EXHIBIT 10.4
ASSET PURCHASE AND ESCROW AGREEMENT
ASSET PURCHASE AND ESCROW AGREEMENT
AGREEMENT made as of this 30th day of December, 1998, between MARKETING DIRECT
CONCEPTS, INC. a Nevada corporation with its principle offices located at 000 X.
Xxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxx 00000, as seller ("Seller") and COURTLEIGH
CAPITAL, INC. a Kansas corporation with its principle offices located at 000 X.
Xxxxxxxx, Xxxxx 00, Xxxxxxx, Xxxxxx 00000, as purchaser ("Purchaser"), and the
LAW OFFICES OF XXXXXXX X. XXXXX ESQUIRE, as Escrow Agent ("Escrow Agent").
Witnesseth, that
WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Seller, certain assets of Seller's business and
assume the liabilities related to those assets, subject to the conditions
hereinafter set forth, including Escrow of common stock and cash until a closing
occurs; and
WHEREAS, the Seller, the Purchaser and the Escrow Agent desire to
provide herein for the terms of such escrow, in addition to the asset sale, and
the Escrow Agent is willing to act on the terms and subject to the conditions
herein, the parties heretofore agree that:
1. SALE AND PURCHASE OF ASSETS.
(a) On the terms and subject to the conditions of this
Agreement, Seller hereby agrees to sell to the Purchaser, and the Purchaser
hereby agrees to purchase from the Seller on the Closing Date, the assets of
Seller's business and assume the liabilities related thereto (as set forth in
Exhibit "A" hereof), valued for purpose of this transaction at the bid price of
Purchaser's shares at January 20, 1999, as quoted on the Over the
Counter-Bulletin Board for the issuance to Seller of 4,500,000 shares of the
authorized by heretofore unissued common stock, without par value, of the
Purchaser (the "CTLH") shares). The parties acknowledge that this sale of assets
expressly excludes all remaining assets of Seller including but not limited to
those listed in Exhibit "B" hereto. The Closing Date may be extended only by
agreement of both parties, communicated to the Escrow Agent.
(b) Purchaser has represented to Seller that Purchaser will
perform the following by the Closing Date, or any extension thereof, and the
Seller's condition of sale is subject thereto: (i) convene a meeting of
shareholders of Purchaser, which shall adopt by vote the following (a) a change
of name of Purchaser to XXXXXXX.XXX,INC.; and (reverse the outstanding common
stock of Purchaser to one (1) share for each thirteen (13) shares of common
stock of outstanding ("Reverse Stock Split"); and (c) approve this Asset
Purchase and Escrow Agreement.
(c) In the event that shareholders of Purchaser do not approve
all of the items set forth in paragraph (b) hereof, this Agreement shall be null
and void as between the parties hereto and the Escrow Agent shall return all
escrowed items to the depositor thereof. Seller shall deposit with Escrow Agent
cash in the amount of Seventy-Five Thousand and No/100 Dollars ($75,000) as its
good faith deposit to fulfill the terms applicable to Seller hereunder.
(d) The Seller acknowledges that the CTLH shares have not been
registered under the Securities Act of 1933, as amended (the "Act"), nor under
any state securities laws, and are subject to any restrictions upon subsequent
transfer thereof under the Act and applicable state securities laws. Seller
acknowledges that ever certificate representing the CTLH shares shall bear a
legend which substantially sets forth such restrictions upon transfer.
(e) The parties agree that there is no right of registration
under the Act or any state securities laws granted hereby as it relates to the
CTLH shares to be issued hereunder.
2. RECORDS.
Upon approval of the shareholders of Purchaser, as provided in
paragraph 1(b) hereof, Purchaser's Board of Director and Officer will
resign said office and by a duly authorized resolution prior to his
resignation, appoint XXXXXXX XXXXXXXXX the President,
Secretary-Treasurer and Director of the Purchaser. Simultaneously,
Purchaser shall deliver to the Escrow Agent a copy of all Purchaser's
records in Purchaser's possession, including correspondence and all
papers relating to the business of Purchaser. Escrow Agent shall
promptly
SELLER /S/ PURCHASER /S/ ESCROW AGENT /S/ PAGE 1
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deliver the Resolution and records to Seller at 000 X. Xxxxxx, xxxxx
000, Xxx Xxxxx, Xxxxxx 00000, by first-class mail, postage prepaid.
3. ESCROW.
The Seller shall deposit, via wire transfer, $75,000 to the bank
account of the Escrow Agent immediately following the date of this
Agreement. The CTLH shares shall be deposited with Escrow Agent upon
the conclusion of a Special Shareholders Meeting and the approval of
the agenda as set forth in paragraph 1(b) hereof. The Escrow Agent
shall hold the $75,000 cash and the CTLH shares for safekeeping and
disposition only pursuant to the terms hereof. The Escrow Agent shall
hold Seventy-Five Thousand Dollars ($75,000.00) good faith deposit of
Seller in a special bank account designated for such purpose without
any obligation to invest the proceeds thereof.
4. DISPOSITION OF ESCROWED ITEMS.
Subject to the completion of the Agreement by the Closing Date (or any
extension thereof), the Escrow Agent shall by first-class mail postage prepaid,
promptly forward the CTLH shares to Seller, and deliver the $75,000 cash good
faith deposit to Xxxxxxxxxx & Associates.
In the event that this Agreement is terminated, canceled, or otherwise
not performed by Seller, then absent other directions from both parties
in writing, the Escrow Agent shall return to each party their
respective deposits. In such event, Purchaser shall be entitled to keep
the Seventy-Five Thousand Dollars ($75,000) good faith deposit as
liquidated damages for Seller's failure to complete the purchase but
shall not have the remedy of specific performance or any other remedy.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser represents and warrants to the Seller that as a result of
this Agreement it will use its best efforts to (a) have this Agreement
duly executed and authorized by all due corporate authority and will be
binding upon Purchaser in accordance with its terms, subject however to
approval of this Agreement and the other stated obligations of
Purchaser for approval of its shareholders as stated herein; (b) at the
closing, the CTLH shares will have been duly authorized by all
requisite action of Purchaser and, when issued, will be validly issued,
fully paid, and non-assessable, and (c) after due investigation,
Purchaser is satisfied that the price to be paid for the CTLH shares is
fair and reasonable.
6. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF PURCHASER.
- Purchaser is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Kansas,
and has the corporate power and authority to carry on its
business as it is now being conducted. The Articles of
Incorporation and Bylaws of Purchaser, copies of which have
been delivered to Seller, are complete and accurate, and the
minute books of Purchaser, which will be delivered to Seller,
contain a record which is complete and accurate in all
material respects, of those meetings, and those corporate
actions of the shareholders and Board of Directors of
Purchaser.
- Prior to the Closing Date, the aggregate number of shares
which Purchaser is authorized to issue is 300,000,000 shares
of common stock with no par value of which 3,025,297 shares of
such common stock are currently issued and outstanding, fully
paid and non-assessable. Purchaser has no outstanding options,
warrants, or other rights to purchase or subscribe to or
securities convertible into or exchangeable for any shares of
capital stock.
- Purchaser has delivered to Seller financial statements of
Purchaser dated
SELLER /S/ PURCHASER /S/ ESCROW AGENT /S/ PAGE 2
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October 31, 1996, October 31, 1997, September 30, 1998 and will deliver
immediately upon completion, audited financial statements dated October 31,
1998. All such financial statements, herein sometimes called "Purchaser
Financial Statements," are complete and correct in all material respects and,
together with the notes of these financial statements, present fairly the
financial position and results of operations of Purchaser for the periods
indicated. All financial statements of Purchaser are prepared in accordance with
generally accepted accounting principles.
- Since the dates of the Purchaser Financial Statements, there
have not been any material adverse changes in the business or
condition, financial or otherwise of Purchaser. Purchaser does
not have any material liabilities or obligations, secured or
unsecured.
- There are no pending legal proceedings or regulatory
proceedings involving Purchaser, and there are no legal
proceedings or regulatory proceedings to the knowledge of
Purchaser, threatened against Purchaser or affecting any of
Purchaser's assets or properties. Purchaser is not in any
material breach of violation of or default under any contract
or instrument to which Purchaser is a party and no event has
occurred with the lapse of time or action by a third party
could result in a material breach or violation of or default
by Purchaser under any contract or other instrument to which
Purchaser is a party or by which Purchaser or any of its
respective properties may be bound or affected, or under its
Articles of Incorporation or Bylaws. There is no court or
regulatory order pending applicable to Purchaser.
- Purchaser shall not enter into or consummate any transactions
prior to the Closing Date and will pay no dividend or increase
the compensation of officers and will not enter into any
Agreement or transaction, except as set forth in this
Agreement.
- Purchaser is not a party to any contract performable in the
future.
7. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller represents and warrants to the Purchaser that (a) it owns of
record and beneficially the assets to be purchased as of the Closing
Date, (b) that is has the full right, power, legal capacity and
authority to enter into this Agreement and to sell and deliver the
assets to the Purchaser and that all requisite corporate action of
Seller have been complied with, (c) it is not insolvent; and (d) the
liabilities to be assumed by Buyer are the sole liabilities of Seller.
The Seller agrees that the transfer of the assets being purchased
hereunder shall be made at the closing by deeds, bills of sale,
assignments, or such other instruments of conveyance, transfer and
assignment as shall be appropriate to carry out the purpose and
intention of this Agreement and sufficient to convey, transfer and
assign to Buyer good and marketable title to all of the assets being
acquired hereunder, free and clear of all liens, claims and
encumbrances of whatsoever kind or character, except as to such liens,
if any, associated with the obligations and liabilities to be assumed
by Buyer as set forth herein, with the prior written consent or
approval by third parties or governmental authorities where required,
and in such form as may be approved by counsel for Buyer.
8. LEGAL OPINION.
Buyer, at closing, will furnish Seller an opinion of its counsel to the
effect that:
(a) Buyer is duly organized, valid and existing in a good standing
under the laws of the State of Kansas and has the authority to
conduct its business, to enter into this Agreement, and in
connection therewith has performed all acts required pursuant
to the laws of Kansas in effecting this Agreement.
(b) Buyer has the authority, pursuant to the corporate laws of the
State of Kansas, to issue from its authorized unissued shares
of Common Stock the CTLH shares.
SELLER /S/ PURCHASER /S/ ESCROW AGENT /S/ PAGE 3
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(c) That such counsel has examined the representations and
warranties of Purchaser hereunder and to his best knowledge
the representations and warranties of Purchaser are true. In
connection therewith, counsel may rely upon certificates of
officers and directors of Purchaser; and
(d) Such other opinions as counsel may be requested to issue and
can issue based upon his review of any documents or
instruments in connection therewith and associated only with
the terms and transactions contemplated by this Agreement.
9. INDEMNIFICATION.
The Seller agrees to and does hereby indemnify the Buyer against and
holds the Buyer harmless from any and all such liabilities,
obligations, debts ,contracts, liens, encumbrances, or other
commitments of whatsoever kind or character, and from any and all loss,
cost or expense in connections therewith, arising directly or
indirectly therefrom (including reasonable expenses and attorney fees
in connection with investigation or defending the same) which Buyer may
suffer or incur by reason of Seller's failure to pay, discharge or
perform any of such liabilities, obligations or commitments, whether
contingent, disputed, known or unknown, and of whatever kind or
character, except as expressly assumed by Buyer as set forth herein.
Similarly, Buyer shall indemnify Seller against and hold it harmless
from any and all liability, costs or expenses (including reasonable
expenses and attorney fees in connection with investigating or
defending the same) which it may suffer or incur by reason of Buyer's
failure to pay, discharge or perform any such liabilities or
obligations of Seller which are expressly assumed by Buyer as set forth
herein. In the event of any lawsuit, proceeding, action, claim or
demand wherein the Seller shall seek indemnity from the Buyer or the
Buyer shall seek indemnity from the Seller pursuant to this paragraph,
the party to the indemnified will give the other party written notice
of the commencement of any such lawsuit, proceedings, action, claim or
demand and the indemnitor will be entitled to participate to the extent
it may wish or assume the defense of such action with counsel
satisfactory to the indemnitee.
10. INVESTMENT BANKING FEES.
The parties agree that XXXXXXXXXX & ASSOCIATES has acted as the
investment banker for both parties in the consummation of this purchase
and sale in connection with this Asset Purchase and Escrow Agreement.
All fees and charges made by Xxxxxxxxxx & Associates shall be paid by
Seller at closing.
Notwithstanding the provisions of paragraph 4 hereof, if Seller secures
its obligation to Xxxxxxxxxx & Associates with the CTLH shares, the
parties agree to authorize the Escrow Agent to hold such shares in
furtherance of the payment Agreement.
11. OTHER RIGHTS AND RESPONSIBILITIES OF THE ESCROW AGENT. The following
provisions shall apply to the Escrow Agent in the course of performing
hereunder:
(a) STATUS OF ESCROW AGENT. The seller and Purchaser acknowledge
and agree that, in acting hereunder, the Escrow Agent is
acting as attorney to the Purchaser, and has advised it in
relation to this transaction, but has not and is not acting as
counsel to Seller, in regard to whom the Escrow Agent is
acting solely as Escrow Agent hereunder.
(b) DISCRETION OF THE ESCROW AGENT. In acting pursuant to this
Agreement, the Escrow Agent shall be fully protected in every
reasonable exercise of his discretion and shall have no
obligation hereunder to any other party except as expressly
set forth herein.
(c) FEES AND EXPENSES OF THE ESCROW AGENT. The Escrow Agent shall
charge a reasonable fee for this escrow services, which will
cover all normal and reasonable expenses of the escrow. If the
sale of the CTLH shares is consummated, such fees and expenses
shall be paid by Purchaser, and delivery of the CTLH shares to
Seller shall not be held up for any failure of Purchaser to
make such payment.
SELLER /S/ PURCHASER /S/ ESCROW AGENT /S/ PAGE 4
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If the sale of the CTLH shares is not consummated, however,
his fees and expenses hall be paid by Seller, in an amount not
to exceed $1,000.
(d) LIABILITY OF THE ESCROW AGENT. In performing any of this
duties hereunder, the Escrow Agent shall not incur any
liability to anyone for any damages, losses or expenses,
except for willful default or negligence and he shall,
accordingly not incur any such liability with respect to any
action taken or omitted in good faith or taken or omitted in
reliance upon any instrument, including written advices
provided for herein, not only as to its due execution and the
validity and effectiveness of its provisions, but also as to
the truth and accuracy of any information contained therein,
which the Escrow Agent shall in good faith believe to be
genuine, to have been signed or presented by a proper person
or persons, and to conform with the provisions of this
Agreement.
(e) INFORMATION AND INDEMNITY. The Purchaser and Seller agree to
provide to the Escrow Agent all information necessary to
facilitate the administration of this Agreement, and the
Escrow Agent may rely upon any representation so made. The
Purchaser and Seller hereby agree to indemnify and hold
harmless the Escrow Agent against any and all claims, losses,
damages, liabilities, costs and expenses, including reasonable
costs of investigation and counsel fees and disbursements,
which may be imposed upon the Escrow Agent or incurred by the
Escrow Agent in connection with his acceptance of appointment
of Escrow Agent hereunder or the performance of his duties
hereunder, including any litigation arising from this
Agreement or involving the subject matter hereof. However,
such indemnity shall not include acts or omissions to act of
the Escrow Agent which involve gross negligence or willful
misconduct.
(f) INTERPLEADER. If at any time a dispute arises as to the duties
of the Escrow Agent or the terms hereof, the Escrow Agent may
deposit the escrowed items with the Clerk of the District
Court of Sedgwick County, Kansas, and may interplead the other
parties hereto. Upon so depositing the escrowed items and
filing its complaint in interpleader, the Escrow Agent shall
be completely discharged and released from all further
liability or responsibility hereunder. The parties hereto, for
themselves, their heirs, successors, assigns and legal
representatives, do hereby submit themselves to the
jurisdiction of said Court and do hereby appoint the Clerk of
the said Court as their agent for services of all process in
connection with any such proceedings.
(g) NOTICES: ORDERS OF COURT, ETC. The Escrow Agent hereby is
expressly authorized and directed to disregard any and all
notices or warnings not specifically called for in or
permitted by this Agreement, or by any other person or entity
not party to this Agreement, excepting only orders or process
of Court, and is hereby expressly authorized to comply with
and obey any and all orders, judgments or decrees of any
Court, and in case the Escrow Agent obeys or complies with any
such order, judgment, or decree of any Court, he shall not be
liable to any of the parties hereto or to any other person,
firm or corporation by reason of such compliance,
notwithstanding that any such order, judgment, or decree may
be subsequently reversed, modified, annulled, set aside or
vacated, or found to have been entered without jurisdiction.
12. NOTICES TO PARTIES. All notices, demands or requests required or
authorized hereunder shall (except as otherwise provided above) be
deemed given sufficiently if in writing and sent by registered mail or
certified mail, return receipt requested and postage prepaid, by
telefax transmission, telegram or cable, or by overnight air courier
service to, the parties.
13. MISCELLANEOUS. All representations and warranties made herein by the
Seller and Purchaser shall survive the consummation of this Agreement.
This Agreement shall bind the parties, their respective successors,
assign, heirs, and legal representatives. No party may assign his, her
or its rights or obligations hereunder without the prior written
consent of all other parties. This Agreement constitutes the entire
Agreement between the parties and may not be modified or canceled
except in writing signed by all parties hereto. This Agreement shall be
governed by and construed in accordance with the laws of Kansas. This
Agreement may be executed at different times and places, in
counterparts and shall be effective as of the date first above written.
Any party
SELLER /S/ PURCHASER /S/ ESCROW AGENT /S/ PAGE 5
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may rely upon a copy of this Agreement received by telefax (telephone
facsimile) transmission and bearing another party's signature as having
been signed by such other party, and a copy of this Agreement received
by telefax and signed by or on behalf of a party shall have been
validly executed to the same extent as if an original copy had been
executed.
14. CLOSING DATE. The Closing of this Agreement will occur on the ___ day
of January, 1999, unless extended by the parties hereto, at 11 o'clock,
A.M., Central Standard Time at the offices of the Purchaser.
SIGNATURE PAGE
TO
ASSET PURCHASE AND ESCROW AGREEMENT
IN WITNESS WHEREOF, the Purchaser, seller and Escrow Agent have duly
executed this Agreement and initialed every preceding page hereof, effective as
of the date first above written.
PURCHASER: COURTLEIGH CAPITAL, INC.
/s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Xxxxxxx X. Xxxxx, President
SELLER: MARKETING DIRECT CONCEPTS, INC.
/s/ Xxxxxxx Xxxxxxxxx
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Xxxxxxx Xxxxxxxxx, President
ESCROW AGENT: LAW OFFICES OF XXXXXXX X. XXXXX, ESQUIRE
/s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Xxxxxxx X. Xxxxx, Esquire
SELLER /S/ PURCHASER /S/ ESCROW AGENT /S/ PAGE 6
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EXHIBIT "A"
ASSETS TO BE PURCHASED
1997 Equipment $48,807.08
1998 Equipment $179,111
1999 Equipment $254,006.75
Furniture & Fixture $75,049
1999 Office Max $898.74
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$557,872.57
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EXHIBIT "B"
EXCLUDED ASSETS
Shares Held by Seller
Innovacom, Inc. 250,000 shares
Visual Telephone of New Jersey, Inc. 250,000 shares
China Resources Development, Inc. 150,000 shares
Semiconductor Laser International, Inc. 40,000 shares
Diversifax, Inc. 150,000 warrants
SafTLock 100,000 shares
American Eco 25,000 shares
