Asset Purchase Agreement
This Asset Purchase Agreement (the "Agreement") is made and effective
February 4, 2000, by and between XxxxxXxxxx.xxx, Inc., An Utah Corporation
("Buyer") and Stitches to go, a Partnership ("Seller").
Seller operates a Stitchery web site specific to the online crafts
community under the name xxxxxxxx.xxx (the "Business").
Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, certain assets of Seller used in the Business, subject to the terms of
this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Transfer of Assets. At the Closing, subject to the terms of this
Agreement, Seller shall sell, assign, transfer, convey and deliver to Buyer,
and Buyer shall purchase from Seller, free and clear of all liens,
encumbrances, claims, clouds, charges, equities or imperfections of any
nature, all software, databases, contract rights, customer lists, trademarks,
trade names, intellectual property, goodwill, materials, supplies, telephone
numbers, business records, and other assets owned by Seller and used or useful
in the Business and related operations. The assets and properties to be
transferred by Seller to Buyer shall include, without limitation those
identified in Exhibit A attached hereto.
2. Conveyance and Transfer Documents. Seller agrees to deliver to Buyer at
the Closing such certificates, bills of sale, documents of title and other
instruments of conveyance and transfer, in form and content satisfactory to
Buyer, as shall be effective to vest in Buyer good and marketable title in and
to any property to be sold, assigned, transferred, conveyed and delivered
hereunder.
3. Payment of Purchase Price. In exchange for full payment for all of the
items purchased from Seller, Buyer shall issue Seller 350,000 shares of its
common stock. Such issued shares shall be "restricted securities" and shall be
imprinted with the following legend or a reasonable facsimile thereof on the
front and reverse sides thereof:
"The shares of stock represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold or otherwise
transferred unless compliance with the registration provisions of such Act has
been made or unless availability of an exemption from such registration
provisions has been established, or unless sold pursuant to Rule 144 under the
Act."
4. Nonassumption of Liabilities. Except as otherwise agreed expressly in
writing and those specifically identified in Exhibit A, Buyer does not and
shall not assume or agree to pay any of Seller's or, where applicable, any
shareholder's, partner's, or member's, liabilities or obligations of any
nature or kind. Seller and, where applicable, any shareholder, partner, or
member, shall each remain responsible for their respective debts and
obligations.
5. Further Assurances. From time to time after the date of this Agreement,
Seller shall give to Buyer, and to Buyer's representatives, auditors and
counsel, full access during normal business hours to all of the properties,
books, records, tax returns, contracts, licenses, franchises and all of the
documents of Seller relating to the Business and shall furnish to Buyer all
information with respect to the Business, as Buyer may from time to time
reasonably request. Promptly following execution of this Agreement, Seller
shall use Seller's best efforts to obtain all consents (if any, including,
without limitation, consents of any government or governmental agency)
necessary to effect the sale, assignment, transfer, conveyance and delivery
contemplated by Section 1 hereof. From time to time after the Closing, at
Buyer's request and without further consideration, Seller agrees to execute
and deliver at Seller's expense such other instruments of conveyance and
transfer and take such other action as Buyer reasonably may require more
effectively to sell, assign, transfer, convey, deliver and vest in Buyer, and
to put Buyer in possession of, any property to be sold, assigned, transferred,
conveyed and delivered hereunder.
6. Closing.
A. The issuance of shares, delivery of documents and completion of other
items related to the transfer of the Business and the assets purchased by
Buyer (the "Closing") shall be held on February 14, 2000, at 5:00 p.m., at
Seller's location, or on such other date, and at such other time and place, as
mutually agreed upon by the parties in writing.
B. At the Closing:
(i) Seller shall execute and deliver to Buyer the instruments of
conveyance and transfer called for in Section 2 hereof;
(ii) Buyer shall deliver to Seller a Board resolution instructing
the Buyer's transfer agent to issue the stock called for in Section 3 above.
7. Representations and Warranties of Seller. Seller represents and
warrants to and covenants with Buyer, and Buyer's successors and assigns
(which representations, warranties and covenants shall survive the Closing),
as follows:
A. Seller has full power and authority to execute and deliver the Agreement
and to consummate the transactions contemplated hereby.
B. This Agreement and Seller's performance of the obligations herein do not
constitute the breach or violation of any agreement, covenant, obligation or
promise to which Seller is legally bound.
C. Seller's execution, delivery and performance of this Agreement will not
constitute the breach or violation of any agreement, obligation, promise,
covenant or court order with respect to any spousal maintenance or child
support obligation and that Seller's spouse, if any, does not own any part of
the Business and no consent or waiver by any such spouse is required to
complete Seller's obligations herein.
D. Except as otherwise disclosed by Seller in writing, as of the date of
this Agreement, the assets and properties of Seller are not, and as of the
Closing they will not be, subject to any liens, encumbrances, claims, clouds,
charges, equities or imperfections of any nature.
E. Neither the execution or delivery by Seller of this Agreement or the
transactions contemplated hereby will: (i) result in the creation of any lien,
security interest, or encumbrance upon any of the assets of Seller; (ii)
violate any order, writ, injunction, decree, judgment, law, rule, regulation
or ruling of any court or governmental authority applicable to Seller or any
of its properties; or (iii) require any consent, approval or authorization of,
or declaration, filing or registration with, any governmental or regulatory
authority.
F. Seller, and where applicable any shareholder, officer, director, member
or partner, are in violation of, or under investigation with respect to, or
have been charged with or given notice of, any violation of any applicable
law, statute, order, rule, regulation, policy or guideline promulgated or
judgment entered, by any federal, state or local court or governmental
authority relating to or affecting the Business, Seller or any of Seller's
assets.
G. As of the Closing Date there has not been, any materially adverse change
in the financial condition, assets, liabilities, business or property of
Seller, or with respect to its employees or customers, and Seller has no
knowledge of any fact or contemplated event which may, in the future, cause
any such materially adverse change. As of the date of Closing, the business
of the Seller has been, and will be, conducted only in the ordinary course.
H. Copies of all instruments, agreements and other documents which have
been delivered or may be delivered to Buyer by Seller pursuant to or in
connection with this Agreement are and will be complete and correct as of the
date hereof and as of the Closing. Exhibits B and C, attached hereto and made
a part hereof, are lists of all contracts, leases, licenses and other
agreements relating to the Business. Seller is not in default and has not
received any notice of default under any such contract, lease, license or
other agreement or under any other obligation relating to the Business.
I. As of the date hereof there is, and on the Closing Date there will be,
no litigation at law or in equity, no proceeding before any commission or
other administrative or regulatory authority, and no dispute, claim or
controversy (including, without limitation, labor union strikes, elections,
arbitrations, grievances, complaints, or administrative actions) pending, or
to the knowledge of Seller threatened, against or affecting the business or
property of Seller or it right to carry on it business and enter into and
consummate the transactions contemplated by this Agreement.
J. There is no unfair labor practice complaint against Seller pending
before the National Labor Relations Board. There is no labor strike dispute,
slowdown or stoppage, or any union organizing campaign, pending, or to the
best of the knowledge of Seller, threatened against or involving Seller. No
labor agreements have been filed with Seller which has had, or may have, a
materially adverse effect on Seller's business. No collective bargaining
agreement is currently being negotiated with Seller.
K. Seller has not employed any broker or finder or incurred any liability
for any brokerage fees, commissions, finder fees or similar fees or expenses,
and no broker or finder has acted directly or indirectly for Seller in
connection with this Agreement or the transactions contemplated hereby.
L. On the date hereof Seller has, and on the Closing Seller shall have,
duly prepared and timely filed all local, state and federal tax returns
(including, without limitation, those which relate to FICA, withholding and
other payroll taxes) required to be filed by such dates, and paid all taxes,
penalties and interest with respect thereto. To the extent that any tax
liabilities have accrued but not become payable, the full amounts thereof have
been reflected as liabilities or reserved against on the Balance Sheet. After
the Closing, Seller shall duly prepare and timely file any and all local,
state and federal tax returns which pertain, in whole or in part, to the
period on or before the Closing, and pay all taxes, penalties and interest
with respect thereto.
M. On the date hereof, the properties and assets to be transferred under
this Agreement are, and on the Closing they will be, in good condition and
repair.
N. Seller shall permit Buyer and its representatives at all reasonable
times during business hours and without interfering with the normal conduct of
the business of Seller, to examine and have full access to all of the
properties, books and records of Seller and to copy such books and records (at
Buyer's expense).
8. Representations and Warranties of Buyer. Buyer represents and warrants
to and covenants with Seller (which representations and warranties shall
survive the Closing) as follows:
A. Buyer is a Corporation duly organized, validly existing and in good
standing under the laws of the State of Utah.
B. Buyer has full power and authority to execute and deliver the Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery and consummation of this Agreement have been duly authorized and
approved by such directors of Buyer as required by, and in accordance with,
applicable laws and the instruments, agreements and documents controlling
Buyer's governance.
C. As of the date hereof there is, and as of the Closing there will not be
litigation at law or in equity, no proceeding before any commission or other
administrative or regulatory authority, and no dispute, claim or controversy
pending, or to the knowledge of Buyer threatened, against or affecting the
right of Buyer to enter into and consummate the transactions contemplated by
this Agreement.
D. Buyer has not employed any broker or finder or incurred any
liability for any brokerage fees, commissions, finder fees or similar fees or
expenses in connection with the transactions contemplated by this Agreement,
and no broker or finder has acted on Buyer's behalf.
9. Indemnification.
A. Seller indemnifies and holds harmless Buyer against any loss, damage or
expense (including, without limitation, taxes, penalties, interest and
reasonable attorney's fees) asserted against or suffered by Buyer arising out
of or resulting from (i) any breach of this Agreement by Seller; (ii) any
inaccuracy in the representations, warranties, and covenants made by Seller in
this Agreement, or in any certificate, schedule, exhibit or written instrument
delivered or to be delivered under this Agreement; and (iii) any liability,
obligation, demand, claim, action, or judgment, known or unknown, which may
already have arisen or which may hereafter arise, by reason of or in
connection with the operation of Seller's business prior to the Closing.
B. (i) Buyer shall promptly notify Seller of any claim or demand which
Buyer determines has given or could give rise to a right of indemnification
under this Agreement. Unless Seller give Buyer written notice that either
contests Buyer's right to indemnification for a claim or demand within thirty
(30) days of the date Buyer notifies them of such a claim or demand, Seller
shall be deemed to have acknowledged Buyer's right to indemnification for such
claim or demand pursuant to the provisions of this Agreement.
(ii) If any claim or demand relates to a claim or demand asserted by a
third party against Buyer, Seller shall have the duty, at Seller's expense, to
defend any such claim or demand. Buyer shall make available to Seller and
Seller's representatives all records and other materials reasonably required
by them for their use in contesting any such claim or demand. Buyer shall
have the right, but not the obligation, to employ separate counsel, and to
participate with Seller in the defense of any such claim or demand, but the
fees and expenses of such separate counsel shall be paid by Buyer. In not
event shall Buyer be obligated to defend any such claim or demand.
10. Conditions Precedent to the Obligations of Buyer. The obligations of
Buyer under this Agreement are subject to the following conditions precedent:
A. The representations, warranties and covenants made by Seller herein to
Buyer shall be true and correct in all material respects on and as of the
Closing Date with the same effect as if such representations, warranties and
covenants had been made on and as of date of the Closing, and Seller shall
have performed and complied with all agreements, covenants and conditions on
their part required to be performed and complied with on or prior to the
Closing.
B. The assets to be purchased by Buyer and the Business shall not have been
adversely affected in any material way (whether or not covered by insurance)
as a result of any fire, casualty, act of God or other force majeure or any
labor dispute or disturbances.
11. Conditions Precedent to the Obligations of Seller. The obligations of
Seller shall be subject to the condition precedent that all warranties,
representations, and covenants made by Buyer to Seller in this Agreement shall
be true and correct in all material respects on and as of the Closing with the
same effect as if such warranties, representations, and covenants had been
made on and as of the date of the Closing, and Buyer shall have performed or
complied with all agreements, covenants and conditions on its part required to
be performed or complied with on or prior to the Closing.
12. Covenants of Seller. Seller covenants with Buyer as follows:
During the two year period from and after the Closing, Seller shall not
directly or indirectly, or as a partner, shareholder, employee, manager or
otherwise, own, manage, operate, control, be employed by, participate in, or
otherwise be connected with any other business the same as or similar to the
Business. In the event any of the provisions of this Section shall be
determined to be invalid by reason of their scope or duration, this Section
shall be deemed modified to such extent as required to cure the invalidity.
In the event of a breach, or a threatened breach, of this covenant, Buyer
shall be entitled to obtain an injunction restraining the commencement or
continuance or the breach, as well as to any other legal or equitable remedies
permitted by law.
13. Consulting Agreement. N/A
14. Notices.
Any notice under this Agreement shall be effectively given upon deposit in the
United States mail, postage prepaid, or by recognized overnight delivery
service, and addressed as follows (or at such change of address given by one
party to the other in writing after the date hereof):
If to Buyer: XxxxxXxxxx.xxx, Inc., 000 Xxxxxx Xxxx., Xxxxx Xxx Xxx, XX 00000
If to Seller: Xxx Xxxxxxxxx
0000 Xxxx 00xx Xxxxxx
Xxxxx, XX 00000
15. Final Agreement.
This Agreement represents the full agreement between the parties and
supersedes any and all prior negotiations and understandings between them.
This Agreement may not be modified or amended except by a written instrument
executed by all of the parties.
15. Governing Law.
This Agreement shall be governed by and construed according to the laws of the
State of Utah.
16. Force Majeure.
Nonperformance of either party shall be excused to the extent that performance
is rendered impossible by strike, fire, flood, governmental acts, orders or
restrictions, or any other reason where failure to perform is beyond the
control and not caused by the negligence of the non-conforming party.
17. No Assignment.
The parties agree that neither party may assign or transfer any rights and
obligations under this Agreement, directly or indirectly except upon the prior
written consent of the other party. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the parties hereto, their
successors and assigns.
18. Severability.
If any provision of this Agreement is held to be invalid by a court of
competent jurisdiction, then the remaining provisions shall nevertheless
remain in full force and effect.
19. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original.
20. Headings.
Headings used in this Agreement are provided for convenience only and shall
not be used to construe meaning or intent.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
XxxxxXxxxx.xxx, Inc.
By: /s/Xxxxx X. Xxxxxx /s/Xxx Xxxxxxxxx
Xxxxx X. Xxxxxx Xxx Xxxxxxxxx, Partner
Chief Executive Officer
/s/Xxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxxx, Partner
EXHIBIT A
Seller's Assets and Liabilities
Financial (approximate values as of 2-4-00):
Cash $ 1,375.36
Inventory $40,133.07
Fixed Assets $19,902.21
Other Assets $ 3,750.00
Accounts payable $ 9,657.21
Bank line of credit $ 4,271.04
Others:
All software relating to the Business, including but not limited to operating
and application software.
All domain names registered to the Business, including but not limited to
xxxxxxxx.xxx.
All e-mail lists and registered member information (approximately 8850 e-mail
addresses).
Complete access including passwords to the Business web site.
Any information that is stored in the databases of the Business.
EXHIBIT B
Interwest Transfer Co.
0000 Xxxx Xxxxxx-Xxxxxxxx Xx.
P. O. Xxx 00000
Xxxx Xxxx Xxxx, Xxxx 00000
Xxxxxxxxxx.xxx, Inc.
000 Xxxxxx Xxxx.
Xxxxx Xxx Xxx, Xxxxxxxxxx 00000
Re: Sale of assets of Stitches To Go ("STG") in exchange for shares of
Xxxxxxxxxx.xxx, Inc., a Utah corporation ("Craftclick or "the Company")
Dear Ladies and Gentlemen:
Pursuant to that certain Asset Purchase Agreement (the "Agreement") between
the undersigned I acknowledge that I have approved this sale and exchange;
that I am aware of all of the terms and conditions of the Agreement; that I
have received and personally reviewed a copy of any and all material documents
regarding the Company, including, but not limited to Articles of
Incorporation, Bylaws, minutes of meetings of directors and stockholders,
financial statements and the Company's Annual and Quarterly and Current
Reports filed with the Securities and Exchange Commission for the past twelve
months which can be reviewed in the Xxxxx Archives at xxx.xxx.xxx. I
represent and warrant that no director or officer of the Company or any
associate of either has solicited this exchange; that I am an "accredited
investor" as that term is known under the Rules and Regulations of the
Securities and Exchange Commission; and/or, I represent and warrant that I
have sufficient knowledge and experience to understand the nature of the
exchange and am fully capable of bearing the economic risk of the loss of my
entire cost basis. I hereby compromise and waive any claims I have or may
have against STG under any federal or state securities laws, rules or
regulations or otherwise, or for any other reason whatsoever.
I understand that you have and will make books and records of your Company
available to me for my inspection in connection with the contemplated exchange
of my shares, and that I have been encouraged to review the information and
ask any questions I may have concerning the information of any director or
officer of the Company or of the legal and accounting firms for the Company.
I understand that the accounting firm for Craftclick is Xxxxxxx, XxXxxxxxxx &
Assoc., 0000 Xxxxx 000 Xxxx, #000, Xxxx Xxxx Xxxx, Xxxx 00000; Telephone:
(000) 000-0000; and that legal counsel for Craftclick is Xxxxxxx X.
Xxxxxxxxxx, Esq., 000 Xxxx 0xx Xxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx 00000,
Telephone #000-000-0000.
I also understand that I must bear the economic risk of ownership of any of
the Craftclick shares for a long period of time, the minimum of which will be
one (1) year, as these shares are "unregistered" shares and may not be sold
unless any subsequent offer or sale is registered with the United States
Securities and Exchange Commission or otherwise exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Act"), or other
applicable laws, rules and regulations.
I intend that you rely on all of my representations made herein and those in
the personal questionnaire (if applicable) I provided for use by Craftclick as
they are made to induce you to issue me the shares of Craftclick under the
Agreement, and I further represent (of my personal knowledge or by virtue of
my reliance on one or more personal representatives), and agree as follows,
to-wit:
1. That the shares being acquired are being received for investment
purposes and not with a view toward further distribution;
2. That I have a full and complete understanding of the phrase "for
investment purposes and not with a view toward further distribution";
3. That I understand the meaning of "unregistered shares" and know that
they are not freely tradeable;
4. That any stock certificate issued by you to me in connection with the
shares being acquired shall be imprinted with a legend restricting the sale,
assignment, hypothecation or other disposition unless it can be made in
accordance with applicable laws, rules and regulations;
5. I agree that the stock transfer records of your Company shall reflect
that I have requested the Company not to effect any transfer of any stock
certificate representing any of the shares being acquired unless I shall first
have obtained an opinion of legal counsel to the effect that the shares may be
sold in accordance with applicable laws, rules and regulations, and I
understand that any opinion must be from legal counsel satisfactory to the
Company and, regardless of any opinion, I understand that the exemption
covered by any opinion must in fact be applicable to the shares;
6. That I shall not sell, offer to sell, transfer, assign, hypothecate or
make any other disposition of any interest in the shares being acquired except
as may be pursuant to any applicable laws, rules and regulations;
7. I fully understand that my shares which are being exchanged for shares
of the Company are "risk capital," and I am fully capable of bearing the
economic risks attendant to this investment, without qualification; and
8. I also understand that without approval of counsel for Craftclick, all
shares of Craftclick to be issued and delivered to me shall be represented by
one stock certificate only and which such stock certificate shall be imprinted
with the following legend or a reasonable facsimile thereof on the front and
reverse sides thereof:
The shares of stock represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold or otherwise
transferred unless compliance with the registration provisions of such Act has
been made or unless availability of an exemption from such registration
provisions has been established, or unless sold pursuant to Rule 144 under the
Act.
Any request for more than one stock certificate must be accompanied by a
letter signed by the requesting stockholder setting forth all relevant facts
relating to the request. Craftclick will attempt to accommodate any
stockholders' request where Craftclick views the request is made for valid
business or personal reasons so long as in the sole discretion of Craftclick,
the granting of the request will not facilitate a "public" distribution of
unregistered shares of common voting stock of Craftclick.
You are requested and instructed to issue a stock certificate as follows,
to-wit:
Xxxx X. Xxxxxxxxx 175,000
(Name(s) and Number of Shares)
0000 Xxxx 00xx Xxxxxx
(Xxxxxxx)
Xxxxx, XX 00000
(City, State and Zip Code)
If joint tenancy with full rights of survivorship is desired, put the initials
JTRS after your names.
Dated this ________ day of _______________________, 2000.
Very truly yours,
/s/Xxxxx X. Xxxxxx
You are requested and instructed to issue a stock certificate as follows,
to-wit:
Xxxxx X. Xxxxxxxxx 175,000
(Name(s) and Number of Shares)
0000 Xxxx 00xx Xxxxxx
(Xxxxxxx)
Xxxxx, XX 00000
(City, State and Zip Code)
If joint tenancy with full rights of survivorship is desired, put the initials
JTRS after your names.
Dated this ________ day of _______________________, 2000.
Very truly yours,
/s/Xxxxx Xxxxxx
