Exhibit 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into on this
31st of August, 2002, by and among iExalt, Inc., a Nevada Corporation, 12000
Aerospace Ave, Suite 375, Houston, Texas 77034, and WordCross Enterprises, Inc.,
an Ohio Corporation, 12000 Aerospace Ave, Suite 375, Houston, Texas 77034, on a
wholly owned subsidiary of iExalt, (collectively the "Seller"), and Christian
Happenings Acquisition Corp., Ltd., an Ohio limited liability corporation, 3428
Rome Corners Road, Galenia, Ohio 43021 (the "Buyer").
WITNESSESTH:
WHEREAS, the Seller is the owner of certain assets used in the operation of
a business known as "Christian Happenings" (the "Assets") and
WHEREAS, the Seller desires to sell the Assets to Buyer and Buyer desires
to purchase the Assets from Seller.
NOW THEREFORE, in consideration of the above premises and the mutual
promises, covenants, agreements, representations and warranties herein
contained, the parties hereto agree as follows:
ARTICLE 1. PURCHASE AND SALE OF ASSETS
1.01. ASSETS BEING SOLD AND PURCHASED. Seller shall sell to Buyer and Buyer
shall purchase from Seller on the terms specified in this Agreement all the
intangible and tangible assets of Seller related solely to the assets identified
in Schedule 1.01 attached hereto, generally described as Christian Happenings
Magazine and used in the operation of Christian Happenings Magazine ("Assets").
At the Closing (as defined in Section 1.04 of this Agreement), Seller shall
convey to Buyer the Assets, free and clear of all liens, security interests,
claims, charges, restrictions and encumbrances, and Buyer shall purchase the
Assets for the Purchase Price set forth in Section 1.02.
1.02. PURCHASE PRICE. The Purchase Price is Three Hundred Thousand dollars
($300,000.00) to be paid as follows: (a) at Closing (as defined in Section
1.04), Buyer shall pay to Seller the sum of Twenty-Five Thousand Dollars
($25,000.00); (b) on or before September 15, 2002, Buyer shall pay to Seller the
sum of Seventy-Five Thousand Dollars ($75,000.00); and (c) an earn-out equal to
(i) Two Hundred Thousand Dollars ($200,000.00) calculated and paid as provided
in Section 1.03, or (ii) the amount actually paid to Seller during the two-year
calendar period following the Closing Date and calculated as set forth in
Section 1.03 (the "Earn Out).
1.03. EARN OUT. The Earn Out shall be shall be calculated based upon the
EBITDA of Buyer allocated to the Assets (the "EBITDA"). If during any fiscal
year of the Buyer, the EBITDA exceeds One Hundred Thousand Dollars
($100,000.00), the Buyer shall pay to Seller an amount equal to one-third (1/3)
of the amount by which EBITDA exceeds One Hundred Thousand Dollars (the "EBITDA
Payment"). The EBITDA Payment shall be made no later than September 30 of each
year until the earlier of (i) the Earn Out has been paid in full or (ii) two (2)
calendar year following the Closing Date (the "Earn Out Payment Period");
provided, however, that if at any time during the Earn Out Payment Period,
iExalt shall not be considered a going concern (either through liquidation,
bankruptcy, or dissolution) (the "Cessation"), then upon notice of Cessation of
business of iExalt, Buyer shall have the right to repurchase the Earn Out for
One Thousand Dollars ($1,000.00).
1.04. CLOSING. The sale and purchase described in this Agreement shall be
consummated on or before August 31, 2002 (the "Closing" or "Closing Date").
1.05. INSTRUMENTS OF TRANSFER. At Closing, the Seller will deliver to the
Buyer such bills of sale, endorsements, trade name assignments, and other
instruments of transfer as shall be effective to
vest in Buyer good and marketable title and interest in and to the Assets. At or
after the Closing, the Seller will execute and deliver to Buyer such further
instruments of conveyance and take such other action as Buyer may reasonably
request in order to more effectively convey to Buyer any of the Assets.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES BY SELLER
Seller hereby represents and warrants to Buyer that the following
statements are true as of the date hereof and will be true as of the Closing
Date:
2.01. TITLE TO ASSETS. Seller has good and marketable title to all Assets
covered by this Agreement. Seller's title to all assets is free and clear of
any liens, encumbrances, or other defects except as shown on Schedule 1.01 (or
the Balance Sheet) attached hereto.
2.02. AUTHORITY TO SELL. Seller has the legal power and right to execute
and deliver this Agreement and to perform and observe the provisions hereof,
including but not limited to sale of the Assets to Buyer. Seller has complied
with all the requirements of any applicable law of the State of Ohio, or the
State of Nevada relative to the sale of Assets described in this Agreement and
that prior to Closing, all of the consents and approvals that may be required by
law or by agreements to which Seller may be a party will be obtained.
2.03. LIABILITIES. Unless disclosed on Schedule 2.03, or the Balance Sheet,
the Buyer does not accept, acquire or become liable for any liability of the
Seller or any current liability related to any asset purchased hereunder.
2.05. DEFAULTS AND VIOLATIONS. Seller is not in default or material
violation of any contracts, agreements, leases, or other instruments or
obligations to be sold and transferred to Buyer pursuant to this Agreement. This
Agreement and the purchase and sale of the Assets to be consummated pursuant to
this Agreement will not create or cause a default or material violation of any
contract, agreement, lease or other instrument to which Seller may be a party.
2.06. LITIGATION. There is now no litigation pending against Seller of
which Seller or its officers are aware that will, might, or could affect
consummation of the purchase and sale of the Assets described in this Agreement
or the transfer of title of any of the Assets in good and marketable condition
to Buyer. Seller is not aware of any threatened litigation which may affect the
consummation of the purchase and sale of the Assets described in this Agreement.
2.07. SURVIVAL OF WARRANTIES. Seller agrees that all warranties made by it
in this Agreement shall survive the Closing.
ARTICLE 3. WARRANTIES OF BUYER
Buyer hereby represents and warrants to Buyer that the following statements
are true as of the date hereof and will be true as of the Closing Date:
3.01. DUE ORGANIZATION. Buyer is a corporation duly organized and existing
under the General Corporation Law of the State of Ohio and that its power as a
corporation has never been and is not now suspended.
3.02. AUTHORITY TO BUY. Buyer has full power and authority to both execute
and perform this Agreement.
ARTICLE 4. OPERATION OF BUSINESS
4.01. SELLER TO CONTINUE BUSINESS. Seller shall continue to manage the
Assets in the normal course until the Closing. Any and all risk of loss or
damages to the Assets during such period from any and all causes shall be the
risk of the Seller.
4.02. PRORATIONS OF COSTS. All expenses paid and incurred related to this
transaction shall be paid by the party incurring the expense. The Parties
anticipate no proration of expenses such as pre-paid expenses or property taxes,
nor
do the Parties anticipate that sales or use tax will apply to this transaction.
4.03. ALLOCATION OF THE PURCHASE PRICE. The Parties agree that the Purchase
Price of the Assets shall be allocated for all purposes in accordance with the
allocation schedule to be reasonably agreed upon by the Parties. The Parties
agree to comply with any applicable Internal Revenue Service laws and
regulations regarding price allocation.
ARTICLE 5. CONDITIONS TO BUYER'S PERFORMANCE
Absent a waiver in writing, all obligations of the Buyer under this
Agreement are subject to satisfaction of the following conditions on or before
the Closing Date:
5.01. PERFORMANCE BY SELLER. Seller shall have performed, satisfied and
complied with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by them, or any of them, on or before
the Closing Date.
5.02. REPRESENTATIONS AND WARRANTIES TRUE AS OF THE CLOSING DATE. Except
as otherwise permitted by this Agreement, all representations and warranties by
Seller in this Agreement shall be true on and as of the Closing Date as though
made at that time.
5.03. THIRD PARTY CONSENTS. All consents and approvals required to be
given by third parties shall have been obtained by Seller and Buyer shall have
been furnished with appropriate evidence reasonably satisfactory to it and its
counsel of the granting of such consents and approvals.
5.04. ABSENCE OF LITIGATION. No action, suit, or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement, or to its consummation, shall have been
instituted or threatened on or before the Closing Date.
5.05. DELIVERIES BY SELLER. Seller shall have delivered to Buyer, at or
before the Closing, the following documents, all of which shall be in form and
substance reasonably acceptable to Buyer:
a. The instruments of transfer required by Section 1.05, including but not
limited to the bill of sale, a copy of which is attached hereto as Schedule
5.05.
b. Any and all documents necessary to transfer to Buyer the present
telephone numbers relating to the business operated with the Assets.
c. A resolution by Seller's Board of Directors authorizing the sale of the
Assets to Buyer.
ARTICLE 6. SELLER'S COVENANTS
6.01. COVENANT NOT TO COMPETE. Seller will execute, if requested by Buyer,
prior to the Closing a covenant not to compete in the form as set forth in
Schedule 6.01.
6.02. RELINQUISHMENT OF NAME. Immediately following the Closing, Seller
shall cause itself and all others who currently are using trade names, service
marks or other intellectual property rights related to the operation of the
Assets purchased and solely limited to the Assets, including but not limited to
"Christian Happenings" to relinquish the use of any names by all appropriate
acts and filings as may be required with various state and local authorities,
and to acknowledge that Seller and all other persons have no rights with respect
to the use and exploitation of such trade names.
ARTICLE 7. DEFAULT
7.01 DEFAULTS BY BUYER. Buyer shall be in default should any payment
identified in the Purchase Price not be paid within three business days of
written notice by Seller to Buyer of a failure to pay.
ARTICLE 8. INDEMNITY AGREEMENT
8.01. SELLER'S INDEMNITY. Except as otherwise expressly provided in this
Agreement or any attachment to this Agreement, Seller shall indemnify and hold
Buyer and the property of Buyer, including the Assets, free and harmless from
any and all claims, liability, loss, damage, or expense resulting from Seller's
ownership of the Assets, including any claim, liability, loss or damage arising
by reason of the injury to or death of any person or persons, or the damage of
any property, caused by Seller's negligent use of the Assets, or the condition
of the Assets when owned by Seller. Provided, however, Seller shall incur no
liability under this section until and unless the aggregate amount of any and
all claims, liability, loss, damage, or expense equals or exceeds $2,500.00
8.02. BUYER'S INDEMNITY. Except as otherwise provided in this Agreement or
any attachment to this Agreement, Buyer shall indemnify and hold Seller free and
harmless from any and all claims, liabilities, loss, damage, or expense
resulting from Buyer's acts or omissions to act after the Closing Date as they
relate to the Assets purchased pursuant to this Agreement and the negligent
operation of the Assets after Closing.
ARTICLE 9. TERMINATION DEFAULT REMEDIES
9.01. TERMINATION. If either Buyer or Seller materially defaults in the
due and timely performance of any of their warranties, covenants or agreements
or in the event of the failure of a party to satisfy or fulfill any of the
conditions in this Agreement, the non-defaulting party may on the Closing Date
give notice of termination. The notice shall specify the default or defaults
upon which the notice is based. The termination shall be effective five (5) days
after the Closing Date, unless the specified default or defaults have been cured
on or before the effective date of the termination.
9.02. DEFAULT; REMEDIES. Notwithstanding Section 9.01, in the event of a
default, the non-defaulting party may seek specific performance of this
Agreement against the defaulting party from a court of competent jurisdiction,
or alternatively, such non-defaulting party may seek damages from the defaulting
party.
9.03. LITIGATION COSTS. If any legal action or other proceeding is brought
for the enforcement of this Agreement or to remedy its breach, the prevailing
party in such action or proceeding shall be entitled to recover its actual
attorney's fees and costs incurred in the action or proceeding, in addition to
such other relief to which it may be entitled.
ARTICLE 10. MISCELLANEOUS
10.01. ENTIRE AGREEMENT. This instrument with its attachments constitutes
the entire agreement between Buyer and Seller respecting the Assets or the sale
of the Assets to Buyer by Seller, and any agreement or representation respecting
the Assets or their sale by Seller to Buyer not expressly set forth in this
instrument is null and void.
10.02. NOTICES. Any and all notices or other communications required or
permitted by this Agreement or by law to be served on or given to either party
hereto, Buyer or Seller, by the other party hereto shall be, unless otherwise
required by law, in writing and deemed duly served and given when personally
delivered to the party to whom directed or any of its officers or, in lieu of
such personal service, five (5) business days after such notice is deposited in
the United States mail, certified mail, return receipt requested, addressed to:
BUYER:
Edward J. Novak, Jr.
Christian Happenings Acquisition Corp., Ltd.
3428 Rome Corners Road
Galenia, Ohio 43021
SELLER:
Donald W. Sapaugh, Chairman/CEO
iExalt, Inc. and WordCross Enterprises, Inc.
12000 Aerospace Avenue
Suite 375
Houston, Texas 77034
10.03. ASSIGNMENT. Neither this Agreement nor any right or interest in it
may be assigned by either party to any other person or corporation without the
express written consent of the other party to this Agreement.
10.04. GOVERNING LAW AND VENUE. This Agreement shall be governed and all
rights and liabilities under it determined in accordance with the laws of the
State of Ohio. Venue for any dispute resolution or litigation shall be Franklin
County, Ohio.
10.05. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which shall
constitute but one Agreement.
10.06. EXPENSES. Each party shall pay all costs and expenses incurred by it
in negotiating and preparing this Agreement and in closing and carrying out the
transactions contemplated herein and hereby.
10.07. FURTHER ASSURANCES. The parties agree that at any time and from
time to time after the Closing Date, they will execute and deliver to any other
party such further instruments or documents as may be reasonably required to
give effect to the transactions contemplated hereunder.
10.08. ARBITRATION. Both parties agree to follow the Rules of Procedure
for Christian Conciliation of the Institute for Christian Conciliation (a
division of Peacemaker Ministries) for any and all disputes concerning or
arising out of this Agreement. Both parties agree that the Bible commands
parties to make every effort to resolve disputes with each other in private and
in obedience agree to proceed to legally binding arbitration before a mutually
agreed arbitrator. Both parties realize that arbitration will be the exclusive
remedy for potential disputes and may not later litigate these or any other
related matters in civil court. The parties agree that Peacemaker Ministries are
not required to provide the exclusive forum, yet any arbitrator determined, must
agree to utilize the Rules as defined above.
IN WITNESS WHEREOF, the parties hereto have set their hands on the date
first set forth above.
BUYER:
Christian Happenings Acquisition Corp., Ltd.
By: /s/ Edward J. Novak, Jr
--------------------------------------------------
Edward J. Novak, Jr its: President
------------------------------ -----------------
SELLER:
iExalt, Inc.
By: /s/ Donald W. Sapaugh
--------------------------------------------------
Donald W. Sapaugh, Chairman/CEO
WordCross Enterprises, Inc.
By: /s/ Donald W. Sapaugh
--------------------------------------------------
Donald W. Sapaugh, Chairman/CEO
SCHEDULE 1.01
DESCRIPTION OF THE ASSETS BEING SOLD
1. The urls and associated websites of ChristianHappenings.com
2. The "Christian Happenings" trade name
3. WordCross Enterprises, Inc.'s customer list
4. The "WordCross" trade name
5. All cash in any bank accounts in WordCross Enterprises, Inc.'s name
6. The telephone number presently used by Christian Happenings
7. Computer System (hardware and software) located at 6155 Huntley Road, Ste.
F, Columbus, Ohio.
8. Office equipment located at 6155 Huntley Road, Ste. F, Columbus, Ohio
9. Supplies, stationery, materials, furniture, fixtures, and furnishings
located at 6155 Huntley Road, Ste. F, Columbus, Ohio
10. Computer software, licenses and warranties, and all books, files, records,
journals, ledgers, disks, reels and all other written or electronic
depositories of business information relating Asset.
11. Goodwill and customer list.
12. Any and all assets of WordCross Enterprises, Inc., which shall be more
fully defined in the Balance Sheet attached hereto
SCHEDULE 2.03
BALANCE SHEET
See attached Balance Sheet dated July 31, 2002.
SCHEDULE 1.05
-------------
BILL OF SALE
iExalt, Inc., a Nevada Corporation, 12000 Aerospace Ave, Suite 375,
Houston, Texas 77034, and WordCross Enterprises, Inc., an Ohio Corporation,
12000 Aerospace Ave, Suite 375, Houston, Texas 77034, iExalt's wholly owned
subsidiary, (collectively the "Seller"), hereby conveys, sells and transfers to
Christian Happenings Acquisition Corp., Ltd., the following assets:
A. All items listed on SCHEDULE 1.01 to that certain Asset Purchase
-------------
Agreement between the Seller and Christian Happenings Acquisition
Corp., LTD., dated August 31, 2002 (the "Agreement").
B. Computer System (hardware and software) listed on SCHEDULED 1.01.
--------------
C. Office equipment listed on SCHEDULED 1.01.
---------------
D. Supplies, stationery, materials, furniture, fixtures, and
furnishings set forth in SCHEDULED 1.01 to the Agreement.
---------------
E. Computer software, licenses and warranties, and all books, files,
records, journals, ledgers, disks, reels and all other written or
electronic depositories of business information set forth in
SCHEDULED 1.01to the Agreement.
---------------
F. Goodwill and customer list.
G. The attached office inventory.
iExalt, Inc.
By: /s/Donald W. Sapaugh
------------------------------------------------
Donald W. Sapaugh, Chairman/CEO
WordCross Enterprises, Inc.
By: /s/Donald W. Sapaugh
------------------------------------------------
Donald W. Sapaugh, Chairman/CEO
SCHEDULE 6.01
NON-COMPETITION AGREEMENT
This NON-COMPETITION AGREEMENT (the "Agreement") dated as of August 31,
2002, by and among iExalt, Inc., a Nevada Corporation, 12000 Aerospace Ave.,
Suite 375, Houston, Texas 77034, and WordCross Enterprises, Inc., an Ohio
Corporation, 12000 Aerospace Ave, Suite 375, Houston, Texas 77034, a wholly
owned subsidiary of iExalt, (collectively the "Seller"), and Christian
Happenings Acquisition Corp., Ltd., an Ohio limited liability corporation, 3428
Rome Corners Road, Galena, Ohio 43021 ("CHAC").
WHEREAS, on or about August 31, 2002, the iExalt and CHAC entered into a
---------------------------------------------------------------------------
certain Asset Purchase Agreement (the "Asset Agreement"); and
------------------------------------------------------------------
WHEREAS, pursuant to the Asset Agreement the parties agreed to enter into
this Agreement.
NOW THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, the parties agree as follows.
1. TERM. The term of this Agreement shall be for a period of sixty
-----
(60) months to commence on August 31, 2002, and shall expire on August 31, 2007.
2. NON-COMPETE. During the term of this Agreement, iExalt agrees that
------------
within the geographic area comprised of the United States, it will not engage,
directly or indirectly, individually or as an agent, employee, officer,
director, shareholder (excluding being a shareholder of stock which represents
not more than 1% interest in a publicly held corporation), or in any other
capacity whatsoever, in the business that WordCross was engaged in as of August
31, 2002, namely the business known as "Christian Happenings".
iExalt agrees that if this provision is rendered invalid or ineffective by
an arbitrator(s), court, or other judicial body due to its scope or length, then
the parties shall request such arbitrator(s), court or other judicial body to
determine a scope and duration which is deemed acceptable in order to render
this provision effective.
3. ARBITRATION. Any controversy or claim arising out of or relating to
-----------
this Agreement, or the breach thereof, shall be settled exclusively by final and
binding arbitration administered by the American Arbitration Association in
Columbus, Ohio and judgment on the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof; except that the parties may
seek injunctive relief for the breach thereof in any court having proper
jurisdiction.
4. SEVERABILITY. If any of the covenants contained herein or any part
-------------
thereof are hereafter construed to be invalid or unenforceable, the remainder of
this Agreement and any application of the other provisions of this Agreement
shall not be affected thereby, but rather shall be enforced to the greatest
extent permitted by law.
5. ENTIRE AGREEMENT; CHOICE OF LAW. This Agreement contains the entire
--------------------------------
agreement of the parties relating to the subject matter hereof and supersedes
all prior agreements or understandings, written or oral, with respect to such
subject. The internal laws of the state of Ohio without reference to its choice
of law or conflicts of law provisions shall govern the validity, interpretation,
construction, performance, and enforcement of this Agreement.
6. MISCELLANEOUS. No provision of this Agreement may be modified,
-------------
waived, or discharged unless such modification, waiver, or discharge is agreed
to in a writing signed by the parties. No waiver by either party hereto at any
time of any breach by the other party hereto or of compliance with any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time. No agreements or representations, oral or
otherwise, expressed or implied, have been made
by either party with respect to the subject matter hereof that are not set forth
expressly in this Agreement.
In witness whereof, this Agreement has been executed by the parties hereto
in counterparts as of the date first written above.
Christian Happenings Acquisition Corp., Ltd.
By: /s/ Edward J. Novak, Jr.
---------------------------------------------
Edward J Novak, Jr. its: President
- -------------------------------- -----------
iExalt, Inc.
By: /s/Donald W. Sapaugh
--------------------------------------------
Donald W. Sapaugh, Chairman/CEO
WordCross Enterprises, Inc.
By: /s/Donald W. Sapaugh
--------------------------------------------
Donald W. Sapaugh, Chairman/CEO