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Title: |
Asset Purchase Agreement |
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Date: |
2000 |
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$55 |
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#1371137 |
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made effective the
6th day of June, 2000 by and between OnRadio.com, a California corporation
("OnRadio"), and GlobalMedia.com, a Nevada corporation ("Global").
BACKGROUND
OnRadio is the owner of contracts under which it provides streaming
media, web site hosting, maintenance, content delivery, and e-commerce
services to terrestrial radio stations (the "Customers"). Global desires to
acquire certain of the contracts and OnRadio is willing to sell such
contracts on the terms and subject to the conditions set forth in this
Agreement. Therefore, the parties agree as follows:
AGREEMENT
SECTION 1. DEFINED TERMS.
1.1 DEFINITIONS. In addition to the terms defined elsewhere in
this Agreement, the following terms, when used herein, shall have the
following meanings:
(a) "ADDITIONAL CONSIDERATION" shall have the meaning set forth in
Section 2.4.
(b) "AGREEMENT" means this Asset Purchase Agreement, including the
schedules and exhibits.
(c) "ASSETS" shall mean, collectively, the Web Site Assets and the
Streaming Media Assets.
(d) "BEST EFFORTS" means the efforts that a prudent Person desirous
of achieving a result would use in similar circumstances to achieve
that result as expeditiously as possible; PROVIDED, HOWEVER, that an
obligation to use Best Efforts under this Agreement does not require
the Person subject to that obligation to take actions that would
result in a materially adverse change in the benefits to such Person
under this Agreement or that would violate any Law or court order
applicable to such Person.
(e) "BREAKUP SHARES" shall have the meaning set forth in Section
2.3(a)(iii).
(f) "BUSINESS DAY" shall mean a day, other than Saturday or
Sunday, on which banks in California are open to the public for the
transaction of their normal banking business.
(g) "CLOSING" AND "CLOSING DATE" means, where the context so
provides, "Initial Closing" and "Initial Closing Date", "Intermediate
Closing(s) and "Intermediate Closing(s) Dates", or "Final Closing" and
"Final Closing Date."
<PAGE>
(h) "CLOSING SHARE PRICE" shall mean the average closing sales price
of the Common Stock on the Nasdaq Stock Market or other stock market
if applicable for the 20 trading days prior to the Initial Closing,
not to exceed $11.00 per share nor be below $5.00 per share.
(i) "COMMON STOCK" means the common stock, par value $0.0001 per
share, of Global.
(j) "CONTRACTS" shall mean, collectively, the Web Site Contracts and
the Streaming Media Contracts.
(k) "CUME" means the cumulative audience statistic for a radio
station as published by Arbitron.
(l) "CUSTOMER CUME" means, where the context so requires, the
agreed-upon CUME for a Customer or the aggregate CUME for all
Customers, in each case as set forth in Schedule 2.1(a)(i) and
2.1(a)(ii). Customer CUME does not include CUME of Sales Prospects.
(m) "CUSTOMER CUME ATTRITION" means, for the relevant period, a
decline in Customer CUME (measured by the Customer CUME for the
relevant customer as set forth in Schedule 2.1 (a)) resulting from
Customer Terminations. Customer CUME Attrition shall be measured by
subtracting the Customer CUME set forth in Schedule 2.1 (a)(i) or
Schedule 2.1 (a)(ii) for each Customer that is the subject of a
Customer Termination.
(n) "CUSTOMER TERMINATION" means (i) the termination of any Contract
by a Customer during the Transition Period, provided that the Customer
does not enter into a new contractual relationship with respect to the
delivery of one or more Global Services prior to the end of the
Transition Period, or (ii) the failure of a Customer to enter into a
new contractual relationship with Global with respect to the delivery
of one or more of Global Services prior to the earlier of (A) the
expiration of a Contract including any extension term contemplated
therein, or (B) the end of the Transition Period.
(o) "CUSTOMERS" means the terrestrial radio customers of OnRadio who
are parties to the Contracts.
(p) "DAMAGES" means any and all costs, losses, damages, amounts paid
in settlement, liabilities, demands, claims, suits, actions,
judgments, causes of action, assessments or expenses, including
interest, penalties, fines and reasonable attorney's fees incident
thereto, incurred in connection with any claim for indemnification
arising out of this Agreement
(q) "DISCLOSURE DOCUMENTS" shall have the meaning set forth in
Section 4.5.
(r) "EQUIPMENT LEASE" shall have the meaning set forth in Section
5.6.
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(s) "ESCROW AGENT" shall have the meaning set forth in the Escrow
Agreement.
(t) "ESCROW AGREEMENT" means the Amended and Restated Holding
Agreement and Instructions to Escrow Agent dated as of May 8, 2000,
and amended June 6, 2000 by and among the Parties and the Escrow
Agent.
(u) "ESCROW FUNDS" shall have the meaning set forth in the Escrow
Agreement.
(v) "FINAL CLOSING" AND "FINAL CLOSING DATE" shall have the
respective meanings set forth in Section 7.6.
(w) "FINAL CLOSING SHARES" shall have the meaning set forth in
Section 2.3(c).
(x) "GLOBAL MEDIA PLAYER" shall mean Global's HTML based streaming
media player with embedded RealPlayer codec.
(y) "GLOBAL SERVICES" means internet-related services, including but
not limited to the streaming media, web site hosting, maintenance,
content delivery, and e-commerce services offered by Global to its
customers in the ordinary course of its business.
(z) "GOVERNMENTAL AUTHORITY" means any nation or government, foreign
or domestic, any state or other political subdivision thereof, and any
agency or other entity exercising executive, legislative, judicial,
regulatory or administrative functions of government, including,
without limitation, all taxing authorities and all authorities having
regulatory oversight of any aspect of OnRadio's Terrestrial Radio
Business.
(aa) "INITIAL CLOSING" and "INITIAL CLOSING DATE" shall have the
respective meanings set forth in Section 7.1.
(bb) "INTERMEDIATE CLOSING(S)" AND "INTERMEDIATE CLOSING DATE(S)"
shall have the respective meanings set forth in Section 7.4.
(cc) "INTERMEDIATE CLOSING(S) SHARES" shall have the meaning set forth
in Section 2.3(b).
(dd) "INTERMEDIATE CLOSING CUTOFF DATE" shall have the meaning set
forth in Section 7.4.
(ee) "INVESTOR RIGHTS AGREEMENT" shall have the meaning set forth in
Section 5.4
(ff) "LAW" means any statute, rule, common law, ordinance, regulation,
order, writ, judgment, injunction, decree, determination, or award
enacted or promulgated by a Governmental Authority.
(gg) "LOSS" means any demand, obligation, liability, claim, loss,
cost,
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expense, tax, lawsuit, arbitration or other legal action, judgment or
damage, liquidated or unliquidated, accrued or contingent, incurred or
suffered, including without limitation any interest, penalties, costs
and reasonable legal fees and expenses in connection with the
incurrence of any Loss or in defending against any Loss.
(hh) "ONRADIO TERRESTRIAL RADIO SERVICES" means the streaming media,
website hosting, maintenance, content delivery, and e-commerce and
other services as set forth in the Contracts.
(ii) "ONRADIO'S TERRESTRIAL RADIO BUSINESS" means the business carried
on by OnRadio of providing the OnRadio Terrestrial Radio Services
under the Contracts to the Customers.
(jj) "PARTIES" means OnRadio and Global.
(kk) "PERSON" means an individual, corporation, partnership, limited
liability company, unincorporated association, trust, joint venture or
other organization or entity, including a Governmental Authority.
(ll) "RELATED CONTRACTS" means certain third party contracts as set
forth in Schedule 3.17 under which OnRadio is providing certain
OnRadio Terrestrial Radio Services to Customers as of the date of this
Agreement.
(mm) "SALES PROSPECTS" shall mean, collectively, the large market
radio station identified in Section 2.4(b), the Streaming Services
Sales Prospects and the Web Services Sales Prospects.
(nn) "SECURITIES LAWS" means the Securities Act of 1933, as amended,
and the securities laws of any state solely to the extent applicable.
(oo) "SHARES" means the shares of Common Stock issued to OnRadio
pursuant to the Escrow Agreement or Section 2.3 or 2.4 below.
(pp) "SOFTWARE LICENSE" shall have the meaning set forth in Section
5.5.
(qq) "STREAMING MEDIA ASSETS" shall have the meaning set forth in
Section 2.1 (a)(ii)
(rr) "STREAMING MEDIA CONTRACTS" means the contracts listed in
Schedule 2.1 (a)(ii).
(ss) "STREAMING MEDIA CONTRACTS CUSTOMERS" means those Customers that
are parties to the Streaming Media Contracts. Streaming Media
Contracts Customers shall not include Customers whose Streaming Media
Contracts have not been renewed or which have been terminated.
(tt) "STREAMING CUSTOMER TRANSITION PROCESS" shall mean, with respect
to a
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particular Streaming Media Contract Customer, (i) installation by or
on behalf of Global of a private frame relay line for the Streaming
Media Contract Customer, (ii) delivery to the Streaming Media Contract
Customer and set-up of an encoder box, and (iii) creation by Global of
a player for the Streaming Media Contract Customer.
(uu) "STREAMING SERVICES SALES PROSPECTS" shall have the meaning set
forth in Section 2.4(a).
(vv) "SUPPLEMENTAL DOCUMENTS" means the instruments, certificates and
other documents referred to herein which shall be executed pursuant to
or in connection with this Agreement, including, without limitation,
the Transition Agreement, the Investor Rights Agreement, the Software
License, and the Equipment Lease.
(ww) "TAX" or "TAXES" means any income, gross receipts, excise,
business and occupation, franchise, real and personal property, sales
and use, withholding, social security, unemployment, disability, and
other taxes or governmental fees or charges or other assessments
(whether imposed directly or through withholding), including any
interest or penalties that may become payable in respect thereof,
imposed by any Governmental Authority.
(xx) "THREATENED" means a claim, proceeding, dispute, action, or other
matter where any demand or statement has been made (orally or in
writing) or any notice has been given (orally or in writing), or if
any other event has occurred or any other circumstances exist, that
would lead a prudent Person to conclude that such a claim, proceeding,
dispute, action, or other matter is likely to be asserted, commenced,
taken, or otherwise pursued in the future.
(yy) "TRANSITION PERIOD" means the period commencing on the Initial
Closing Date and ending on the one year anniversary thereof.
(zz) "TRANSITION AGREEMENT" shall have the meaning set forth in
Section 5.3.
(aaa) "WEB SERVICES SALES PROSPECTS" shall have the meaning set forth
in Section 2.4(c).
(bbb) "WEB SITE ASSETS" shall have the meaning set forth in Section
2.1 (a).
(ccc) "WEB SITE CONTRACTS" means the web site hosting and other
contracts listed in Schedule 2.1 (a)(i).
1.2 ACCOUNTING TERMS; MONETARY TERMS. Any term that is used in the
context of describing or referring to an accounting concept and that is not
specifically defined in this Agreement shall be construed in accordance with
United States Generally Accepted Accounting Principles. All sums of money
referred to herein are expressed in United States Dollars.
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<PAGE>
1.3 MEANING OF "KNOWLEDGE." For all purposes of this Agreement, any
reference to the existence or absence of facts which is indicated to be based on
a Party's knowledge, is intended to signify that no information has come to the
attention of any current officer or director of such Party that would give such
Person constructive or actual knowledge of the existence or absence of such
facts. For the purposes of this Agreement, a Person shall have constructive
"knowledge" of a fact, event, condition or circumstance when she or he has
knowledge that would lead a reasonable Person to inquire as to the existence or
absence of such fact, event, condition or circumstance.
1.4 DISCLOSURE SCHEDULES AND EXHIBITS. Schedules delivered by OnRadio
to Global in connection with the execution and delivery of this Agreement or
after the execution of this Agreement (the "Disclosure Schedules") contain
certain information and data required to be disclosed by this Agreement. The
Disclosure Schedules identify the information and data disclosed with reference
to the sections of this Agreement and shall be attached to and form a part of
this Agreement. Exhibits attached to this Agreement contain examples of
documents that are substantially similar to the Supplemental Documents.
SECTION 2. ASSETS PURCHASED; LIABILITIES ASSUMED; CONTINGENT PAYMENTS;
CUSTOMER RETENTION HOLDBACK
2.1 PURCHASE AND SALE OF ASSETS.
(a) On the terms and subject to the conditions set forth in this
Agreement, OnRadio shall sell, assign, transfer, convey and deliver to Global,
and Global shall purchase, acquire and accept from OnRadio, all of the following
assets, properties and rights of OnRadio (collectively, the "Web Site Assets"):
(i) All Web Site Contracts;
(ii) All of OnRadio's rights under the Web Site Contracts,
including without limitation the right to receive fees payable by the
Customers under the Web Site Contracts;
(iii) Copies of the invoices and correspondence related to
the Web Site Contracts; summaries of payments, accounts receivables
for the Web Site Contracts only;
(iv) All rights and claims (known or unknown, matured or
unmatured, accrued or contingent) in favor of OnRadio in respect of
the Web Site Contracts.
(b) On the terms and subject to the conditions set forth in this
Agreement, OnRadio shall sell, assign, transfer, convey and deliver to Global,
and Global shall purchase, acquire and accept from OnRadio, all of the following
assets, properties and rights of OnRadio (collectively, the "Streaming Media
Assets"):
(i) All Streaming Media Contracts;
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<PAGE>
(ii) All of OnRadio's rights under the Streaming Media
Contracts, including without limitation the right to receive fees
payable by the Customers under the Streaming Media Contracts;
(iii) Copies of the invoices and correspondence related to
the Streaming Media Contracts; summaries of payments, accounts
receivables for the Streaming Media Contracts only;
(iv) All rights and claims (known or unknown, matured or
unmatured, accrued or contingent) in favor of OnRadio in respect of
the Streaming Media Contracts.
2.2 ASSUMPTION OF LIABILITIES. Contemporaneously with the purchase of
the Web Site Contracts, OnRadio shall assign and Global shall assume each
liability and obligation of OnRadio under the Web Site Contracts arising or to
be performed after the Initial Closing ("Assumed Web Site Contract Liability").
Contemporaneously with the purchase of the Streaming Media Contracts, OnRadio
shall assign and Global shall assume each liability and obligation of OnRadio
under the Streaming Media Contracts arising or to be performed with respect to
each Streaming Media Contract assigned in connection with an Intermediate
Closing, and with respect to all the Streaming Media Contracts assigned in
connection with the Final Closing ("Assumed Streaming Media Contract
Liability"). Global is not assuming, and shall not be deemed to have assumed,
any liabilities of OnRadio other than those described in this paragraph,
including any liability or obligation of OnRadio (except as set forth in this
paragraph) whether accrued or fixed, absolute or contingent, known or unknown,
or determined or determinable, and whether incurred prior to, on, or after the
Closing ("Retained Liability"). Nothing herein shall be construed to relieve
OnRadio of any obligation under the Transition Agreement.
2.3 PURCHASE PRICE FOR WEB SITE ASSETS; PAYMENT. The aggregate
purchase price for the Web Site Assets and Streaming Media Assets shall be
$9,000,000 ($2,250,000 of which shall be subject to the Holdback Provision set
forth in Section 2.7 below) paid as follows:
(a) at the Initial Closing:
(i) $500,000 in cash;
(ii) a number of Shares determined by dividing $2,250,000
by the Closing Share Price; and
(iii) the stock certificate registered in OnRadio's name
representing 47,619 shares of Common Stock with the agreed value of
$250,000 ("Breakup Shares"), which was delivered to OnRadio pursuant
to the terms of the amended and restated letter of intent between the
Parties dated May 5, 2000;
(b) at each Intermediate Closing, a number of Shares determined
in the manner set forth in Section 7.4 below for the Streaming Media Contracts
being transferred and assigned in such Intermediate Closing; and
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(c) at the Final Closing, a number of Shares determined by
dividing $3,750,000 by the Closing Share Price (the "Final Closing Shares"),
less the total number of shares issued and delivered to OnRadio in any prior
Intermediate Closing(s) under 2.3 (b).
2.4 CONTINGENT PAYMENTS. OnRadio shall be entitled to up to an
additional $3,000,000 ("Additional Consideration"), payable in Shares based upon
the Closing Sales Price, on the following terms and conditions:
(a) OnRadio shall transition all on-going radio station
streaming sales leads and prospects ("Streaming Services Sales Prospects"),
all of which are identified on the attached Schedule 2.4, to Global.
(b) OnRadio shall introduce Global to the large market radio
station listed in Schedule 2.4; and
(c) OnRadio shall transition all on-going radio station web
services sales prospects ("Web Services Sales Prospects"), all of which are
identified on the attached Schedule 2.4, to Global.
To that end, within thirty (30) days of Initial Closing, OnRadio shall assist in
the transition of these opportunities through joint sales or executive level
calls with Global representatives at each Sales Prospect. The Parties agree that
the aggregate CUME for the above three opportunities (the "Aggregate Sales
Prospect CUME") shall be the sum of the CUME for each Sales Prospect set forth
in Schedule 2.4. If Global enters into a contract for the provision of Global
Services with a Sales Prospect within six (6) months of Initial Closing, OnRadio
shall be entitled to a portion of the Additional Consideration determined by
multiplying $3,000,000 by a ratio, the numerator of which is the CUME for the
Sales Prospect set forth on Schedule 2.4 and the denominator of which is the
Aggregate Sales Prospects CUME as set forth in such schedule. A certificate for
that number of Shares (based upon the Closing Sales Price) representing the
portion of the Additional Consideration to which OnRadio is entitled shall be
delivered to OnRadio within thirty (30) days of the execution of each such
contract.
2.5 REGISTRATION RIGHTS. All Shares issued to OnRadio under this
Agreement, including Shares issued pursuant to Sections 2.3, 2.4, 2.7 and 9.3,
or to be delivered pursuant to Section 7, shall be "Registrable Securities" as
defined in the Investor Rights Agreement.
2.6 FURTHER DOCUMENTS OR NECESSARY ACTION. OnRadio and Global,
respectively, shall take all action that is reasonably necessary to effectuate
the transactions contemplated under this Agreement. On or after the Initial
Closing Date, if any further action is reasonably necessary to carry out the
purposes of this Agreement and to vest Global with full title to the Web Site
Assets, OnRadio and Global shall take all reasonably necessary actions. On or
after each Intermediate Closing Date and on or after the Final Closing Date, if
any further action is reasonably necessary to carry out the purposes of this
Agreement and to vest Global with full title to the Streaming Media Assets
transferred and assigned on such Intermediate Closing Date or Final Closing
Date, as applicable, OnRadio and Global shall take all reasonably necessary
actions. Each party shall bear its own costs and expenses in connection with any
such
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further actions.
2.7 CUSTOMER RETENTION HOLDBACK. OnRadio acknowledges that Global is
entering into this Agreement based in part upon certain Customer retention
assumptions. In particular, Global has assumed that the monthly Customer CUME
loss will not exceed 1.5% per month during the Transition Period ("Assumed
Customer CUME Attrition"). The Parties have therefore agreed to an adjustment of
the Purchase Price in the event that, at the end of the Transition Period,
Customer CUME Attrition exceeds the cumulative Assumed Customer CUME Attrition.
For these purposes, the Parties agree that Global shall retain $2,250,000 of the
aggregate Purchase Price in the form of Shares, based upon the Closing Share
Price, (as a holdback (the "Holdback Shares"). At the Initial Closing, a
certificate evidencing the Holdback Shares shall be issued in the name of
OnRadio but deposited into Escrow, and OnRadio will deliver to the Escrow Agent
an assignment separate from certificate duly executed by OnRadio with respect to
the Holdback Shares. If on the one year anniversary of the Initial Closing (the
"Anniversary"), the aggregate annualized Customer CUME Attrition is no more than
18%, all of the Holdback Shares shall be paid over and distributed to OnRadio.
If on the Anniversary, the aggregate annualized Customer CUME Attrition is more
than 18%, all of the Holdback Shares shall be retained by Global and cancelled.
The Parties agree that the same CUME statistics on Schedules 2.1(a)(i) and (ii)
shall be used as the basis to measure Customer CUME Attrition. Global
acknowledges and agrees that its retention and cancellation of the Holdback
Shares shall be Global's exclusive remedy in the event that Customer CUME
Attrition exceeds the Assumed Customer CUME Attrition.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER. OnRadio hereby
represents and warrants to Global that, except as disclosed on any Disclosure
Schedule, the following statements are true and correct on the date of this
Agreement (unless some other date is specified as of which the statement is
made) and will be true and correct on the Initial Closing Date as though made on
such date:
3.1 ORGANIZATION. OnRadio is a corporation duly organized, validly
existing and in good standing under the laws of the State of California. OnRadio
is duly qualified or licensed as a foreign corporation and is in good standing
in each jurisdiction where the nature of OnRadio's Terrestrial Radio Business or
the ownership of the Assets or performance of the Contracts requires such
qualification or license.
3.2 POWER AND AUTHORITY. OnRadio has all requisite corporate power
and authority to enter into, execute, deliver and perform this Agreement and the
Supplemental Documents to which it is party.
3.3 AUTHORIZATION; ENFORCEABILITY. OnRadio's board of directors has
approved the transactions contemplated by this Agreement and the Supplemental
Documents, and on or before the Initial Closing Date OnRadio will have taken or
caused to have been taken all action (including the obtaining of any approval of
shareholders required by law or by OnRadio's articles of incorporation or
bylaws) necessary for the authorization, execution, delivery and performance of
this Agreement and the Supplemental Documents. This Agreement has been duly
executed and
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delivered by OnRadio. As of the Initial Closing Date, each of the Supplemental
Documents to which OnRadio is a party will have been duly executed and delivered
by OnRadio. Assuming the due authorization, execution and delivery by Global,
this Agreement constitutes a valid and binding obligation of OnRadio enforceable
against OnRadio in accordance with its terms except to the extent that
enforceability may be limited by bankruptcy, reorganization, insolvency or other
laws affecting the enforcement of creditors' rights generally or the
availability of equitable remedies subject to the discretion of the court. Upon
execution of the Supplemental Documents by Global and OnRadio, the Supplemental
Documents to which OnRadio is a party will be the valid and binding obligations
of OnRadio enforceable against OnRadio in accordance with their respective terms
except to the extent that enforceability may be limited by bankruptcy,
reorganization, insolvency or other laws affecting the enforcement of creditors'
rights generally or the availability of equitable remedies subject to the
discretion of the court.
3.4 ABSENCE OF CERTAIN CONFLICTS. Neither the execution and delivery
of this Agreement and the Supplemental Documents to which OnRadio is a party,
nor the consummation of any of the transactions contemplated by this Agreement
and the Supplemental Documents, will (i) conflict with or result in a breach of
any provision of the Articles of Incorporation or Bylaws of OnRadio; (ii)
require the payment or the incurring of any obligation on the part of OnRadio,
or result in a loss of rights or default (or give rise to any right of
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