EXHIBIT 2.2
TRANSFER AND ASSUMPTION AGREEMENT
This Transfer and Assumption Agreement (the "Agreement") is entered
into and dated effective as of May 31, 2005 (the "Effective Date") by and among
Cyber Merchants Exchange, Inc., a California corporation (the "Company"), ASAP
Show Inc., a Nevada corporation ("ASAP"), and Xxxxx Xxxx, an adult resident of
the State of California ("Yuan").
RECITALS
A. ASAP is a wholly owned subsidiary of the Company without any
business assets or activities, and the Company owns all of the capital stock of
ASAP.
B. The Company desires to transfer its existing trade show business
operations ("Business") and any and all assets in connection with the Business
to ASAP in accordance with the terms hereof.
C. ASAP desires to acquire and purchase from the Company, as of the
Effective Date, all of assets of every kind and description (including cash,
accounts receivable, inventory, equipment, contracts, deposits and prepaid
expenses) used in or related to the Business together with all assets of the
Company (but specifically excluding from such assets, the capital stock of ASAP
owned by the Company) (the foregoing assets being referred herein collectively
as the "Assets").
D. The Assets to be acquired by ASAP include, but shall not be limited
to, those specifically set forth on Schedule A attached hereto, which Schedule A
shall be revised and amended by the parties hereto within thirty (30) days after
the Effective Date based on an audit of the Company's and ASAP's financial
statements by Xxxxxx and Company, LLP (the "Auditor") as of the Effective Date.
E. As consideration for the transfer of the Assets by the Company to
ASAP, ASAP has agreed to assume, perform and pay each and every liability and
obligation of the Company (including, without limitation, accounts and trade
payables, accrued expenses, payroll liabilities, deferred revenue, customer
deposits, loans, and obligations under contracts and agreements) as of the
Effective Date including, without limitation, the liabilities of the Company set
forth on Schedule B attached hereto, which Schedule B shall be revised and
amended by the parties hereto within thirty (30) days after the Effective Date
based on an audit of the Company's and ASAP's financial statements by the
Auditor as of the Effective Date.
F. Yuan desires to forever and irrevocably release the Company from any
and all obligations and claims with respect to any debt and/or obligations of
the Company owed to Yuan from and through the Effective Date ("Yuan
Obligations") including, without limitation, (i) any obligations of the Company
incurred in connection with Yuan's capacity as an employee, officer and director
of the Company, and (ii) any obligations of the Company with respect to advances
and loans made by Yuan to the Company, which obligations will be assumed by ASAP
pursuant to the terms hereof ("Yuan Loans").
G. Following the completion of the transactions contemplated hereunder
and the modification of Schedules A and B pursuant to the audit of the Company's
financial statements by auditor, the Company desires to distribute all of the
capital stock of ASAP to its stockholders on a pro rata basis ("Distribution").
H. Following the completion of the transactions contemplated under this
Agreement and the Distribution, and subject to the satisfaction of the
conditions contained on a certain Securities Purchase Agreement by and among the
Company, Yuan and KI Equity Partners II, LLL ("KI Equity") dated November 19,
2004, as may be amended from time to time by the parties ("Purchase Agreement"),
KI Equity has agreed to subscribe for and purchase certain capital stock of the
Company for a purchase price of $415,000 ("Subscription Funds").
I. Upon receipt of the Subscription Funds by the Company, the Company
will handle and disburse such Subscription Funds in the manner set forth in this
Agreement, with any portion of the Subscription Funds remaining being paid to
ASAP as a reduction of its purchase price for the Assets, subject to the
Company's maintenance of a $50,000 reserve for future indemnity claims
hereunder.
AGREEMENTS
NOW, THEREFORE, in consideration of the above recitals, the following
representations, warranties, covenants and conditions, and other good and
valuable consideration, the receipt of which is acknowledged, the parties agree
as follows:
1. Transfer of Assets. On the Effective Date, the Company hereby sells,
assigns, conveys, transfers and delivers to ASAP, on an "AS IS, WHERE IS" basis,
without any warranties or representations of any kind or nature, all of the
Assets. Within thirty (30) days following the Effective Date, the Company and
ASAP shall cause the Auditor to deliver to the Company and ASAP the audited
financial statements of the Company and ASAP as of the Effective Date. Upon such
delivery, the Company and ASAP shall update and amend the Schedule A attached
hereto and provide any supporting schedules reasonably required to identify the
Assets in detail.
2. Assumption of Liabilities. ASAP hereby assumes, and agrees to pay,
observe and perform all of the duties, obligations, terms, provisions and
covenants of all of Company's burdens, debts, obligations and liabilities of
every nature and kind, whether liquidated or contingent, xxxxxx or inchoate,
known or unknown, including but not limited to Company's accounts and trade
payables, accrued expenses, payroll liabilities, vacation and sick pay accruals,
deferred revenue, customer deposits, Yuan Loans, loans from Xxxxxxx Xxx, vendor
and customer claims, obligations under any contracts, agreement, instruments,
licenses and leases, accrued salaries and benefits, taxes of any kind or nature
(including all taxes of the Company arising out of or with respect to the
transactions under this Agreement and the Distribution), filings made with any
regulatory agencies, fines and penalties, obligations, damages or expenses
(including fines and penalties) arising as a result of the Company's failure to
comply with any laws, rules or regulations applicable to the Company or the
Business (including, without limitation, any and all laws, rules and regulations
under and with respect to the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended), employment matters and benefits
(including any and all liabilities arising out of or with respect to the
termination of the Company's employees under this Agreement whether for
severance, health care insurance continuation or any other matter), employment
and consulting contracts, debt, subordinated debt, claims made by any past or
current holders of the Company's securities, warranties and other customer
claims, actions and proceedings, pending or threatened, and liabilities,
obligations or claims, whether or not presently asserted, arising out of,
relating to or connection with the Assets or the Business heretofore conducted
by the Company or any of its affiliates and subsidiaries at any time prior to
the Effective Date (the "Assumed Liabilities"). The Assumed Liabilities shall
include, but not be limited to: (i) all of the Company's liabilities and
obligations under any contracts or agreements to which the Company is party
including all obligations for the payment of past, current or future amounts
payable thereunder (including, without limitation, the lease of the Company's
office facilities in El Monte, California, any distribution, license, joint
venture agreement involving the Company, and any other contract or agreement
relating to the Company or the Business) ("Contract Liabilities"); (ii) each of
the liabilities set forth on Schedule B hereto, as may be amended and updated as
provided herein, (iii) any claims by past or present stockholders, debt holders,
warrant holders, or option holders of the Company on account of actions or
events occurring prior to the Effective Date and/or with respect to the
Distribution, and (iv) any and all obligations of the Company with respect to
the stock option or incentive plans of the Company and any and all options and
shares issued under such plans ("Option Plans").
Within thirty (30) days following the Effective Date, the Company and
ASAP shall cause the Auditor to deliver to the Company and ASAP the audited
financial statements of the Company and ASAP as of the Effective Date. Upon such
delivery, the Company and ASAP shall update and amend the Schedule B attached
hereto and provide any supporting schedules reasonably required to identify the
Assumed Liabilities in detail.
Within thirty (30) days following the Effective Date, ASAP shall have:
(i) paid in full each of the liabilities set forth on Schedule B hereto, as
amended and modified, or provided for the payment thereof out the Subscription
Funds, or obtained the consent to the assumption of such liability by ASAP and a
release of liability in favor of the Company; and (ii) obtained the consent to
the assumption of all Contract Liabilities and a release of liability thereunder
in favor of the Company from the third party to whom liability or obligation is
owed now or in the future ("Release").
3. Additional Agreements. ASAP agrees to: (i) pay any and all taxes of
any kind incurred by the Company with respect to the transactions contemplated
under this Agreement and the Distribution ("Transaction Taxes"), (ii) distribute
any and all tax forms or reports to the recipients of the Distribution, and (ii)
pay and be responsible for any and all costs and expenses incurred by the
Company, ASAP or Yuan in connection with this Agreement, the Purchase Agreement,
the Distribution and any other matters relating to the foregoing (including,
without limitation, all fees and expenses for accounting, legal, transfer agent,
filing fees, stockholder mailings, consulting, finders, commissions, taxes,
transfer fees, and other charges of any kind or nature whatsoever) ("Transaction
Costs"). The Transactions Costs shall include the $30,000 finders' fee due and
payable at the closing of the Purchase Agreement to Xxxxxx Xxxxxx/Xxxx Xxxxxxx
and all costs and expenses incurred by the Company, ASAP or Yuan from and after
the Effective Date through and including the closing of the Purchase Agreement.
The parties hereto agree that the Distribution shall not be effected
until such time as: (i) the Auditor has delivered the audited financial
statements of the Company and ASAP, which shall be reasonably acceptable to KI
Equity, (ii) the Schedules A and B hereto have been modified and amended as
contemplated hereunder, which modifications and amendments shall be reasonably
acceptable to KI Equity, and (iii) all conditions under the Purchase Agreement
have been satisfied or waived by the parties thereto.
Upon closing of the Purchase Agreement, the Subscription Funds shall be
paid direct to the Company subject to the following provisions. The Company
shall have the right to pay out the Subscription Funds, without any further
action or consent by any party: (i) any of the Assumed Liabilities which have
not been paid in full or for which a Release has not been obtained, (ii) any
expenses, costs or liabilities of any kind incurred by the Company from the
Effective Date through the closing of the Purchase Agreement, (iii) any of the
Transaction Taxes or Transaction Costs, and (iv) any of the Contract Liabilities
for which the Company has not been released. After making the payments as
specified in the foregoing sentence, the Company shall remit to ASAP the
remaining amount of the Subscription Funds which shall be treated as a reduction
of the purchase price paid by ASAP for the Assets; provided, however, that the
Company shall retain $50,000 of such funds to establish an indemnity reserve
("Indemnity Reserve") to be handled in accordance with this Agreement. The
Indemnity Reserve shall be available to the Company to satisfy any
indemnification obligations of Yuan and ASAP under this Agreement and any
indemnification obligations of Yuan under the Purchase Agreement. On the date
six months (6) months following the closing of the Purchase Agreement, to the
extent that the Indemnity Reserve has not and is not the subject of an
indemnification claim under this Agreement or the Purchase Agreement, the
Indemnity Reserve (less any payments made therefrom) shall be paid by the
Company to ASAP, without interest.
4. Waiver and Release. Yuan, for himself and on behalf of all his
spouse and family members and all affiliated persons and entities, hereby
waives, and forever releases and discharges the Company from any and all
liabilities or obligations with respect to the Yuan Obligations including,
without limitation, any interest, charges, penalties or other charges arising
under or related to the Yuan Obligations, and further including the obligations
under the Yuan Loans which have assumed by ASAP under this Agreement. ASAP
hereby waives, and forever releases and discharges the Company from any and all
debts, claims, liabilities or obligations of any kind owed by the Company to
ASAP.
5. Indemnification. ASAP and Yuan hereby jointly and severally agree to
indemnify and hold harmless the Company and its directors, officers, managers,
members, shareholders, agents and employees (each, an "Indemnified Person") from
and against any losses, claims, expenses, damages or liabilities (or actions or
proceedings in respect thereof) ("Damages") incurred by any Indemnified Person
arising out of or with respect to the Assumed Liabilities or the breach by ASAP
or Yuan of any representation, warranty or agreement hereunder ("Indemnity
Claim"), and ASAP and Yuan shall reimburse any Indemnified Person for all
expenses (including reasonable counsel and expert fees) as they are incurred by
any such Indemnified Persons in connection with any Indemnity Claim, including
any costs and expenses for investigating, preparing or defending any action or
proceeding, whether pending or threatened, and whether or not such Indemnified
Person is a party hereto.
If at any time the Company determines to assert a right to
indemnification under this Section 5, Company shall give to ASAP or Yuan written
notice describing the matter for which indemnification is sought in reasonable
detail. In the event that a demand or claim for indemnification is made
hereunder with respect to a matter the amount or extent of which is not yet
known or certain, the notice of demand for indemnification shall so state, and,
where practicable, shall include an estimate of the amount of the matter. The
failure of the Company to give notice of any matter to ASAP or Yuan shall not
relieve ASAP or Yuan of any liability that ASAP or Yuan may have to the Company.
Within 10 days after receipt of the notice referred to above, ASAP or Yuan shall
(i) acknowledge in writing its responsibility for all or part of such matter,
and shall pay or otherwise satisfy the portion of such matter as to which
responsibility is acknowledged or take such other action as is reasonably
satisfactory to the Company to resolve any such matter that involves anyone not
a party hereto, or (ii) give written notice to the Company of its intention to
dispute or contest all or part of such responsibility. Upon delivery of such
notice of intention to contest, the parties shall negotiate in good faith to
resolve as promptly as possible any dispute as to responsibility for, or the
amount of, any such matter. If such dispute is not resolved within 10 days, such
dispute shall be submitted to arbitration as provided under Section 10(h)
hereof.
ASAP or Yuan shall have the authority and right to satisfy such
Indemnity Claims, without notice or cost to the Company, and the Company shall
reasonably cooperate with ASAP or Yuan as necessary to dispute and defend
against any indemnification claim as determined by ASAP or Yuan, at ASAP's
and/or Yuan's expense, and the Company shall supply any necessary confirmation
or available documentation as related to the defense of any indemnification
claim involving a third party. In the event ASAP or Yuan fail to pay an
indemnification claim for which ASAP or Yuan accept responsibility or for which
ASAP or Yuan is determined to be responsible under this Agreement or the
Purchase Agreement, the Company may use Indemnity Reserve maintained by it under
Section 3 to pay and satisfy such claim.
6. Release of all Claims. ASAP and Yuan, for themselves and each of
their respective successors and assigns, hereby forever release the Company and
its successors and assigns, and their respective past and present officers and
directors, employees, shareholders, members, consultants, attorneys,
accountants, other professionals, insurers, agents and all other related
entities, including, but not limited to, assigns, predecessors, successors,
controlling corporations, subsidiaries or other affiliates (jointly, the
"Related Parties") from any and all claims, demands, and causes of action of
every kind and nature, including, without limitation, those relating to or
arising out of the Yuan Obligations, and any federal, state or local laws, and
common law; provided, however, that nothing contained herein shall be construed
to limit in any way the rights of either party, and their successors and
assigns, to enforce the terms of this Agreement. ASAP and Yuan irrevocably agree
to refrain from directly or indirectly asserting any claim or demand or
commencing (or causing to be commenced) any suit, action, or proceeding of any
kind, in any court or before any tribunal, against the Company and its Related
Parties based upon any released claim.
7. Representations and Warranties of Company. Company represents and
warrants to ASAP and Yuan that: (i) on the date of this Agreement, Company has
all necessary authority to execute this Agreement; (ii) there is no claim,
action, suit or other proceeding pending, threatened or known, which, if decided
adversely, would interfere with the consummation of the transaction contemplated
hereby; (iii) no approval or consent of any governmental authority or third
party is required for Company to enter into or perform this Agreement; (iv) this
Agreement is enforceable in accordance with its terms, subject to the laws of
insolvency and general principles of equity; and (v) this Agreement has been
duly authorized and adopted by the Company.
8. Representations and Warranties of ASAP and Yuan. ASAP and Yuan
represent to Company that: (i) on the date of this Agreement, ASAP and Yuan have
all necessary authority to execute this Agreement; (ii) there is no claim,
action, suit or other proceeding pending, threatened or known against ASAP and
Yuan, which, if decided adversely, would interfere with the consummation of the
transaction contemplated hereby; (iii) no approval or consent of any
governmental authority or third party is required for ASAP and Yuan to enter
into or perform this Agreement; (iv) this Agreement is enforceable against ASAP
and Yuan in accordance with its terms, subject to the laws of insolvency and
general principles of equity; and (v) this Agreement has been duly authorized
and adopted by ASAP.
9. Delivery and Cooperation. If either party requires any further
documentation, the other party will promptly respond to any reasonable requests
for additional documentation.
10. Miscellaneous.
(a) Successors and Assigns. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns. KI Equity shall be a
third party beneficiary under this Agreement to the extent it may be entitled to
receive payment of the Indemnity Reserve for an indemnification obligation of
Yuan under the Purchase Agreement, and KI Equity shall have the right to enforce
such provisions as if it was a signatory to this Agreement.
(b) Survival of Covenants and Representations. All agreements,
covenants, representations and warranties made by the parties herein shall
survive the delivery of this Agreement.
(c) Severability. Should any part of this Agreement for any reason be
declared invalid or unenforceable, such decision will not affect the validity or
enforceability of any remaining portion, which remaining portion will remain in
force and effect as if this Agreement had been executed with the invalid portion
thereof eliminated, and it is hereby declared as the intention of the parties
hereto that the parties would have executed the remaining portion of this
Agreement without including therein any such part or portion that may, for any
reason, be hereafter declared invalid or unenforceable.
(d) Governing Law and Venue. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada, without reference
to choice of law principles.
(e) Captions. The descriptive headings of the various Sections or parts
of this Agreement are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
(f) Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto concerning the subject matter contained herein, and
supersedes all prior agreements or understanding of the parties. No provision of
this Agreement may be waived or amended except in a writing signed by both
parties. A waiver or amendment of any term or provision of this Agreement shall
not be construed as a waiver or amendment of any other term or provision.
(g) Counterparts. This Agreement may be executed by facsimile
signatures and in multiple counterparts, each of which shall be deemed an
original. It shall not be necessary that each party executes each counterpart,
or that any one counterpart be executed by more than one party so long as each
party executes at least one counterpart.
(h) Arbitration. All disputes, controversies or claims ("Disputes")
arising out of or relating to this Agreement shall in the first instance be the
subject of a meeting between a representative of each party who has
decision-making authority with respect to the matter in question. Should the
meeting either not take place
or not result in a resolution of the Dispute within twenty (20) business days
following notice of the Dispute to the other party, then the Dispute shall be
resolved in a binding arbitration proceeding to be held in Denver, Colorado in
accordance with the international rules of the American Arbitration Association.
The arbitrators may award attorneys' fees and other related arbitration
expenses, as well as pre- and post-judgment interest on any award of damages, to
the prevailing party or parties, in their sole discretion. The parties agree
that a panel of three arbitrators shall be required, all of whom shall be fluent
in the English language, and that the arbitration proceeding shall be conducted
entirely in the English language. Any award of the arbitrators shall be deemed
confidential information for a minimum period of five years.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date first
written above.
CYBER MERCHANTS EXCHANGE, INC.
By: /s/ Xxxxx Xxxx
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Xxxxx Xxxx, President
/s/ Xxxxx Xxxx
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Xxxxx Xxxx, Individually
ASAP SHOW INC.
By: /s/ Xxxxx Xxxx
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Xxxxx Xxxx, President
