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EXHIBIT 10.4
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement") dated as of August 6, 1999 (the
"Effective Date") by and between Xxxxxxx Xxxx (d/b/a Freshmeat), an individual
residing at Xxxxxxxxxxxxxxx 00, 00000 Xxxxxxxxxxx, Xxxxxxx Xxxxxxxx of Germany
("Owner"), and Andover Advanced Technologies, Inc., a Massachusetts corporation,
with its principal offices at 00 Xxxxx Xxxx, Xxxxx, Xxxxxxxxxxxxx 00000, the
United States of America ("Purchaser").
1. CONVEYANCE OF RIGHTS.
(a) On the Effective Date, Owner hereby transfers, grants, assigns, and
relinquishes exclusively to Purchaser all of Owner's right, title, and interest
in and to (i) the web site described in Schedule 1 attached hereto (the
"Website"), and all proprietary rights therein, including all patent, copyright
and trade secret rights, all patent applications, if any, relating thereto, and
all technical information, documents, data, content, designs, prototypes and
software relating to the Website; (ii) all rights to commercialize the Website
in any manner; (iii) any domain names and trademarks listed in Schedule 1,
(collectively, the "Trademarks"), together with the goodwill symbolized by the
Trademarks, and all registrations or applications for registration thereof, and
(iv) any other assets listed in Schedule 1 (all such items listed in Schedule 1,
collectively, the "Purchased Assets").
(b) In the event the transfer or assignment of Owner's rights in the
Purchased Assets is not permissible under applicable German laws, Owner shall
grant to Purchaser the irrevocable and exclusive right to exercise all of
Owner's bundle of rights in the Purchased Assets.
2. DELIVERY OF PHYSICAL OBJECTS. Concurrently with execution of this
Agreement, Owner has delivered to Purchaser: (a) a master copy of all content
and any software (in both source and object code form) that is included among
the Purchased Assets in electronic form; and (b) all system and user
documentation pertaining to the Purchased Assets, including without limitation
design or development specifications.
3. PURCHASE PRICE. In consideration of the conveyance to Purchaser of the
Purchased Assets, Purchaser shall deliver to Owner the consideration in the
amounts and at the times specified in Schedule 2 attached hereto (the "Purchase
Price").
4. FURTHER ASSURANCES. In each case, at the request of Purchaser without
further cost or expense to Owner, Owner shall execute and deliver such further
conveyance instruments and take such further actions as may be necessary or
desirable to evidence more fully the transfer of ownership of all of the
Purchased Assets to Purchaser. Subject to the foregoing sentence, Owner
therefore agrees (a) to execute, acknowledge, and deliver any affidavits or
documents of assignment and conveyance regarding the Purchased Assets; (b) to
provide testimony in connection with any proceeding affecting the right, title,
or interest of Purchaser in the Purchased
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Assets; and (c) to perform any other acts deemed necessary to carry out the
intent of this Agreement.
5. PROTECTION OF TRADE SECRETS. For purposes of this Agreement, "Trade Secret"
means the whole or any portion or phase of any scientific or technical
information, design, process, procedure, formula, or improvement included in the
Purchased Assets that is valuable and not generally known to the business
concerns engaged in the development or marketing of products competitive with
the Purchased Assets. From and after the date of execution hereof, and for so
long thereafter as the data or information remain Trade Secrets, Owner shall not
use, disclose, or permit any person not authorized by Purchaser to obtain any
Trade Secrets (whether or not the Trade Secrets are in written or tangible
form), except as specifically authorized by Purchaser.
6. ACKNOWLEDGMENT OF RIGHTS. In furtherance of this Agreement, Owner hereby
acknowledges that, from and after the Effective Date of this Agreement,
Purchaser has acceded to all of Owner's right, title, and standing to (a)
receive all rights and benefits pertaining to the Purchased Assets; (b)
institute and prosecute all suits and proceedings and take all actions that
Purchaser, in its sole discretion, may deem necessary or proper to collect,
assert, or enforce any claim, right, or title of any kind in and to any and all
of the Purchased Assets; and (c) defend and compromise any and all such actions,
suits, or proceedings relating to such transferred and assigned rights, title,
interest, and benefits, and perform all other such acts in relation thereto as
Purchaser, in its sole discretion, deems advisable.
7. REPRESENTATIONS AND WARRANTIES. Owner represents and warrants to Purchaser
as follows:
(a) Except as set forth in Schedule 7(a) attached hereto, Purchaser shall
receive, pursuant to this Agreement, complete and exclusive right, title and
interest in and to all tangible and intangible property rights existing in the
Purchased Assets. Owner has developed the Purchased Assets entirely through his
own efforts for his own account. The Purchased Assets are free and clear of all
liens, claims, encumbrances, rights or equities whatsoever of any third party.
(b) Except for third party software, applications and information to which
the Website provides links, the Purchased Assets do not infringe any patent,
copyright, trade secret or other intellectual property right of any third party;
the Purchased Assets are fully eligible for protection under applicable
copyright law; and the source code, if any, for the Purchased Assets have been
maintained in confidence.
(c) To the best of Owner's knowledge and except for third party software,
applications and information to which the Website provides links, the Purchased
Assets do not contain any material that is libelous, slanderous, defamatory,
obscene or illegal. There is no action, suit, claim, or proceeding pending or,
to the best of Owner's knowledge, threatened against or affecting Owner, arising
from the use of the Purchased Assets prior to the Effective Date.
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(d) To the best of Owner's knowledge and except for third party software,
applications and information to which the Website provides links, the software,
hardware and firmware which comprise the Purchased Assets is Year 2000
Compliant. The term "Year 2000 Compliant", as used in the preceding sentence,
means that no operational function, financial function, data transmission,
communication or process is materially affected or materially interrupted by
dates prior to, during or after the Year 2000, and in particular, without
prejudice to the generality of the foregoing that: (i) no value for current date
will cause any interruption in operation; (ii) all manipulation of time related
data will produce the required results for all valid date values prior to,
during and after the Year 2000; (iii) if the date elements in interfaces and
data storage specify the century, they will permit specifying the correct
century either explicitly or by unambiguous algorithms or inferencing rules; and
where any date element is represented without a century, the correct century
shall be unambiguous for all manipulations involving that element; and (iv) Year
2000 must be recognized as a leap year.
8. INDEMNIFICATION.
(a) Owner shall indemnify Purchaser from and against, and shall defend or
settle at Owner's own expense, any action against Purchaser based on a claim
that the use of the Purchased Assets constitutes an infringement of any
copyright, patent, trade secret or other intellectual property right of a third
party. Owner will pay any costs and damages actually awarded against Purchaser,
and reasonable expenses (including but not limited to reasonable attorney's
fees) incurred by Purchaser in any such action attributable to any such claim.
(b) Owner shall indemnify and hold Purchaser harmless from and against any
costs, damages and fees reasonably incurred by Purchaser, including, but not
limited to, fees of attorneys and other professionals, to the extent based on or
attributable to an allegation, claim or action (i) arising out of any
allegations that the Purchased Assets contain any material that is libelous,
slanderous, defamatory, obscene or illegal, or (ii) with respect to any and all
losses, liabilities, damages or obligations resulting from or relating to any
untrue representation or breach of warranty by Owner, provided that Purchaser
first gives written notice to Owner of such claim or breach and Owner shall have
thirty (30) days to cure such claim or breach which gives rise to Purchaser's
indemnification claim under this Section 8(b).
(c) Owner's obligation to indemnify Purchaser in accordance with this
Section 8 shall apply provided that the loss suffered by the Purchaser exceeds
U.S. $5,000 and further provided that Owner's indemnification of Purchaser shall
not exceed in the aggregate the actual amount of (i) cash consideration already
paid to Owner by Purchaser in accordance with Schedule 2 attached hereto as of
the date Purchaser asserts such indemnification claim against Owner plus (ii)
any stock consideration already paid to Owner by Purchaser in accordance with
Schedule 2 attached hereto as of the date Purchaser asserts such indemnification
claim, provided that Owner shall have the sole discretion of making payment by
transferring stock in kind to the Purchaser or cash of equal value. In any
event, Owner's payment obligation in accordance with clause (ii) above shall not
exceed $333,333 in cash. Notwithstanding the foregoing, Owner's obligation to
indemnify Purchaser in accordance with this Section 8 shall not be subject to
any of the limits described in the previous sentence for losses arising from
Owner's fraud, willful conduct or gross negligence.
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9. NON-COMPETITION / NON-SOLICITATION. Owner hereby agrees to the following:
(a) For a period of five (5) years after the Effective Date, Owner will
not anywhere in the world engage or participate in, directly or indirectly, as
principal, agent, employee, employer, consultant, investor or partner, or assist
in the management of, or own any stock or any other ownership interest in, any
Competitive Business (as defined herein); provided that the ownership of not
more than 5% of the outstanding securities of any class listed on an exchange or
regularly traded in the over-the-counter market shall not constitute a violation
of this Section 9(a). For purposes of this Agreement, "Competitive Business"
shall mean any business which relates to the collection and distribution of
information on software and applications.
(b) For a period of five (5) years after the Effective Date (the
"Non-Solicitation Period"), Owner will not solicit, or attempt to solicit, any
officer, director, consultant or employee of Purchaser or any of its
subsidiaries or affiliates to leave his or her engagement with Purchaser or such
subsidiary or affiliate nor will it call upon, solicit, divert or attempt to
solicit or divert from Purchaser or any of its affiliates or subsidiaries any of
their customers or suppliers, or potential customers or suppliers; provided,
however, that nothing in this Section 9(b) shall be deemed to prohibit Owner
from calling upon or soliciting a customer or supplier during the
Non-Solicitation Period if such action relates solely to a business which is not
competitive with Purchaser; and provided, further, however, that nothing in this
Section 9(b) shall be deemed to prohibit Owner from placing advertisements in
newspapers or other media of general circulation advertising employment
opportunities.
10. ADDITIONAL COVENANTS.
(a) The parties, as soon as practicable but in no event no later than
September 1, 1999, will enter into a service contract containing the following
provisions: (i) Owner (or an enterprise established by Owner) shall provide
maintenance and service for the Website and Owner shall devote such business
time that is reasonably necessary to operate the Website in a manner consistent
with Owner's past business practices. (ii) Owner shall have full editorial and
creative control over the content of the Website and shall report to the
President of Purchaser. (iii) As compensation for such services, Owner shall
receive an annual payment of U.S. $90,000 per year payable in twelve (12)
monthly installments on the first day of each month. (iv) Purchaser shall
reimburse Owner for all reasonable expenses incurred by Owner in connection with
the performance of his services, provided that any expense exceeding $1,000
shall require the prior consent of Purchaser. (v) The term of the service
contract shall be for three (3) years. (vi) Purchaser will pay to owner a
$10,000 annual end of the year bonus.
(b) Owner, as reasonably requested by Purchaser, shall provide assistance
in completing or consummating any necessary filings or transfers in connection
with the Purchased Assets in the United States and the Federal Republic of
Germany.
(c) Purchaser hereby acknowledges that Owner has confirmed to the
registered users of the Web site that such users will not receive unsolicited
e-mail or other messages from their use of
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the Web site (a.k.a. spamming). Purchaser agrees to take commercially reasonable
measures to prevent such spamming on the Website after Closing.
11. TERMINATION. All rights, obligations and terms of this Agreement including
Purchaser's rights to indemnification shall terminate and expire three (3) years
after the date hereof. Notwithstanding the foregoing, the provisions in Section
9 of this Agreement shall survive five (5) years after the date hereof.
12. MISCELLANEOUS. (a) This Agreement will inure to the benefit of, and be
binding upon, the parties hereto, together with their respective legal
representatives, successors and assigns. (b) If any provision of this Agreement
is found invalid or unenforceable, that provision will be enforced to the
maximum extent permissible, and the other provisions of this Agreement will
remain in force. (c) This Agreement and schedules are the complete and exclusive
agreement among the parties with respect to the subject matter hereof,
superseding and replacing any and all prior agreements, communications and
understandings (both written and oral) regarding such subject matter. This
Agreement may only be modified, or any rights under it waived, by a written
agreement executed by both parties. (d) This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts,
exclusive of its rules governing choice of law and conflict of laws, provided
that the venue for any court proceeding shall be Frankfurt am Main in the
Federal Republic of Germany.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written.
OWNER
/s/ Xxxxxxx Xxxx
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Xxxxxxx Xxxx
ANDOVER ADVANCED TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Title: President
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SCHEDULE 1
LIST OF ASSETS
1. Domain: xxxxxxxxx.xxx
2. "FRESHMEAT" servicemark for computer services, namely providing on-line
software update information and download links in the, filed as Open Source
Software, Int. Class: 042.
There is a pending application dated April 8, 1999 (serial number
75/677150) for registration of this servicemark in the United States.
The servicemark was first used in commerce on March 24, 1998.
3. Web site copyrights for web sites in xxxxxxxxx.xxx
4. Scripts for the creation of the Web site contents of xxxxxxxxx.xxx
5. Data contained in the xxxxxxxxx.xxx databases.
6. Revenue generated through the sale of T-shirts containing the Web site
logo.
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SCHEDULE 2
PURCHASE PRICE
1. CASH CONSIDERATION. Total cash consideration to be paid shall be
$667,000 which shall be paid as follows to the Owner:
(a) $367,000 on the Effective Date; and
(b) a monthly installment of $20,000 payable on the first business
day of each month commencing on September 1, 1999 through and
including November 1, 2000. The aggregate payment under this
clause (b) shall be $300,000.
2. STOCK CONSIDERATION. In the event that the Purchaser completes an
initial public offering of its common stock (an "Offering"), in addition to the
consideration set forth above, the Purchaser shall issue shares of its common
stock to the Owner with an aggregate value as set forth below. The number of
shares of common stock to be issued to the Seller in each instance shall be
calculated using the price per share initially offered to the public in such
Offering:
Aggregate Value Timing
--------------- ------
$111,111 Upon closing of Offering
$111,111 Twelve (12) months after closing of Offering
$111,111 Twenty-four (24) months after closing of Offering
In the event that the service contract of Xxxxxxx Xxxx with the Purchaser
referenced in Section 10 of this Agreement is terminated for Cause or
voluntarily by the individual, the Purchaser shall not be required to issue any
of the shares due to the Seller following the date of such termination.
3. ALTERNATE CASH CONSIDERATION. In the event that an Offering does not
occur within eighteen (18) months from the Effective Date, the Owner shall have
a one time option which must be exercised in writing not less than eighteen (18)
months after the Effective Date and not more than nineteen (19) months after the
Effective Date, to forego the consideration set forth in Section 2 above and to
receive in lieu thereof the following cash payments:
(i) US $100,000 paid on the date which is five (5) days following the
receipt by the Purchaser of the Owner's election hereunder;
(ii) US $100,000 paid on the date which is twelve (12) months after the
receipt by the Purchaser of the Owner's election hereunder; and
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(iii) US $100,000 paid on the date which is twenty-four (24) months after
the receipt by the Purchaser of the Owner's election hereunder.
In the event that the service contract of Xxxxxxx Xxxx with the Purchaser
referenced in Section 10 of this Agreement is terminated for Cause or
voluntarily by the individual, the Purchaser shall not be required to make any
payment in accordance with this Alternate Cash Consideration.
4. NATURE OF PURCHASE PRICE/PURCHASE PRICE ALLOCATION. The Parties agree that
all payments hereunder shall be deemed purchase price payable for the purchase
of the Purchased Assets and not compensation to the Owner. If necessary, the
Parties will mutually agree on the allocation of the Purchase Price.
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SCHEDULE 7(a)
TITLE AND INTEREST
Web site copyrights for web sites in xxxxxxxxx.xxx.
Certain volunteers have assisted the Owner in proofreading materials posted on
the web site.
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