement may be executed in two or more counterparts each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
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15.
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SUCCESSORS
AND ASSIGNS
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This
Agreement will be binding upon and inure to the benefit of the parties, their
respective heirs, successors and assigns.
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16.
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ASSIGNMENT
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FFA shall
be entitled to assign FFA’s rights under this contract to a corporation in which
FFA is a shareholder. Upon such assignment being effectuated, and a copy thereof
being transmitted to NMC, the assignment shall be effective.
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17.
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EFFECTIVE
DATE
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This
Agreement shall have an effective date of June 30,
2009.
IN WITNESS THEREOF, the
parties hereto sign or set their hands and/or seals to this agreement as of the
dates indicated below:
NMC:
NEW
MILLENNIUM CONSULTANTS, LLC
/s/
Xxxxxx Xxxxx
Xxxxxx
Xxxxx, Majority Member
FFA:
ON
BEHALF OF FREE FOR ALL, INC.
/s/
Xxxxxx Xxxxx
Xxxxxx
Xxxxx, Board Member
/s/
Xxxx Xxxxxxxx
Xxxx
Xxxxxxxx, Board member
/s/
Xxxxx Xxxxx
Xxxxx X.
Xxxxx, Board Member
SCHEDULE
“A”
LIST
OF ASSETS AND LIABILITIES
A. SCHEDULE OF INTANGIBLE
ASSETS EXCHANGED
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(Application
Approved)
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1.
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Trademark
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#771-
407322
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Get
Benefit Relief
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(Application
Pending)
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2.
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Trademark
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#773-96784
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Get
Rx Relief
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3.
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Common
Law Trademark & Domain Name
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(No
Federal application filed. Common law rights acquired through
use, Federal application to be filed by FFA.)
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(RX
Cut and xxx.XXXXX.xxx)
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4.
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U.S.
Copyright on the New Millennium, LLC Business Plan (application pending
since 4/29/2008).
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5.
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Assignment
of all Intellectual Property Rights previously assigned to New Millennium
Consultants, LLC from Flateye, LLC relating to software and other
intellectual property used with the discount prescription
cards. Flateye’s rights were paid for as part of the $12,500
monthly fee paid by New Millennium Consultants, LLC to Flateye, LLC as
this was a “work for hire” agreement which required all rights to be
transferred to New Millennium Consultants, LLC for no additional
consideration.
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B. SCHEDULE OF TANGIBLE ASSETS
EXCHANGED
1. The
telephone number of New Millennium Consultants, LLC.
2. All
computers used by New Millennium Consultants, LLC staff.
3. All
data on New Millennium Consultants, LLC services.
4. All
accounts receivable.
5. All
employees and consultants.
6. All
cash on hand.
7. (All
other assets listed in the balance sheet prepared by FFA’s accountant (Xxxxxx
Xxxxx) attached hereto and made a part hereof.)
8.
The rights to the transaction payments and BIN # 013824 under the Agelity Retail
Sponsor Agreement dated May 2008 which was previously assigned to NMC via a
written assignment agreement dated March 9, 2009.
C. SCHEDULE OF LIABILITIES
ASSUMED
1. Flateye
consulting contract of $12,500 per month.
2. Those
other liabilities listed on the balance sheet prepared by FFA’s accountant
(which are attached hereto and made a part hereof.)
3. Lease
payment obligations in Exhibit “B” hereto.
EXHIBIT
“B”
ASSUMPTION
OF LEASES
Free For All, Inc. hereby assumes from
New Millennium Consultants, L LC the Dell equipment leases dated April 7, 2008
at a rate of $762.31 per month and May 20, 2009 at a rate of $685.85 per
month. (Copies of both leases are incorporated herein by
reference.) New Millennium Consultants, LLC shall have no further
liability under these leases.
Free For All, Inc. is not assuming any
other leases.
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Date:
October 1, 2009
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/s/
Xxxxxx Xxxxx
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Xxxxxx
Xxxxx, Board Member
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Date:
October 1, 2009
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/s/
Xxxxx Xxxxx
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Xxxxx
X. Xxxxx, Board Member
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Date:
October 1, 2009
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/s/
Xxxx Xxxxxxxx
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Xxxx
Xxxxxxxx, Board Member
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