Exhibit 10.1
ASSET PURCHASE AGREEMENT
BETWEEN
STAR NUMBER, INC.
(the "Vendor")
AND
TELEPLUS WIRELESS, CORP.
(the "Purchaser")
December 29, 2005
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of December 29, 2005.
BETWEEN:
STAR NUMBER, INC., a corporation incorporated under the laws of the State
of Delaware
(the "Vendor")
- and -
TELEPLUS WIRELESS, CORP., a corporation incorporated under the laws of the
State of Nevada
(the "Purchaser")
WHEREAS the Vendor carries sells pre-paid and post-paid wireless
telecommunications services under the name "Liberty Wireless";
AND WHEREAS the Vendor desires to sell and the Purchaser desires to purchase
certain of the assets of the Vendor upon and subject to the terms and conditions
hereinafter set forth;
NOW THEREFORE, in consideration of the respective premises, covenants,
agreements, representations, warranties and indemnities of the Parties herein
contained, and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged by the Parties), the Parties hereby
agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement, unless something in the subject matter or context is
inconsistent therewith:
"Adjustment Amount" has the meaning set out in Section 3.3.
"Affiliate" means, with respect to any person, any other person that directly or
indirectly controls, is controlled by, or is under common control with that
other person. For the purposes of this definition, a person "controls" another
person if that person directly or indirectly possesses the power to direct or
cause the direction of the management and policies of that other person, whether
through ownership of securities, by contract or otherwise, and "controlled by"
and "under common control with" have similar meanings.
"Agreement" means this agreement, including its recitals and schedules, as
amended from time to time in accordance with the provisions hereof.
2
"Applicable Law" means: (i) any applicable domestic or foreign law including any
statute, subordinate legislation or treaty; and (ii) any applicable guideline,
directive, rule, standard, requirement, policy, order, judgment, injunction,
award or decree of a Governmental Authority having the force of law.
"Assumed Contracts" means all of the contracts, agreements, licenses, permits,
consents or approvals which are purchased, assigned, transferred, licensed or
assumed by or to the Purchaser hereunder, as described in Schedule 2.1.
"Assumed Liabilities" has the meaning set out in Section 4.1.
"Audited Financial Statements" has the meaning set out in Section 7.5.
"Business Day" means a day other than a Saturday, Sunday or statutory holiday in
the State of Delaware.
"Capital Assets" means long-term assets, owned for personal or investment
purposes, that are not bought or sold in the normal course of business,
including fixed assets such as land, buildings, equipment, furniture, and
fixtures.
"Claims" means all losses, damages, expenses, liabilities (whether accrued,
actual, contingent, latent or otherwise), claims and demands of whatever nature
or kind including all legal fees and costs on a solicitor and client basis.
"Closing" means the completion of the transaction of purchase and sale
contemplated in this Agreement.
"Closing Balance Sheet" has the meaning set out in Section 7.8.
"Closing Date" means December 29, 2005 or such other date as may be agreed to in
writing between the Parties.
"Code" means the Internal Revenue Code of 1986, as amended, together with the
rules and regulations promulgated thereunder.
"Effective Time" means 11:59 p.m. (EST) on December 31, 2005.
"Encumbrances" means mortgages, liens, pledges, charges, security interests,
restrictions, claims, encumbrances, rights to use or acquire, ownership
interests, actions, or registrations against title of any suits, proceedings,
judgements, awards, assessments and reassessments or demands of any nature
whatsoever.
"Environmental Law" means any Applicable Law relating to the environment
including those pertaining to: (i) reporting, licensing, permitting,
investigating, remediating and cleaning up in connection with any presence or
Release, or the threat of the same, of Hazardous Substances, and (ii) the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, handling and the life of Hazardous Substances, including those
pertaining to occupational health and safety.
"Excluded Assets" has the meaning set out in Section 2.2.
"Financial Statements" has the meaning set out in subsection 6.1(g).
"GAAP" or "generally accepted accounting principles" means, at any time, United
States generally accepted accounting principles.
3
"Governmental Authority" means any domestic or foreign legislative, executive,
judicial or administrative body or person having or purporting to have
jurisdiction in the relevant circumstances.
"Hazardous Substance" means any substance or material that is prohibited,
controlled or regulated by any Governmental Authority pursuant to Environmental
Laws including pollutants, contaminants, dangerous goods or substances, toxic or
hazardous substances or materials, wastes (including solid non-hazardous wastes
and subject wastes), petroleum and its derivatives and by products and other
hydrocarbons, all as defined in or pursuant to any Environmental Law.
"Indemnified Party" has the meaning set out in subsection 10.3(a).
"Indemnifying Party" has the meaning set out in subsection 10.3(a).
"Intellectual Property" means intellectual property of whatever nature and kind
including all domestic and foreign trade-marks, business names, trade names,
domain names, trading styles, patents, trade secrets, Software, industrial
designs and copyrights, whether registered or unregistered, and all applications
for registration thereof, and inventions, formulae, recipes, product
formulations, processes and processing methods, technology and techniques,
know-how and manuals.
"Licensed Intellectual Property" means all Intellectual Property not owned by
the Vendor but licensed to Vendor by the owner of such Intellectual Property and
used in connection with the Purchased Assets, including the right to use the
Intellectual Property listed in Schedule 6.1(w).
"Owned Intellectual Property" means all Intellectual Property owned by the
Vendor and belonging to or used in the Purchased Assets, including the
Intellectual Property listed in Schedule 6.1(w).
"Parties" means, collectively, the parties to this Agreement and "Party" means
any one of them;
"Permits" means all permits, consents, waivers, licences, certificates,
approvals, authorizations, registrations, franchises, rights, privileges and
exemptions, or any item with a similar effect, issued or granted by any person.
"Permitted Encumbrances" means (i) Encumbrances for taxes, assessments or
governmental charges or levies on property not yet due and delinquent; (ii)
Encumbrances for taxes, assessments and governmental charges due and being
contested in good faith and diligently by appropriate proceedings (and for the
payment of which adequate provision has been made); (iii) undetermined or
inchoate Encumbrances incidental to current construction and current operations
and statutory Encumbrances of any nature whatsoever claimed or held by any
Governmental Authority that have not at the time been filed or registered
against the title to the assets affected thereby or served upon either Vendor
pursuant to law or that relate to obligations not due or delinquent; (iv)
assignments of insurance provided to landlords (or their mortgagees) pursuant to
the terms of any lease, and rights reserved in any lease for rent or for
compliance with the terms of such lease; and (v) security given in the ordinary
course of the Purchased Assets to any public utility or Governmental Authority
in connection with the Purchased Assets, other than security for borrowed money.
"Pre-Paid Deposits" has the meaning set out in subsection 2.1(d).
"Purchase Price" has the meaning set out in Section 3.1.
"Purchased Assets" has the meaning set out in Section 2.1.
4
"Release" means any release or discharge of any Hazardous Substance including
any discharge, spray, injection, inoculation, abandonment, deposit, spillage,
leakage, seepage, pouring, emission, emptying, throwing, dumping, placing,
exhausting, escape, xxxxx, migration, dispersal, dispensing or disposal.
"Software" means all software relating to the Purchased Assets, including all
versions thereof, and all related documentation, manuals, source code and object
code, program files, data files, computer related data, field and data
definitions and relationships, data definition specifications, data models,
program and system logic, interfaces, program modules, routines, sub-routines,
algorithms, program architecture, design concepts, system designs, program
structure, sequence and organization, screen displays and report layouts, and
all other material related to such software.
"Sprint Agreement" means that Private Label PCS Services Agrement dated November
17, 2005 by and between Sprint Spectrum LP and the Vendor.
"Sprint Letter of Credit" means that certain Letter of Credit dated November 10,
2005 by and between Sprint Spectrum LP and Inphonic, Inc.
"Target Number" has the meaning set out in subsection 3.3(c).
"Time of Closing" means 2:00 p.m. (Chicago Time) on the Closing Date or such
other time as the Closing may occur.
"Third Party" has the meaning set out in subsection 10.4(c).
"Third Party Claim" has the meaning set out in Section 10.3(b).
"Vendor's Premises" has the meaning set out in Section 7.5.
1.2 Headings
The division of this Agreement into Articles and Sections and the insertion of a
table of contents and headings are for convenience of reference only and do not
affect the construction or interpretation of this Agreement. The terms "hereof",
"hereunder" and similar expressions refer to this Agreement and not to any
particular Article, Section or other portion hereof. Unless something in the
subject matter or context is inconsistent therewith, references herein to
Articles, Sections and Schedules are to Articles and Sections of and Schedules
to this Agreement.
1.3 Extended Meanings
In this Agreement words importing the singular number only include the plural
and vice versa, words importing any gender include all genders and words
importing persons include individuals, partnerships, associations, trusts,
unincorporated organizations and corporations. The term "including" means
"including without limiting the generality of the foregoing".
1.4 Statutory References
In this Agreement, unless something in the subject matter or context is
inconsistent therewith or unless otherwise herein provided, a reference to any
statute is to that statute as now enacted or as the same may from time to time
be amended, re-enacted or replaced and includes any regulations made thereunder.
5
1.5 Accounting Principles
Wherever in this Agreement reference is made to a calculation to be made or an
action to be taken in accordance with generally accepted accounting principles,
or GAAP, such reference will be deemed to be to the generally accepted
accounting principles from time to time approved by the Financial Accounting
Standards Board, or any successor institute, applicable as at the date on which
such calculation or action is made or taken or required to be made or taken.
1.6 Currency
Unless otherwise indicated, all dollar amounts in this Agreement are expressed
in U.S. funds.
1.7 Schedules
The following are the schedules annexed hereto and incorporated by reference
herein and deemed to be part of this Agreement:
Schedule 2.1 Purchased Assets
Schedule 6.1(g) Financial Statements
Schedule 6.1(h) Profit and Loss Statements
Schedule 6.1(n) Permitted Encumbrances
Schedule 6.1(q) Guarantees, Indemnifications, Sureties or
Similar Obligations
Schedule 6.1(w) Intellectual Property
Schedule 6.1(bb) License and Maintenance Agreements for Third party
Software
Schedule 6.1(dd) Taxes and Other Matters
Schedule 6.1(gg) Notifications, Consents and Approvals
Schedule 6.2(d) Waivers to be Obtained by Purchaser
ARTICLE 2
PURCHASE AND SALE OF ASSETS
2.1 Assets to be Purchased and Sold
Upon and subject to the terms and conditions hereof, the Vendor agrees to sell,
assign and transfer to the Purchaser and the Purchaser agrees to purchase from
the Vendor, as of and with effect from the Effective Time, all of the right,
title, benefit and interest of the Vendor in and to the assets listed below
(collectively, the "Purchased Assets"):
(a) subject to Section 2.3, all right, title and interest of the Vendor
in, to and under and the full benefit of all the Assumed Contracts,
as set forth in Schedule 2.1;
(b) unfilled orders received by the Vendor in connection with the
Purchased Assets, as set forth in Schedule 2.1;
6
(c) forward commitments to the Vendor for supplies or materials entered
into in the usual and ordinary course of business, including third
party deposits, whether or not there are any written contracts with
respect thereto, as set forth in Schedule 2.1;
(d) pre-paid deposits paid by customers that the Vendor has collected in
advance that are still on reserve as of the Effective Time for
service beyond the Effective Time (the "Pre-Paid Deposits"), as set
out in Schedule 2.1;
(e) accounts receivable for charges invoiced to customers of Vendor, but
not yet collected that cover service beyond the Effective Time as
well as all contracts with customers, as set out in Schedule 2.1;
(f) the corporate name, domain names, logo and all trade names
associated with the business related to the Purchased Assets, as
more particularly set out in Schedule 2.1;
(g) the records of sales, customer lists and supplier lists of or used
in connection with the Purchased Assets, as more particularly set
out in Schedule 2.1, as well as any related artwork used in
connection with the business related to the Purchased Assets;
(h) the "Executive Dashboard" as well as the market reports, market
studies, market research and marketing plans in connection with the
business related to the Purchased Assets, as more particularly set
out in Schedule 2.1; and
(i) the active stock, inactive new stock, recovery stock and salvage
stock, as set out in Schedule 2.1.
2.2 Excluded Assets
The Purchased Assets shall be limited to the assets set forth in Schedule 2.1
and shall not include any other property or assets of the Vendor (the "Excluded
Assets").
2.3 Assignment of Contracts
Nothing in this Agreement shall be construed as an attempt to assign any Assumed
Contract which, as a matter of law, is not assignable without the consent of the
other party or parties thereto, unless such consent shall have been given, or
any claim or demand thereunder as to which all the remedies for the enforcement
thereof enjoyed by the Vendor would not, as a matter of law, pass to the
Purchaser as an incident of the transfers to be made under this Agreement.
Notwithstanding the foregoing, in order that the full value of any Assumed
Contract may be realized for the benefit of the Purchaser, the Vendor will, at
the request and expense and under the direction of the Purchaser in the name of
the Vendor or otherwise as the Purchaser shall specify, take all such action and
do or cause to be done all such things as shall, in the opinion of the
Purchaser, acting reasonably, be necessary or proper in order that the
obligations of the Vendor thereunder may be performed in such manner that the
value of the rights under the Assumed Contract shall be preserved and shall
enure to the benefit of the Purchaser and that the collection of monies due and
payable to the Purchaser in and under the Assumed Contract shall be received by
the Purchaser and promptly pay over to the Purchaser all monies collected by or
paid to the Vendor in respect of the Assumed Contract. Subject to the foregoing,
the Vendor and the Purchaser shall use all reasonable efforts to obtain all
consents of all requisite parties to the assignment by the Vendor to the
Purchaser of any Assumed Contract which is necessary. The Vendor and the
Purchaser will cooperate with one another in obtaining such consents but, in the
event any party to any Assumed Contract will not agree or consent to the
assignment thereof from the Vendor to the Purchaser, the Vendor, at the request
of the Purchaser, will carry out and comply with the terms and provisions of any
of such Assumed Contract as agent for the Purchaser at the Purchaser's cost and
for the Purchaser's benefit.
7
ARTICLE 3
PURCHASE PRICE
3.1 Purchase Price
The aggregate purchase price payable by the Purchaser to the Vendor for the
Purchased Assets (the "Purchase Price") shall be satisfied by the Purchaser
paying the Vendor the amount of US$1,900,000 as follows:
(a) US$1,400,000 in cash on the Closing Date; and
(b) US$500,000 to be paid to the Vendor in four (4) equal successive
quarterly cash instalments of US$125,000 each, subject to adjustment
in accordance with Section 3.3, the first such instalment payable 90
days from the Closing Date, which payment obligation shall be
evidenced by a promissory note secured by liens on the Purchased
Assets, in form and substance satisfactory to the Parties.
3.2 Allocation of Purchase Price
The Vendor and the Purchaser agree to allocate the Purchase Price among the
Purchased Assets in accordance with their fair market values as may be mutually
agreed, which may include the values set forth on the Closing Balance Sheet, as
well as to provide for a reasonable allocation to the assignment of the Sprint
Agreement, the customer lists and any other items as determined by the Purchaser
and, as to the remaining balance, to allocate it to goodwill.
3.3 Adjustment to Purchase Price
The parties agree that:
(a) the aggregate amount of all Pre-Paid Deposits received prior to the
Effective Time for services with respect to the Purchased Assets
that have not been provided as of the Effective Time shall be
deducted from the Purchase Price and be subtracted from the amount
payable by the Purchaser on the Closing Date.
(b) the number of Customers (as defined in this subsection) to be
acquired by the Purchaser in connection with the acquisition of the
Purchased Assets shall not be less than 22,000 Customers (the
"Target Number"). "Customers" is defined for purposes of this
subsection as active customers in respect of the Purchased Assets at
the Time of Closing that are (A) with respect to pre-paid customers
either: (i) less than fifteen (15) days in arrears in payments due
to the Vendor at the Time of Closing; or (ii) are more than fifteen
(15) days in arrears but the outstanding balance owing from such
Customer is less than 50% of the total monthly account of such
Customer or (B) with respect to post-paid customers either: (i) less
than thirty (30) days in arrears in payments due to the Vendor at
the Time of Closing; or (ii) are more than thirty (30) days in
arrears but the outstanding balance owing from such Customer is less
than 50% of the total monthly account of such Customer. In the event
the number of Customers acquired at the Effective Time is less than
the Target Number, the Purchase Price shall be reduced by US$95 per
Customer short of the Target Number.
8
3.4 Accounts Receivable
The Parties agree that accounts receivable received by the Purchaser within 60
days of the Effective Time for services with respect to the Purchased Assets
provided prior to the Effective Time shall be for and on behalf of the Vendor
and shall be remitted promptly thereto. All such amounts received more than 60
days after the Effective Time shall belong to the Purchaser.
3.5 Sales and Transfer Taxes
The Purchaser shall be liable for and shall pay all federal, state and
provincial sales taxes (including any retail sales taxes) and all other taxes or
other like charges of any jurisdiction properly payable in connection with the
transfer of the Purchased Assets by the Vendor to the Purchaser.
ARTICLE 4
ASSUMPTION OF LIABILITIES
4.1 No Liabilities
Except as otherwise set out in this Agreement, the Purchaser shall not assume,
shall have no obligation or responsibility with respect to, and shall be
indemnified and saved harmless, by the Vendor, of, from and against, any
liabilities or obligations, contingent or otherwise, of the Vendor related to
any liabilities or obligations of the Vendor arising prior to the Effective
Time.
4.2 Bulk Sales
The Parties waive compliance with any bulk sales laws of any jurisdiction
applicable in respect of the transaction of purchase and sale contemplated by
this Agreement. The Vendor shall indemnify and hold harmless the Purchaser from
any liabilities, including any costs or expenses of the Purchaser relating
thereto arising due to the failure of the Parties to comply with applicable bulk
sales laws in respect of the purchase and sale of the Purchased Assets.
4.3 Sales Taxes
Subject to Section 3.5 and Article 10, the Vendor shall indemnify and hold
harmless the Purchaser from any liabilities, including any costs or expenses of
the Purchaser relating thereto, arising due to the failure of the Vendor to pay
all requisite taxes payable prior to Closing under the laws of any jurisdictions
in which the business related to the Purchased Assets is carried on or in which
any of the Purchased Assets are located.
ARTICLE 5
EMPLOYEES
5.1 Employee Liability
9
Nothing in this Agreement shall be construed so as to transfer any of the
employees of the Vendor to the Purchaser, so as to transfer any of the
obligations and liabilities of the Vendor with respect to said employees to the
Purchaser or so as to obligate the Purchaser to employ after the Time of Closing
any employee of the Vendor. The Vendor shall indemnify and hold harmless the
Purchaser from any liabilities, including any costs or expenses of the Purchaser
relating thereto, regarding said employees.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 Vendor's Representations and Warranties
The Vendor represents and warrants to the Purchaser that as of the date hereof
and as of the Effective Time, except as set forth in Schedule 6.1:
Corporate
(a) The Vendor is a corporation duly incorporated, organized and
subsisting under the laws of the State of Delaware with the
corporate power to own its assets and to carry on its business and
has made all necessary filings under all applicable corporate,
securities and taxation laws or any other laws to which the Vendor
is subject.
(b) The Vendor has the power, authority and right to enter into and
deliver this Agreement and to transfer the legal and beneficial
title and ownership of the Purchased Assets to the Purchaser free
and clear of all liens, charges, encumbrances and any other rights
of others.
(c) This Agreement has been duly authorized by all necessary corporate
action and delivered and constitutes a valid and legally binding
obligation of the Vendor, enforceable against the Vendor in
accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization and other laws of general application
limiting the enforcement of creditors' rights generally and to the
fact that specific performance is an equitable remedy available only
in the discretion of the court.
(d) There is no contract, option or any other right of another binding
upon or which at any time in the future may become binding upon the
Vendor to sell, transfer, assign, pledge, charge, mortgage or in any
other way dispose of or encumber any of the Purchased Assets other
than pursuant to the provisions of this Agreement or pursuant to
purchase orders accepted by the Vendor in the usual and ordinary
course of the Purchased Assets.
(e) Neither the entering into nor the delivery of this Agreement nor the
completion of the transactions contemplated hereby by the Vendor
will result in the violation of: (i) any of the provisions of the
organizational documents or by-laws of the Vendor; (ii) any material
agreement or other instrument to which the Vendor is a party or by
which the Vendor is bound; or (iii) any Applicable Law.
Financial
(f) The books and records of the Vendor relating to the Purchased Assets
are true and correct and all material financial transactions of the
Vendor relating to the Purchased Assets have been accurately
recorded in such books and records and, to the extent possible, such
books and records have been prepared in accordance with generally
accepted accounting principles consistently applied.
10
(g) The audited financial statements of InPhonic, Inc., the parent
company of the Vendor (the "Parent"), for the fiscal year ended
December 31, 2004, and the unaudited financial statements for the
Parent for the three (3) quarters ended September 30, 2005 of the
fiscal year 2005 (the "Financial Statements"), a copy of each of
which is attached hereto as Schedule 6.1(g): (i) are in accordance
with the books and accounts of the Parent as at the date thereof;
(ii) are true and correct and present fairly the financial position
of the Parent as at the date thereof; (iii) have been prepared in
accordance with generally accepted accounting principles
consistently applied, and (iv) present fairly all of the assets and
liabilities of the Parent as at the date thereof including all
contingent liabilities of the Parent as at the date thereof.
(h) The unaudited and unreviewed profit and loss statements for the
Vendor's business carried out under the name "Liberty" for 2003,
2004 and for 2005 (up until the end of November), a copy of each of
which is attached hereto as Schedule 6.1(h): (i) are true and
correct and present fairly the revenues, cost of goods sold,
operating expenses and earnings for the business carried out under
the name "Liberty" and (ii) have been prepared in accordance with
generally accepted accounting principles consistently applied.
(i) Since the date of the Financial Statements, the Vendor has carried
on its business in its usual and ordinary course and the Vendor has
not entered into any transaction out of the usual and ordinary
course with respect to the Purchased Assets. Since the date of the
Financial Statements there has been no change in the affairs,
business, prospects, operations or condition of the Purchased
Assets, financial or otherwise, whether arising as a result of any
legislative or regulatory change, revocation of any licence or right
to do business, fire, explosion, accident, casualty, labour dispute,
flood, drought, riot, storm, condemnation, act of God, public force
or otherwise, except changes occurring in the usual and ordinary
course of business that have not materially and adversely affected
the affairs, business, prospects, operations or condition of the
Purchased Assets, financial or otherwise.
(j) No current or former director, officer, shareholder or employee of
the Vendor or any person not dealing at arm's length (within the
meaning of the Code) with any such person or with the Vendor is
indebted to the Vendor.
Purchased Assets
(k) All the records of sales, customer lists and supplier lists of or
used in connection with the business related to the Purchased Assets
are true and complete and have been disclosed to the Purchaser by
the Vendor and Schedule 2.1 makes complete reference thereto.
(l) All the market reports, market studies, market research and
marketing plans used in connection with the business related to the
Purchased Assets are true and complete and have been disclosed to
the Purchaser by the Vendor and Schedule 2.1 makes complete
reference thereto.
11
(m) The Vendor is the owner of the Purchased Assets with good title to
all the other Purchased Assets, free and clear of all liens,
charges, encumbrances and any other rights of others other than
Permitted Encumbrances.
(n) There are no Permitted Encumbrances on the Purchased Assets and no
facts of which the Vendor is aware which could give rise to
Permitted Encumbrances, except as disclosed in Schedule 2.1.
Contracts and Commitments
(o) The Vendor is not a party to any contract or commitment relating to
the Purchased Assets outside the usual and ordinary course of its
business and is not a party to any contract or commitment relating
to the Purchased Assets extending for a period of time longer than
12 months or involving expenditures by the Vendor in the aggregate
in excess of US$25,000.
(p) The Vendor is not in material default or breach of any contract or
commitment relating to the Purchased Assets and there exists no
condition, event or act that, with the giving of notice or lapse of
time or both, would constitute such a material default or breach,
and all such contracts and commitments are in good standing and in
full force and effect without amendment thereto and the Vendor is
entitled to all benefits thereunder.
(q) Except as set out in Schedule 6.1(q), the Vendor is not a party to
or bound by any guarantee, indemnification, surety or similar
obligation pertaining to the Purchased Assets.
(r) The Vendor does not have any subsidiaries or any agreements, options
or commitments to acquire any securities of any corporation or to
acquire or lease any real property or assets to be used in or in
connection with the Purchased Assets.
(s) There are no material outstanding orders, notices or similar
requirements relating to the business related to the Purchased
Assets or to the Purchased Assets issued by any Governmental
Authority and there are no matters under discussion with any
Governmental Authority relating to material orders, notices or
similar requirements.
Intellectual Property
(t) The Vendor has the exclusive right to use the Owned Intellectual
Property and has not granted licenses to others to use the Owned
Intellectual Property.
(u) The Vendor has the right to use and sublicense the Licensed
Intellectual Property.
(v) The Owned Intellectual Property is in good standing and has been
duly registered or applications to register the same have been filed
in all appropriate offices to preserve the rights therein and of the
Vendor thereto.
(w) The Intellectual Property listed on Schedule 6.1(w) includes all of
the Intellectual Property used in or required for the proper
carrying on of the Purchased Assets, including the Owned
Intellectual Property and the Licensed Intellectual Property, and
where such Intellectual Property has been registered or applications
to register have been made, the particulars are set forth in
Schedule 6.1(w).
12
(x) The Vendor is not a party to any contract or commitment to pay any
royalty, licence or other fee with respect to the use of the Owned
Intellectual Property or the Licensed Intellectual Property except
as set out in Schedule 6.1(w).
(y) No consents are required in order for the Licensed Intellectual
Property to be licensed or sub-licensed to any third party or for
the Owned Intellectual Property to be sold to the Purchaser under
this Agreement.
(z) To the Vendor's knowledge, neither the conduct of the Purchased
Assets nor the sale of the Purchased Assets under this Agreement
involves any infringement, misuse or misappropriation of any
Intellectual Property rights of third parties.
(aa) The Owned Intellectual Property and the Licensed Intellectual
Property are not invalid or unenforceable. To the Vendor's
knowledge, no infringement, misuse or misappropriation of the Owned
Intellectual Property has occurred.
(bb) Copies of all licence and maintenance agreements for third party
software programs have been made available by the Vendor to the
Purchaser (a list of which appears in Schedule 6.1(bb), except in
respect of programs that are shrinkwrapped software and that are
purchased off-the-shelf by the Vendor.
Environmental
(cc) The Vendor has not been convicted of an offence or been subjected to
any judgment, injunction or other proceeding or been fined or
otherwise sentenced for non-compliance with any Environmental Laws,
and it has not settled any prosecution or other proceeding short of
conviction in connection therewith, in relation to the Purchased
Assets.
Taxes and other Matter
(dd) Except as set forth on Schedule 6.1(dd):
(1) Vendor has duly and timely filed all required tax returns and
has paid all taxes required to be paid by it on or prior to the
Closing, and such tax returns correctly reflected the facts
regarding the income, business, operations and any other required
information. There are no agreements, waivers or other arrangements
providing for an extension of time with respect to the filing of any
tax returns or payment of any taxes; there are no investigations,
examinations, reassessments, claims, actions, suits or proceedings
threatened or pending against Vendor in respect of any taxes, nor
are there any matters under discussion with any federal, provincial,
state or local government or taxing authority, relating to any taxes
imposed, levied or assessed by any such government or authority.
(2) Vendor has withheld from payments made to employees, directors,
officers or shareholders all amounts which it is required to
withhold or deduct by law and has duly remitted such amounts within
the time and in the manner required by law.
(3) Vendor has filed all necessary tax returns in the states in
which it has conducted business.
13
(4) Vendor is not a party to nor has any obligations under any
tax-sharing, tax indemnity or tax allocation agreement or
arrangement. Vendor has no liability for the taxes of any person
(other than Vendor) under Section 1.1502-6 of the treasury
regulations under the Code (or any similar provisions of state,
local or foreign law) as the transferee or successor, by contract or
otherwise.
(5) There are no liens for taxes (other than for current taxes not
yet due and payable) upon any of Vendor's assets.
(6) As used herein, "tax or taxes" means all taxes (including
estimated taxes), assessments, reassessments, charges, levies and
all other imposts, together with all interest, penalties and fines
thereon or additions thereto, of whatever kind or nature, including
without limitation, income, sales, employment (including social
security and unemployment) and franchise, imposed, levied or
assessed by any federal, state, provincial or local government or
taxing authority, and including any transferee or secondary
liability in respect of any tax (whether imposed by law, contractual
agreement or otherwise); and "tax returns" means all federal, state
or local tax reports, returns, declarations of estimated tax or
other information required to be filed with respect to Vendor, its
income, properties and business.
General
(ee) There are no actions, suits or proceedings (whether or not
purportedly on behalf of the Vendor): (i) pending or threatened
against or adversely affecting, or which could materially adversely
affect, the Purchased Assets or the Purchased Assets; or (ii) before
or by any Governmental Authority.
(ff) The Vendor is using the Purchased Assets in material compliance with
all Applicable Laws in all jurisdictions in which the business
related to the Purchased Assets is carried on, is not in breach of
any such Applicable Laws and is duly licensed, registered or
qualified in all jurisdictions in which the Vendor carries on the
business related to the Purchased Assets to enable the business
related to the Purchased Assets to be carried on as now conducted
and its assets to be owned, leased and operated, and all such
licences, registrations and qualifications are valid and subsisting
and in good standing and none of the same contains any term,
provision, condition or limitation which has or may have a material
adverse effect on the operation of the Purchased Assets or which may
be affected by the completion of the transactions contemplated
hereby.
(gg) The Vendor has, and requires, no licences, permits, approvals,
registrations, consents or other authorizations to own and operate
the business related to the Purchased Assets as now conducted, and
Purchaser is not required to obtain any licenses, permits,
approvals, registrations, consents or other authorizations to enable
the Purchaser to own and operate the business related to the
Purchased Assets as now conducted after the Closing, except as set
forth in Schedule 6.1(gg).
(hh) There is no requirement for the Vendor to make any filing with, give
any notice to or to obtain any licence, permit, certificate,
registration, authorization, consent or approval of, and
Governmental Authority as a condition to the lawful consummation of
the transactions contemplated by this Agreement, except for any
filings, notifications, licenses, permits, certificates,
registrations, consents and approval described in Schedule 6.1(hh).
There is no requirement under any Assumed Contract to give any
notice to, or to obtain the consent or approval of, any party to
such Assumed Contract relating to the consummation of the
transactions contemplated by this Agreement, except for the
notifications, consents and approvals described in Schedule 6.1(hh).
14
(ii) To the Vendor's knowledge, all information that the Vendor has
provided to the Purchaser relating to the Purchased Assets is true
and correct in all material respects. No representation or warranty
or other statement made by the Vendor in this Agreement or any
schedule or exhibit delivered pursuant to this Agreement contains
any untrue statement of a material fact or omits to state a material
fact necessary to make any of them, in light of the circumstances in
which it was made, not misleading. Notwithstanding the foregoing,
the Purchaser acknowledges and agrees that the Vendor is making no
representation or warranty as to any projections or other
forward-looking information provided by the Vendor to the Purchaser.
(jj) The Vendor has the financial ability to complete the transactions
contemplated by this Agreement. Following the Closing, the Vendor
will be Solvent. As used in this paragraph, the term "Solvent" means
that (i) the present fair market value (or present fair salesable
value) of the assets of the Vendor is not less than the total amount
required to pay the liabilities of the Vendor on their total
existing debts and liabilities (including contingent liabilities)
(which liabilities are calculated for purposes of this
representation in the manner used in the preparation of the Parent's
consolidated financial statements) as they become absolute and
matured; (ii) the Vendor is able to realize upon its assets and pay
its debts and other liabilities, contingent obligations and
commitments as they mature and become due in the normal course of
business; and (iii) the Vendor is not incurring debts or liabilities
beyond its ability to pay as such debts and liabilities mature.
6.2 Purchaser's Representations and Warranties
The Purchaser represents and warrants to the Vendor that:
(a) The Purchaser is a corporation duly incorporated, organized and
subsisting under the laws of the State of Nevada.
(b) The Purchaser has good and sufficient power, authority and right to
enter into and deliver this Agreement and to complete the
transactions to be completed by the Purchaser contemplated
hereunder.
(c) This Agreement has been duly authorized by all necessary corporate
action and delivered and constitutes a valid and legally binding
obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization and other laws of general application
limiting the enforcement of creditors' rights generally and to the
fact that specific performance is an equitable remedy available only
in the discretion of the court.
(d) Neither the entering into nor the delivery of this Agreement nor the
completion of the transactions contemplated hereby by the Purchaser
will result in the violation of: (i) any of the provisions of the
organizational documents or by-laws of the Purchaser; (ii) any
agreement or other instrument to which the Purchaser is a party or
by which the Purchaser is bound; or (iii) any Applicable Law, except
as set forth in Schedule 6.2(d) and for which the Purchaser
undertakes to obtain a waiver within thirty (30) days of the Closing
Date.
15
(e) The Purchaser has the financial ability to complete the transactions
contemplated by this Agreement. Following the Closing, the Purchaser
will be Solvent. As used in this paragraph, the term "Solvent" means
that (i) the present fair market value (or present fair salesable
value) of the assets of the Purchaser is not less than the total
amount required to pay the liabilities of the Purchaser on their
total existing debts and liabilities (including contingent
liabilities) (which liabilities are calculated for purposes of this
representation in the manner used in the preparation of the
Purchaser's consolidated financial statements) as they become
absolute and matured; (ii) the Purchaser is able to realize upon its
assets and pay its debts and other liabilities, contingent
obligations and commitments as they mature and become due in the
normal course of business; and (iii) the Purchaser is not incurring
debts or liabilities beyond its ability to pay as such debts and
liabilities mature.
ARTICLE 7
COVENANTS OF THE VENDOR
7.1 Representations, Warranties and Conditions
The Vendor will ensure that the representations and warranties of the Vendor set
out in Section 6.1 are true and correct at the Time of Closing and that the
conditions of Closing for the benefit of the Purchaser set out in Section 12.1
have been performed or complied with by the Time of Closing.
7.2 Purchaser's Access to Books and Records
The Vendor covenants and agrees to retain all original accounting books and
records relating to the Purchased Assets (relating to the period on or prior to
the Closing Date) which are not delivered to the Purchaser upon Closing for a
period of six (6) years from the Closing Date or for such longer period as may
be required by Applicable Law. So long as any such books and records are
retained by the Vendor pursuant to this Agreement, the Purchaser shall have the
reasonable right to inspect and to make copies (at its own expense) of the same
at any time upon reasonable request during normal business hours and upon
reasonable notice for any proper purpose and without undue interference to the
business operations of the Vendor. The Vendor shall have the right to have its
representatives present during any such investigations.
7.3 Request for Consents
The Vendor will use its reasonable commercial efforts to obtain, prior the
Closing Date, all consents which are required under the Assumed Contracts set
forth in Schedules 2.1. Such consents shall be upon such terms as are acceptable
to the Purchaser, acting reasonably. The Purchaser will co-operate in obtaining
such consents. All other required consents shall be obtained by the Vendor by no
later than January 29, 2006
7.4 Audited Financial Statements
The Vendor shall cause to be prepared and delivered to the Purchaser, at the
cost and expense of the Vendor, annual financial statements of the Parent for
the two years ended December 31, 2005 (the "Financial Statements") promptly
following the filing of such Financial Statements with the U.S. Securities and
Exchange Commission.
16
7.5 Assistance by Vendor
In order that the Purchaser may, following the Closing, realize the full benefit
of the Assumed Contracts, the Vendor will, at the request and under the
direction of the Purchaser, as the Purchaser shall specify: (a) take all such
action and do or cause to be done all such things as shall, in the opinion of
the Purchaser acting reasonably, be necessary or proper, including providing the
Purchaser reasonable access to the Vendor's premises during normal business
hours located at 00000 Xxxxxxxxx xxxx., Xxxxx 000, Xxxxxx, Xxxxxxxx 00000
following the Purchaser's delivery of written notice two business days prior to
the date such access is requested (the "Vendor's Premises"), in order that the
obligations of the Purchaser thereunder may be performed in such manner that the
value of such Assumed Contracts shall be preserved and shall enure to the
benefit of the Purchaser, and that the collection of moneys due and payable to
the Purchaser in and under the Assumed Contracts shall be received by the
Purchaser; and (b) promptly pay over to the Purchaser any moneys collected after
the Effective Time by or paid to the Vendor in respect of every such Assumed
Contract.
7.6 Funds Collected by the Vendor
The Parties acknowledge that, subsequent to Closing, funds for hardware and
related accessories, subscriber funds and other funds related to subscriber
services may be collected by the Vendor which belong to the Purchaser. The
Vendor acknowledges that it collects such funds for and on behalf of the
Purchaser and undertakes to remit such funds to the Purchaser in accordance with
the terms set forth in a mutually acceptable transition services agreement.
7.7 Liberty on Parent Website
The Vendor shall cause the Parent to maintain the level and intensity of
visibility of all "Liberty" brands on its websites until the earlier of February
15, 2006 or until such time as the Parties have concluded a mutually acceptable
agreement with respect thereto. The Parties agree to negotiate in good faith for
the conclusion of such agreement.
7.8 Referrals
The Vendor shall, and shall cause the Parent to, continue to refer to the
Purchaser any customers or potential customers who do not meet the Vendor's or
the Parent's credit requirements until the earlier of February 15, 2006 or until
such time as the Parties have concluded a mutually acceptable lead referral
agreement with respect thereto. The Parties agree to negotiate in good faith for
the conclusion of such agreement.
7.9 Audit
Within sixty-five (65) days of the Closing Date, the Vendor shall deliver to the
Purchaser an audit of the business related to the Purchased Assets, which audit
shall include profit and loss statements for said business for the fiscal years
2004 and 2005 as well as a balance sheet of said business as at the Effective
Time (the "Closing Balance Sheet"). The Purchaser shall engage its auditors,
Xxxxx & Partners, or any other auditors, at the Purchaser's sole and entire
discretion, to complete such audit. The Parties hereto agree that they will each
pay for fifty percent (50%) of the audit.
7.10 Distributor Agreements
No later than five (5) Business Days from the Closing Date, the Vendor shall
deliver to the Purchaser, in electronic format where available, copies of all
distributor agreements and/or purchase orders in respect of the business related
to the Purchased Assets, as well as all other related agreements, documents and
information with respect thereto. Furthermore, the Vendor shall facilitate
introductions between the Purchaser, on the one hand, and the parties to the
aforementioned distributor agreements and/or purchase orders, on the other hand.
For the avoidance of doubt, such agreements and orders shall not be deemed to be
Purchased Assets.
17
7.11 Domain Registration Locations
No later than five (5) Business Days from the Closing Date, the Vendor shall
deliver to the Purchaser the domain registration locations of each of the
websites referred to in Schedule 2.1 as well as the expiry dates of such domain
registrations.
7.12 Hosting of Websites
The Vendor shall, or shall cause the Parent to, continue to host the websites
referred to in Schedule 2.1 at no cost to the Purchaser (i) for a period of six
(6) months after the Closing Date, and (ii) thereafter at a price to be
determined by the Parties, negotiating in good faith.
ARTICLE 8
COVENANTS OF THE PURCHASER
8.1 Representations, Warranties and Conditions
The Purchaser will ensure that the representations and warranties of the
Purchaser set out in Section 6.2 are true and correct at the Time of Closing and
that the conditions of Closing for the benefit of the Vendor set out in Section
12.2 have been performed or complied with by the Time of Closing.
ARTICLE 9
SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES
9.1 Survival of Vendor's Representations, Warranties and Covenants
(a) The representations and warranties of the Vendor set forth in
Section 6.1 will survive the completion of the sale and purchase of
the Purchased Assets herein provided for and, notwithstanding such
completion, will continue in full force and effect for the benefit
of the Purchaser for a period of 12 months from the Closing Date or
such earlier date as may be imposed by statute.
(b) The covenants of the Vendor set forth in this Agreement will survive
the completion of the sale and purchase of the Purchased Assets
herein provided for and, notwithstanding such completion, will
continue in full force and effect for the benefit of the Purchaser
in accordance with the terms thereof.
9.2 Survival of Purchaser's Representations, Warranties and Covenants
(a) The representations and warranties of the Purchaser set forth in
Section 6.2 will survive the completion of the sale and purchase of
the Purchased Assets herein provided for and, notwithstanding such
completion, will continue in full force and effect for the benefit
of the Vendor for a period of 12 months from the Closing Date or
such earlier date as may be imposed by statute.
18
(b) The covenants of the Purchaser set forth in this Agreement will
survive the completion of the sale and purchase of the Purchased
Assets herein provided for and, notwithstanding such completion,
will continue in full force and effect for the benefit of the Vendor
in accordance with the terms thereof.
ARTICLE 10
INDEMNIFICATION
10.1 Indemnification by Vendor
The Vendor hereby agrees to indemnify and hold the Purchaser harmless from and
against any claim, demand, action, cause of action, damage, loss (including lost
profits), costs, liability or expense (including legal fees) which may be made
or brought against the Purchaser or which the Purchaser may suffer or incur,
directly or indirectly, in respect of as a result of, or arising out of:
(a) any non-fulfillment of any agreement or covenant on the part of the
Vendor contained in this Agreement or any document or certificate
given pursuant to this agreement;
(b) any inaccuracy in or breach of any of the Vendor's representations
or warranties contained in this Agreement or any document or
certificate given pursuant to this Agreement;
(c) any non-compliance with the provisions of any bulk sales laws of any
jurisdiction applicable in respect of the transaction of purchase
and sale contemplated by this Agreement;
(d) any non-compliance or non-payment under the laws of any jurisdiction
in which the business related to the Purchased Assets is carried on
or in which any of the Purchased Assets are located; and
(e) any Claims against the Purchaser relating to any liabilities or
obligations of the Vendor other than in relation to the Assumed
Contracts, including any liabilities or obligations relating to the
Excluded Assets.
10.2 Indemnification by Purchaser
The Purchaser hereby agrees to indemnify and hold the Vendor harmless from and
against any claim, demand, action, cause of action, damage, loss (including lost
profits), cost, liability or expense (including legal fees) which may be made or
brought against the Vendor or which the Vendor may suffer or incur, in respect
of, or arising out of:
(a) any non-fulfillment of any agreement or covenant on the part of the
Purchaser contained in this Agreement or any document or certificate
given pursuant to this Agreement;
19
(b) any inaccuracy in or breach of any of the Purchaser's
representations or warranties contained in this Agreement or any
document or certificate given pursuant to this Agreement; and
(c) any retail sales tax, income tax or other tax in respect of the
Purchased Assets with respect to any period of time after the
Closing, including any retail sales tax with respect to the sale of
the Purchased Assets.
10.3 Procedure for Indemnification
(a) Following receipt from the Vendor or the Purchaser, as the case may
be (the "Indemnified Party"), of a written notice of a claim for
indemnification which has not arisen in respect of a Third Party
Claim (as defined in subsection 10.3(b) below), the party who is in
receipt of such notice (the "Indemnifying Party") shall have 30 days
to make such investigation of the claim as the Indemnifying Party
considers necessary or desirable. For the purpose of such
investigation, the Indemnified Party shall make available to the
Indemnifying Party the information relied upon by the Indemnified
Party to substantiate the claim. If the Indemnified Party and the
Indemnifying Party agree at or prior to the expiration of such 30
day period (or any mutually agreed upon extension thereof) to the
validity and amount of the claim, the Indemnifying Party shall
immediately pay to the Indemnified Party the full agreed upon amount
of the claim.
(b) The Indemnified Party shall notify the Indemnifying Party in writing
as soon as reasonably practicable after being informed in writing
that facts exist which may result in a claim originating from a
Person other than the Indemnified Party (a "Third Party Claim") and
in respect of which a right of indemnification given pursuant to
Sections 10.1 or 10.2 may apply. The Indemnifying Party shall have
the right to elect, by written notice delivered to the Indemnified
Party within 10 days of receipt by the Indemnifying Party of the
notice from the Indemnified Party in respect of the Third Party
Claim, at the sole expense of the Indemnifying Party, to participate
in or assume control of the negotiation, settlement or defense of
the Third Party Claim, provided that:
(i) such will be done at all times in a diligent and bona fide
matter;
(ii) the Indemnifying Party acknowledges in writing its obligation
to indemnify the Indemnified Party in accordance with the
terms contained in this Agreement in respect of that Third
Party Claim; and
(iii) the Indemnifying Party shall pay all reasonable out-of-pocket
expenses incurred by the Indemnified Party as a result of such
participation or assumption.
(c) If the Indemnifying Party elects to assume such control, the
Indemnified Party shall cooperate with the Indemnifying Party and
its counsel and shall have the right to participate in the
negotiation, settlement or defense of such Third Party Claim at its
own expense. If the Indemnifying Party does not so elect or, having
elected to assume such control, thereafter fails to proceed with the
settlement or defense of any such Third Party Claim in accordance
with paragraphs 10.3(b)(i) through 10.3(b)(iii), inclusively, the
Indemnified Party shall be entitled to assume such control. In such
case, the Indemnifying Party shall cooperate where necessary with
the Indemnified Party and its counsel in connection with such Third
Party Claim and the Indemnifying Party shall be bound by the results
obtained by the Indemnified Party with respect to such Third Party
Claim.
20
10.4 Additional Indemnification Rules and Procedures
The obligation of the Parties to indemnify each other pursuant to this Section
10.4 shall also be subject to the following:
(a) notwithstanding the threshold contained in subsection 10.4(b), an
Indemnified Party shall only be entitled to make a claim for
indemnification pursuant to Article 10 if written notice containing
reasonable particulars of such claim is delivered to the
Indemnifying Party within the time periods provided for in Section
10.3;
(b) no claim for indemnification may be made until the aggregate value
of all such claims, whether or not previously made by the
Indemnified Party, exceeds US$25,000. For greater certainty, such
threshold shall not apply to any adjustment of the Purchase Price
pursuant to any provision of this Agreement. The parties acknowledge
that this US$25,000 threshold is not a deductible and the
Indemnified Party shall be entitled to seek recovery of the amount
of all claims which would not have been defeated by the operation of
the survival periods provided in Sections 9.1 or 9.2, as the case
may be;
(c) if any Third Party Claim is of a nature such that the Indemnified
Party is required by applicable law to make a payment to any Person
(a "Third Party") with respect to such Third Party Claim before the
completion of settlement negotiations or related legal proceedings,
the Indemnified Party may make such payment and the Indemnifying
Party shall, forthwith after demand by the Indemnified Party,
reimburse the Indemnified Party for any such payment. If the amount
of any liability under the Third Party Claim in respect of which
such a payment was made, as finally determined, is less than the
amount which was paid by the Indemnifying Party to the Indemnified
Party, the Indemnified Party shall, forthwith after receipt of the
difference from the Third Party, pay such difference to the
Indemnifying Party;
(d) except in the circumstances contemplated by subection 10.4(c) above,
and whether or not the Indemnifying Party assumes control of the
negotiation, settlement or defense of any Third Party Claim, the
Indemnified Party shall not settle or compromise any Third Party
Claim except with the prior written consent of the Indemnifying
Party (which consent shall not be unreasonably withheld). A failure
by the Indemnifying Party to respond in writing to a written request
by the Indemnified Party for consent for a period of five (5)
business days or more shall be deemed a consent by the Indemnifying
Party to such request;
(e) the Indemnifying Party and the Indemnified Party shall provide each
other on an ongoing basis with all information which may be relevant
to the other's liability hereunder and shall supply copies of all
relevant documentation promptly as they become available;
(f) notwithstanding subection 10.4(d) if the Indemnified Party has
assumed control of the negotiation, settlement and defence of a
Third Party Claim, the Indemnifying Party shall not settle any Third
Party Claim or conduct any related legal or administrative
proceeding in a manner which would, in the opinion of the
Indemnified Party, acting reasonably, have a material adverse impact
on the Indemnified Party, unless the Indemnified Party fails to
respond in writing to a written request by the Indemnifying Party
for consent to the proposed action by the Indemnifying Party within
five (5) business days; and
21
(g) except with respect to Claims arising out of obligations under the
Sprint Agreement, tax liabilities, Product Liability and liabilities
caused by the fraud, gross negligence or willful misconduct of the
other Party, the maximum liability for either Party under this
Agreement shall not exceed the Purchase Price. For the purposes of
this paragraph 10.4(g), "Product Liability" means liability incurred
in connection with the sale or use of any products by Vendor or its
customers as a result of negligence, strict liability, breach of
warranty or similar consumer protection claims, including legal
liability for replacement or repair of such products other than in
the ordinary course of business.
10.5 Rights Cumulative
The rights or indemnification contained in this Article 10 are cumulative and
are in addition to every other right or remedy of the Parties contained in this
Agreement.
10.6 Right of Set-Off
To fund, in part or in whole, any claims made by the Purchaser under this
Article 10 against the Vendor, the Vendor agrees that the Purchaser shall be
entitled to set-off against amounts owing by it to the Vendor under Section 3.1,
provided that any such set-off shall be made in accordance with this Section
10.6. The Purchaser shall provide 5 days prior written notice of its intention
to claim set-off under this section, and such written notice shall include all
available particulars of the claim and a detailed calculation of the Purchaser's
estimate of amounts owing to it under this Article 10. The amount of the
proposed set-off shall represent a bona fide estimate of the quantum of damages
to which the Purchaser claims entitlement under this Article 10. Pending final
resolution of any disputed claim made by the Purchaser under this Section 10.6,
the Purchaser shall be entitled to withhold the amount of such claim from any
payment of due under Section 3.1. If the Purchaser and the Vendor are unable to
agree as to the appropriate quantum to be set off by the Purchaser, the matter
shall be settled in accordance with the provisions of Article 14.
ARTICLE 11
RISK OF LOSS
11.1 Damage or Destruction
The Purchased Assets shall be and remain at the risk of the Vendor up to and
including the Time of Closing. If, prior to the Effective Time, all or any part
of the Purchased Assets are destroyed or damaged or shall be appropriated,
expropriated or seized by governmental or other lawful authority, the Vendor
shall no later than 10 Business Days thereafter (but in any event prior to the
Closing Date), issue to the Purchaser a notice in writing (a "Damage Notice")
(a) describing such destruction, damage, appropriation, expropriation or
seizure, (b) indicating the estimated cost to repair or replace such damage or
property, and (c) indicating whether it is willing to repair or replace such
damage or property. The Purchaser shall have 5 Business Days following receipt
of the Damage Notice:
22
(a) to reduce the Purchase Price by an amount equal to the cost of
repair, or, if destroyed or damaged beyond repair, by an amount
equal to the replacement cost of the assets forming part of the
property or assets so damaged or destroyed and to complete the
purchase; or
(b) to complete the purchase without reduction of the Purchase Price, in
which event all proceeds of an insurance or compensation for
expropriation or seizure shall be payable to the Purchaser and any
right and claim of the Vendor to any such amounts not paid by the
Effective Time shall be assigned to the Purchaser; or
(c) if all or a substantial portion of the property or assets are so
destroyed or damaged, of terminating this Agreement and not
completing the purchase, in which case all obligations of the
Purchaser shall terminate forthwith upon the Purchaser giving notice
as required herein.
ARTICLE 12
CONDITIONS OF CLOSING
12.1 Conditions for the Benefit of the Purchaser
(a) The sale by the Vendor and the purchase by the Purchaser of the
Purchased Assets is subject to the following conditions, which are
for the exclusive benefit of the Purchaser and which are to be
performed or complied with at or prior to the Time of Closing:
(i) the representations and warranties of the Vendor set forth in
Section 6.1 will be true and correct in all material respects
at the Time of Closing with the same force and effect as if
made at and as of such time;
(ii) the Vendor will have performed or complied with all of the
terms, covenants and conditions of this Agreement to be
performed or complied with by the Vendor at or prior to the
Time of Closing;
(iii) the Purchaser will be furnished with such certificates or
other instruments (including instruments of conveyance with
respect to the Purchased Assets) of the Vendor or of officers
of the Vendor as the Purchaser or the Purchaser's counsel may
reasonably deem necessary in order to establish that the
terms, covenants and conditions contained in this Agreement
have been performed or complied with by the Vendor at or prior
to the Time of Closing have been performed or complied with
and that the representations and warranties of the Vendor
herein given are true and correct at the Time of Closing;
(iv) there will have been obtained from all appropriate federal,
state, provincial, municipal or other governmental or
administrative bodies such approvals or consents as are
required to permit the change of ownership of the Purchased
Assets contemplated hereby and to permit the business related
to the Purchased Assets to be carried on by the Purchaser as
now conducted;
(v) no action or proceeding in the United States will be pending
or threatened by any person, government, governmental
authority, regulatory body or agency to enjoin, restrict or
prohibit: (A) the sale and purchase of the Purchased Assets
contemplated hereby; or (B) the right of the Purchaser to
conduct the Purchased Assets;
23
(vi) no material damage to the Purchased Assets will have occurred
from the date hereof to the Time of Closing;
(vii) all necessary steps and proceedings will have been taken to
permit the Purchased Assets to be duly and regularly
transferred to and registered in the name of the Purchaser;
(viii) all consents or approvals from or notifications to any lessor
or other third person required under the terms the Assumed
Contracts with respect to the assignment thereof to the
Purchaser hereunder, or otherwise in connection with the
consummation of the transactions contemplated hereby, shall
have been duly obtained or given, as the case may be, on or
before the Time of Closing;
(ix) the Vendor shall have delivered to the Purchaser a
non-competition agreement having a term of three (3) years in
form and substance satisfactory to the Purchaser, acting
reasonably;
(x) the Vendor shall have successfully assigned and transferred to
the Purchaser all major agreements including, without
limitation, the Sprint Agreement. For greater certainty, the
successful assignment and transfer of any agreement shall
include a consent thereto by the co-contracting party in form
and substance satisfactory to the Purchaser, acting
reasonably;
(xi) the Vendor and the Purchaser shall have entered into a
preferred mobile virtual network enabler agreement with a term
of at least one (1) year in form and substance satisfactory to
the Purchaser;
(xii) the Vendor shall have delivered to the Purchaser a guarantee
by InPhonic, Inc. in favour of the Purchaser guaranteeing the
obligations of the Vendor under this Agreement, in form and
substance satisfactory to the Purchaser;
(xiii) the Vendor will have delivered to the Purchaser a favourable
opinion of the Vendor's counsel in form and substance
satisfactory to the Purchaser, as to the Vendor's corporate
existence, standing in its organizational jurisdiction, and
authority, as to due execution and delivery and as to
enforceability;
(xiv) the Vendor shall have delivered to the Purchaser a consent and
release by Comerica of its security on the Purchased Assets,
in form and substance satisfactory to the Purchaser;
(xv) the Vendor shall have delivered to the Purchaser assignment
agreements in registerable form in respect of the trade names
"Liberty Wireless", "Liberty Wireless For All" and "Viva
Liberty";
(xvi) the Vendor will furnish the Purchaser with evidence
satisfactory to it that the Vendor will file, following
Closing, articles of amendment to remove the names "Liberty
Wireless", "Liberty Wireless For All", "Viva Liberty" and any
names similar thereto as trade names and for any other use;
and
24
(xvii) the form and legality of all matters incidental to the sale
by the Vendor and the purchase by the Purchaser of the
Purchased Assets will be subject to the approval of the
Purchaser's counsel.
(d) In case any term or covenant of the Vendor or condition to be
performed or complied with for the benefit of the Purchaser at or
prior to the Time of Closing has not been performed or complied with
at or prior to the Time of Closing, the Purchaser, without limiting
any other right that the Purchaser has, may at its sole option
either: (i) rescind this Agreement by notice to the Vendor, and in
such event the Purchaser will be released from all obligations
hereunder; or (ii) waive compliance with any such term, covenant or
condition in whole or in part on such terms as may be agreed upon
without prejudice to any of its rights of rescission in the event of
non-performance of any other term, covenant or condition in whole or
in part; and, if the Purchaser rescinds this Agreement, the Vendor
will also be released from all obligations hereunder unless the
term, covenant or condition for which the Purchaser has rescinded
this Agreement was one that the Vendor had covenanted, pursuant to
Article 7, to ensure had been performed or complied with, in which
event the Vendor will be liable to the Purchaser for any Claims
incurred by the Purchaser directly or indirectly as a result of such
breach.
12.2 Conditions for the Benefit of the Vendor
(a) The sale by the Vendor and the purchase by the Purchaser of the
Purchased Assets is subject to the following conditions, which are
for the exclusive benefit of the Vendor and which are to be
performed or complied with at or prior to the Time of Closing:
(i) the representations and warranties of the Purchaser set forth
in Section 6.2 will be true and correct in all material
respects at the Time of Closing with the same force and effect
as if made at and as of such time;
(ii) the Purchaser will have performed or complied with all of the
terms, covenants and conditions of this Agreement to be
performed or complied with by the Purchaser at or prior to the
Time of Closing;
(iii) the Vendor will be furnished with such certificates or other
instruments of the Purchaser or of officers of the Purchaser
as the Vendor or the Vendor's counsel may reasonably think
necessary in order to establish that the terms, covenants and
conditions contained in this Agreement to have been performed
or complied with by the Purchaser at or prior to the Time of
Closing have been performed or complied with and that the
representations and warranties of the Purchaser herein given
are true and correct at the Time of Closing;
(iv) the Sprint Letter of Credit will be released and terminated;
(v) the Purchaser shall have delivered to the Vendor a promissory
note in the amount of US$500,000;
(vi) the Purchaser shall have delivered to the Vendor a security
agreement creating a security interest in the Purchased Assets
in favour of the Vendor and securing the Purchaser's
obligations under the aforementioned promissory note;
25
(vii) the Purchaser shall have delivered to the Vendor a guarantee
agreement by Teleplus Enterprises, Inc.. in favour of the
Vendor guaranteeing the obligations of the Purchaser under the
aforementioned promissory note;
(viii) the Purchaser will have delivered to the Vendor a favourable
opinion of the Purchaser's counsel in form and substance
satisfactory to the Vendor, only as to the Purchaser's
corporate existence, standing, and authority, as to due
execution and delivery and as to enforceability.
(b) In case any term or covenant of the Purchaser or condition to be
performed or complied with for the benefit of the Vendor at or prior
to the Time of Closing has not been performed or complied with at or
prior to the Time of Closing, the Vendor, without limiting any other
right that the Vendor has, may at its sole option either: (i)
rescind this Agreement by notice to the Purchaser, and in such event
the Vendor will be released from all obligations hereunder; or (ii)
waive compliance with any such term, covenant or condition in whole
or in part on such terms as may be agreed upon without prejudice to
any of its rights of rescission in the event of non-performance of
any other term, covenant or condition in whole or in part; and, if
the Vendor rescinds this Agreement, the Purchaser will also be
released from all obligations hereunder unless the term, covenant or
condition for which the Vendor has rescinded this Agreement was one
that the Purchaser had covenanted, pursuant to Article 8, to ensure
had been performed or complied with, in which event the Purchaser
will be liable to the Vendor for any Claims incurred by the Vendor
directly or indirectly as a result of such breach.
ARTICLE 13
CLOSING ARRANGEMENTS
13.1 Closing
The sale and purchase of the Purchased Assets will be completed at the Time of
Closing at the offices of Vendor.
13.2 Closing Procedure
At the Time of Closing, upon satisfaction of all the conditions set out in
Article 12 which have not been waived as provided therein:
(a) the Vendor shall deliver to the Purchaser: (i) all deeds,
conveyances, bills of sale, transfers, assignments, assurances,
consents and any other documents necessary or reasonably required to
effectively transfer the Purchased Assets to the Purchaser with good
and marketable title free and clear of all Encumbrances other than
Permitted Encumbrances, such documents to be in registrable form to
the extent registrable; and (ii) actual possession of the Purchased
Assets; and
(b) the Purchaser shall make the payment of the portion of the Purchase
Price payable on the Closing Date by wire transfer.
26
13.3 Examination of Records and Purchased Assets
(a) At the Time of Closing, the Vendor will forthwith make available to
the Purchaser and its authorized representatives all databases
recorded or stored by means of any device, including in electronic
form, title documents, abstracts of title, deeds, surveys, leases,
certificates of trade marks and copyrights, contracts and
commitments in its possession or under its control directly relating
to any of the Purchased Assets; and the Vendor will forthwith make
available to the Purchaser and its authorized representatives for
examination all books of account and accounting records directly
relating to the Purchased Assets and the Vendor will, if reasonably
requested, provide copies, at the cost of the Purchaser, of the
following records maintained in connection with the Purchased
Assets: financial statements, records of past sales, customer lists,
supplier lists, payroll records, inventory data, inventory master
records and accounts receivable data. The Vendor will give the
Purchaser and its authorized representatives every reasonable
opportunity to have access to and to inspect the Purchased Assets.
The exercise of any rights of access or inspection by or on behalf
of the Purchaser under this Section 13.3(a) will not affect or
mitigate the covenants, representations and warranties of the Vendor
hereunder which will continue in full force and effect.
(b) At the Time of Closing, the Vendor will deliver to the Purchaser all
of the documents referred to in subection 13.3(a). The Purchaser
will preserve the documents so delivered for a period of six (6)
years from the Closing Date, or for such other period as is required
by any applicable law, and will permit the Vendor and its authorized
representatives reasonable access thereto in connection with the
affairs of the Vendor, but the Purchaser will not be responsible or
liable to the Vendor for or as a result of any loss or destruction
of or damage to any such documents.
ARTICLE 14
DISPUTES
14.1 Best Endeavours to Settle Disputes
In the event of any dispute, claim, question or difference arising out of or
relating to this Agreement or any agreement executed pursuant to this Agreement
or any breach hereof, the parties hereto shall use their best endeavours to
settle such dispute, claim, question or difference. To this effect, they shall
consult and negotiate with each other, in good faith and understanding of their
mutual interests, to reach a just and equitable solution satisfactory to all
parties.
27
ARTICLE 15
GENERAL
15.1 Further Assurances
Each of the Vendor and the Purchaser will from time to time execute and deliver
all such further documents and instruments and do all acts and things as the
other party may, either before or after the Closing Date, reasonably require to
effectively carry out or better evidence or perfect the full intent and meaning
of this Agreement.
15.2 Time of the Essence
Time is of the essence of this Agreement.
15.3 Expenses, Fees and Commissions
Each of the Vendor and the Purchaser will pay its respective legal and
accounting costs and expenses incurred in connection with the preparation,
execution and delivery of this Agreement and all documents and instruments
executed pursuant hereto, and the completion of the transactions contemplated
hereby, and any other costs and expenses whatsoever and howsoever incurred and
will indemnify and save harmless the other from and against any Claim for any
broker's, finder's or placement fee or commission alleged to have been incurred
as a result of any action by it in connection with the transactions hereunder.
15.4 Public Announcements
Except as required by law, no public announcement or press release concerning
the sale and purchase of the Purchased Assets may be made by the Vendor or the
Purchaser without the prior consent and joint approval of the Vendor and the
Purchaser.
15.5 Benefit of the Agreement
This Agreement will enure to the benefit of and be binding upon the respective
heirs, executors, administrators, other legal representatives, successors and
permitted assigns of the parties hereto.
15.6 Entire Agreement
This Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and cancels and supersedes any prior
understandings and agreements between the parties hereto with respect thereto.
There are no representations, warranties, terms, conditions, undertakings or
collateral agreements, express, implied or statutory, between the parties other
than as expressly set forth in this Agreement.
15.7 Amendments and Waivers
No amendment to this Agreement will be valid or binding unless set forth in
writing and duly executed by both of the parties hereto. No waiver of any breach
of any provision of this Agreement will be effective or binding unless made in
writing and signed by the party purporting to give the same and, unless
otherwise provided, will be limited to the specific breach waived.
28
15.8 Assignment
This Agreement may not be assigned by the Vendor without the written consent of
the Purchaser but may be assigned by the Purchaser without the consent of the
Vendor to an Affiliate of the Purchaser, provided that such Affiliate enters
into a written agreement with the Vendor to be bound by the provisions of this
Agreement in all respects and to the same extent as the Purchaser is bound and
provided that the Purchaser will continue to be bound by all the obligations
hereunder as if such assignment had not occurred and perform such obligations to
the extent that such Affiliate fails to do so.
15.9 Notices
Any demand, notice or other communication to be given in connection with this
Agreement must be given in writing and will be given by personal delivery, by
registered mail or by electronic means of communication addressed to the
recipient as follows:
to the Purchaser:
Teleplus Wireless, Corp.
0000 XxxxxXxxxxx
Xxxxx 000
Xx-Xxxxxxx, Xxxxxx, X0X 0X0
Attention: Marius Silvasan, CEO
Fax No.: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxx LLP
000 X. Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Fax No.: (000) 000-0000
to the Vendor:
Star Number, Inc.
00000 Xxxxxxxxx Xxxx.
Xxxxx 000
Xxxxxx, XX 00000
Attwntion: Xxxxx X. Xxxxxxx, President MVNO
Fax No.: (000) 000-0000
with a copy to:
InPhonic, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, General Counsel
Fax No.: (000) 000-0000
29
or to such other address, individual or electronic communication number as may
be designated by notice given by either party to the other. Any demand, notice
or other communication given by personal delivery will be conclusively deemed to
have been given on the day of actual delivery thereof and, if given by
registered mail, on the 5th Business Day following the deposit thereof in the
mail and, if given by electronic communication, on the day of transmittal
thereof if given during the normal business hours of the recipient and on the
Business Day during which such normal business hours next occur if not given
during such hours on any day. If the party giving any demand, notice or other
communication knows or ought reasonably to know of any difficulties with the
postal system that might affect the delivery of mail, any such demand, notice or
other communication may not be mailed but must be given by personal delivery or
by electronic communication. 15.10 Remedies Cumulative
The rights and remedies of the Parties hereunder are cumulative and are in
addition to, and not in substitution for, any other rights and remedies
available at law or in equity or otherwise. No single or partial exercise by a
Party of any right or remedy precludes or otherwise affects the exercise of any
other right or remedy to which that Party may be entitled.
15.11 Governing Law
The internal laws of the State of Delaware, irrespective of its choice of law
principles, shall govern the validity of this Agreement, the construction of its
terms, and the interpretation and enforcement of the rights and duties of the
Parties hereto. All disputes arising out of this Agreement or the obligations of
the Parties hereunder, including disputes that may arise following termination
of this Agreement, shall be subject to the exclusive jurisdiction and venue of
the Delaware State courts of New Castle County, Delaware (or, if there is
federal jurisdiction, then the exclusive jurisdiction of the United States
District Court for the District of Delaware with venue thereof in the division
thereof in which New Castle County is located. EACH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY CONSENTS TO THE PERSONAL AND EXCLUSIVE JURISDICTION AND VENUE OF
SAID COURTS AND WAIVES TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT
OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND
AGREES NOT TO PLEAD OR CLAIM THE SAME.
15.12 Severability.
Whenever possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable law,
such provisions will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
30
15.13 Drafting.
The parties acknowledge and confirm that each of their respective attorneys have
participated jointly in the review and revision of this Agreement and that it
has not been written solely by counsel for one party. The parties hereto
therefore stipulate and agree that the rule of construction to the effect that
any ambiguities are to be or may be resolved against the drafting party shall
not be employed in the interpretation of this Agreement to favor any party
against another.
15.14 Reserved
15.15 Counterparts
This Agreement may be executed in any number of counterparts, each of which will
be deemed to be an original and all of which taken together will be deemed to
constitute one and the same instrument. The exchange of copies of this Agreement
and of signature pages by electronic mail or facsimile transmission shall
constitute effective execution and delivery of this Agreement as to the parties
and may be used in lieu of the original Agreement for all purposes. Signatures
of the parties transmitted by electronic mail or facsimile shall be deemed to be
their original signatures for all purposes.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date first
above written.
TELEPLUS WIRELESS, CORP.
By: /s/ Marius Silvasan
--------------------------------------- ---------------------------------------
Witness Name: Marius Silvasan
Title: Chief Executive Officer
I have the authority to bind the
Corporation
STAR NUMBER, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------- ---------------------------------------
Witness Name: Xxxxx X. Xxxxxxx
Title: President MVNO
I have the authority to bind the
Corporation
31
DISCLOSURE SCHEDULES
TO
ASSET PURCHASE AGREEMENT
BETWEEN
STAR NUMBER, INC.
(the "Vendor")
AND
TELEPLUS WIRELESS, CORP.
(the "Purchaser")
All capitalized terms not otherwise defined herein shall have the meanings
given to them in the Asset Purchase Agreement.
All documents listed or referred to herein have been made available, or
copies thereof provided, to the Parties and their representatives.
Disclosure of any information or dollar amount in any section or exhibit
to these Disclosure Schedules, or inclusion of any information in the
information provided or made available by the Parties or any of their
representatives, shall not constitute an admission that such Party or its
Affiliates have any liability with respect to such matters. No reference to or
disclosure of any item or other matter in these Disclosure Schedules shall be
construed as an admission or indication that such item or other matter is
required to be disclosed, material, has or would have a material adverse effect
on such Party or is outside such Party's ordinary course of business. Any
information disclosed or referred to in any schedule contained in these
disclosure schedules shall constitute disclosure called for in any other
schedule in these Disclosure Schedules but only to the extent that the relevance
of such other disclosure in such other schedule is evident on the face of the
schedule.
It is expressly understood by the Parties that the foregoing does not in
any way lessen or otherwise limit the representations, warranties and covenants
of the respective Parties, as set forth in the Agreement.
32
SCHEDULE 2.1
PURCHASED ASSETS
(a) Assumed Contracts:
o Private Label PCS Services Agrement dated November 17, 2005 by
and between Sprint Spectrum L.P. and Star Number, Inc.,.
(attached)
o Liberty Wireless Distributor Agreement dated April 25, 2005 by
and between Interstate Connections, Ltd. and the Vendor,
including Attachment A. (attached)
o Agreement dated June 15, 2005 by and between Amerivision
Communications, d/b/a Affinity4 and the Vendor, including
Exhibit A, titled Exhibit A InPhonic PayGo - PLS (page 1),
also including Page 3 of the June 15, 2005 Agreement
initialled to change Section 7.2, the fifth day to the
fifteenth (15th) day. (attached)
(b) Unfilled Orders:
The amount is approximately $14,000.
(c) Forward Commitments to Vendor for Supplies and Materials:
The amount is approximately $0.
(d) Pre-Paid Deposits:
The amount is approximately $847,000.
(e) Accounts Receivable:
The amount is approximately $282,000, net of reserves and
chargebacks.
(f) Trade Names, Domain Names and Logo: (attached)
o Liberty Wireless (SM), Viva Liberty (SM), Liberty Wirelss for
All (SM)
o xxxxxxxxxxxxxxx.xxx and xxxxxxxxxxx.xxx
o The following logo:
[LOGO] Liberty Wireless
(g) Customer and Supplier Lists
o Approximately 23,000 active and 19,000 suspended subscribers
for whom Purchaser will become the "Mobile Radio Services
Provider" of record at closing, such list will be provided
within 7 business days of the closing via electronic means.
(h) Executive Dashboard and Marketing Reports and Materials:
33
o Handset Box designs and box inventory - includes approximately
44,000 Liberty handset cartons warehoused at Xxxxxxx Xxxxx,
Inc. (attached)
o In-box and electronic customer collateral including:
o Design for Welcome Letter, titled Congratulations!
You've Joined Millions of Satisfied Wireless Customers
(attached as word file and pdf file) Design for Invoice,
titled Sales Receipt and Wireless Service Guide
(attached as word file and pdf file)
o Design for Subscriber Terms and Conditions, titled
StarNumber Wireless Agreement - Terms and Conditions
(attached)
o Design for Guide to Wireless Services, (attached
examples of Internet site)Design for Rebate (attached)
o Text for order confirmation, shipping and customer
service emails (attached)
o HTML code and URL for Liberty Xxxxxxxx.xxx homepage
(attached)
o Design for rebate - MVNOrebate.pdf (attached)
o Branding to customize MMA software for Liberty Wireless
(i) the active stock, inactive new stock, recovery stock and salvage stock, a
list of which is attached hereto as Exhibit A and forms a part of this
Schedule 2.1. For this stock, the Purchaser shall pay to the
VendorUS$456,100 to be paid in four (6) equal payments as follows:
$91,220 on Closing
$72,976 at 31 January 2006
$72,976 at 15 February 2006
$72,976 at 28 February 2006
$72,976 at 15 March 2006
$72,976 at 28 March 2006
---------------------------
34
SCHEDULE 6.1(g)
FINANCIAL STATEMENTS
The following documents are attached hereto:
o Form 10-K for the Period Ending 12/31/04
o Form 10-Q for the Period Ending 3/31/05
o Form 10-Q for the Period Ending 6/30/05
o Form 10-Q for the Period Ending 9/30/05
35
SCHEDULE 6.1(h)
PROFIT AND LOSS STATEMENTS
The following documents are attached hereto:
o Profit and loss statements of Vendor's "Liberty" business for 2003,
2004 and the first 11 months of 2005.
36
SCHEDULE 6.1(n)
PERMITTED ENCUMBRANCES
None
37
SCHEDULE 6.1(q)
GUARANTEES, INDEMNIFICATIONS, SURETIES OR SIMILAR OBLIGATIONS
None
38
SCHEDULE 6.1(w)
INTELLECTUAL PROPERTY
Trademark VIVA LIBERTY Serial Number 78/563,630 (ITU) PENDING
Trademark Ser. No. 78/326,834 Liberty Wirless for All; Register Number 2,979,533
Trademark Ser. No. 78/371,483 Liberty Wirless; Register Number 2,928,910
39
SCHEDULE 6.1(bb)
LICENSE AND MAINTENANCE AGREEMENTS FOR THIRD PARTY SOFTWARE
None.
40
SCHEDULE 6.1(dd)
TAXES AND OTHER MATTERS
Star Number, Inc. is undergoing certain audits for prior years in the ordinary
course by the IRS, the State of New York and the State of Florida.
The following relates only to Star Number and not to the Purchased Assets:
On July 25, 2005, the Federal Communications Commission ("FCC") issued a Notice
of Apparent Liability, asserting that InPhonic, Inc. registered with the FCC and
reported and contributed to the Universal Service Fund ("USF") and the
Telecommunications Relay Service Fund later than required by FCC rules. The FCC
has preliminarily proposed a fine for late payment of such fees. InPhonic, Inc.
does not believe that an FCC penalty is appropriate under such circumstances,
and plans to respond to the FCC's preliminary finding and to assert that no fine
is appropriate under the circumstances.
41
SCHEDULE 6.1(gg)
NOTIFICATIONS, CONSENTS AND APPROVALS
The following Assumed Contracts require consent to assignment:
o Private Label PCS Services Agrement dated November 17, 2005 by and
between Sprint Spectrum L.P. and Star Number, Inc., .
o Agreement dated June 15, 2005 by and between Amerivision
Communications, d/b/a Affinity4 and the Vendor, including Exhibit A,
titled Exhibit A InPhonic PayGo - PLS (page 1), also including Page
3 of the June 15, 2005 Agreement initialled to change Section 7.2,
the fifth day to the fifteenth (15th) day.
The following Assumed Contracts require notice of assignment:
o Liberty Wireless Distributor Agreement dated April 25, 2005 by and
between Interstate Connections, Ltd. and the Vendor, including
Attachment A.
The transactions contemplated by the Asset Purchase Agreement require the
consent of Comerica Bank under the Amended and Restated Loan and Security
Agreement, as amended, by and among Comerica Bank, Vendor and the other parties
thereto.
42
SCHEDULE 6.2(d)
WAIVERS TO BE OBTAINED BY PURCHASER
Under the terms of the secured convertible debentures issued to Cornell Capital
Partners, LP by Teleplus Enterprises, Inc. on December 13, 2005, and related
agreements (including a security agreement entered into by the Purchaser), the
Purchaser has undertaken not to create liens on certain of its assets.
43
