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EXHIBIT 10.11
STOCK PURCHASE AGREEMENT
BY AND AMONG
ESAT, INC.
AND
CORPORATE FINANCIAL ENTERPRISES, INC., AND
AMERICAN EQUITIES, LLC
DATED AS OF NOVEMBER 22, 1999
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STOCK PURCHASE AGREEMENT
Stock Purchase Agreement, made and entered into as of November 22, 1999
(the "Agreement"), among eSat, Inc., a Nevada corporation (the "Company") and
Corporate Financial Enterprises, Inc., a Delaware corporation and/or its
designees ("CFE") and American Equities, LLC, a California limited liability
company, and its designees ("AE," and, together with CFE, "Investor").
WHEREAS, the Company desires to sell, and the Investor desires to purchase,
on the terms and conditions of this Agreement, up to 2,500,000 shares of the
Series B 12% Convertible Preferred Stock of the Company, $0.01 par value (the
"Preferred Stock"), in the form attached hereto as Exhibit A;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Investor agrees
as follows:
SECTION I. SALE AND PURCHASE OF THE COMPANY'S SECURITIES; CLOSING.
1.1 SALE AND PURCHASE OF PREFERRED STOCK. Subject to the terms and
conditions hereof, the Company agrees to sell to Investor and Investor agrees to
purchase from the Company on the Closing Date, 2,500,000 shares of Preferred
Stock for an aggregate cash purchase price (the "Purchase Price") of Five
Million Dollars ($5,000,000), payable to the Company (i) $1,000,000 in cash at
Closing (it being acknowledged that the Company has received $750,000 toward
such payment prior to the date hereof), and (ii) $4,000,000 in eight equal
monthly installments of $500,000 each, commencing on December 22, 1999. Investor
shall have the right to prepay all or any part of the Purchase Price at any
time.
1.2 CLOSING. The closing of the transactions (the "Transactions")
contemplated by this Agreement (the "Closing"), shall take place at the offices
of CFE, 0000 Xxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxxxx 00000, at 10:00 a.m., Pacific
Standard time, on the first business day following satisfaction (or waiver) of
all of the conditions set forth in Sections IV and V hereof (the "Closing Date")
or at such other place or day as may be mutually acceptable to the Investor and
the Company.
1.3 DELIVERY; PAYMENT. At the Closing, the Company will deliver to
Investor a certificate, dated the Closing Date, representing the shares of
Preferred Stock purchased by such Investor, registered in its name (or in the
name of its nominee if it so specifies to the Company prior to the Closing
Date).
SECTION II. THE COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Investor to enter into this Agreement and to purchase
the
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Preferred Stock, the Company hereby represents and warrants to Investor, except
as disclosed in the Company Disclosure Schedule delivered to the Investor on the
date hereof, as follows. The matters referred to in the Company Disclosure
Letter shall be deemed to qualify only the specific representations and
warranties which are referred to therein. References to items as being subject
"to the best knowledge of the Company" means the actual knowledge of any present
director or executive officer of the Company, or the knowledge such person
should have, or a reasonably prudent person could be expected to discover or
become aware of, in the course of conducting a reasonably comprehensive
investigation into such matters.
2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of Nevada and has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted. The Company is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, including California As of the date of this Agreement the
Company has no other equity interest in any other entity.
2.2 ARTICLES OF INCORPORATION AND BYLAWS. The Company has heretofore
furnished to Investor a complete and correct copy of the Articles of
Incorporation and bylaws of the Company as amended to date. The Articles of
Incorporation and bylaws of the Company are in full force and effect. As of the
date of this Agreement, the Company is not in violation of any of the provisions
of its Articles of Incorporation or bylaws.
2.3 CAPITALIZATION. The authorized capital stock of the Company
consists of 50,000,000 shares of common stock and 10,000,000 shares of preferred
stock. As of the date hereof and as of the Closing Date, (i) 39,910,607 shares
of common stock were issued and outstanding, all of which were validly issued,
fully paid and nonassessable (except 22,144,000 shares which were issued as
collateral for loans and never paid for, and which will be canceled within 90
days of the Closing Date), and (ii) no shares of preferred stock were issued and
outstanding (not including the Preferred Stock issued pursuant hereto or
1,000,000 shares of the Company's 12% Series A Convertible Preferred Stock). As
of the date hereof and as of the Closing Date, options and warrants to purchase
not more than 10,000,000 shares of common stock have been granted and are
outstanding. Except as described above or contemplated hereby, there are, and as
of the Closing Date there will be, no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Company or obligating the Company to issue or
sell any shares of capital stock of, or other equity interests in, the Company.
All shares of the Company's capital stock subject to issuance, upon issuance on
the terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable.
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To the best knowledge of the Company, except as provided in the Preferred Stock
terms, there are no shareholder agreements, voting trusts or other agreements
relating to voting or disposition of any shares of the Company's capital stock
or granting to any person or group of persons the right to elect, or to
designate or nominate for election, a director to the Company's board of
directors.
2.4 AUTHORITY RELATIVE TO THE TRANSACTION AGREEMENTS. The Company has
all necessary corporate power and authority to execute and deliver this
Agreement and the certificates representing the Preferred Stock (collectively,
the "Transaction Documents"), to perform its obligations hereunder and
thereunder and to consummate the Transactions. The execution and delivery of the
Transaction Documents and the consummation by the Company of the Transactions
have been duly and validly authorized by all necessary corporate action and no
other corporate proceedings on the part of the Company are necessary to
authorize the Transaction Documents or to consummate the Transactions. The
Transaction Documents have been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Investor,
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights generally and to general principles of
equity.
2.5 MATERIAL CONTRACTS; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The Company has made available to the Investor on or prior to
the date hereof true, correct and complete copies of each agreement, contract or
other instrument (including all amendments thereto) to which the Company is a
party or by which the Company is bound which would require the Company to pay in
excess of $25,000 in the aggregate, or which provides that the Company will
receive more than $25,000 in the aggregate, or which would otherwise obligate
the Company to provide services or products with an aggregate value of in excess
of $25,000 (collectively, the "Material Contracts").
(b) To the best knowledge of the Company, neither the Company nor
any party other than the Company, is in default in any material respect in the
performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any Material Contract to which the Company
is a party. To the best knowledge of the Company, all of the Material Contracts
are in full force and effect, and are the valid, legal and binding obligations
of all of the parties thereto.
(c) The execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company will not (i)
conflict with or violate the Articles of Incorporation or bylaws of the Company,
(ii) to the best knowledge of the Company, conflict with or violate any foreign
or domestic
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(federal, state or local) law, statute, ordinance, rule, regulation, permit,
injunction, writ, judgment, decree or order ("Law") applicable to the Company or
by which any asset of the Company is bound or affected, or (iii) to the best
knowledge of the Company, conflict with, result in any breach of or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or require any payment under, or result in the
creation of a lien, claim, security interest or other charge or encumbrance on
any asset of the Company pursuant to, any Material Contract.
(d) To the best knowledge of the Company, the execution and
delivery of this Agreement by the Company do not, and the performance of this
Agreement by the Company will not, require any consent, approval, authorization
or permit of, or filing with or notification to, any United States (federal,
state or local) or foreign government or governmental, regulatory or
administrative authority, agency, commission, board, bureau, court or
instrumentality or arbitrator of any kind ("Governmental Authority"), except (i)
for applicable requirements, if any, of the Securities Act of 1933, as amended
(the "Securities Act"), the Exchange Act and state securities laws, and (ii)
where failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, would not prevent consummation of the
Transactions or otherwise prevent the Company from performing its obligations
under this Agreement.
2.6 FINANCIAL STATEMENTS.
(a) The Company has heretofore delivered to Investor a true and
complete copy of its unaudited statement of operations, statement of cash flows
and balance sheet, as of June 30, 1999 (the "Financials"). The Financials fairly
present, in all material respects, the financial position and results of
operations of the Company as at the respective dates thereof and for the
respective periods indicated therein.
(b) Except as and to the extent set forth on, or reserved against
on, the balance sheet of the Company as of June 30, 1999 contained in the
Financials, the Company has no liability or obligation of any nature (whether
accrued, absolute, contingent, fixed, liquidated, unliquidated or otherwise) as
of the date of execution and delivery of this Agreement that would be required
to be reflected on, or reserved against in, a balance sheet of the Company, or
in the notes thereto, prepared in accordance with generally accepted accounting
principles, except for liabilities or obligations incurred in the ordinary
course of business since June 30, 1999.
(c) Except in each case as disclosed in the Financials, the
Company is not indebted to any director or executive officer of the Company
(except for amounts due as normal salaries and bonuses or in reimbursement of
ordinary expenses) and no such person is indebted to the Company.
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2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1999, except
as contemplated by this Agreement, the Company has conducted its business only
in the ordinary course and in a manner consistent with past practice and, since
such date to the date hereof, there has not been (a) any material change by the
Company in its accounting methods, principles or practices, (b) any revaluation
by the Company of any material asset (including, without limitation, any writing
down of the value of inventory or writing off of notes or accounts receivable),
other than in the ordinary course of business consistent with past practice, (c)
entry by the Company into any commitment or transaction material to the Company,
except in the ordinary course of business and consistent with past practice, (d)
any agreement by the Company to take any of the actions described in this
Section 2.7 except as expressly contemplated by this Agreement, other than for
such events that would not, individually or in the aggregate, have a Company
Material Adverse Effect.
2.8 INTELLECTUAL PROPERTY.
(i) Intellectual Property Assets. The Company is the exclusive owner of all
Intellectual Property Assets, and has the full right to own, use and exploit
such assets. The term "Intellectual Property Assets" includes all of the
following which are owned, used or licensed by the Company:
(1) all trademarks, service marks, trade and trading names, logos,
marketing symbols, fictional business names, and all protective properties
therefor, including trademark and service xxxx registrations and applications
therefor (collectively, "Marks");
(2) all inventions, discoveries, innovations and protective properties
therefor, including, but not limited to, patents, utility models and
applications therefor (collectively, "Patents");
(3) all works of authorship, artistry and creative works, and all
copyrights therefor, including copyright registrations and applications therefor
(collectively, "Copyrights");
(4) all rights in mask works (collectively, "Rights in Mask Works");
and
(5) all know-how, trade secrets, confidential information, customer
lists, software, technical and business information and data, process
specifications, plans, diagrams, drawings, and blue prints (collectively, "Trade
Secrets");
(6) all rights of publicity and moral rights throughout the world; and
(7) any licenses of any of the foregoing pursuant to which the Company
has any right to the use or benefit of, or other rights with respect to, any of
the foregoing (other than off-the-shelf or other commercially available
software).
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(ii) Agreements. The Company is not obligated to pay royalties or license
fees to any person.
(iii) Patents.
(1) The Company is the exclusive owner of all right, title and
interest in and to each of its patents, if any, free and clear of all
encumbrances.
(2) No pending or issued patent has been or is now involved in any
interference, reissue, reexamination or opposition proceeding. There is no
potentially interfering patent or patent application of any third party.
(3) None of the Company's patents is infringed or has been challenged
or threatened in any way. None of the products or services manufactured or
provided or sold, nor any process or know-how used, by the Company infringes or
has been alleged to infringe any patent or other proprietary right of any other
person or entity.
(iv) Trademarks.
(1) The Company is the owner of all right, title and interest in and
to each of the it trademarks, serial marks or other registrations (the "Marks"),
free and clear of all encumbrances.
(2) All Marks that have been registered with the United States Patent
and Trademark Office are currently in compliance with all Legal Requirements
(including the timely post-registration filing of affidavits of use and
incontestability and renewal applications) and are valid and enforceable.
(3) No Xxxx has been or is now involved in any opposition,
invalidation, or cancellation and no such action is threatened with respect to
any of the Marks.
(4) There is no potentially interfering trademark or trademark
application of any third party.
(5) No Xxxx is infringed or has been challenged or threatened in any
way. None of the Marks used by the Company infringes or is alleged to infringe
any trade name, trademark, or service xxxx or designation of origin of any third
party.
(v) Copyrights.
(1) The Company is the exclusive owner of all right, title, and
interest in and to each of its copyrights, free and clear of all encumbrances.
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(2) All registered copyrights are currently in compliance with Legal
Requirements, and are valid and enforceable.
(3) None of the Company's copyrights is infringed or has been
challenged or threatened in any way. None of the subject matter of any of the
copyrights infringes or is alleged to infringe any copyright of any third party
or is a derivative work based on the work of a third party.
2.9 LITIGATION. As of the date of this Agreement, except as set forth
on Schedule 2.9, there is no suit, claim, action, proceeding or investigation
pending, or, to the Company's best knowledge, threatened against the Company.
2.10 BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company, other
than (i) Corporate Financial Enterprises, Inc., which the Company agrees to pay
$500,000 within 30 days following the Closing Date.
2.11 SHARES FULLY PAID, ETC. The shares of Preferred Stock to be sold
to Investor pursuant hereto, when issued and paid for pursuant to the terms of
this Agreement, will be duly authorized, validly issued and outstanding, fully
paid and nonassessable and shall be free and clear of all pledges, liens,
encumbrances and restrictions. The common stock issuable upon conversion of the
Preferred Stock has been reserved for issuance and when issued upon exercise in
accordance with the terms of the Preferred Stock, will be duly authorized,
validly issued and outstanding, fully paid, nonassessable and free and clear of
all pledges, liens, encumbrances and restrictions.
2.12 SHARES OF COMMON STOCK. The outstanding shares of common stock of
the Company have been issued in full compliance with the Securities Act, the
California corporations code and any other applicable blue sky laws.
2.13 NO PREEMPTIVE RIGHTS. The issuance, sale and delivery of the
Preferred Stock and the common stock into which the Preferred Stock is
convertible are not subject to any preemptive right of shareholders of the
Company arising under law or the Articles of Incorporation or Bylaws or to any
contractual right of first refusal or other contractual right in favor of any
person.
2.14 EMPLOYEE BENEFIT PLAN. Each employee benefit plan which covers
employees of the Company has been maintained in compliance in all material
respects with all applicable laws.
2.15 INSURANCE. The Company is insured with reputable insurers against
such risks and in such amounts as are prudent in accordance with industry
practices. All of the insurance policies, binders or bonds maintained by the
Company
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(the "Policies") have been maintained in accordance with their respective terms
and will remain in full force and effect after the Closing. The Company has not
received any notice of default with respect to any provision of any such
Policies.
2.16 DISCLOSURE. The information contained in the Company's
registration statement on Form 10, as filed on November 8, 1999, is true,
complete and correct in all material respects, and does not contain any untrue
statement of a material fact or any omission to state a material fact necessary
in order to make the statements made, in the light of
the circumstances under which they were made, not misleading.
SECTION III. REPRESENTATIONS OF THE INVESTOR.
INVESTOR REPRESENTS THAT:
3.1 INVESTMENT INTENT.
(a) The shares of Preferred Stock being acquired by Investor are
being acquired for investment for Investor's own account and not with the view
to, or for resale in connection with, any distribution or public offering
thereof. Such Investor understands that the shares of Preferred Stock have not
been registered under the Securities Act or any state securities laws by reason
of their contemplated issuance in transactions exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) thereof and
applicable state securities laws, and that the reliance of the Company and
others upon these exemptions is predicated in part upon this representation by
Investor. Such Investor further understands that the shares of Preferred Stock
may not be transferred or resold without (i) registration under the Securities
Act and any applicable state securities laws, or (ii) an exemption from the
requirements of the Securities Act and applicable state securities laws.
(b) Each certificate representing shares of Preferred Stock shall
be endorsed with the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR WITH THE SECURITIES COMMISSION OF ANY
STATE UNDER ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS AND
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THOSE SECURITIES LAWS.
3.2 LOCATION OF PRINCIPAL OFFICE, QUALIFICATION, ETC. The state in
which Investor's principal office (or domicile, if such Investor is an
individual) is located is California. Investor acknowledges that the Company has
made available to Investor
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at a reasonable time prior to the execution of this Agreement the
opportunity to ask questions and receive answers concerning the terms
and conditions of the sale of securities contemplated by this
Agreement and to obtain any additional information (which the Company
possesses or can acquire without unreasonable effort or expense) as
may be necessary to verify the accuracy of information furnished to
Investor. Investor (a) is able to bear the loss of its entire
investment in the shares of Preferred Stock without any material
adverse effect on its business, operations or prospects, and (b) has
such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of the investment to
be made by it pursuant to this Agreement.
3.3 ACTS AND PROCEEDINGS. This Agreement has been duly authorized by
all necessary action on the part of Investor, has been duty executed and
delivered by Investor, and is a valid and binding agreement of Investor.
3.4 ACCREDITED INVESTOR. The Investor is an "accredited investor"
within the meaning of Rule 501 promulgated under the Securities Act.
3.5 ORGANIZATION AND QUALIFICATION. Investor is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where the failure to be so
incorporated, existing or in good standing or to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
material adverse effect on Investor's business, operations, properties, assets,
financial condition or results of operations.
3.6 NO CONFLICT
(a) The execution and delivery of this Agreement by Investor does
not, and the performance of this Agreement by Investor will not conflict with or
violate the organizing documents of the Investor.
SECTION IV. CONDITIONS OF INVESTOR'S OBLIGATION
The obligation to purchase and pay for the shares of Preferred Stock which
Investor has agreed to purchase on the Closing Date is subject to the
fulfillment prior to or on the Closing Date, of the conditions set forth in this
Section 4.
4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company under this Agreement which are qualified as to materiality shall
have been true and correct (as so qualified) when made and shall be true and
correct (as so qualified) at and as of the Closing Date, as if made on and as of
such date. The representations and warranties of the Company under this
Agreement which are not qualified as to materiality shall have been true and
correct in all material respects when made and shall be true and correct in all
material respects at and as of
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the Closing Date, as if made on and as of such date.
4.2 COMPLIANCE WITH AGREEMENT. The Company shall have performed and
complied with all agreements or covenants required by this Agreement to be
performed and complied with by it prior to or as of the Closing Date.
4.3 INJUNCTIONS, RESTRAINING ORDER OR ADVERSE LITIGATION. No order,
judgment or decree of any court, arbitral tribunal, administrative agency or
other governmental or regulatory authority or agency shall purport to enjoin or
restrain the Investor from acquiring the shares of Preferred Stock.
SECTION V. CONDITIONS TO COMPANY'S OBLIGATIONS
The obligation to sell the shares of Preferred Stock which the Company has
agreed to sell on the Closing Date is subject to the fulfillment prior to or
on the Closing Date of the conditions set forth in this Section 5.
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Investor under this Agreement shall be true and correct in all material
respects as of the Closing Date with the same effect as though made on and as of
the Closing Date.
5.2 COMPLIANCE WITH AGREEMENT. The Investor shall have performed and
complied with all agreements or covenants required by this Agreement to be
performed and complied with by it prior to or as of the Closing Date.
5.3 INJUNCTIONS, RESTRAINING ORDER OR ADVERSE LITIGATION. No order,
judgment or decree of any court, arbitral tribunal, administrative agency or
other governmental or regulatory authority or agency shall purport to enjoin or
restrain the Investor from acquiring the shares of Prefered Stock on the Closing
Date.
SECTION VI. CERTAIN COVENANTS OF THE INVESTOR AND THE COMPANY.
6.1 APPROVALS, ETC. Subject to the terms and conditions provided
herein, each of the parties hereto agrees to (i) use all reasonable efforts to
take all action and to do all other things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement; and (ii) use all reasonable efforts to obtain
all necessary or appropriate waivers contemplated by this Agreement.
6.2 ACCESS. The Company hereby agrees that, from the date hereof until
the earlier to occur of the termination of this Agreement and the Closing Date,
the Company will grant the Investor and its representatives such access during
normal business hours as may be reasonably requested to the personnel, advisors,
properties,
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books, accounts, records, contracts and documentation of, or relating to, the
business and operations of the Company.
VII. INDEMNIFICATION; REMEDIES
7.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE. All
representations, warranties, covenants, and obligations in this Agreement, the
Company Disclosure Letter, any supplements to the Company Disclosure Letter and
any certificate or document delivered pursuant to this Agreement will survive
the Closing for two years. The right to indemnification, payment of Damages or
other remedy based on such representations, warranties, covenants, and
obligations will not be affected by any investigation conducted with respect to,
or any knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant, or obligation. The waiver of any condition
based on the accuracy of any representation or warranty, or on the performance
of or compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
7.2 INDEMNIFICATION AND PAYMENT OF DAMAGES. Each Party (an "Indemnifying Party")
will indemnify and hold harmless the other parties and their respective
representatives, stockholders, controlling persons, and affiliates
(collectively, the "Indemnified Persons") for, and will pay to the Indemnified
Persons the amount of, any loss, liability, claim, damage (including incidental
and consequential damages), expense (including costs of investigation and
defense and reasonable attorneys' fees) or diminution of value, whether or not
involving a third-party claim (collectively, "Damages"), arising, directly or
indirectly, from or in connection with:
(a) any breach of any representation or warranty made by the Indemnifying
Party in this Agreement, or any schedule, certificate or document
delivered by the Indemnifying Party pursuant to this Agreement;
(b) any breach of any representation or warranty made by the Indemnifying
Party in this Agreement as if such representation or warranty were
made on and as of the Closing Date;
(c) any breach by the Indemnifying Party of any of its covenants or
obligations in this Agreement;
(d) any claim by any Person for brokerage or finder's fees or commissions
or similar payments based upon any agreement or understanding alleged
to have been made by any such Person with the Company (or any person
acting on its behalf) in connection with any of the Transactions.
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The remedies provided in this Section 7.2 will not be exclusive of or limit any
other remedies that may be available to Investor or the other Indemnified
Persons.
7.3 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced or brought
against it (a "Proceeding"), such indemnified party will, if a claim
is to be made against an Indemnifying Party under such Section, give
notice to the Indemnifying Party of the commencement of such claim,
but the failure to notify the Indemnifying Party will not relieve the
Indemnifying Party of any liability that it may have to any
indemnified party, except to the extent that the Indemnifying Party
demonstrates that the defense of such action is prejudiced by the
Indemnifying Party's failure to give such notice.
(b) If any Proceeding referred to in Section 7.3(a) is brought against an
indemnified party and it gives notice to the Indemnifying Party of the
commencement of such Proceeding, the Indemnifying Party will be
entitled to participate in such Proceeding and, to the extent that it
wishes (unless (i) the Indemnifying Party is also a party to such
Proceeding and the indemnified party determines in good faith that
joint representation would be inappropriate, or (ii) the Indemnifying
Party fails to provide reasonable assurance to the indemnified party
of its financial capacity to defend such Proceeding and provide
indemnification with respect to such Proceeding), to assume the
defense of such Proceeding with counsel satisfactory to the
indemnified party and, after notice from the Indemnifying Party to the
indemnified party of its election to assume the defense of such
Proceeding, the Indemnifying Party will not, as long as it diligently
conducts such defense, be liable to the indemnified party under this
Section 7 for any fees of other counsel or any other expenses with
respect to the defense of such Proceeding, in each case subsequently
incurred by the indemnified party in connection with the defense of
such Proceeding, other than reasonable costs of investigation. If the
Indemnifying Party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the
claims made in that Proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may
be effected by the Indemnifying Party without the indemnified party's
consent unless (1) there is no finding or admission of any violation
of law, statute, rule, regulation, order or decree or any violation of
the rights of any person or entity and no effect on any other claims
that may be made against the indemnified party, and (2) the sole
relief provided is monetary damages that are paid in full by the
Indemnifying Party; and (iii) the indemnified
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party will have no liability with respect to any compromise or
settlement of such claims effected without its consent. If notice is
given to an Indemnifying Party of the commencement of any Proceeding
and the Indemnifying Party does not, within ten days after the
indemnified party's notice is given, give notice to the indemnified
party of its election to assume the defense of such Proceeding, the
Indemnifying Party will be bound by any determination made in such
Proceeding or any compromise or settlement effected by the indemnified
party.
(c) Notwithstanding the foregoing, if an indemnified party determines in
good faith that there is a reasonable probability that a Proceeding
may adversely affect it or its affiliates, the indemnified party may,
by notice to the Indemnifying Party, assume the exclusive right to
defend, compromise, or settle such Proceeding, but the Indemnifying
Party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent
(which may not be unreasonably withheld).
(d) the Company hereby consents to the non-exclusive jurisdiction of any
court in which a Proceeding is brought against any Indemnified Person
for purposes of any claim that an Indemnified Person may have under
this Agreement with respect to such Proceeding or the matters alleged
therein, and agree that process may be served on the Company with
respect to such a claim anywhere in the world.
7.4 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS. A claim for indemnification for
any matter not involving a third-party claim may be asserted by notice to the
party from whom indemnification is sought.
SECTION VIII. MISCELLANEOUS.
8.1 NO WAIVERS; CUMULATIVE REMEDIES. No failure or delay on the part
of the Investor in exercising any right, power or remedy hereunder or under any
Transaction Document shall operate as waiver thereof; nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
hereunder or thereunder. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
8.2 CHANGES, WAIVERS, ETC. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
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8.3 EXPENSES. Each party shall pay its own expenses in connection with
the Transactions contemplated hereby and by the Transaction Documents.
8.4 NOTICES. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be delivered, or
mailed first-class postage prepaid, registered or certified mail.
(a) if to Investor, addressed to such Investor at its address as
shown on the books of the Company, or at such other address as such holder may
specify by written notice to the Company; or
(b) if to the Company, at
eSat, Inc.
00000 Xxxxxx Xxxx., Xxxx X
Xxxxxxxx Xxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Chief Executive Officer
, or; or at such other address as the Company may specify by written notice to
the Investor.
8.5 ASSIGNMENT.
(a) This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(b) Investor may assign its rights under this Agreement to any of
its affiliates.
8.6 SEVERABILITY. Whenever possible, each provision of this Agreement
will 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 provision 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.
8.7 ENTIRE AGREEMENT. This Agreement and exhibits and schedules hereto
and the other Transaction Documents contain the entire agreement between the
parties and supersede any prior understandings, agreements or representations by
or between the parties, written or oral, which may have related to the subject
matter hereof in any way.
8.8 GOVERNING LAW. The internal law, without regard to conflicts of
laws principles, of the State of California shall govern all questions
concerning the construction, validity and interpretation of this Agreement and
the performance of the obligations imposed by this Agreement.
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8.9 COUNTERPARTS. This Agreement may be executed concurrently in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company and the Investor have caused this Agreement
to be executed by its duly authorized representative.
THE COMPANY: INVESTOR:
eSat, Inc. AMERICAN EQUITIES, LLC
By: By:
---------------------------------- -------------------------------------
Xxxxxxx Xxxxxx Xxxx Xxxxxxxx
President Managing Member
CORPORATE FINANCIAL ENTERPRISES, INC.
By:
-------------------------------------
Name: Xxxxx Xxxxxxx
Title: President
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