EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of April 24,
2006, by and between Digicorp, a Utah corporation ("Buyer"), and EAI
Technologies, Inc., a Virginia corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Seller has developed an application for Buyer known as
ITunesBucks ("ITunesBucks"), which is a marketing application that allows
customers to accumulate points that can be used to purchase merchandise;
WHEREAS, Buyer has outstanding invoices totaling $152,000 (the "Invoices")
which Buyer owes Seller as consideration for developing ITunesBucks; and
WHEREAS, Buyer desires to purchase and Seller desires to sell to Buyer
ITunesBucks and its associated assets in exchange for (a) the issuance to Seller
of 138,182 shares of Buyer's common stock, $.001 par value per share ("Common
Stock"), and (b) the waiver by Seller of the outstanding Invoices, pursuant to
the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
SECTION 1. PURCHASE AND SALE OF ASSETS.
1.1 Sale of Assets. Seller agrees to sell, assign, transfer and deliver
to Buyer, and Buyer agrees to purchase from Seller, all of Seller's right, title
and interest in and to ITunesBucks and its associated assets and properties of
every kind all as described in Exhibit A attached hereto as well as all
Intellectual Property and all ideas of Seller of every kind and description
related to ITunesBucks, tangible and intangible, real, personal or mixed, and
wherever located, including, without limitation, the following:
(a) Intellectual Property. All of Seller's Intellectual Property
relating to ITunesBucks;
(b) Goodwill. All of the goodwill of Seller in, and the going
concern value of, ITunesBucks, and all of the ideas and Intellectual Property,
proprietary information, marketing materials and trade secrets related to
ITunesBucks; and
(c) Records. All of Seller's files and records, and other files
and records relating to ITunesBucks and all files and records relating to all
Intellectual Property and all ideas of Seller in connection with ITunesBucks.
The assets, properties, ideas, Intellectual Property, goodwill and records
of Seller being sold to and purchased by Buyer under this Section 1.1 are
referred to herein collectively as the "Assets."
1.2 Excluded Liabilities. It is expressly understood that Buyer shall
not assume, pay or be liable for any liability or obligation of Seller of any
kind or nature at any time existing or asserted, whether known, unknown, fixed,
contingent or otherwise, not specifically assumed herein by Buyer, including,
without limitation, any liability or obligation relating to, resulting from or
arising out of any fact existing or event occurring prior to, or relating to the
Assets prior to the date hereof.
1.3 Purchase Price; Payment. In consideration of the sale by Seller to
Buyer of the Assets, and subject to satisfaction of the conditions contained
herein, Buyer shall issue to Seller 138,182 shares of Common Stock of Buyer (the
"Purchase Price").
1.4 Closing Date. Subject to satisfaction of the conditions contained
herein, the closing of the sale and purchase of the Assets provided for in
Section 1.1 hereof (the "Closing") shall take place at the offices of Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (or at such other place as the parties may designate) on the date of
this Agreement, or on such other date as Seller and Buyer may agree. The date on
which the Closing shall be held is referred to in this Agreement as the "Closing
Date."
1.5 Further Assurances. Seller shall, from time to time after the
consummation of the transactions contemplated herein, at the request of Buyer
and without further consideration, execute and deliver further instruments of
transfer and assignment and take such other action as Buyer may reasonably
require to more effectively transfer and assign to, and vest in, Buyer the
Assets free and clear of all Liens (defined below).
1.6 Sales and Transfer Taxes. All sales, transfer, use, recordation,
documentary, stamp, excise taxes, personal property taxes, fees and duties under
applicable law incurred in connection with this Agreement or the transactions
contemplated hereby will be borne and paid by Buyer.
1.7 Transfer of Subject Assets. Seller shall deliver or cause to be
delivered to Buyer good and sufficient instruments of transfer transferring to
Buyer title to all of the Assets, together with all required consents. Such
instruments of transfer (a) shall contain appropriate warranties and covenants
which are usual and customary for transferring the type of property involved
under the laws of the jurisdictions applicable to such transfers, (b) shall be
in form and substance reasonably satisfactory to Buyer and its counsel, (c)
shall effectively vest in Buyer good and marketable title to all of the Assets
free and clear of all Liens, and (d) where applicable, shall be accompanied by
evidence of the discharge of all Liens against the Assets. Buyer agrees and
acknowledges that the form of instrument of transfer attached hereto as Exhibit
B is acceptable.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER. In order to induce Buyer to
enter into this Agreement, Seller hereby represents and warrants to Buyer as
follows:
2.1 Required Action. All actions and proceedings necessary to be taken
by or on the part of Seller in connection with the transactions contemplated by
this Agreement have been duly and validly taken, and this Agreement and each
other agreement, document and instrument to be executed and delivered by or on
behalf of Seller pursuant to, or as contemplated by, this Agreement
(collectively, the "Seller Documents") has been duly and validly authorized,
executed and delivered by Seller and no other action on the part of Seller is
required in connection therewith. Seller has full right, authority, power and
capacity to execute and deliver this Agreement and each other Seller Document
and to carry out the transactions contemplated hereby and thereby. This
Agreement and each other Seller Document constitutes, or when executed and
delivered will constitute, the legal, valid and binding obligation of Seller,
enforceable in accordance with its respective terms.
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2.2 No Conflicts. The execution, delivery and performance by Seller of
this Agreement and each other Seller Document does not and will not (a)
constitute a violation of, or conflict with or result in any breach of,
acceleration of any obligation under, right of termination under, or default
under, any agreement or instrument to which Seller is a party or by which Seller
or the Assets is bound, (b) violate any judgment, decree, order, statute, rule
or regulation applicable to Seller or the Assets, or (c) require Seller to
obtain any approval, consent or waiver of, or to make any filing with, any
person or entity (governmental or otherwise) that has not been obtained or made.
2.3 Title. Seller has good and marketable title to all of the Assets
free and clear of all mortgages, pledges, security interests, charges, liens,
restrictions and encumbrances of any kind (collectively, "Liens") whatsoever.
Upon the sale, assignment, transfer and delivery of the Assets to Buyer
hereunder and under the Seller Documents, there will be vested in Buyer good,
marketable and indefeasible title to the Assets, free and clear of all Liens.
The Assets include all of the assets and properties (a) held for use by Seller
in connection with Assets and (b) necessary for Buyer to use the Assets in the
manner for which the Assets were developed. All of the tangible Assets are in
good repair, have been well maintained and are in good operating condition, do
not require any material modifications or repairs, and comply in all material
respects with applicable laws, ordinances and regulations, ordinary wear and
tear excepted.
2.4 No Litigation. Seller is not now involved in nor, to the knowledge
of Seller, is Seller threatened to be involved in any litigation or legal or
other proceedings related to or affecting the Assets or which would prevent or
hinder the consummation of the transactions contemplated by this Agreement.
2.5 Brokers. Seller has not retained any broker or finder or other
person who would have any valid claim against any of the parties to this
Agreement for a commission or brokerage fee in connection with this Agreement or
the transactions contemplated hereby.
2.6 Intellectual Property
(a) For purposes hereof, the term "Intellectual Property"
includes: (i) all drawings, marketing plans, potential business concepts or
similar documents; (ii) all patents, patent applications, patent rights, and
inventions and discoveries and invention disclosures related to the Assets
(whether or not patented); (iii) Seller's rights to the name "ITunesBucks" and
all trade names, trade dress, logos, packaging design, slogans, any and all
Internet domain names used or useful in connection with the Assets or related to
them, registered and unregistered trademarks and service marks and applications
related to the Assets; (iv) all copyrights in both published and unpublished
works related to the Assets, including, without limitation, all compilations,
databases and computer programs, and all copyright registrations and
applications, and all derivatives, translations, adaptations and combinations of
the above; (v) all know-how, trade secrets, confidential or proprietary
information, customer lists, research in progress, algorithms, data, designs,
processes, formulae, drawings, schematics, blueprints, flow charts, models,
prototypes, techniques, Beta testing procedures and Beta testing results related
to the Assets; and (vi) all goodwill, franchises, licenses, permits, consents,
approvals, technical information, telephone numbers, and claims of infringement
against third parties related to the Assets, as well as any idea related to the
Assets.
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(b) Seller has exclusive ownership of, and has good, valid and
marketable title to, all of the Intellectual Property, free and clear of any
Liens, and has the right to use all of the Intellectual Property without payment
to any third party.
2.7 Accreditation. Seller is an "accredited investor" within the meaning
of Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as
amended (the "Securities Act"). Seller understands that the Purchase Price is
being offered to him in reliance upon specific exemptions from the registration
requirements of United States federal and state securities laws and that Buyer
is relying upon the truth and accuracy of, and Seller's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
Seller set forth herein in order to determine the availability of such
exemptions and the eligibility of Seller to receive the Purchase Price.
2.8 Investment Experience; Suitability. Seller is familiar with the type
of risks inherent in the acquisition of securities such as the shares of Common
Stock of Buyer and Seller's financial position is such that he can afford to
retain the Purchase Price for an indefinite period of time without realizing any
direct or indirect cash return on his investment.
2.9 Investment Purpose. Seller represents that the shares of Common
Stock comprising the Purchase Price are being issued to it for its own account,
for investment purposes only and not for distribution or resale to others in
contravention of the registration requirements of the Securities Act. Seller
agrees that it will not sell or otherwise transfer the shares of Common Stock
comprising the Purchase Price unless such shares are registered under the
Securities Act or unless an exemption from such registration is available.
2.10 Information. Seller and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of Buyer
and materials relating to the offer and sale of the shares of Common Stock
comprising the Purchase Price which have been requested by Seller or its
advisors. Seller and its advisors, if any, have been afforded the opportunity to
ask questions of the Buyer. Notwithstanding the foregoing, Buyer has not
disclosed to Seller any material nonpublic information and will not disclose
such information unless such information is disclosed to the public prior to or
promptly following such disclosure to Seller. Neither such inquiries nor any
other due diligence investigation conducted by Seller or any of its advisors or
representatives shall modify, amend or affect Seller's right to rely on Buyer's
representations and warranties contained in Section 3 below. Seller understands
that its investment in the shares of Common Stock comprising the Purchase Price
involves a significant degree of risk.
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2.11 Disclosure. The representations, warranties and statements contained
in this Agreement and in the certificates, exhibits and schedules delivered by
Seller to Buyer pursuant to this Agreement do not contain any untrue statement
of a material fact, and, when taken together, do not omit to state a material
fact required to be stated therein or necessary in order to make such
representations, warranties or statements not misleading in light of the
circumstances under which they were made. There are no facts known to Seller
which presently or may in the future have a material adverse affect (financial
or otherwise) on the Assets which have not been specifically disclosed herein or
in a schedule furnished herewith, other than general economic conditions
affecting the Assets generally.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BUYER. As a material inducement to
Seller entering into this Agreement, Buyer hereby represents and warrants to
Seller as follows:
3.1 Organization. Buyer is duly organized, validly existing and in good
standing under the laws of the State of Utah, with full corporate power and
authority to own or lease its properties and to conduct its business in the
manner and in the places where such properties are owned or leased or such
business is currently conducted or proposed to be conducted. Buyer is not in
violation of any term of its articles of incorporation or bylaws.
3.2 Required Action. All actions and proceedings necessary to be taken
by or on the part of Buyer in connection with the transactions contemplated by
this Agreement have been duly and validly taken, and this Agreement and each
other agreement, document and instrument to be executed and delivered by or on
behalf of Buyer pursuant to, or as contemplated by, this Agreement (the "Buyer
Documents") has been duly and validly authorized, executed and delivered by
Buyer and no other action on the part of Buyer is required in connection
therewith. Buyer has full right, authority, power and capacity to execute and
deliver this Agreement and Buyer Document and to carry out the transactions
contemplated hereby and thereby. This Agreement and each Buyer Document
constitutes, or when executed and delivered will constitute, the legal, valid
and binding obligation of Buyer, enforceable in accordance with its respective
terms.
3.3 No Conflicts. The execution, delivery and performance by Buyer of
this Agreement and each Buyer Document does not and will not (a) constitute a
violation of, or conflict with or result in any breach of, acceleration of any
obligation under, right of termination under, or default under, any agreement or
instrument to which Buyer is a party or by which it is bound, (b) violate any
judgment, decree, order, statute, rule or regulation applicable to Buyer, or (c)
require Buyer to obtain any approval, consent or waiver of, or to make any
filing with, any person or entity (governmental or otherwise) that has not been
obtained or made.
3.4 Brokers. Buyer has not retained any broker or finder or other person
who would have any valid claim against any of the parties to this Agreement for
a commission or brokerage fee in connection with this Agreement or the
transactions contemplated hereby.
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3.5 Disclosure. The representations, warranties and statements contained
in this Agreement and in the certificates, exhibits and schedules delivered by
Buyer to Seller pursuant to this Agreement do not contain any untrue statement
of a material fact, and, when taken together, do not omit to state a material
fact required to be stated therein or necessary in order to make such
representations, warranties or statements not misleading in light of the
circumstances under which they were made.
SECTION 4. WAIVER OF INVOICES AND RELEASE. Upon completing the purchase and sale
of the Assets contemplated by Section 1, effective on the Closing Date Seller
hereby waives all outstanding sums owed to it by Buyer as reflected in the
Invoices. In connection with such waiver and in consideration of the Purchase
Price, and other good and valuable consideration, received from Buyer, Seller
hereby releases and discharges Buyer, Buyer's officers, directors, employees,
agents, representatives, successors and assigns from all actions, causes of
action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialities, covenants, contracts, controversies, agreements, promises,
damages, judgments, executions, claims and demands whatsoever, arising from or
related to the Assets and the outstanding sums reflected in the Invoices, in
law, admiralty, or equity, which against Buyer, Seller, Seller's successors and
assigns ever had, now have or hereafter can, shall or may have.
SECTION 5. POST-CLOSING COVENANTS; SURVIVAL. All representations, warranties,
covenants, agreements and indemnities contained in this Agreement, or in any
schedule, exhibit, certificate, agreement, document or statement delivered
pursuant hereto, are material, shall be deemed to have been relied upon by the
parties and, shall survive the consummation of the transactions contemplated
herein for a period of two (2) years regardless of any investigation conducted
by or knowledge of any party hereto.
SECTION 6. INDEMNIFICATION. Seller and Buyer (respectively an "Indemnifying
Party") each hereby agrees to indemnify and hold harmless the other party, its
affiliates, directors, officers, employees, agents, successors and assigns (each
an "Indemnified Party", as applicable), against and in respect of all losses,
liabilities, obligations, damages, deficiencies, actions, suits, proceedings,
demands, assessments, orders, judgments, costs and expenses (including the
reasonable fees, disbursements and expenses of attorneys and consultants) of any
kind or nature whatsoever, but net of the proceeds from any insurance policies
or other third party reimbursement for such loss, to the extent sustained,
suffered or incurred by or made against any Indemnified Party, to the extent
based upon, arising out of or in connection with: (a) any breach of any
representation or warranty made by the Indemnifying Party in this Agreement or
in any schedule, exhibit, certificate, agreement or other instrument delivered
pursuant to this Agreement; (b) any breach of any covenant or agreement made by
the Indemnifying Party in this Agreement or in any schedule, exhibit,
certificate, agreement or other instrument delivered pursuant to this Agreement;
and (c) in the case where Seller is the Indemnifying Party, any claim made by
any person or entity which relates to the Assets which arises in connection with
or on the basis of events, acts, omissions, conditions or any other state of
facts occurring on or existing on or before the Closing Date.
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SECTION 7. NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (a) upon receipt, when
delivered personally, (b) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party), or (c) one (1) business day after deposit
with an overnight courier service, in each case properly addressed to the party
to receive the same. The addresses and facsimile numbers for such communications
shall be:
If to Buyer: DIGICORP
----------- Attn: Chief Executive Officer
0000 Xxxxxxx Xxxxxx
Xxxxxx Xxx Xxx, XX 00000
Facsimile: (000) 000-0000
If to Seller: EAI Technologies, Inc.
------------ Attn: Chief Executive Officer
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
or to such other address and/or facsimile number and/or to the attention
of such other person as specified by written notice given to the other
respective party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (a) given by the recipient of such notice,
consent, waiver or other communication, (b) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission, or (c)
provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (a), (b) or (c) above, respectively.
SECTION 8. MISCELLANEOUS.
8.1 Assignability; Binding Effect. This Agreement shall not be
assignable by either party except with the written consent of other party to
this Agreement. This Agreement shall be binding upon and shall inure to the
benefit of, the parties hereto and their respective successors and assigns.
8.2 Headings. The subject headings used in this Agreement are included
for purposes of convenience only and shall not affect the construction or
interpretation of any of its provisions.
8.3 Amendments; Waivers. This Agreement may not be amended or modified,
nor may compliance with any condition or covenant set forth herein be waived,
except by a writing duly and validly executed by Buyer and Seller or, in the
case of a waiver, the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any such right,
power or privilege, or any single or partial exercise of any such right, power
or privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege.
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8.4 Bulk Sales Law. Buyer hereby waives compliance by Seller of any
applicable bulk sales law and Seller agrees to make full and timely payment when
due of all amounts owed by such Seller to its creditors. Seller agrees to
indemnify and hold Buyer harmless from, and reimburse Buyer for any loss, cost,
expense, and liability or damage (including reasonable counsel fees and
disbursements and expenses) which Buyer may suffer or incur by virtue of the
non-compliance by Seller with such laws.
8.5 Entire Agreement. This Agreement, together with the exhibits hereto,
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes and cancels any and all prior or contemporaneous
arrangements, understandings and agreements between them relating to the subject
matter hereof.
8.6 Severability. In the event that any provision or any portion of any
provision of this Agreement shall be held to be void or unenforceable, then the
remaining provisions of this Agreement (and the remaining portion of any
provision held to be void or unenforceable in part only) shall continue in full
force and effect.
8.7 Governing Law. This Agreement and the transactions contemplated
hereby shall be governed and construed by and enforced in accordance with the
laws of the State of California without regard to conflict of laws principles.
8.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
constitute the same instrument.
8.9 Expenses. Each party shall pay its own expenses incident to the
negotiation, preparation and performance of this Agreement and the transactions
contemplated hereby, including all fees and expenses of its counsel and
accountants for all activities of such counsel and accountants undertaken
pursuant to this Agreement, whether or not the transactions contemplated hereby
are consummated.
8.10 Remedies. It is specifically understood and agreed that certain
breaches of this Agreement will result in irreparable injury to the parties
hereto, that the remedies available to the parties at law alone will be an
inadequate remedy for such breach, and that, in addition to any other legal or
equitable remedies which the parties may have, a party may enforce its rights by
an action for specific performance and the parties expressly waive the defense
that a remedy in damages will be adequate.
8.11 Dispute Resolution. Except as provided below, the parties agree to
submit disputes between them relating to this Agreement and its formation,
breach, performance, interpretation and application to arbitration as follows.
Each party will provide written notice to the other party of any dispute within
one year of the date when the dispute first arises or occurs. If a party fails
to provide such notice, recovery on the dispute will be barred. Arbitration will
be conducted in Los Angeles County, California pursuant to the Rules of the
American Arbitration Association ("AAA"), as modified herein. The arbitration
shall be conducted by one (1) arbitrator chosen in accordance with the rules of
the AAA. Unless the arbitrator finds that exceptional circumstances require
otherwise, the arbitrator will grant the prevailing party in arbitration its
costs of arbitration and reasonable attorneys' fees as part of the arbitration
award. Neither party will be required to arbitrate any dispute relating to
actual or threatened violation of Intellectual Property rights. Either party
will be entitled to receive in any court of competent jurisdiction injunctive,
preliminary or other equitable relief, in addition to damages, including court
costs and fees of attorneys and other professionals, to remedy any actual or
threatened violation of its rights with respect to which arbitration is not
required hereunder.
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8.12 Third Party Rights. Except as regards to the indemnification rights
and obligations herein, this Agreement is for the benefit of the parties hereto
and is not entered into for the benefit of, and shall not be construed to confer
any benefit upon, any other party or entity.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Seller and Buyer have caused this Asset Purchase
Agreement to be executed as of the date first above written.
BUYER:
DIGICORP
By: /s/ Xxx Xxxxxx
------------------------------------
Name: Xxx Xxxxxx
Title: Chief Executive Officer
SELLER:
EAI TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxxxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxxxxx
Title: Chief Executive Officer
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EXHIBIT A
ASSETS
DOCUMENTATION
ITunesBucks - portal application representation via:
- Screen Templates
- Use Cases
- Entry page mock ups
SYSTEM COMPONENTS
ITunesBucks portal application as covered by
- End user HTML/JSP pages and associated software components
- Mid tier processing (login, data collection, email routing)
- Backend database (all associated tables and fields)
- All associated source code from the CVS repository
The application has gone through several iterations. The above shall refer to
the product in its current form without any further enhancements.
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