ASSET PURCHASE AGREEMENT Between VEMICS, INC. and E LEARNING DESKTOP VENTURES, INC.
Exhibit
10.2
Between
and
E
LEARNING DESKTOP VENTURES, INC.
This
ASSET PURCHASE AGREEMENT ("Agreement") is entered into as of January 25, 2007
("Effective Date"), by and between Vemics, Inc., a Nevada Corporation whose
address is 000 Xxxxxx Xxxxxxx Xxxxx, Xxxxxx, Xxx Xxxx 00000 ("Vemics''), and E
Learning Desktop Ventures Inc., a Canadian Corporation whose address is 0000
Xxxxxx Xx # 000, Xxxxxxxxxxx XX Xxxxxx ("EL Desktop").
1.
Sale of business
assets.
(a) Sale. On the terms
and subject to the conditions set forth herein, EL Desktop shall sell, convey,
transfer, assign, and deliver to Vemics, and Vemics shall purchase, acquire and
accept, as provided for and subject to the limitations set forth herein, all of
EL Desktop's assets, contracts, agreements, properties, business, intellectual
property, copyrights, patents, trademarks, leases and goodwill of every kind and
description, wherever located, including but not limited to those set forth on
or as provided for in Exhibit A (Asset List) and Exhibits A-I through A-5
(Contracts), all as they exist upon the consummation of closing (collectively,
the "Assets"). Vemics shall have the option (exercisable in its sole and
absolute discretion) to accept or reject the sale, conveyance, transfer
assignment and/or delivery of any EL Desktop assets, contracts, agreements,
properties, business, intellectual property, copyrights, patents, trademarks,
leases and goodwill, including but not limited to any of the leases listed in
Exhibit B herein; any such items so rejected by Vemics shall be retained by EL
Desktop and shall not be included within the Assets. With respect to all EL
Desktop assets, contracts, agreements, properties, business, intellectual
property, copyrights, patents, trademarks, leases and goodwill, including but
not limited to any of the leases listed in Exhibit B herein that EL Desktop
obtains after the Effective Date, within 10 days of entering into or otherwise
obtaining such assets, contracts, agreements, properties, business, intellectual
property, copyrights, patents, trademarks, leases and goodwill, including but
not limited to any of the leases listed in Exhibit B, EL Desktop shall provide
written notice thereof to Vemics, which notice shall be accompanied by a
complete and correct copy of the assets, contracts, agreements, properties,
business, intellectual property, copyrights, patents, trademarks, leases and
goodwill, including but not limited to any of the leases listed in Exhibit B;
Vemics shall have 30 days after receipt of all of the foregoing from EL Desktop
to accept or reject the assignment of such assets, contracts, agreements,
properties, business, intellectual property, copyrights, patents, trademarks,
leases and goodwill, including but not limited to any of the leases listed in
Exhibit B.
Desktop
must reveal to and notify Vemics, in writing, of all revenue-generating
contracts, agreements, memoranda of agreements and other business arrangements
that EL Desktop has entered into and/or will enter into in the future ("New
Contracts"). Such notice shall be provided by EL Desktop to Vemics within 15
days of the first to occur of (i) the parties' execution and delivery of, or
(ii) EL Desktop's direct or indirect receipt of any income, payments or other
compensation from, any such New Contracts. Upon written demand of Vemics, EL
Desktop will assign to Vemics, at no additional cost or expense, any or all such
New Contracts. These New Contracts shall include but not be limited to the
contracts attached hereto as Exhibits A-1 through A-5 (the "Contracts"). EL
Desktop shall be under a continuing on-going obligation now and in the future to
reveal and notify Vemics of any such New Contracts, and its failure to do so
shall be a material breach of this Agreement. EL Desktop represents
and warrants to Vemics that (1) all contracts being assigned to Vemics under
this Agreement (including the Contracts) are in full force and effect and are
valid and enforceable in accordance with their terms, (2) no party to any such
contract is in breach in any manner whatsoever of its liabilities, duties and/or
obligations under such contract and (3) such contracts are fully assignable to
Vemics as written without the need of any consents or approvals.
(c)
No Assumption of
liabilities. Vemics shall not now and/or in the future assume,
pay, perform, or discharge any debts, obligations, contracts, agreements, leases
and liabilities of EL Desktop of any kind, character, or description, whether
accrued, absolute, contingent, or otherwise (regardless of whether reflected or
reserved against on EL Desktop's balance sheets, books of account, and records);
provided, however, that, subject to the terms and conditions of this Agreement,
Vemics shall assume and agree to discharge and perform, when due, any those
debts, obligations and liabilities arising entirely after the Closing Date under
those contracts, agreements and leases included in the Assets (excluding any
debts, obligations and/or liabilities accruing, arising out of or relating to
any breach or default by EL Desktop on or prior to the Closing Date under any
such contracts, agreements and leases included in the Assets). EL
Desktop agrees to fully pay or otherwise satisfy when due, and to indemnify,
hold harmless and defend Vemics from and against, all claims, debts,
liabilities, obligations, duties, defense costs (including reasonable attorneys'
fees), judgments and other expenses arising out of those debts, obligations,
contracts, agreements, leases and/or liabilities of EL Desktop not specifically
assumed by Vemics under this Agreement.
1
(d)
Assurance. EL
Desktop warrants and represents that Vemics shall not be subjected to any
liability to any third party as the result of this Agreement, except as
otherwise provided in Section 1(c) with respect to debts, obligations and
liabilities arising entirely after closing under those contracts, agreements and
leases included in the Assets.
(e)
Conveyances. The
sale, conveyance, transfer, assignment, and delivery of the Assets shall be
effected by deeds, bills of sale, endorsements, assignments, drafts, checks, and
other instruments of transfer and conveyance, in form and substance acceptable
to Vemics (collectively, the "Closing Documents'', which shall be executed and
delivered by EL Desktop at closing.
(f)
Additional
documents. EL Desktop shall, at any one or more times after
the Closing Date, upon Vemics' request, execute, acknowledge, and deliver all
further deeds, assignments, transfers, conveyances, powers of attorney, and
assurances, and do all other acts and things, that are required or appropriate
to assign, transfer, grant, convey, assure, and confirm to Vemics, or to its
successors and assigns, or to aid and assist in collecting and reducing to
possession, any of or all the Assets to Vemics, and/or any of or all the
obligations of EL Desktop to be assigned to, and assumed, paid, performed,
and/or discharged by Vemics pursuant to this Agreement.
2.
Composition of purchase
price. On the terms and subject to the conditions herein set
forth, Vemics shall issue and deliver to EL Desktop on the Closing
Date:
(a)
Common
stock. At closing, Vemics will issue to EL Desktop an
aggregate of one million one hundred eleven thousand one hundred twelve
(1,111,112) restricted shares (the "Shares") of Vemics common stock, with a par
value of $.00I per share (the "Common Stock"), all of which Shares shall be
registered in the name of EL Desktop. With respect to said Shares, (i) at
closing stock certificates representing one million (1,000,000) restricted
shares of Common Stock will be delivered by Vemics to EL Desktop, and (ii) at
closing stock certificates representing the remaining one hundred eleven
thousand one hundred twelve (111,112) restricted shares of Common Stock (the
"Escrowed Shares") will be presented by Vemics to EL Desktop along with a blank
stock power relating to said Escrowed Shares, and thereupon EL Desktop will sign
the stock power in blank (with a signature guaranty) and deliver said signed
stock power and said stock certificates representing the Escrowed Shares to
Vemics to be held in escrow pursuant to this Agreement. Vemics will
hold said stock power and Escrowed Shares in escrow to offset any losses, debts,
obligations or liabilities which may be borne or incurred by Vemics due to,
arising out of or otherwise relating to any breach or violation of this
Agreement (including without limitation Section 1(c) of this Agreement) by EL
Desktop (collectively, "Losses"). If by July 16, 2007, Vemics has not
borne or incurred any Losses, and EL Desktop is not in breach or violation of
any term and condition of this Agreement (including without limitation Section
1(c) of this Agreement), then, subject to the terms and conditions of this
Agreement, the Escrowed Stock will be released by Vemics to EL Desktop. If on or
prior to July 16, 2007, Vemics has borne or incurred any Losses, or EL Desktop
is in breach or violation of any term and condition of this Agreement (including
without limitation Section 1(c) of this Agreement), then on July 16, 2007,
Vemics shall so notify EL Desktop, and may offset its Losses and any other
damages incurred or to be incurred by Vemics as a result thereof on a
dollar-for-dollar basis against the Escrowed Shares, in which event each such
Escrowed Share shall be valued at the average of the closing prices of Vemics
Common Stock over the 30 trading days immediately preceding July 16, 2007, as
reported in the pink sheets or, if Vemics Common Stock is traded on an exchange,
as reported by such exchange (if Vemics Common Stock is not traded in the pink
sheets or on an exchange an any date during said 30 trading days, each Escrowed
Shares shall be valued at US$.90); provided, however, in the event any such
Losses and/or other damages have not been liquidated on or prior to July 16,
2007 (including without limitation any Losses or damages which may be reasonably
anticipated by Vemics to be incurred after July 16, 2007), then, for purposes of
any such offset, on July 16, 2007, Vemics may make a reasonable estimate of the
amount of such unliquidated Losses and/or other damages which Vemics may incur.
In the event of any such offset by Vemics, the Escrowed Shares as to which the
offset is applied (rounded up to the next whole share) shall be deemed
repurchased by Vemics from - EL Desktop and to thereupon become authorized but
unissued shares, and any Escrowed Shares as to which the offset is not applied
shall, subject to the terns and conditions of this Agreement, be released and
delivered to EL Desktop.
2
(b)
Common stock bonus - Warrant
and Additional Warrant.
(1)
Warrant. Subject
to the provisions of this Section, on February 28, 2008, Vemics will issue to EL
Desktop a warrant for restricted shares of Vemics Common Stock, not to exceed
750,000 restricted shares of Vemics' Common Stock, with a strike price of US$.90
per share of Common Stock and a term of 5 (five) years, which warrant shall be
in the form attached hereto as Exhibit C (the "Warrant"). The number
of restricted shares of Vemics Common Stock to be subject to the Warrant will be
based on the amount of net revenue received by Vemics which is generated by E.
Xxxxx Xxxxxxxxxx ("Xxxxxxxxxx") as an employee of Vemics between the Closing
Date and February 28, 2008, according to the matrix below; provided, however,
that no Warrant shall be issued if the amount of net revenue received by Vemics
which is generated by the International Education Solutions Division directed by
E Xxxxx Xxxxxxxxxx between the Closing Date and February 28, 2008, is not at
least US$975,000:
|
Target
Net Revenue:
|
US$1,500,000
|
|
Date
to Reach Target Net Revenue:
|
February
28, 2008
|
|
%
of Target Net
Revenue
Reached
|
Percentage
of
Warrant
which will be
exercisable
|
Number
of shares which will be
exercisable
under the Warrant
|
|
Less
than 65%
|
-0-%
(no Warrant to be issued)
|
-0-
shares (no warrant to be issued)
|
|
65%
|
45%
|
337,500
shares
|
|
75%
|
60%
|
450,000
shares
|
|
85%
|
75%
|
562,500
shares
|
|
95%
|
90%
|
675,000
shares
|
|
100%
or more
|
100%
|
750,000
shares
|
(2)
Additional
Warrant.
(i) Subject
to the provisions of this Section, on February 28, 2008, Vemics will issue to EL
Desktop an additional warrant for 750,000 restricted shares of Vemics Common
Stock, with a strike price equal to 90% of the average of the closing prices of
Vemics Common Stock over the 30 trading days immediately preceding February 28,
2008 (as reported in the pink sheets or, if Vemics Common Stock is traded on an
exchange, as reported by such exchange) (if Vemics Common Stock is not traded in
the pink sheets or on an exchange an any date during said 30 trading days, a
share of Vemics Common Stock shall be valued at US$.90 so that the strike price
would be US$.81), if the amount of net revenue received by Verities which is
generated by Xxxxxxxxxx as an employee of Vemics between the Closing Date and
February 28, 2008, is US$2,250,000 or more. If Vemics does, or is obligated to,
issue such an additional warrant to EL Desktop pursuant to this Section
2(b)(2)(i), then no additional warrant shall be issued or issuable pursuant to
Section 2(b)(2)(ii).
(ii) Subject
to the provisions of this subsection, if Vemics does not and is not obligated to
issue an additional warrant to EL Desktop pursuant to Section 2(b)(2)(i), then
on February 28, 2009, Vemics will issue to EL Desktop an additional warrant for
750,000 restricted shares of Vemics Common Stock, with a strike price equal to
90% of the average of the closing prices of Vemics Common Stock over the thirty
trading days immediately preceding February 28, 2009 (as reported in the pink
sheets or, if Vemics Common Stock is traded on an exchange, as reported by such
exchange) (if Vemics Common Stock is not traded in the pink sheets or on an
exchange an any date during said 30 trading days, a share of Vemics Common Stock
shall be valued at US$.90 so that the strike price would be US$.81), if the
amount of Vemics' net revenue which is generated by Xxxxxxxxxx as an employee of
Vemics between March 1, 2008 and February 28, 2009, is US$3,000,000 or
more.
3
(iii) Any
additional warrant issued by Vemics pursuant to this Section 2(b)(2) (an
"Additional Warrant") shall be for a term of 5 (five) years, and shall be in
substantially the same form as the Warrant attached hereto as Exhibit
C. In the event any stock split, reverse stock split,
recapitalization, merger, consolidation, conversion, or similar transaction to
which Vemics is a party occurs prior to the issuance of any Additional Warrant,
then, notwithstanding Sections 2(b)(2)(i) and (ii) above, Vemics may, in ifs
reasonable discretion, appropriately adjust the strike price and/or number,
class or type of shares to be received upon exercise of the Additional Warrant
as if the Additional Warrant had been issued immediately prior to such event or
transaction.
(c)
Restrictions and
Rights. The following provisions shall apply to the Vemics
Shares, the Warrant, Additional Warrant and the Additional Shares (as defined
below):
(1)
The Shares are not, and if and when issued neither (i) the Warrant and any
securities issued upon exercise of the Warrant, (ii) the Additional Warrant and
any securities upon exercise of the Additional Warrant, nor (iv) the Additional
Shares will be, registered under the Securities Act of 1933, as amended
("Securities Act"), or under any state "blue sky" laws (collectively, "State
Acts"). The Shares are, and if and when issued (i) the Warrant and any
securities issued upon exercise of the Warrant, (ii) the Additional Warrant and
any securities upon exercise of the Additional Warrant, and (iii) the Additional
Shares will be, "restricted securities," as that term is defined in U.S.
Securities and Exchange Commission ("SEC") Rule 144, and may not be sold,
assigned, transferred or otherwise disposed of unless registered under the
Securities Act and all applicable State Acts or unless exemptions from such
registration requirements are available for such transaction.
(2) The
certificate or certificates evidencing the Vemics Shares (including any Escrowed
Shares) to be delivered to EL Desktop, or, if and when issued, evidencing (i)
the Warrant and any securities issued upon exercise of the Warrant, (ii) the
Additional Warrant and any securities issued upon exercise of the Additional
Warrant, and (iii) the Additional Shares, will bear a restrictive legend
substantially in the following form as long as applicable:
"THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THESE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE,
AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT COVERING THESE SECURITIES UNDER THE
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT REGISTRATION OF THESE SECURITIES
IS NOT REQUIRED UNDER THE ACT OR UNDER APPLICABLE STATE SECURITIES
LAWS."
(3)
(i) If, at any
time after the first anniversary of the Closing Date, Vemics files a
registration statement under the Securities Act for purposes of a public
offering of securities of the Vemics for its own account, it shall notify EL
Desktop in writing (the "Company Notice"). EL Desktop shall have the right (the
"Piggyback Right"), subject to the limitations set forth in this Section, to
include in any such registration statement all or any portion of the Vemics'
Shares and Additional Shares then held by EL Desktop. In order to exercise the
Piggyback Right, EL Desktop shall give written notice to Vemics (the "Piggyback
Notice") no later than fifteen (15) days following the date on which the Vemics
gives the Company Notice. The Piggyback Notice shall set forth the number of
Vemics' Shares and Additional Shares that EL Desktop desires to include in the
registration statement. All expenses of any such registration will be paid by
the Vemics.
4
(ii) If the
registration statement under which Vemics gives a notice under this Section is
for an underwritten offering, Vemics shall so advise the EL Desktop in the
Company Notice. In such event, the right of any EL Desktop to be
included in a registration pursuant to this Section shall be conditioned upon EL
Desktop's participation in such underwritten offering and the inclusion of EL
Desktop's Vemics' Shares and Additional Shares in the underwritten offering to
the extent provided herein. All holders of Vemics' Shares and Additional Shares
proposing to distribute their shares by means of such underwritten offering
(including without limitation EL Desktop) shall enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting by Vemics. Notwithstanding any other provision of this
Agreement, if the underwriter determines in good faith that marketing or other
factors require a limitation of the number of shares to be underwritten, the
number of shares that may be included in the underwriting shall be allocated,
first, to Vemics; second, if and to the extent permitted by the underwriter, to
EL Desktop with respect to the Vemics' Shares and Additional Shares; and third,
if and to the extent permitted by the underwrite, to any other stockholder of
Vemics (i.e., other than EL Desktop) on a pro rata basis. No such reduction
shall reduce the securities being offered by Vemics for its own account to be
included in the registration and underwriting. If EL Desktop
disapproves of the terms of any such underwriting, EL Desktop may elect to
withdraw therefrom by written notice to Vemics and the underwriter, delivered at
least twenty (20) business days prior to the effective date of the registration
statement.
(iii)
Vemics shall have the right to terminate or withdraw any registration initiated
by it under this Section prior to the effectiveness of such registration whether
or not EL Desktop has elected to include securities in such
registration.
(4)
With a view to making available to EL Desktop the benefits of SEC Rule 144 and
any other rule or regulation of the SEC that may at any time permit EL Desktop
to sell securities of Vemics to the public without registration, Vemics agrees
to use reasonable efforts, after the first anniversary of Closing Date and so
long as the EL Desktop owns any Vemics' Shares or Additional Shares, to: (i)
make and keep available adequate current public information with respect to
Vemics, as those terms are understood and defined in SEC Rule 144; (ii) to file
with the SEC in a timely manner all reports and other documents required of
Vemics under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (at any time after Vemics has become subject to such reporting
requirements); and (iii) furnish to any EL Desktop forthwith upon request (A) to
the extent accurate, a written statement by the Company that it has complied
with the reporting requirements of SEC Rule 144, the Securities Act, and the
Exchange Act, or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after Vemics so qualifies); and (B) to
the extent accurate, a copy of the most recent annual or quarterly report of
Vemics and such other reports and documents so filed by Vemics.
(d)
Cash or Additional
Shares. Vemics shall pay to EL Desktop Creditors up to US$250,000 in cash
to satisfy any outstanding debts, liabilities or obligations to EL Desktop's
present creditors (collectively, the "Cash Payments") identified in "Exhibit D "
(collectively the "EL Desktop Creditors") with payment to be made to EL Desktop
Creditors on before the date indicated on said "Exhibit D". This
Section 2(d) is subject to Section I (c) above, and in the event of any
inconsistency, Section 1(c) shall control. Any such Cash Payments so
made by Vemics will be used by EL Desktop to satisfy its current financial
obligations, and Vemics may require a final determination of what these
financial obligations are prior to making any such Cash Payment. Exhibit D is a
list prepared by EL Desktop of its current financial obligations. No
Cash Payments so made by Vemics will be paid, directly or indirectly, by EL
Desktop to the management or shareholders of EL Desktop, except for such monies
as are due for back salaries, expenses and documented loans made to EL Desktop
(excluding direct equity investments made by, and any convertible debentures
held by, management or shareholders of EL Desktop, which shall not be paid or
otherwise satisfied, in whole or in part, directly or indirectly, with any such
Cash Payments by Vemics). If on or before September 15, 2007, Vemics
has not made Cash Payments aggregating US$250,000 pursuant to this Section 2(d),
then on September 16, 2007, Vemics will issue to EL Desktop such number of
additional restricted shares (the "Additional Shares") of Vemics Common Stock,
registered in the name of EL Desktop and rounded up to the next whole share, as
shall have an aggregate value equal to the difference between US$250,000 and the
dollar amount of the aggregate Cash Payments (if any) made by Vemics on or prior
to September 15, 2007. For this purpose, each Additional Share shall be valued
at the average of the closing prices of Vemics Common Stock over the 30 trading
days immediately preceding September 16, 2007, as reported in the pink sheets
or, if Vemics Common Stock is traded on an exchange, as reported by such
exchange (if Vemics Common Stock is not traded in the pink sheets or on an
exchange an any date during said 30 trading days, each Escrowed Shares shall be
valued at US$.90).
(e)
Excluded property.
Vemics shall not acquire, and EL Desktop shall retain, all assets and
property of EL Desktop which are not assigned to Vemics pursuant to this
Agreement.
5
(f)
Transfer of Lease
Interests. EL Desktop covenants and agrees that it will offer
to transfer to Vemics, for no additional consideration, any lease or leasehold
interest in the properties it has in its possession now (referred to in Exhibit
B.) or in the future (at which time Vemics will have sole option whether to
accept or reject said lease interest). With respect to all leases and leasehold
interests currently held by EL Desktop (referred to in Exhibit B), Vemics shall
furnish an estoppel certificate from each lessor under such leases, whereby the
lessors will verify that each of the leases is not in default and is in full
force and effect as of the date of closing. Such estoppel certificate shall
contain a provision whereby the lessor consents to the transfer. With respect to
all leases and leasehold interests currently held by EL Desktop (referred to in
Exhibit B), Vemics will accept or reject such assignment at closing. With
respect to all leases and leasehold interests that EL Desktop obtains after the
Effective Date, within 10 days of entering into or otherwise obtaining such
lease or leasehold interest, EL Desktop shall provide written notice thereof to
Vemics, which notice shall be accompanied by a complete and correct copy of the
applicable lease and any other documents and agreements related thereto, along
with an estoppel certificate as described above in this Section 2(f) from the
applicable lessor; Vemics shall have 30 days after receipt of all of the
foregoing from EL Desktop to accept or reject the assignment of such new lease
or leasehold interest.
(g)
Vemics '
account. From and after the Effective Date, all operations
relating to EL Desktop's Assets to be conveyed to Vemics shall be for the
account, and shall accrue to the benefit, of Vemics.
3.
Representations and warranties
of EL Desktop. EL Desktop hereby represents and warrants to
Vemics as follows:
(a)
Duly
organized. EL Desktop is a corporation duly organized and
validly existing in good standing under the laws of Canada, and is entitled to
own or lease its properties and to carry on its business as and in the places
where such properties are now owned, leased, or operated and such business is
now conducted.
(b)
Subsidiary corporations.
EL Desktop has no subsidiary corporations.
(c)
Leases. Exhibit B is a
list and brief description of all material leases and agreements under which EL
Desktop leases, holds, and operates real property or significant items of
personal property. All such leases and agreements are assignable except as
stated therein, and no material adverse claim against, or defect in, the
interest purportedly leased or given under or by any such instrument exists. EL
Desktop is not in default with respect to any instrument on such list. EL
Desktop owns outright and has good and marketable title to all the assets and
properties listed in Exhibit A, Exhibit A-1 through Exhibit A-5, and Exhibit
B.
(d)
Intangible
property. Exhibit E is a list of all material United States
and Canadian patents, patent applications, and trademarks owned by or registered
in the name of EL Desktop or in which EL Desktop has any rights, and in each
case a brief description of the nature of such rights. EL Desktop is not a
licensor in respect of any United States or Canadian patents, trademarks, trade
names, and applications therefor, except as stated in such list.
(e)
Insurance. Exhibit F
contains a brief description of all material policies of fire, liability, and
other forms of insurance held by EL Desktop.
(f)
Authorization. EL
Desktop's Board of Directors have approved this Agreement and the transactions
contemplated herein, and have authorized the execution and delivery of this
Agreement by EL Desktop. This Agreement and the transactions contemplated
herein, including the conveyance, assignment, transfer, and delivery of the
Assets of EL Desktop, have been consented to in writing by the shareholders of
record of EL Desktop who are entitled to vote thereon. This Agreement and the
transactions contemplated herein have been authorized and approved by all
necessary corporate action of EL Desktop.
This
Agreement constitutes the legal, valid and binding obligation of EL Desktop,
enforceable against EL Desktop in accordance with its terms. When executed and
delivered by EL Desktop, the Closing Documents will constitute the legal, valid
and binding obligations of EL Desktop, enforceable against EL Desktop in
accordance with their respective terms.
6
(g)
EL Desktop has the Legal right, power, authority and ability to execute and
deliver this Agreement and the Closing Documents and to perform its obligations
thereunder, including without limitation to transfer all of the Assets to
Vemics. EL Desktop hereby certifies that its intellectual property, patents,
copyrights, and trademarks do not and will not infringe upon or misappropriate
any intellectual property, copyright, patent, right of publicity or privacy
(including but not limited to defamation), trade secret, trademark, or other
proprietary rights of any third party. In addition, EL Desktop hereby certifies
that none of its Assets are subject to any lien or encumbrance by any third
party. EL Desktop also certifies that the Contracts referenced herein are in
good standing and that EL Desktop is in full performance and compliance with
said Contracts and said Contracts are not subject to any right, setoff or
encumbrance by any third party.
(h)
EL Desktop's performance of this Agreement will not conflict with any other
contract or other agreement to which EL Desktop is a party or otherwise
bound.
(i)
EL Desktop warrants that none of the Assets are subject to any lien or
encumbrance of any kind in favor of any lender or other person.
(j)
EL Desktop agrees to indemnify, hold harmless and defend Vemics from and against
all claims, defense costs (including reasonable attorneys' fees), judgments and
other expenses arising out of the breach of any provisions of this Agreement by
EL Desktop.
(k)
EL Desktop is acquiring the Shares, the Warrant, the Additional Warrant and the
Additional Shares for its own account and will not sell, assign, transfer, or
otherwise dispose of any of the Shares, the Warrant (or any securities issued
upon exercise of the Warrant), the Additional Warrant (or any securities issued
upon exercise of the Additional Warrant), any of the Additional Shares
(collectively, the "Vemics Securities"), or any interest in any of the Vemics
Securities, without registration under the Securities Act, and all applicable
State Acts, except in a transaction which is exempt from such registration
requirements. EL Desktop has no pm-existing plan or proposal to, and EL Desktop
has not and will not within the one-year period following the Closing Date,
distribute or adopt a plan or proposal to distribute any or all of the Vemics
Securities to its shareholders and/or other persons, whether in connection with
a dissolution of EL Desktop or otherwise, without the prior written consent of
Vemics or unless such Vemics Securities have been registered under the
Securities Act and all applicable State Acts.
EL
Desktop has such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risk of an investment in the Vemics
Securities, and has obtained, in its judgment, sufficient information from
Vemics to evaluate the merits and risks of an investment in the Vemics
Securities. EL Desktop has been provided the opportunity to obtain information
and documents concerning Vemics and the Vemics Securities, and has been given
the opportunity to ask questions of and receive answers from, the directors and
officers of Vemics concerning Vemics and the Vemics Securities and other matters
pertaining to this investment. EL Desktop acknowledges and agrees that it has
obtained from EL Desktop, and has reviewed, those documents listed on Exhibit G
(the "Vemics Disclosure Documents"). EL Desktop is aware of the risks inherent
in an investment in Vemics, and specifically the risks of an investment in the
Vemics Securities (including without limitation the risks referred to in the
Vemics Disclosure Documents). In addition, EL Desktop is aware and acknowledges
that there can be no assurance of the future viability or profitability of
Vemics, nor can there be any assurance relating to the current or future value
of the Vemics Common Stock or any of the other Vemics Securities.
|
|
4.
|
Representations and warranties
of Vemics Vemics represents and warrants to EL Desktop as follows:
|
(a)
Duly
organized. Vemics is a corporation duly organized and validly
existing in good standing under the laws of Nevada, and is entitled to own or
lease its properties and to carry on its business as and in the places where
such properties are now owned, leased, or operated and such business is now
conducted.
(b) Securities. The Shares and
any Additional Shares, when issued and delivered as provided herein, will be
Vemics' duly authorized, validly issued and outstanding, fully paid and
non-assessable shares of Vemics Common Stock. The Warrant and the Additional
Warrant, if and when issued and delivered as provided herein, will be Vemics'
duly authorized, validly issued and outstanding, warrants, and if and when any
securities are issued upon any exercise of the Warrant or the Additional
Warrant, such securities will be the duly authorized, validly issued and
outstanding, fully paid and non-assessable securities of Vemics.
(c)
Authorization. Vemics'
Board of Directors has approved this and authorized this Agreement.
7
5.
No assumption of liabilities
by Vemics
(a)
Except as otherwise provided in Section 1(c), EL Desktop acknowledges that
Vemics is acquiring EL Desktop's Assets hereunder without any assumption of EL
Desktop's liabilities. EL Desktop covenants that it shall fully and timely
satisfy all its present liabilities to creditors.
(b)
EL Desktop will hold Vemics harmless against all claims for products, service,
and professional liability against EL Desktop arising out of sales of products
or services rendered by EL Desktop.
(c)
EL Desktop represents that it has disclosed all its debts, liabilities and
obligations to Vemics, and that EL Desktop has no undisclosed
liabilities.
(d)
EL Desktop has paid or will pay or fully provide for all Canadian, United States
and state income and other taxes which relate to the conduct of its business
through the Closing Date. EL Desktop represents that there is no pending tax
claim or dispute on taxes which might result in a lien against EL Desktop's
Assets.
(e)
Bulk sales
law. The parties hereby waive EL Desktop's compliance with the
provisions of any applicable bulk sales laws. EL Desktop shall hold a sufficient
amount of the cash in trust to pay all its creditors as and when their claims
come due, and hold and save Vemics harmless against any loss, damage or expense,
including reasonable attorneys' fees and court costs, incurred by Vemics as a
result of or attributable to the parties' failure to comply with such
provisions.
(f)
Division of taxation
notice. EL Desktop shall cooperate with Vemics and give all
required information to the Canadian Division of Taxation as required by the
Canadian Division of Taxation, and shall cooperate with Vemics and give all
required information to Vemics and the Internal Revenue Services as required by
the Internal Revenue Code, and shall timely complete and execute such tax
returns, forms, notices and/or reports as may be required in connection with the
foregoing.
(g)
Licensing. EL Desktop
will comply with all United States and Canadian laws regarding licensing and
import/export restrictions of technology.
6.
Excepted
transactions. None.
7.
Access to
records. (a) Available material. Before the Closing Date, each
party's officers and accredited representatives shall each have full access to
the other party's plants, properties, books, accounts, and records of every
kind, including, without limitation, the other party's monthly balance sheets
and income and operating statements, and each will furnish the other with all
additional financial and operating data and other information as to its business
and properties that is from time to time reasonably requested. Each party shall
authorize and direct its respective independent auditors to make available to
the other party before the Closing Date any information, including access to
work papers, requested by such party. Before the Closing Date, each party may
also have representatives present at the taking of inventories by the
other.
(b)
Unavailable
material. None.
(c)
Confidentiality. Vemics
and EL Desktop mutually acknowledge that, pursuant to their respective rights to
inspect the other's plants, properties, books, accounts and records, and EL
Desktop's receipt of the Vemics Disclosure Documents, as provided in this
Agreement, they may become privy to the other's Confidential Information, and
that communication of such Confidential Information to third parties (whether
such communication is authorized by Vemics or EL Desktop respectively or
otherwise), or the unauthorized use of one party's Confidential Information by
the other party, could damage the other's business after the transaction is
completed. Vemics and EL Desktop therefore mutually agree to take reasonable
steps to insure that such Confidential Information about the other, obtained by
Vemics or EL Desktop respectively, or any of their respective employees,
officers, agents, attorneys, or other accredited representatives, shall remain
confidential, shall not be used by them except as authorized by this Agreement,
and not be disclosed or revealed to third parties; provided, however, that it is
agreed that Vemics may use and disclose any Confidential Information of EL
Desktop that is included among the Assets acquired by Vemics pursuant to this
Agreement. "Confidential Information" includes information not
ordinarily known by noncompany personnel, including customer lists, supplier
lists, trade secrets, channels of distribution, pricing policy and records,
inventory records, and all other information normally understood to be
confidential or otherwise designated as such by EL Desktop or Vemics
respectively.
8
8.
(a) Closing date. The
closing under this Agreement shall take place at 000 Xxxxxx Xxxxxxx, Xxxxxx, XX
00000, Eastern Daylight Time, on January 25, 2007, at 10:00 AM, or such other
date as shall be mutually agreed upon by Vemics and EL Desktop (the "Closing
Date").
(b)
Payment. All
payments required to be made under this Agreement shall be made in the time
period prescribed in this Agreement All stock to be issued to EL Desktop shall
be issued on the applicable dates set forth herein, subject to the escrow
provision set forth herein.
(c)
All Assets shall be transferred to Vemics on the Closing Date of this
transaction or, with respect to Assets which may arise after the Closing Date,
at such future date as set forth herein.
9.
Approval of Vemics' Board of
Directors. Vemics had previously called a meeting of its Board
of Directors at which time the Board of Directors of Vemics approved this
Agreement and its execution, delivery, and performance by Vemics.
10.
Employment of E. Xxxxx
Xxxxxxxxxx
(a)
Principal. Vemics
affirms that it intends to employ Xxxxxxxxxx in a principal executive capacity
from and after the Closing Date, as Senior Vice
President International Sales, and EL Desktop hereby affirms that it
is its understanding that Xxxxxxxxxx intends to enter into the Vemics'
employment in such a capacity from and after the Closing Date. After closing,
Xxxxxxxxxx will receive compensation of US$120,000.00 per annum, plus bonuses
and commissions to be determined, as shall be set forth in a separate Employment
Agreement between Vemics and Xxxxxxxxxx to be executed and delivered at closing
(the "Employment Agreement"). The Employment Agreement will have a term of 3
years, and will contain such other terms and conditions, including, but not
limited to, appropriate non-competition, non-solicitation, and non-disclosure
provisions as are usual and customary. This Employment Agreement shall be
substantially in the form attached hereto as Exhibit H.
(c) Right to
terminate. If Xxxxxxxxxx should die on or before the Closing
Date, Vemics may terminate this Agreement by giving EL Desktop written notice on
or before the Closing Date of Vemics' exercise of such termination
rights. If Vemics does not exercise its option to terminate, EL
Desktop may terminate this Agreement by giving written notice to Vemics on or
before the Closing Date. It shall be a condition precedent to Vemics obligation
to close under this Agreement that Xxxxxxxxxx executed and delivers the
Employment Agreement on or before the Closing Date.
11.
Survival of representations
and warranties. EL Desktop's representations and warranties
made in this Agreement shall survive for a period of 24 months after the Closing
Date, except for the representation and warranty contained in Sections 1(c),
1(d), 5 and 14 (relating, in general, to EL Desktop's debts, liabilities and
obligations not being assumed by Vemics), which shall continue to survive until
all debts, liabilities and obligations are satisfied in full by EL Desktop and
all applicable preference periods have expired.
Vemics'
representations and warranties made in this Agreement shall not survive the
Closing Date, and Vemics shall not have any subsequent liability with regard
thereto.
12.
Consent of third party.
(a) Assignments. To the extent that the assignment of any contract, license,
lease, commitment, sales order, purchase order or any other Asset to be assigned
to Vemics requires the consent of a third party, this Agreement shall not
constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof. EL Desktop will diligently pursue and use its best
efforts to obtain any required consent of the third parties to the assignment to
Vemics of any such contracts, licenses, leases, commitments, sales orders,
purchase orders or other Assets of EL Desktop. If such consent is not obtained
prior to the Closing Date, EL Desktop will cooperate with Vemics in any
reasonable arrangement designed to provide for Vemics the benefits under any
such contracts, licenses, leases, commitments, sales orders, purchase orders or
other Asset, including enforcement, at the cost and for the benefit of Vemics,
of all EL Desktop's rights against the third party arising out of a breach or
cancellation by such third party or otherwise.
(b)
Accounts receivable.
Vemics may collect for its account all EL Desktop receivables and other items
that are transferred to Vemics, and may endorse EL Desktop's name on all checks
received on account of such items. EL Desktop shall deliver to Vemics all cash
or other property EL Desktop receives for such items.
9
13.
Fees and
expenses. Each party shall pay their own fees and expenses
incurred in preparing this Agreement, carrying it into effect, and consummating
the transactions contemplated hereby.
14.
Waiver of compliance with bulk
sale requirements. Vemics waives EL Desktop's compliance
provisions with the provisions of the bulk sales law as enacted in any
applicable jurisdiction. EL Desktop, however, shall indemnify and hold Vemics
harmless from all debts, liabilities and obligations of EL Desktop which are not
assumed by Vemics under this Agreement, and from any and all liabilities
resulting from noncompliance with the bulk sales law, including, but not limited
to, all costs and expenses incurred in connection with the defense or settlement
of any such liability or obligation (including without limitation reasonable
attorneys fees).
15.
(a) Assignment of agreement. This
Agreement shall not be assignable by either party except with the other's
written consent, which shall not be unreasonably withheld, conditioned or
delayed.
(b) Third
parties. Nothing in this Agreement, expressed or implied, is
intended to confer upon any person, other than the parties hereto and their
successors and permitted assigns, any rights or remedies under or by reason of
this Agreement
16.
Brokerage. Each
party represents and warrants to the other that there are no rights to or claims
for brokerage commissions or finders' fees in connection with the transactions
contemplated by this agreement, insofar as such rights or claims are alleged to
be based on arrangements or agreements made by it or on its behalf, and each of
the parties agrees to indemnify the other against and hold it harmless from all
liabilities arising from any such right or claim (including, without limitation,
cost of counsel fees in connection therewith).
17.
Notices. All
notices and other communications ("Notices') to be given hereunder by either
party to the other shall be in writing and delivered personally or sent by
registered or certified mail, postage prepaid,
if to
Vemics, addressed to:
Xxxx
Xxxxx, President
000
Xxxxxx Xxxxxxx Xxxxx
Xxxxxx,
Xxx Xxxx 00000
And if to
EL Desktop:
E. Xxxxx
Xxxxxxxxxx, President
E
Learning Desktop Ventures Inc
0000
Xxxxxx Xx # 000
Xxxxxxxxxxx
XX Xxxxxx
The
address for delivery of Notices may be changed by any party upon furnishing to
the other the new address for Notices in accordance with the provisions of this
paragraph.
10
18.
Entire
agreement. This Agreement, and the Closing Documents, contains
the entire agreement between the parties with respect to the transactions
contemplated herein, and is intended by the parties to be an integration of all
of the promises, agreements, conditions, understandings, warranties,
representations and covenants between the parties hereto with respect to the
subject matter hereof All Exhibits referred to in this Agreement and attached
hereto are hereby incorporated herein by reference. Each party has caused to be
included herein all representations and warranties that it considers material
for the purposes of the transactions contemplated hereby, based upon
investigations which each of them has made of the other's business and affairs.
The representations and warranties contained herein constitute all the
representations and warranties upon which the parties have relied. Nothing
contained in this Agreement, any Closing Document, nor any of the exhibits
referred to herein or any other instrument or document furnished by either party
to the other after the Closing Date in relation to this transaction, contains or
will contain any untrue statement of any material fact or omits or will omit to
state any material fact required to be stated in order to make such statement,
document, or other instrument not misleading.
19.
Execution. This
Agreement is being executed and delivered by the parties as of the Effective
Date.
20.
Governing
law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to the principles of choice of law or conflicts of law.
21.
Severability of provisions.
The invalidity or unenforceability of any term, phrase, clause,
paragraph, restriction, covenant, agreement or other provision hereof shall in
no way affect the validity or enforcement of any other provision, or any part
thereof.
22.
Headings. The
captions and titles in this Agreement are for convenience and reference only,
and shall not be used to define, limit, or otherwise construe its teams and
provisions.
23.
Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same
instrument.
24.
Actions necessary to complete
transaction. Each party hereby agrees to execute and deliver
all such other documents or instruments and to take any action that is
reasonably required to effectuate the transactions contemplated by this
Agreement.
25.
Non-waiver. No
delay or failure by either party to exercise any right hereunder, and no partial
or single exercise of any such right, shall constitute a waiver of that or any
other right, or release the other party from any claims arising out of or
connected with this Agreement, unless otherwise expressly provided
herein..
26.
Binding
effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
27.
Time of essence. Time
is of the essence of this Agreement.
In
witness whereof the parties have caused this Agreement to be duly executed by
their respective officers.
VEMICS: EL
DESKTOP:
Vemics,
Inc. E
Learning Desktop Ventures Inc.
By /s/ Xxxx
Xxxxx By
/s/ E. Xxxxx
Xxxxxxxxxx
Xxxx
Xxxxx,
President E.
Xxxxx Xxxxxxxxxx, President
|
Exhibits:
|
A
|
Asset
List
|
|
A-1
through A-5
|
Contracts
|
|
|
B
|
Leases
|
|
|
C
|
Warrant
|
|
|
D
|
Current
Financial Obligations
|
|
|
E
|
Patents
|
|
|
F
|
Insurance
|
|
|
G
|
Vemics
Disclosure Documents
|
|
|
H
|
Employment
Agreement
|
11
