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Item
1.01
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Entry
into a Material Definitive
Agreement
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On July
1, 2009, WQN, Inc. (the “Company”) entered into an asset purchase agreement (the
“Purchase Agreement”) with Blindspot Alert, Inc., a Nevada corporation
(“Blindspot”) pursuant to which Blindspot agreed to acquire all of the Company’s
intellectual property, products, services, assets and general intangibles
related to the software program “Websafety” (the “Assets”). As
consideration for acquiring these assets, Blindspot agreed to pay the Company
27,000,000 shares of Blindspot’s common stock. Based on the last bid
price for a share of Blindspot’s common stock on July 1, 2009, the value of the
27,000,000 share is $2,700,000. In May 2007 the Company acquire these
same assets for $700,000 (which was payable in shares of the Company’s common
stock).
On July
2, 2009, the Company and Blindspot closed on the transactions contemplated by
the Purchase Agreement.
A copy of
the Purchase Agreement is attached hereto as Exhibit 10.1. The
following is a summary of the material terms of each of the Purchase Agreement,
and is qualified in its entirety to reference to the Purchase Agreement attached
hereto.
Purchase
Agreement
Pursuant to the terms of the Purchase
Agreement, Blindspot acquire all of the Company’s right, title and interest in
the Assets. In consideration for the Assets Blindspot agreed that at
closing it would issue to the Company 27,000,000 shares of the Company’s
unregistered common stock (the “Shares”), representing approximately 45% of the
outstanding shares of common stock in Blindspot after consummation of the
transaction.
The transactions contemplated by the
Purchase Agreement were closed on July 2, 2009, and the closing of the
transactions were conditioned upon the approval of the board of directors of
Blindspot.
The Purchase Agreement contains
standard representations, warranties and covenants of both parties, including a
representation by the Company that all of its rights in the intellectual
property the Company is acquiring are valid and enforceable. The
Company has agreed that, for a period of three years after the closing of the
transactions contemplated by the Purchase Agreement, it will not compete with
the Company, or solicit or influence any employee, vendor or customer of the
Company. In addition, the Company has agreed that it will not, for a
period of two years, contact, for the purpose of soliciting the sale of any
product or service that competes with Blindspot, any individual, business,
corporation or other entity that has utilized or will utilize in the next three
years any of the intellectual property rights associated with the assets
Blindspot is acquiring under the Purchase Agreement.
Employment
Agreements
In connection with the transactions
contemplated by the Purchase Agreement, each of B. Michael Adler, the Company’s
Chief Executive Officer, and Russell Spiesser, the Company’s Chief Technology
Officer, entered into employment agreements with Blindspot.
Mr. Adler
entered into an employment agreement with Blindspot to serve as Blindspot’s
Chairman of the Board of Directors. Mr. Adler’s employment began on
July 2, 2009 and ends on December 31, 2010; provided, however, that such term
will be extended automatically for an additional calendar year unless either
party gives sixty days prior written notice. As consideration for
serving as Blindspot’s Chairman, Mr. Adler will receive 1,500,000 shares of
Blindspot’s common stock, 1,400,000 of which are subject to vesting based on
Blindspot reaching specific sales goals. In addition, upon Blindspot
achieving $1,000,000 in monthly sales from multilevel marketing sales Mr. Adler
will receive an annual salary of $240,000. Mr. Adler has not resigned
as Chief Executive Officer and director of the Company.
Mr. Spiesser entered into an employment
agreement with Blindspot to serve as Blindspot’s Chief Techology Officer, the
same position he has served for the Company since the Company acquired the
Assets in May 2007. Mr. Spiesser’s employment began on July 2, 2009
and ends on July 2, 2010; provided, however, that such term will automatically
be extended for an additional year on each anniversary unless either party gives
sixty days prior written notice. As consideration for serving as
Blindspot’s Chief Technology Officer, Mr. Spiesser will receive a monthly salary
of $7,000 and options to acquire 400,000 shares of Blindspot’s common stock at
an exercise price of $0.10 per share. One-fifth of the options will
vest on each anniversary of Mr. Spiesser’s employment date. Effective
as of July 2, 2009, Mr. Spiesser resigned as Chief Technology Officer of the
Company.
In addition to the employment
agreements mentioned above, effective July 2, 2009 Blindspot (i) appointed David
W. Sasnett, a director of the Company, as a director of Blindspot; and (ii)
hired John Williams, Chief Financial Officer of the Company, as the Treasurer
and Chief Financial Officer of Blindspot. Neither Mr. Sasnett nor Mr.
Williams have resigned from their positions with the Company.
About Blindspot Alert,
Inc.
Blindspot was incorporated on July 3,
2006 in the State of Nevada under the name “Promotions on Wheels Holdings,
Inc.” On December 12, 2008 they changed their name to “Blindspot
Alert, Inc.” Prior to the transactions contemplated by the Purchase
Agreement, Blindspot’s main shareholder was Texas Atlantic Capital Partners,
LLC, a company managed by E. Denton Jones who is also a director of Blindspot,
which owns 13,800,000 shares of Blindspot’s common stock. Mr. Jones
is a director of the Company and beneficially owns 335,000 shares of common
stock of the Company.
On June
30, 2008 Blindspot entered into a License Agreement with the Company pursuant to
which the Company granted Blindspot the right to market and sell the Company’s
WebSafety software products. A copy of this License Agreement is
attached hereto as Exhibit 10.2 for reference. In connection with the
consummation of the transactions contemplated by the Purchase Agreement, this
License Agreement has been terminated.
