EXHIBIT 2.5
AGREEMENT FOR PURCHASE OF ASSETS
OF
COMPACT CONNECTION, INC.
(a Nevada Corporation)
This Agreement for Purchase of Assets (this "Agreement") is entered
into effective the 23rd day of April, 1998 between COMPACT CONNECTION, INC., a
Nevada corporation (the "Seller"); XXXXXXX XXXXXX, (the "Seller's Shareholder");
and COMPACT CONNECTION, INC., a Delaware corporation (the "Buyer"), a
wholly-owned subsidiary of TELESERVICES INTERNATIONAL GROUP INC., a Florida
corporation ("TSIG").
R E C I T A L S
A. Seller desires to sell and Buyer desires to purchase
substantially all of the assets of the Seller described herein;
B. Seller and Buyer entered into a Letter of Intent date February
18, 1998 (the "LOI"), and an Agreement and Plan of
Reorganization dated March 5, 1998 (the "Plan"); and
C. The parties desire to restructure the transaction pursuant to
the terms and conditions set forth in this Agreement, such
that this Agreement shall supercede and replace the LOI and
the Plan in their entirety.
NOW, THEREFORE, the parties agree as follows:
1. Agreement to Sell and Purchase. Subject to the terms and conditions
of this Agreement, on the closing date and in consideration of the purchase
price set forth below, the Seller will sell, transfer, assign and convey to the
Buyer, substantially all of the assets of the Seller used in the Seller's
business, including:
1.1 Equipment. All furniture, computers, telephones,
machinery, tools and equipment used in the business (the "Equipment"). At
Closing, Seller shall deliver and transfer to Buyer any certificate of title or
other documentation necessary to complete the transfer of the Equipment.
1.2 Fixtures. The fixtures used at all locations of the
business (the "Fixtures"). At Closing, Seller shall deliver and transfer to
Buyer any certificate of title or other documentation necessary to complete the
transfer of the Equipment.
1.3 Inventory. All inventory and supplies of the business
(the "Inventory").
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1.4 Software. All software used in the Seller's business (the
"Software").
1.5 Names. Seller hereby assigns and transfers to Buyer at
Closing, Seller's entire right, title and interest, worldwide, in and to all of
Seller's trademarks and service marks (including both design and word marks),
together with all the goodwill associated with said marks, and Seller's interest
in all certificates of registration, pending applications for registration, and
any common law rights in any of the said marks (collectively the "Trademarks").
In addition to the Trademarks, Seller shall transfer to Buyer and Buyer shall
thereby acquire any and all of Seller's trade names used in connection with the
business, including but not limited to the trade names "Compact Connection" and
"CCI" (collectively the "Trade Names").
1.6 Intangible Assets. Goodwill; copyrights; trade show
booths; advertising and promotional materials (including catalogs and sales
brochures with original camera ready art work); logotypes phone numbers;
customer, sales representative, distributors and supplier lists (including names
and addresses); customer and supplier invoices; all historical files, records,
contracts, and agreements, whether written or oral, of any nature relating to
Seller and its assets; business plans of any nature prepared by or on behalf of
Seller; manuals; Seller's rights under executory sales orders and executory
purchase orders; third party contracts (e.g., all non-compete and non-disclosure
agreements with third parties which accrue to Seller's benefit); and all other
intangible assets associated in a material way with Seller's operations.
1.7 Miscellaneous Assets. All other assets of the business,
including without limitation all telephone numbers, contract rights, deposits
with landlords, utilities and others (the "Miscellaneous Assets").
The assets being acquired by the Buyer are hereafter referred to as the
"Acquired Assets".
2. Purchase Price. The purchase price for the Acquired Assets is Six
Million (6,000,000) shares of restricted common stock of TSIG (the "TSIG
Shares").
2.1 Purchase Price Adjustments.
(a) The purchase price is subject to adjustment whereby the
number of TSIG Shares may be appropriately decreased by Buyer in the event
that any of the audited financial statements required by Section 8.8 differ
substantially and materially from the financial information provided by Seller
prior to the date of this Agreement.
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(b) On the date twenty-four (24) months after Closing, an
additional number of shares of restricted common stock of TSIG ("Additional
TSIG Shares") may be issued to Seller if the average of the daily closing
price for the fifteen (15) consecutive business days before such date (the
"Average Price") is below $2.50 per share (the "Target Price"). In the event
that the Average Price is below the Target Price, the formula for determining
the number of additional shares to be issued is as follows:
[Target Price-Average Price] x [$15,000,000 - ($6,000,000 x Average Price)]
= # of additional shares
(c) The Target Price will be appropriately adjusted for any
stock splits or stock dividends (for example, if TSIG's common stock is split so
that two new shares are issued in exchange for each outstanding share, the
Target Price would be adjusted to $1.25 per share).
2.2 Restrictions on Transfer of TSIG Shares. The parties
hereto acknowledge that the TSIG Shares (including any Additional TSIG Shares)
to be issued in connection with the transactions contemplated hereby are
restricted as to transfer and the certificates therefore shall bear legends to
such effect and no transfer of any TSIG Shares may be effected, except pursuant
to an effective registration statement prepared and filed pursuant to the Act or
pursuant to an exemption from registration thereunder, as evidenced by an
opinion of counsel or as otherwise allowed under the laws of descent and
distribution. A legend will be placed on any certificates representing the TSIG
Shares (including any Additional TSIG Shares), substantially to the following
effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF A CURRENT AND EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT WITH RESPECT TO SUCH SECURITIES,
OR AN OPINION OF THE ISSUER'S COUNSEL TO THE EFFECT THAT REGISTRATION
IS NOT REQUIRED UNDER THE ACT.
3. Payment of Purchase Price. The purchase price to be paid by the
Buyer to the Seller shall be payable after (i) completion of the audited
financial statements of Seller, as required by Section 8.8; and (ii) after
Seller changes its corporate name, as required by Section 7. The TSIG Shares
shall not be delivered until after these requirements are met, without regard to
the actual Closing Date.
4. No Assumption of Liabilities. Buyer shall assume no liabilities of
Seller, known or unknown, whether arising or accruing on or before the date of
Closing or thereafter. Without limiting the generality of the foregoing, Buyer
assumes no liability or responsibility for any administrative proceedings,
litigation, claims, taxes, assessments or penalties which affect or involve
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Seller in any way, or any obligations of Seller for liability to existing or
former employees or shareholders. Furthermore, Any and all amounts for
liabilities relating to the operation of the Seller's business prior to and
after the Closing, shall be the sole and exclusively liability of Seller.
5. Allocation of Purchase Price. The purchase price to be paid under
this Agreement for the Acquired Assets shall be allocated as determined by Buyer
upon completion of the audited financial statements of Seller, as required by
Section 8.8. The Seller, Seller's Shareholder and Buyer agree to report this
transaction for federal and state tax purposes in accordance with said
allocations.
The parties acknowledge that the allocation will be a good faith
estimate of the fair market value of the assets being acquired under this
Agreement.
6. Inventory. Seller shall take a complete physical inventory of all
stock in trade and inventory of the Seller, the results of which shall be
provided to Buyer upon completion of the audit of Seller, as required by Section
8.8.
7. Use of Name and Assignment of Telephone Numbers. From the date of
Closing, the Buyer shall have the exclusive right to use of the Trademarks and
the Trade Names. Within five (5) business days from Closing, the Seller shall
file Articles of Amendment changing its name to some other dissimilar name, and
shall from the date of Closing make no further use of any of the Trademarks or
Trade Names. Furthermore, Seller will take any and all necessary steps required
to assign all telephone numbers included in the Acquired Assets to Buyer.
8. Seller's Representations and Warranties. The Seller and Seller's
Shareholder hereby jointly and severally represent and warrant to the Buyer as
follows:
8.1 Organization. The Seller is a corporation duly organized
and validly existing in good standing under the laws of the State of Nevada,
possesses all requisite corporate power and authority to own, operate and use
its properties (including the Acquired Assets) to carry on its business as it is
now being conducted. The Articles of Incorporation and the Bylaws delivered or
to be delivered to the Buyer are complete and correct and contain all amendments
thereto.
8.2 Authorization. Seller's Shareholder and the Seller have
the full power and authority to enter into this Agreement and to carry out their
respective obligations hereunder. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Seller's Board of Directors and Seller's Shareholder, and do
not violate, result in a breach of, or constitute a default under any judgment,
order or decree to which the Seller or Seller's Shareholder are subject, or the
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Seller's Articles of Incorporation or Bylaws. The execution, delivery and
performance of this Agreement by the Seller and Seller's Shareholder will not
violate, with or without the giving of notice and/or the passage of time, any
provision of law now applicable to the shareholders or the Seller, or result in
the creation of any lien, charge or encumbrance upon any of the assets of the
Seller pursuant to any corporate charter, bylaw, indenture, mortgage, deed of
trust, loan agreement, or other agreement or instrument to which the Seller or
the Seller's Shareholder are a party or by which the Seller or the Seller's
Shareholder may be bound, or to which they may be subject. The transactions
contemplated by this Agreement will not require the authorization, consent or
approval of any third party.
8.3 Title to Acquired Assets. Seller is the owner and has good
and marketable title to the Acquired Assets being sold to the Buyer hereunder,
free and clear of all claims, liens, pledges or encumbrances of any kind, and
Buyer will receive good and marketable title to the Acquired Assets, free and
clear of all claims, liens, pledges or encumbrances of any kind. The Acquired
Assets are all of the assets and rights necessary for the efficient conduct of
the business being conducted by Seller.
8.4 Taxes. The Seller has prepared and filed all federal,
state and local tax returns which are required to be filed, has paid all taxes
due pursuant to such returns or any assessments received by Seller, such returns
accurately reflect the taxes payable, and the Seller has adequately reserved for
all current taxes. All deposits required by law to be made by Seller, including
but not limited to estimated income, franchise and employees' withholding and
social security taxes to the date of Closing, have been paid by Seller. Neither
the Internal Revenue Service nor any other taxing authority is now asserting, or
threatening to assert, any deficiency, assessment or claim for taxes, interest
or penalties. The parties expressly agree that neither Buyer nor TSIG will
assume or be liable for any such taxes, which shall remain the sole
responsibility of Seller.
8.5 Commitments. To Seller's knowledge, Seller is not a party
to or bound by any written or oral agreement, partnership, joint venture, lease,
commitment or other understanding or obligation material to the business which
affect the Acquired Assets. All such commitments are valid, binding and in full
force and effect, and, the Seller is not in default, or alleged to be in
default, under any commitment included in the Acquired Assets, nor is any other
party under any such commitment in default or alleged to be in default.
8.6 Compliance with Laws. The Seller is not in violation in
any material respect of any law, rule, regulation, order, injunction or decree
of the government or courts of the United States or any state or other
jurisdiction in which the Seller conducts business, including, without
limitation any federal, state or local laws relating to employment, working
conditions or environmental matters, and no notice of any such violation has
been received which remains uncorrected.
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8.7 Intangible Assets. All of the Seller's patents,
trademarks, trade names and copyrights, and registration and applications
therefor, if any, are valid and in good standing, and no proceedings involving
the invalidity thereof or ownership by the Seller thereof are pending or to
Seller's knowledge have been threatened. The Seller owns the entire right, title
and interest in and to, and has the exclusive right to, the patents, Trademarks,
Trade Names, service marks and copyrights, as well as trade secrets, formulae
and processes included in the Acquired Assets. The conduct of the business of
the Seller does not infringe upon the patent, trademark, service xxxx, copyright
or confidential information, formulae, or trade secrets of any third party.
8.8 Financial Statements. Seller will provided audited
financial statements of Seller prepared in accordance with the requirements of
Regulation S-B of the Securities Act of 1933, as amended (the "Act"). Such
audited financial statements shall include: (i) a balance sheet as of December
31, 1997; (ii) statements of income and changes in financial position for the
years ended December 31, 1997 and 1996; and (iii) and such other financial
statements as may be required by Buyer's or TSIG's auditors. Subsequent to
Closing, Buyer may require, in its sole and absolute discretion and at its
expense, additional audited financial statements, including a balance sheet as
of the Closing Date, and statements of income and changes in financial position
for the period ended on the Closing Date. Upon completion, the required
financial statements shall be attached hereto as Exhibit 8.8.
8.9 Machinery and Equipment. All machinery, tools, equipment
and other personal property of the Seller owned or used in its operation shall
be identified on the financial statements, and no disposition of any equipment,
tools, machinery or personal property has occurred except in the ordinary course
of business. All of the assets listed on the financial statements are in
existence and in the possession and control of the Seller, are in good operating
condition and repair, and are free and clear of all mortgages, liens,
encumbrances. The Acquired Assets constitute all of the non-cash assets which
are material to the operation of the business.
8.10 No Litigation. There is (i) no litigation, proceeding,
arbitral action or governmental investigation pending or, as far as is known to
the Seller or Seller's Shareholder, threatened against the Seller or any of its
assets, and (ii) no decree, injunction or order of any court or governmental
department or agency outstanding against the Seller or the Seller's Shareholder.
8.11 Customers and Strategic Relationships. There has been no
termination, cancellation, limitation, adverse modification or change in the
business relationship of the Seller with any customer or other third parties.
Seller will obtain, prior to Closing, letters of assurance from Seller's primary
vendors or suppliers, which letters shall provide that the vendor or supplier is
(i) willing to provide products to Buyer on terms at least as favorable as
previously provided to Seller, and (ii) is prepared to handle and accept
increased volume of product orders from Buyer.
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8.12 Real Property. The Seller's leased real estate and the
operations conducted thereon are in compliance in all material respects with
applicable laws, rules and regulations regarding the use of these properties.
The Buyer, at its option, may request Seller to assign the lease to Buyer.
8.13 Transactions with Interested Persons. No officer,
supervisory employee, director or shareholder of the Seller and Seller's
Shareholder, or their respective spouses or children, owns directly or
indirectly on an individual or joint basis, any interest in any customer,
supplier or competitor of the Seller, or any organization which has a contract
or other arrangement with the Seller, in all cases excepting the insubstantial
ownership of shares of stock of publicly traded companies.
8.14 Disclosure. No representation, warranty or statement in
this Agreement, nor in any exhibit, certificate or schedule hereto or to be
delivered to Buyer pursuant to this Agreement, contains any untrue statement of
a material fact or omits to state any material fact necessary in order to make
the statements contained therein or herein not misleading.
8.15 Effect of This Agreement. The execution, delivery and
performance of this Agreement by Seller and the consummation of the transactions
contemplated herein by Seller and Buyer do not require the consent, waiver,
approval, license or authorization of any person or public authority; do not
violate in any material respect any provision of law applicable to Seller; do
not conflict with or result in the breach of Seller's Articles of Incorporation
or Bylaws; and do not violate any restriction of any kind or character in any
agreement between Seller and any other party included in the Acquired Assets.
The consummation of this transaction does not result in the creation of any
lien, charge or encumbrance on any of the Acquired Assets.
8.16 Change of Corporate Name. Seller will take any all
requisite steps necessary to change its corporate name as required under Section
8 hereof and that all such requisite procedures to effectuate this requirement
will be completed no later than five (5) working days following the Closing
Date. Seller shall promptly provide Buyer with a copy of the Articles of
Amendment changing Seller's corporate name.
8.17 Exclusive Due Diligence Review. Buyer shall be entitled
to an exclusive due diligence investigation of Seller. During the exclusive due
diligence period, Seller shall make available all pertinent data, including, but
not limited to, all customer sales records, equipment schedules, list of other
assets, corporate minutes, records, tax returns, financial information and other
essential documents, as may be required by Buyer, its officers and its
designated legal counsel, accountants, lenders and consultants. Further, during
said exclusive due diligence review period, Seller and Seller's Shareholder
shall not entertain nor solicit other offers for the purchase of any assets or
any interest in Seller, and Seller's Shareholder shall not entertain nor solicit
other offers for the purchase of his interest in Seller.
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Seller has furnished or will furnish to Buyer copies of all
documents and other information requested by Buyer pursuant to its due diligence
review of Seller, including but not limited to such items specified on the
checklist previously provided to Seller and Seller's Shareholder as attached
hereto as Exhibit 8.17, with both the adequacy of the responses and the content
thereof to be satisfactory to Buyer in its sole and absolute discretion. At
Closing, all written information provided in response to said due diligence
review shall also be annexed to Exhibit 8.17 and certified by Seller's
Shareholder. No "due diligence" reviews undertaken by Buyer shall in any event
relieve Seller or Seller's Shareholder of their responsibilities for the
accuracy and completeness of any representation or warranty of Seller or of
Seller's Shareholder contained herein or the performance of any covenant or
agreement of Seller or of Seller's Shareholder contained herein.
9. Representations and Warranties of Buyer. The Buyer hereby represents
and warrants to the Seller as follows:
9.1 Corporate Existence. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Buyer has all requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder.
9.2 Corporate Authority. The execution, delivery and
performance of this Agreement by Buyer and the consummation by it of the
transactions contemplated hereby have been duly and effectively authorized by
all necessary corporate action. This Agreement, upon its execution by Buyer and
Seller, shall constitute a legal, valid and binding obligation of Buyer,
enforceable in accordance with its terms, except as they may be limited by
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditor's rights generally.
9.3 Effective Agreement. The execution, delivery and
performance of this Agreement by Buyer and the consummation by it of the
transactions contemplated herein do not require the consent, waiver or approval
of any person or public authority; do not violate in any material respect any
provision of law applicable to Buyer; do not result in a breach of the Articles
of Incorporation or Bylaws of Buyer and do not violate any other restriction of
any character which may be imposed upon Buyer.
10. Conduct of the Business Prior to Closing. Until the Closing Date,
the Seller and Seller's Shareholder agree to do the following:
10.1 Ordinary Course. The Seller will engage in activities or
transactions only in the ordinary course of its business, and use its reasonable
commercial best efforts to preserve its business including preserving the
goodwill of suppliers, customers and others having business relations with the
Seller;
10.2 Compliance. The Seller will not take any action which
will cause the Seller to be in violation in any of the representations or
warranties contained in Section 8 of this Agreement.
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10.3 Normal Use. All equipment, buildings, offices, and other
personal or real property owned, leased or used by Seller or the Seller will be
kept and maintained in normal good operating condition and repair, normal wear
excepted.
10.4 Insurance. The Seller will maintain and enforce at all
times between the date of this Agreement and the Closing Date, insurance of the
type and character and in amounts heretofore carried by the Seller.
10.5 Investigation. The Seller will continue to afford the
Buyer and its agents full and free access to its business premises, properties,
books, tax returns and records in order that the Buyer may have full opportunity
to make such investigation as they shall desire of the business affairs of the
Seller upon reasonable notice during normal business hours.
11. Third Party Consents. On or before the date of Closing, the Buyer
shall use commercially reasonable efforts to obtain the consents of all
requisite third parties in order to effectuate the transaction contemplated
herein.
12. Conditions to Seller's Obligation to Close. Unless waived in
writing by the Seller, the obligation of the Seller to sell the Acquired Assets
to the Buyer shall be subject to the following conditions precedent:
12.1 Representations and Warranties True. The representations
and warranties made by the Buyer shall be true and correct in all material
respects as of the Closing Date with the same force and effect as if they had
been made on and as of the Closing Date.
12.2 Performance. The Buyer shall have performed and complied
with all agreements and conditions required by this Agreement to be performed
and complied with by the Buyer prior to or at the Closing.
13. Conditions to Buyer's Obligation to Close. Unless waived in writing
by the Buyer, the obligations of the Buyer to purchase the Acquired Assets shall
be subject to the following conditions precedent:
13.1 Representations and Warranties True. All the
representations and warranties of the Seller and the Seller's Shareholder
contained in this Agreement shall have been true and correct in all material
respects when made and shall be true and correct in all material respects on and
as of the Closing Date as if then made or given, except to the extent such
warranties and representations may have been affected by changes specifically
permitted by this Agreement.
13.2 Performance. The Seller shall have performed and complied
with all agreements and conditions required by this Agreement to be performed
and complied with by Seller prior to or at the Closing.
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13.3 No Material Adverse Change. During the period from
signing this Agreement to the Closing Date, there shall not have been any
material adverse change in the financial condition of the Seller, and the Seller
shall not have sustained any material loss or damage to the Acquired Assets,
whether or not insured, that affects its ability to conduct its business.
13.4 Tender. The Seller shall have delivered the Acquired
Assets to the Buyer, and all other actions required of Seller or the Seller's
Shareholder under this Agreement shall have been taken.
13.5 Third Party Approvals. Seller has obtained all requisite
third party consents to the sale and transfer of all the Acquired Assets.
13.6 UCC Termination Statements. Seller shall have delivered
to Buyer UCC-3 Termination Statements for all financing statements or other
liens covering the Acquired Assets, if any.
13.7 Delivery of Records. The Seller shall have delivered
accurate and complete copies of the following records and documents:
(a) all bills of sale, titles, assignments, receipts,
warranties and other documents evidencing title to or otherwise effectuating the
transfer of the ownership of all the Acquired Assets from Seller to Buyer;
(b) all invoices, orders, contracts and other
documentation relating, in any manner to the Acquired Assets.
13.8 No Injunction. At Closing there shall be no injunctions
or restraining orders of any nature issued by any court of competent
jurisdiction or administrative body directing that this Agreement or any
material transaction contemplated hereby shall not be consummated as provided
for herein; there shall be no investigation, action or other proceeding pending
before any court or governmental authority or threatened against Seller in
connection with this Agreement or consummation of this transaction contemplated
herein; none of the parties hereto shall have received from any governmental
authority any notice, oral or written, of any potential litigation, civil or
criminal or administrative, against Seller for violations alleged to arise out
of the consummation of the transaction contemplated hereby.
14. Closing. The closing of the transactions provided for in this
Agreement (the "Closing") shall be deemed effective at the close of business of
Seller on April 30, 1998, or upon such later date upon which the parties may
mutually agree to close (the "Closing Date"). Unless specifically agreed to in
writing, Seller will make available and deliver to Buyer the Acquired Assets on
the date of execution of this Agreement.
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The risk of loss to the property being sold hereunder shall be and
remain with the Seller until the Closing of the sale, at which time the risk of
loss to such property shall pass to the Buyer. The Seller shall be responsible
for the discharge of all of its obligations to employees employed by Seller
accrued to the Closing Date, including all salaries and wages, commissions, sick
pay and vacation pay obligations. The Buyer shall have no responsibility to
employ any of the Seller's employees or to make any payment to them whatever for
services rendered to the Seller. Furthermore, Buyer shall be under no obligation
to continue any of Seller's prior contracts with any suppliers or vendors, or to
continue any of Seller's prior distributor relationships.
15. Termination/Unwind.
15.1 Grounds for Termination. Buyer may, at any time prior to
Closing, terminate this Agreement if:
(a) any of the material representations and warranties made
by Seller or Seller's Shareholder as set forth herein or otherwise in connection
with this Agreement are found to be materially inaccurate, in the opinions of
Buyer's legal counsel and/or independent certified public accountants; or
(b) Seller or Seller's Shareholder fail to perform any of
its respective obligations pursuant to the terms of this Agreement on or before
the Closing Date; or
(c) the financial information, including the audited
financial statements required to be provided in accordance with Section 8.8 is
not, in the sole and absolute discretion of Buyer, substantially and materially
as represented and as compared with the financial information provided by Seller
prior to the date of this Agreement or the Closing Date; or
(d) Buyer, in its sole and absolute discretion, determines
not to consummate the proposed transactions after its due diligence review of
Seller.
15.2 Procedure Upon Termination. In the event of termination and
abandonment by any party hereunder, notice thereof shall forthwith be given to
other parties and the transactions contemplated by this Agreement shall be
terminated and/or abandoned without further action by the parties. Except as
provided in Section 16 (which obligations shall survive any termination and/or
abandonment of this transaction) and except for breaches or the non-fulfillment
of the warranties, representations, covenants and agreements contained in this
Agreement by such party, none of the parties shall have any further liability or
obligation to the other under this Agreement; subject, however, to Section 29.
15.3 Unwind. If, at any time after Closing, Seller is unable
to provide audited financial statements, Buyer shall be entitled to terminate
and unwind this transaction by way of rescission. Acquiror shall also be
entitled to terminate and unwind this transaction by way of rescission, should
audited financial statements be provided that, in the opinions of Buyer's legal
counsel and independent certified public accountants, vary materially from the
unaudited financial statements to be provided under Section 8.8. Notice of
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rescission shall be effective when delivered, in writing, executed by Buyer's
Chairman, with the approval of the Board of Directors. Seller, Seller's
Shareholder, Buyer and TSIG shall then immediately take those steps necessary to
unwind the transaction so that Seller and Buyer are in the same unrelated
positions as before the Closing Date.
16. Indemnification.
16.1 Indemnification by Seller and Seller's Shareholder. The
Seller and Seller's Shareholder hereby agree to indemnify, defend and hold
harmless Buyer, from, against, and with respect to any claim, liability,
obligation, loss, damage, assessment, tax, judgment, action, suit, proceeding,
demand, cost or expense (including, without limitation, reasonable attorneys
fees and costs, and expenses reasonably incurred in investigating, preparing,
defending against or prosecuting any litigation or claim), of any kind or
character, arising out of or in any manner incident, relating or attributable to
any failure of Seller to perform or observe, or to have performed or observed,
in full, any covenant, agreement or condition to be performed or observed by the
Seller under this Agreement or under any certificate or other document or
agreement signed by Seller in connection with this Agreement, or arising out of
or in any manner incident, relating or attributable to the breach of any
representation or warranty by the Seller under this Agreement or under any
certificate or other document or agreement signed by Seller in connection with
this Agreement. The obligations contained in this Section shall survive Closing.
16.2 Indemnification by Buyer. Buyer hereby agrees to
indemnify, defend and hold Seller and Seller's Shareholder harmless from,
against and with respect to any claim, liability, obligation, loss, damage,
assessment, tax, judgment, action, suit, proceeding or demand, cost or expense
(including, without limitation, reasonable attorneys fees and costs, and
expenses reasonably incurred in investigating, preparing, defending against or
prosecuting any litigation or claim), of any kind or character, arising out of
or attributable to any failure of Buyer to perform or observe, or to have
performed or observed, any covenant, agreement or condition of the Buyer under
this Agreement, or relating or attributable to the breach of any representation
or warranty by the Buyer under this Agreement or under any certificate or other
document or agreement signed by Buyer in connection with this Agreement. The
obligations contained in this Section shall survive Closing.
16.3 Notice and Defense. In the case of any action or claim
brought by a third party against the Buyer, or the Seller, for an indemnifiable
claim, the party against whom the claim is brought must, as a condition to
enforceability of the other parties indemnity obligations hereunder, give the
party to whom the obligation to indemnify may accrue prompt written notice of
the action or claim and afford such party the opportunity to direct and control
the negotiations, defense and settlement of the action or claim. The
indemnifying party may elect within twenty (20) days after receipt of such
notice to contest the claim in such manner as it deems necessary or advisable.
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If the indemnifying party elects to contest such claim, the indemnified party
shall have the right to appoint associate counsel in such proceedings at its own
expense. The indemnifying party shall not have the right to settle an
indemnifiable matter except with the consent of the indemnified party. The
indemnified party shall permit the indemnifying party reasonable access to the
books and records of the indemnified party and its subsidiaries and shall
otherwise cooperate with the indemnifying party in connection with any matter or
claim for indemnification. If the indemnifying party does not elect to contest
such claim, the indemnified party shall have the exclusive right to prosecute,
defend, compromise, settle or pay such claim and receive indemnification
therefor. If neither the indemnifying party nor the indemnified party elect to
contest the claim, then the indemnifying party shall pay the amount of any
indemnifiable claim within 30 days after receipt of the notice of claim.
16.4 Third-Party Indemnification. Each of Seller and Buyer
shall make a good faith attempt (which shall not be deemed to include an
obligation to commence any litigation) to seek indemnification from any third
parties, including insurers, who may be liable upon any claims made against
Seller or Buyer and for which the other party would be liable under this
Section. To the extent either party indemnifies the other party for claims upon
which third parties, including insurers, may be liable, the indemnified party
shall, to the extent permissible, subrogate to the indemnifying party its rights
with respect to such claims.
17. Assignment of Covenants Not To Compete and Non-Disclosure
Agreements. The Seller and Seller's Shareholder hereby assign to the Buyer all
of Seller's rights under all contracts or instruments of any nature which
benefit Seller by providing for covenants not to compete and the non-disclosure
of Seller's confidential information; provided, no obligations (if any) of the
Seller under such instruments are, however, being assumed by virtue of this
Section.
18. Covenant Not To Compete. As a further inducement to Buyer to enter
into this Agreement, Seller and Seller's Shareholder each covenant and agree as
follows:
18.1 Confidentiality. Seller and Seller's Shareholder shall
hold in confidence, and shall not disclose any and all secret or confidential
information of Seller from the date of the execution of this Agreement, and
shall not use any such information after Closing without the prior written
consent of Buyer.
18.2 Non-Competition. Seller and its successors and affiliates
shall not, either alone or in partnership or in conjunction with any person,
firm, association, syndication, company or corporation as principal, agent,
consultant, employee or shareholder, directly or indirectly, or in any other
manner engage in competition with Buyer for a period of six (6) years from the
Closing. During such six (6) year period, the parties named in this Section
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Page 13 of 17
shall not directly or indirectly solicit or entice or in any way divert any
vendor, supplier, customer, distributor or strategic relationship of Buyer to do
business with any entity in a manner which impairs or competes with the conduct
of Buyer's business. Seller's Shareholder has entered into an employment
agreement with Buyer dated this date, and has agreed to comply with
non-competition and non-disclosure provisions outlined in said employment
agreement.
18.3 Equitable Relief. Seller and Seller's Shareholder
acknowledge the irreparable injury that will result to Buyer and its business
and properties if such parties should breach the covenants contained in this
Section 18 and understands that Buyer purchased the Acquired Assets in reliance
upon such covenants. Accordingly, if any of the parties listed in this Section
18 should breach such covenants, Buyer's remedies may include, in addition to
other available remedies and damages, injunctive relief enjoining breach of such
covenants without posting a bond.
The rights and obligations contained in this Section shall survive
Closing.
19. Setoff. In addition to and not in lieu of any other rights it may
have pursuant to this Agreement and the exhibits, Buyer shall have the right,
upon written notice to Seller, to withhold payment to Seller for any and all
losses, damages, costs, taxes and expenses, including attorneys' fees (the
"Losses") incurred by the Buyer by reason of a breach of any of the
representations, warranties or covenants of the Seller or Seller's Shareholder
made in this Agreement or in any exhibit hereto. Any such offset shall be only
for the amount of the Losses actually realized or estimated in good faith by the
Buyer, and the balance of the payment shall be paid to the Seller.
20. Bulk Sales Law. In lieu of compliance with the applicable
provisions of any bulk sales statute, if applicable, Seller and Seller's
Shareholder agree to hold harmless the Buyer from any and all liabilities
(including court costs and attorney's fees) in the event that any creditor or
other claimant shall make a claim of any kind against the Buyer or the Acquired
Assets or the proceeds thereof in the hands of the Buyer, other than with
respect to an obligation or liability of the Seller expressly assumed under this
Agreement by the Buyer.
21. Survival of Representations and Warranties. All representations and
warranties made hereunder and in any exhibits or certificates delivered pursuant
hereto shall be deemed to be material and to have been relied upon by the Buyer
and Seller, notwithstanding any investigation heretofore or hereafter made by or
on behalf of the Buyer or Seller, and shall survive the Closing for a period of
three (3) years.
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22. Notices. To be effective, any notice hereunder shall be in writing,
delivered in person or mailed by certified or registered mail, postage prepaid,
to the appropriate party or parties at the addresses set forth below their
signatures hereto, or to such other address as the parties may hereinafter
designate.
23. Amendment and/or Modification. Neither this Agreement nor any term
or provision hereof may be changed, waived, discharged, amended or modified
orally, or in any manner other than by an instrument in writing signed by all of
the parties hereto.
24. Binding Effect. Subject to provisions hereof regarding assignment,
if any, this Agreement shall be binding upon and inure to the benefit of the
respective parties, and their legal representatives, successors, assigns and
heirs.
25. Interpretation and Fair Construction of Contract. This Agreement
has been reviewed and approved by each of the parties. In the event it should be
determined that any provision of this Agreement is uncertain or ambiguous, the
language in all parts of this Agreement shall be in all cases construed as a
whole according to its fair meaning and not strictly construed for nor against
either party.
26. Undertaking and Further Assurances. Each party to this Agreement
shall perform any and all acts and execute and deliver any and all documents as
may be necessary and proper under the circumstances in order to accomplish the
intents and purposes of this Agreement and to carry out its provisions.
27. Costs and Attorneys' Fees. If any party hereto shall bring any
suit, arbitration or other action against another for relief, declaratory or
otherwise, arising out of this Agreement, the substantially prevailing party
shall have and recover against the other party, in addition to all costs and
disbursements, such sum as the Court or arbiter may determine to be a reasonable
attorney's fee.
28. Waiver of Breach. The failure of any party hereto to insist upon
strict performance of any of the covenants and agreements herein contained, or
to exercise any option or right herein conferred, in any one or more instances,
shall not be construed to be a waiver or relinquishment of any such option or
right, or of any other covenants or agreements, but the same shall be and remain
in full force and effect.
29. Specific Performance. The parties hereto acknowledge that the
rights of Buyer to consummate the transactions contemplated herein are unique
and of an extraordinary character, and that, in the event that Seller or
Seller's Shareholder fail to perform in accordance with this Agreement, Buyer
will be without an adequate remedy at law. The parties agree, therefore, that in
such event Buyer may, in addition to any remedies at law for damages or other
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Page 15 of 17
relief or other rights or remedies, institute and prosecute an action in any
court of competent jurisdiction to enforce specific performance of this
Agreement or seek any injunction or other equitable relief, and Seller and
Seller's Shareholder hereby waive the defense that Buyer has adequate remedy at
law.
30. Entire Agreement. This Agreement (and any attached exhibits)
contains the entire agreement and understanding of the parties with respect to
the entire subject matter hereof, and there are no representations, inducements,
promises or agreements, oral or otherwise, not embodied herein. Any and all
prior discussions, negotiations, commitments and understandings relating thereto
are merged herein, including any provisions of the LOI and the Plan. There are
no conditions precedent to the effectiveness of this Agreement other than as
stated herein, and there are no related collateral agreements existing between
the parties that are not referenced herein.
31. Expenses. Subject to the Indemnification provisions above, all
costs and expenses incurred by either party in negotiating this Agreement or in
consummating the transactions contemplated hereby, except as provided herein,
shall be paid by the party incurring such expenses.
32. Governing Law and Venue. The parties agree that this Agreement and
the transactions contemplated hereby shall be construed and enforced in
accordance with the laws of the State of Florida, and that any action or
proceeding that may be brought arising out of, in connection with or by reason
of this Agreement shall be brought only in a court of competent jurisdiction
within the county of Pinellas, Florida. Each of the parties hereto hereby
submits, unconditionally and irrevocably, to the jurisdiction to the aforesaid
courts for the purpose of any such lawsuits.
In the event of termination of this Agreement by mutual agreement of
the parties, or termination in accordance with Section 15, then Buyer, Seller
and Seller's Shareholder intend that no party would have any claim against any
other party resulting from or related to the failure to consummate the proposed
transactions, and that each party would, in any such case, pay its own costs and
attorneys' fees incurred as a result; subject, however, to Section 29.
33. Default Costs. In the event any party hereto has to resort to legal
action to enforce any of the terms hereof, such party shall be entitled to
collect attorney's fees and other costs from the party in default.
34. Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force and
effect.
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35. Headings. The section headings in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
36. Counterparts and Facsimile Signatures. This Agreement and any
exhibits, attachments, or documents ancillary hereto, may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument. Execution and delivery of this Agreement by exchange of facsimile
copies bearing the facsimile signature of a party hereto shall constitute a
valid and binding execution and delivery of this Agreement by such party. Such
facsimile copies shall constitute enforceable original documents.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement
effective on the date first set forth above.
Seller: BUYER:
COMPACT CONNECTION, INC., COMPACT CONNECTION, INC.,
a Nevada corporation a Delaware corporation
By: /s/ Xxxxxxx Xxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------ -----------------------------------
Xxxxxxx Xxxxxx, CEO Xxxxxx X. Xxxxxx, Chairman
0000 Xxxxxxxxxxx Xx., Xxxxx 00 000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx Xxx, XX 00000 Xx. Xxxxxxxxxx, XX 00000
SELLER'S SHAREHOLDER: TSIG:
XXXXXXX XXXXXX TELESERVICES INTERNATIONAL GROUP INC.
By: /s/ Xxxxxxx Xxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------ ----------------------------------
Xxxxxxx Xxxxxx, individually Xxxxxx X. Xxxxxx, Chairman
0000 Xxxxxxxxxxx Xx., Xxxxx 00 000 Xxxxxx Xxx. Xxxxx, Xxxxx 0000
Xxxxx Xxx, XX 00000 Xx. Xxxxxxxxxx, XX 00000
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Page 17 of 17
ADDENDUM TO THE
AGREEMENT FOR PURCHASE OF ASSETS
OF
COMPACT CONNECTION, INC.
(a Nevada Corporation)
This Addendum is made this 24th day of April 1998 to the Agreement for
Purchase of Assets of Compact Connection, Inc. (this "Addendum") dated April 23,
1998 among COMPACT CONNECTION, INC., a Nevada corporation (the "Seller");
XXXXXXX XXXXXX, (the "Seller's Shareholder"); and COMPACT CONNECTION, INC., a
Delaware corporation (the "Buyer"), and a wholly-owned subsidiary of
TELESERVICES INTERNATIONAL GROUP INC., a Florida corporation ("TSIG").
In further consideration of the agreement of Seller's Shareholder to
enter into the Employment Agreement with Buyer dated April 23, 1998, TSIG agrees
to provide the following funding to Buyer:
1. TSIG will provide, or cause to be provided, working capital for the
day to day operations of Buyer in the aggregate amount of $250,000 as follows:
* $50,000 will be provided the week of May 4, 1998.
* $50,000 will be provide upon completion of the audit of Seller.
* $50,000 will be provided the second week following completion of the
audit of Seller.
* $50,000 will be provided the fourth week following completion of the
audit of Seller.
* $50,000 will be provided the sixth week following completion of the
audit of Seller.
2. TSIG will provide, or cause to be provided, up to $2,000,000 in
additional funding for such specific purposes as may be requested by the Board
of Directors of Buyer.
The working capital or additional funding to be provided may be in the
form of cash, equipment, computer hardware or software or other assets, or any
combination thereof, as requested by the Board of Directors of Buyer.
This Addendum may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument. Execution and delivery of
this Addendum by exchange of facsimile copies bearing the facsimile signature of
a party hereto shall constitute a valid and binding execution and delivery of
this Addendum by such party. Such facsimile copies shall constitute enforceable
original documents.
IN WITNESS WHEREOF, the parties hereto have signed this Addendum
effective on the date first set forth above.
Seller: BUYER:
COMPACT CONNECTION, INC., COMPACT CONNECTION, INC.,
a Nevada corporation a Delaware corporation
By: /s/ Xxxxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
----------------------------- -----------------------------------
Xxxxxxx Xxxxxx, CEO Xxxxxx X. Xxxxxx, Chairman
SELLER'S SHAREHOLDER: TSIG:
XXXXXXX XXXXXX TELESERVICES INTERNATIONAL GROUP INC.
/s/ Xxxxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
---------------------------------- -----------------------------------
Xxxxxxx Xxxxxx, individually Xxxxxx X. Xxxxxx, Chairman
