EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BETWEEN
XXXXXXXX.XXX, INC.
AND
XXXXXXXX.XXX INTERNATIONAL, INC.
MARCH 14, 2002
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of March 14, 2002, (the
"Effective Date"), between Xxxxxxxxx.xxx International Inc., a Delaware
corporation ("Buyer"), and Xxxxxxxx.xxx, Inc., a Delaware corporation
("Seller").
WHEREAS, Seller owns certain assets relating to the licensing of toy
designs to toy manufacturers and acting as a toy inventor's agent in licensing
toy designs developed by others (the "Business");
WHEREAS, Seller desires to sell and Buyer desires to buy all assets of
the Business as more particularly described below upon all of the terms and
subject to the conditions set forth herein;
WHEREAS, upon consummation of the sale to Buyer of the Business, Buyer
intends to continue to operate the Business as currently conducted.
NOW THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. "Acquired Assets" shall mean all rights, titles and exclusive
interests of Seller in and to all patents, trademarks, trade names, technical
processes, know-how and other intellectual property associated with the Business
of the Company, whether registered or not, including, but not limited to the
twenty seven (27) toy designs Seller acquired from Xxxxxx Design Group; all
tangible and intangible property related to the Business of the Company
including customer lists, records, goodwill and other intangible assets; all
contracts for purchases from suppliers or deliveries to customers of the
Company; and any other assets of any nature whatsoever that are related to or
used in connection with the Business of the Company and its goodwill.
1.2. "Agreement" means this Asset Purchase Agreement between Seller and
Buyer entered into as of the Effective Date, and all the exhibits and schedules
hereto.
1.3. "Closing Date" or "Closing" shall mean 10:00 a.m. EST on March 14,
2002, or such earlier date as the parties may agree.
1.4. "Excluded Assets" shall mean all rights, titles and exclusive
interests of Seller in and to all cash, cash equivalents and marketable
securities; and all receivables due accruing prior the Closing Date.
1.5. "Liens" is defined in Section 2.1.
1.6. "Purchase Price" shall mean 100 shares of the Buyer's common
stock, par value $.001 (the "shares"), which are all of the outstanding shares
of Buyer's stock.
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ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Assets Transferred. Subject to the terms and conditions hereof,
Seller hereby agrees to sell, transfer and assign to Buyer, and Buyer hereby
agrees to buy, on the Closing Date, all of Seller's rights, titles and interests
in and to the Acquired Assets. The Acquired Assets are and, when conveyed to
Buyer, will be, free and clear of all liens, security interests, claims,
obligations, liabilities, and other encumbrances (collectively, "Liens"). Buyer
will assume the obligations of Seller under material contracts, if any.
2.2 Excluded Assets. The Excluded Assets shall be retained by Seller
and shall not sold to Buyer pursuant to this Agreement; Seller hereby retains
any and all rights in and to the Excluded Assets.
2.3 Assumed Liabilities. Purchaser is not assuming any liabilities of
Seller whatsoever.
2.4 Closing.
At the Closing, Seller shall deliver to Buyer:
(A) An executed Xxxx of Sale and Assignment, conveying
all of Seller=s rights, titles and interests in and
to the Acquired Assets to Buyer for the Purchase
Price;
(B) All of the Acquired Assets that exist in tangible
form, such as the customer lists and records,
business licenses and applicable employee files and
records, or appropriate means of access to the same;
and
At the Closing, Buyer shall deliver to Seller:
(A) Resolutions of Buyer=s Board of Directors authorizing
the terms of this Agreement and the payment of the
Purchase Price set forth in Section 1.6 hereof.
(B) An executed Xxxx of Sale and Assignment; and
(C) A stock certificate or certificates representing the
Shares.
2.5 Payment of Purchase Price. Buyer shall issue and deliver the
certificate or certificates representing the Shares to Seller at the Closing.
The Shares shall be fully paid and non-assessable, and the certificate or
certificates therefore shall so state.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization. Seller is a corporation duly organized and validly
existing in the State of Delaware.
3.2 Ownership. Seller is the sole owner of the Acquired Assets.
3.3 Title to Acquired Assets. Seller has good title to all of the
Acquired Assets, free and clear of all Liens, except as set forth on Schedule
1.1 hereto (if any).
3.4 Litigation. There are no lawsuits or legal proceedings or
investigations, pending or threatened, which could adversely affect the ability
of Seller to perform its obligations under this Agreement, or the ability of
Buyer to operate the Business after the Closing, nor are there any judgments or
orders (judicial,
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administrative or otherwise) outstanding (A) requiring Seller to take any action
of any kind with respect to the Acquired Assets, or (B) which otherwise relate
to, involve or affect the Acquired Assets.
3.5 Compliance with Laws. To Seller's knowledge, Seller is in
compliance, in all material respects, with all applicable legal requirements in
connection with the conduct of the Business, except where the failure to do so
would not have a material adverse effect on Buyer or the operation of the
Business.
3.6 Tax Returns; Other Tax Reports. Seller has filed all material tax
returns and other tax reports required to be filed as they relate to the
operation of the Business, and has timely paid all taxes which have become due
and payable as shown on any such return or report, or has established reserves
or otherwise provided for any material tax liability which it is contesting or
intends to contest in good faith.
3.7 Bonds. There are no franchise, construction, fidelity, performance
or other bonds posted or required to be posted by Seller in connection with the
Acquired Assets.
3.8 Finders and Brokers. Seller has not entered into any contract,
arrangement or understanding with any person which may result in an obligation
of Buyer to pay any finder's fees, brokerage or agent's commissions or other
like payments in connection with the negotiations leading up to this Agreement
or the consummation of the transactions contemplated by this Agreement, and
Seller is not aware of any claim or basis for any claim for payment of any
finder's fees, brokerage or agent's commissions or like payment in connection
with the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
4.1 Organization. Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware.
4.2 Power; Authority; Consents. Buyer has the corporate power and
authority to enter into this Agreement, to perform its obligations hereunder, to
own, lease and operate the Acquired Assets, to carry on the Business as
currently being conducted, and to assume the obligations of the Seller under the
material contracts, if any. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby,
including the issuance of the Shares to Seller, have been duly authorized and
approved by the Board of Directors of Buyer and no other corporate proceedings
on the part of Buyer are necessary to authorize and approve this Agreement and
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by Buyer, and this Agreement constitutes a valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
or by the principles governing the availability of equitable remedies.
4.3 Finders and Brokers. Buyer has not entered into any contract,
arrangement or understanding with any person which may result in an obligation
of Seller to pay any finder's fees, brokerage or agent's commissions or other
like payments in connection with the negotiations leading up to this Agreement
or the consummation of the transactions contemplated by this Agreement, and
Buyer is not aware of any claim or basis for any claim for payment of any
finder's fees, brokerage or agent's commissions or like payment in
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connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby.
ARTICLE V
COVENANTS
5.1 Access and Information. After the Closing Date, if necessary,
subject to the provisions of Section 5.2 hereof, Seller shall (i) provide, to
the officers and other authorized representatives of Buyer, full access, during
normal business hours upon reasonable advance notice, to any and all premises,
properties, files, books, records, documents and other information of Seller,
(ii) cause its officers to furnish to Buyer and Buyer's authorized
representatives any and all financial, technical and operating data and other
information pertaining to the Acquired Assets as Buyer may reasonably request,
(iii) make available to Buyer and its authorized representatives personnel of
Seller to consult with such persons concerning the Acquired Assets and (iv) make
available for inspection and copying by Buyer true and complete copies of any
documents relating to the foregoing.
5.2 Confidentiality. Seller and Buyer acknowledge that the transactions
described herein are of a confidential nature and each of Seller and Buyer
agrees not to disclose any of such confidential information, except to (i) their
respective legal, financial, and accounting advisors, (ii) their lenders,
shareholders, officers, and directors, or (iii) as required by law.
5.3 Conduct of the Business Prior to the Closing. Between the date
hereof and the Closing Date, Seller shall (i) conduct the operation of the
Acquired Assets only in the ordinary course, (ii) use commercially reasonable
efforts to preserve intact the Acquired Assets and its business relationships
with, and the goodwill of, its suppliers, customers, employees and others, and
(iii) not sell any Acquired Assets, or take any action which would be
inconsistent with or cause any of Seller's representations and warranties
contained herein to be untrue or inaccurate in any material respect as of the
Closing Date.
5.4 Additional Agreements. If at any time after the Closing Date, any
further document is necessary to convey good title to the Acquired Assets or to
otherwise carry out the purposes of this Agreement, the parties agree to execute
and deliver any such document.
5.5 Notification of Certain Matters. Between the date hereof and the
Closing Date, Seller will give prompt notice in writing to Buyer of: (i) any
information that indicates that any representation and warranty contained herein
will not be true and correct in any material respect as of the Closing Date;
(ii) the occurrence of any event which will result, or has a reasonable prospect
of resulting, in the failure to satisfy a material condition specified in this
Agreement; and (iii) any notice of, or other communication relating to, any
default or event which, with notice or lapse of time or both, would become a
material default, received by Seller subsequent to the date of this agreement
and prior to the Closing Date, under any Material Contract.
ARTICLE VI
TERMINATION
Section 6.1. Termination by Mutual Consent. This Agreement may be
terminated at any time prior to Closing by the mutual written consent of the
Seller and Buyer.
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Section 6.2. Termination by Seller or Buyer. This Agreement may be
terminated by either the Seller or Buyer, by giving written notice of such
termination to the other party, if the Closing shall not have occurred by March
14, 2002; provided that the terminating party is not then in material breach of
its obligations under this Agreement.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF BUYER TO EFFECT THE CLOSING
The obligations of Buyer required to be performed by it at the Closing
shall be subject to the satisfaction, on or prior to the Closing Date, of each
of the following conditions, each of which may be waived by Buyer as provided
herein except as otherwise required by applicable law:
7.1 Representations and Warranties; Agreements; Covenants. Each of the
representations and warranties of the Seller contained in this Agreement shall
be true and correct in all material respects as of the Closing Date, with the
same force and effect as if made on and as of the Closing Date, and each of the
obligations of Seller required by this Agreement to be performed by it at or
prior to the Closing shall have been duly performed and complied with in all
material respects as of the Closing.
7.2 Authorization of Agreement. All action necessary to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby shall have been duly and validly taken by
Seller.
7.3 Consents. Seller shall have obtained all required material consents
of third parties in connection with the transfer of the Acquired Assets to
Buyer.
7.4 Absence of Litigation. No order, stay, judgment or decree shall
have been issued and be in effect by any court restraining or prohibiting the
consummation of the transactions contemplated hereby.
7.5 Closing Documents. All of the documents listed in Section 2.4 shall
have been delivered to Buyer at the Closing in satisfactory form.
7.6 No Material Adverse Change. No material adverse change shall have
occurred since the date of this Agreement.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF SELLER TO EFFECT THE CLOSING
The obligations of Seller required to be performed by it at the Closing
shall be subject to the satisfaction, on or prior to the Closing Date, of each
of the following conditions, each of which may be waived by Seller as provided
herein except as otherwise provided by applicable law:
8.1 Representations and Warranties; Agreements; Covenants. Each of the
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects as of the Closing Date, with the same
force and effect as if made on and as of the Closing Date, and each of the
obligations of Buyer required by this Agreement to be performed by it at or
prior to the Closing shall have been duly performed and complied within all
material respects as of the Closing.
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8.2 Authorization of Agreement; Consents. All action necessary to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken by Buyer.
8.3 Absence of Litigation. No order, stay, judgment or decree shall
have been issued and be in effect by any court restraining or prohibiting the
consummation of the transactions contemplated hereby.
8.4 Consents. Buyer shall have obtained all required material consents
of third parties in connection with the acquisition of the Acquired Assets from
Seller.
8.5 Closing Documents. All of the documents listed in Section 2.4 shall
have been delivered to Seller at the Closing in satisfactory form.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1 Survival. All representations, warranties and obligations contained
in this Agreement, or in any Schedule, certificate, document or statement
delivered pursuant hereto, shall survive for a period of one (1) year after the
Closing.
9.2 Indemnification. The parties shall indemnify each other as set
forth below:
(a) Seller hereby agrees to indemnify and hold harmless Buyer
and its members, managers, directors, officers, employees and all persons which
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with Buyer from, and to reimburse
Buyer and its members, managers, directors, officers, employees and all persons
which directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with Buyer for, any and all damages,
liabilities and third-party claims, and all fees, costs and expenses of any kind
related thereto (including, without limitation, any and all reasonable legal
fees, except with respect to clause (ii) below) arising out of, based upon or
resulting from (i) any misrepresentation of Seller which is contained in or made
pursuant to this Agreement, or (ii) the failure of Seller to pay any liability
of Seller than is not one of the Assumed Liabilities to the extent of the actual
amount for which a valid claim arising out of, based upon or resulting from such
unpaid liability is made against Buyer or (iii) the breach of or failure to
perform by Seller of any of its obligations contained in or made pursuant to
this Agreement; provided, however, that such indemnity shall not apply to any
inaccuracy, breach or failure to perform a representation, warranty or
obligation if, and to the extent that, Buyer is specifically advised by Seller
in writing of or has actual knowledge of such inaccuracy, breach or failure to
perform prior to the Closing and nevertheless proceeds with the Closing.
(b) Buyer hereby agrees to indemnify and hold harmless Seller
and its members, managers, directors, officers, employees and all persons which
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with Seller for, any and all losses,
damages, liabilities and claims and all fees, costs and expenses of any kind
related thereto (including, without limitation, any and all reasonable legal
fees) arising out of, based upon or resulting from (i) any misrepresentation of
Buyer which is contained in or made pursuant to this Agreement or (ii) Buyer's
breach of or failure to perform any of its obligations contained in or made
pursuant to this Agreement, subject to the same proviso contained in Section
9.2(a) above.
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(c) For purposes of Sections 9.2(c), and 9.2(d) hereof, Buyer,
on the one hand, and Seller, on the other hand, shall be referred to as an
"indemnifying party" or an "indemnified party," as the case may be. In the event
of the occurrence of any event which either Buyer or Seller asserts is an
indemnifiable event pursuant to this Article IX, the party claiming
indemnification shall notify the indemnifying party in writing promptly. If such
event involves the claim of any third party, the indemnifying party shall have
sole control over, and shall assume all expense with respect to, the defense or
settlement of such claim; provided, however, that:
(i) The indemnified party shall be entitled to
participate in the defense of such claim and to employ counsel
at its own expense to assist in the handling of such claim;
(ii) The indemnifying party shall obtain the prior
written approval of the indemnified party before entering into
any settlement of such claim or ceasing to defend against such
claim, if pursuant to or as a result of such settlement or
cessation, injunctive or other equitable relief would be
imposed against the indemnified party, and such approval shall
not be unreasonably withheld.
If the indemnifying party does not assume sole control over the defense
or settlement of such claim as provided in this Section 9.2(c), the indemnified
party shall have the right to defend and settle the claim in such reasonable
manner as it may deem appropriate at the reasonable cost and expense of the
indemnifying party, and the indemnifying party shall promptly reimburse the
indemnified party therefor in accordance with this Section 9.2.
(d) In any event involving the claim of any third party, the
indemnified party shall cooperate fully with the indemnifying party in the
defense of any such claim under this Section 9.2. Without limiting the
generality of the foregoing, the indemnified party shall furnish the
indemnifying party with such documentary or other evidence as is then in its
possession as may reasonably be requested by the indemnifying party for the
purpose of defending against any such claim.
9.3 Exclusive Remedy. In the event that a misrepresentation or breach
of warranty, agreement or covenant is discovered by either party after the
Closing, or in the event of any other claim relating to or arising under this
Agreement or any of the transactions contemplated hereby (the "Transactions"),
or any document executed in connection with the Transactions, other than a claim
based upon fraud or intentional misrepresentation, the sole and exclusive rights
and remedies of the complaining party shall be as set forth in this Article 9,
and such party shall not be entitled to a rescission of this Agreement.
9.4 Net Recovery. The effect of any misrepresentation or breach or
failure to perform or comply with any warrant, covenant or agreement of, or any
indemnifiable claim against, Seller under or in respect of, this Agreement or
any of the Transactions, or any document executed in connection with the
Transactions, and any damages resulting therefrom, shall be determined based
solely on actual damages (1) on a net after-tax basis (that is, with the amount
thereof reduced to reflect the tax benefit, if any, resulting therefrom), and
(2) net of any amount recovered or recoverable by or on behalf of Buyer in
respect thereof or in connection therewith under any one or more policies of
insurance maintained by any party hereto or any third party.
9.5 Consequential Damages; Disclaimer of Warranties. NO PARTY HERETO
SHALL BE HELD LIABLE HEREUNDER FOR INCIDENTAL, INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES, OR FOR LOST PROFITS OR LOST OPPORTUNITY COSTS, WHETHER OR
NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
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ARTICLE X
MISCELLANEOUS
10.1 Expenses; Taxes. Each of the parties hereto shall pay its own fees
and expenses (including the fees of any attorneys, accountants or others engaged
by such party, except as otherwise provided herein) in connection with this
Agreement and the transactions contemplated hereby. Sales tax, use tax or any
similar tax arising out of the transactions contemplated hereby, if any, shall
be paid by Buyer.
10.2 Notices. All notices or other communications required or permitted
hereunder shall be given in writing and shall be delivered or sent by registered
or certified mail, postage prepaid. Any party may change its address for
purposes of notice by giving notice in accordance with the provisions of this
Section 10.2. Any such notice will be deemed to be given when received, if
personally delivered or sent by facsimile (with confirmation of delivery), and,
if mailed, five (5) days after deposit in the United States mail, properly
addressed, with proper postage affixed.
10.3 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto (and, with
respect to Article IX, the indemnified parties referred to therein) and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder may be assigned by any of the
parties hereto without the prior written consent of the other parties.
10.4 Entire Agreement; Captions. This Agreement contains the entire
understanding of the parties with respect to the transactions contemplated
hereby and supersedes all prior written or oral commitments, arrangements or
understandings with respect, thereto. There are no restrictions, agreements,
promises, warranties, covenants or undertakings other than those expressly set
forth or referred to herein. The captions in this Agreement are for convenience
of reference only, do not form a part hereof and do not in any way modify,
interpret or construe the intentions of the parties.
10.5 Amendments; Termination. This Agreement may be modified, and any
waiver of compliance with any provision or condition hereof or consent provided
for herein shall be effective, only by a written instrument duly executed by the
parties hereto. This Agreement (except for the provisions of Sections 5.2 and
10.1 hereof, which shall continue in effect) and the transactions contemplated
hereby may be terminated and abandoned at any time prior to the Closing Date (i)
by written agreement of the parties hereto or (ii) by Buyer or Seller upon
written notice given to the other party, as a result of the failure of the
satisfaction of one or more of the conditions to Closing set forth herein;
provided, however, that such failure shall not be the result of any action or
inaction on the part of the party seeking to terminate this Agreement. In the
event of any termination permitted by the preceding sentence, the parties hereto
shall have no liabilities pursuant to this Agreement to the other parties
hereto, except for liabilities arising out of a breach of Section 5.2 or 10.1
hereof. However, a termination under this Section 10.5 shall not relieve any
party of liability for any intentional failure to perform or comply with any
agreement or any intentional misrepresentation or constitute a waiver of any
claim with respect thereto.
10.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
be considered one and the same instrument.
10.7 Governing Law. This Agreement shall be governed by the laws of the
State of New York, without giving effect to its conflict of laws rule.
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10.8 Severability. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality or enforceability of the remaining provisions of this Agreement shall
not be affected thereby. To the extent permitted by applicable law, each party
waives any provision of law which renders any provision of this Agreement
invalid, illegal or unenforceable in any respect.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
SELLER:
XXXXXXXX.XXX, INC.
By: /s/ Xx Xxxxxx
---------------------------------------
Name: Xx Xxxxxx
Title: President and CEO
BUYER:
XXXXXXXX.XXX INTERNATIONAL, INC.
By: /s/ Xx Xxxxxx
---------------------------------------
Name: Xx Xxxxxx
Title: President and CEO
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SCHEDULE 1.1
LIENS
None.
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