EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and
entered into this 4th day of March, 2002, by and among FIREBALL ENTERPRISES,
LLC, an Oklahoma limited liability company, together with its successors and
assigns ("Fireball"), with mailing address c/x Xxxxxx & Xxxxxx, PLLC, 0000 X.X.
00xx Xxxxxx, Xxxxx 000, Xxxxxxxx Xxxx, Xxxxxxxx 00000, and ZENEX TELECOM, INC.,
formerly known as Lone Wolf Energy, Inc., a Colorado corporation ("Zenex
Telecom"), XXXX X. XXXXXX, an individual ("Xxxx Xxxxxx"), XXXXXXX X. XXXXXX, an
individual ("Xxxx Xxxxxx"), XXX XXXXXX, formerly known as XXX XXXXXXXX, an
individual and the spouse of Xxxx Xxxxxx ("Xxx Xxxxxx"), and NEWBOY, INC., a
corporation ("Newboy"), which is owned and controlled by Xxxx Xxxxxx (Xxxx
Xxxxxx, Xxxx Xxxxxx, Xxx Xxxxxx and Newboy shall be sometimes collectively
referred to herein as the "Shareholders"). Zenex Telecom shall for all purposes
under this Agreement be deemed to have the mailing address of Zenex Telecom, 000
Xxxxxx X. Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxx Xxxx, Xxxxxxxx 00000. The
Shareholders shall for all purposes under this Agreement be deemed to have the
mailing address c/o Xxxx Xxxxxx, 00000 Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxx
00000-0000. Fireball, Zenex Telecom, Xxxx Xxxxxx, Xxxx Xxxxxx, Xxx Xxxxxx and
Newboy are sometimes collectively referred to in this Agreement as the
"Parties."
RECITALS
A. Zenex Telecom is a Colorado corporation and a publicly-held
company which files periodic reports with the United States Securities and
Exchange Commission ("SEC"). Zenex Telecom is engaged in the telecommunications
business through its second tier subsidiary, Zenex Long Distance. Inc., an
Oklahoma corporation, d/b/a Zenex Communications, Inc. ("Zenex Long Distance"),
the wholly-owned subsidiary corporation of Prestige Investments, Inc.. an
Oklahoma corporation ("Prestige"), the wholly-owned subsidiary corporation of
Zenex Telecom.
B. Zenex Long Distance is engaged in the business of providing
long distance calling cards and service in the telecommunications industry and
possesses state and federal regulatory authority to transact business in
forty-nine (49) states of the United States of America at its only offices in
Oklahoma City, Oklahoma County, Oklahoma, located at 000 Xxxxxx X. Xxxx Xxxxxx,
Xxxxx 000, Xxxxxxxx Xxxx, Xxxxxxxx 00000 (the "Business").
C. Prestige is a holding company that and owns all of the
issued and outstanding capital stock of Zenex Long Distance. Zenex Telecom, in
turn, is a holding company that owns all of the issued and outstanding capital
stock of Prestige. The Shareholders are the owners and record holders of shares
of Zenex Telecom described below in this Agreement (the "Shares"). Xxxx Xxxxxx
and Xxxx Xxxxxx are principal executive officers of Zenex Telecom, Prestige and
Zenex Long Distance and all of the members of the Board of Directors of Zenex
Telecom, Prestige and Zenex Long Distance. Xxxx Xxxxxx and Xxxx Xxxxxx also own
options to acquire certain additional shares of the common capital stock of
Zenex Telecom ("Stock Options") for the exercise price and subject to certain
other terms and conditions specified in the agreements evidencing those Stock
Options ("Stock Option Agreements").
D. Fireball desires to acquire the Shares from the
Shareholders and the Stock Options from Xxxx Xxxxxx and Xxxx Xxxxxx for the
purchase price and other valuable consideration set forth herein, subject to the
terms and conditions set forth and more specifically described below in this
Agreement.
E. As the executive officers and members of the Board of
Directors of Zenex Telecom, Prestige and Zenex Long Distance, Xxxx Xxxxxx and
Xxxx Xxxxxx have existing employment agreements and other written agreements and
documents entitling them to receive certain employment benefits and payments
with regard to their employment by Zenex Telecom, Prestige and/or Zenex Long
Distance and in regard to any termination of their employment by any of those
entities ("Employee Benefits"). Zenex Telecom owns certain shares of stock in
Eagle Building Technologies, Inc. ("Eagle") acquired pursuant to the agreement
dated August 14, 2001 between Eagle and Zenex Telecom (the "Eagle Agreement").
As a material inducement for Fireball to enter into this Agreement, Xxxx Xxxxxx
and Xxxx Xxxxxx will surrender any and all right, title and interest which they
have in and to their employment agreements and the other said Employee Benefits
from Zenex Telecom, Prestige and/or Zenex Long Distance solely in exchange for
the transfer and assignment to Xxxx Xxxxxx and Xxxx Xxxxxx by Zenex Telecom on
the Closing Date (as defined below) of all of the shares of Eagle stock ("Eagle
Stock") owned by Zenex Telecom and the Eagle Agreement. In exchange, Xxxx Xxxxxx
and Xxxx Xxxxxx will agree to release any and all rights to the said Employee
Benefits in the manner set forth and described below in this Agreement and to
resign from all positions that they hold as an officer or director of Zenex
Telecom, Prestige, Zenex Long Distance and/or any of their respective
Affiliates, in a manner satisfactory to Fireball on the Closing Date.
F. Accordingly, Fireball, on the one hand, and the
Shareholders, on the other hand, desire to make certain representations,
warranties, covenants and other agreements in connection with the transactions
contemplated in this Agreement.
NOW, THEREFORE, in consideration of the aforementioned
Recitals, the premises, and of the mutual covenants, agreements, promises,
representations and warranties set forth herein, and for such other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the Parties hereto, the Parties hereto do hereby covenant and
agree as follows.
ARTICLE I
DEFINITIONS
The terms defined in this Article I shall have the following
respective meanings for all purposes of this Agreement and all schedules and
exhibits hereto:
1.1 "AFFILIATE" means with respect to any Person, any other
Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under direct or indirect common control with,
such first Person. For purposes of this definition, the term "CONTROL"
(including the correlative meanings of the terms "CONTROLS," CONTROLLED BY," and
"UNDER DIRECT OR INDIRECT CONTROL WITH") as used with respect to any Person,
shall mean the possession, directly
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or indirectly, of the power to direct or cause the direction of the management
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise.
1.2 "BUSINESS" shall have the meaning given to that term in
Paragraph B of the Recitals above.
1.3 "CLOSING" means the consummation and effectuation of the
transactions contemplated herein pursuant to the terms and conditions of this
Agreement and subject to the provisions of Article II, below, which shall occur
(a) at 2:00 p.m. CST in the offices of Fellers, Snider, Xxxxxxxxxxx, Xxxxxx &
Xxxxxxx, P.C., in Oklahoma City, Oklahoma, on March 5, 2002, or on such other
date or at such other time or place as is mutually agreed upon by the Parties
hereto.
1.4 "CLOSING DATE" means March 6, 2002, or such later date
that the Parties may mutually agree on which the Closing occurs.
1.5 "CODE" means the Internal Revenue Code of 1986, as
amended.
1.6 "EMPLOYEE BENEFITS" means all wages, accrued vacation,
sick leave and personal day payments, employment contracts and collective
bargaining agreements, salary continuation (for disability or otherwise),
scholarship programs or other compensatory practices, whether formal or
informal, for the benefit of one or more present or former Employees or their
beneficiaries, medical, dental and hospitalization, Medicare premium
reimbursement, sick pay, sickness and accident benefits, short- and long-term
disability benefits, workers' compensation, life insurance (and any other death
benefits) and any and all other individual and group benefits under all Employee
Plans and other arrangements in effect or covering one or more employees or
retired, disabled or terminated Employees (including their dependents and
beneficiaries).
1.7 "EMPLOYEE PLANS" means any of the following which is or
was at any time during the preceding seven (7) years sponsored by Zenex Telecom,
Prestige or Zenex Long Distance; any employee welfare benefit plan [within the
meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")] or employee pension benefit plan (within the meaning of
Section 3(2) of ERISA), including all collectively bargained plans, and all
plans or policies providing for "fringe benefits" (including, but not limited
to, vacation, paid holidays, personal leave, employee discount, educational
benefits, or similar programs), and all other bonus, incentive, compensation,
profit sharing, deferred compensation, stock, severance, retirement, health,
life, disability, group insurance, employment, stock option, stock purchase,
stock appreciation rights, supplemental unemployment, layoff, consulting, or any
other similar plan, agreement, policy or arrangement (whether written or oral,
qualified or unqualified, currently effective or terminated), and any trust,
escrow or other agreement related thereto, regardless of whether funded.
1.8 "EMPLOYEES" shall mean all present employees of Zenex Long
Distance whose services are or have been used primarily by or in connection with
the Business, including part-time Employees.
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1.9 "FINANCIAL STATEMENTS" shall have the meaning given to
that term in Section 3.4 of this Agreement.
1.10 "INTELLECTUAL PROPERTY" means all Patents, Know-How,
Technology, trademarks and copyrights which are used by Zenex Telecom or Zenex
Long Distance in the conduct of its Business.
1.11 "KNOW-HOW" means all technical information, know-how
data, techniques, discoveries, inventions, ideas and other information (whether
or not patentable) that (i) Zenex Telecom, Prestige, Zenex Long Distance or the
Shareholders, or their respective Affiliates, have or may develop or acquire; or
(ii) that Zenex Telecom, Prestige, Zenex Long Distance or the Shareholders, or
their respective Affiliates, control; and (iii) is necessary or desirable in the
use, including any use in connection with research and experimentation,
manufacture, sale or other disposition or which is otherwise essential with
regard to the conduct of the Business.
1.12 "LIABILITIES" means any direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility, known
or unknown, fixed or unfixed, xxxxxx or inchoate, liquidated or unliquidated,
secured or unsecured, accrued, absolute, contingent or otherwise, including
without limitation, liabilities on account of Taxes, other governmental charges
or lawsuits brought, whether or not of the kind required by generally accepted
accounting principles to be set forth in a financial statement.
1.13 "LIEN" means any lien, pledge, mortgage, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction, or any other encumbrance, restriction or
limitation whatsoever.
1.14 "LOSSES" means any and all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and attorneys' fees and disbursements and costs of
investigation.
1.15 "MACHINERY AND EQUIPMENT" means all of the office
equipment, machinery, vehicles, equipment, desktop computers, hand-held
computers (including, without limitation, all printers, modems, terminals and
controls used in operating such desktop or hand-held computers and all spare
parts of such equipment), all software, fixtures, telephone numbers and other
personal property and fixed assets owned by Zenex Telecom, Prestige or Zenex
Long Distance, or their respective Affiliates, and used in the Business.
1.16 "NOTICE" means any notice given pursuant to the terms of
Section 10.3 of this Agreement, below.
1.17 "PERSON" means an individual, partnership, corporation,
trust, unincorporated organization, association or joint venture or government
agency, political subdivision or instrumentality thereof.
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1.18 "ORDINARY COURSE OF BUSINESS" means an action taken by a
Person that: (i) is consistent with the past practices of such Person and is
taken in the ordinary course of the normal day-to-day operations of such Person;
(ii) is not required to be authorized by the Board of Directors of such Person
(or by any person or group of persons exercising similar authority); and (iii)
is similar in nature and magnitude to action customarily taken, without any
authorization by the Board of Directors (or by any person or group of persons
exercising similar authority), in the ordinary course of the normal day-to-day
operations of such Persons that are in the same line of business as such Person.
1.19 "REGULATORY APPROVALS" means all necessary approvals,
certifications, licenses and authorizations and all pending applications seeking
such approvals, licenses or authorizations from any local, state or federal
governmental authority necessary for the conduct of the Business of Zenex
Telecom, Prestige or Zenex Long Distance, and the marketing and sale of long
distance services provided by Zenex Long Distance.
1.20 "RETURNS" means all returns, declarations, reports,
statements and other documents required to be filed in respect of Taxes and
Employee Benefit Plans, and the term "RETURN" means any one of the foregoing
Returns.
1.21 "TARIFFS" means all state and federal tariffs, licenses,
consents, approvals, permits and authorizations owned by Zenex Long Distance
that are issued by the federal or state regulatory agency having the authority
to regulate long distance telecommunications and which are necessary for Zenex
Long Distance to possess in order to conduct the Business in the manner in which
it is currently being conducted.
1.22 "TAXES" means all federal, state, local, foreign and
other net income, gross income, gross receipts, sales, use, documentary, ad
valorem, value-added, transfer, franchise, profits, license, lease, real
property gains or transfer, service, service use, rental, withholding, payroll,
employment, excise, worker's compensation, Pension Benefit Guaranty Corporation
premiums, severance, stamp, occupation, premium, property, windfall profits,
production, customs, duties or other taxes, assessments, fees, levies or other
governmental charges of any kind whatever, together with any penalties,
additions to tax or additional amounts with respect thereto and the term "Tax"
means any one of the foregoing Taxes.
1.23 "TECHNOLOGY" means, collectively, all of the right, title
and interest of Zenex Telecom, Prestige, Zenex Long Distance or the Shareholders
in Know-How and Patents.
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ARTICLE II
SALE AND PURCHASE OF SHARES STOCK OPTIONS; CLOSING
2.1 SALE AND PURCHASE OF SHARES AND STOCK OPTIONS. Subject to
the terms and conditions of this Agreement and on the basis of the
representations, warranties, covenants and agreements contained herein, the
Shareholders agree to sell to Fireball, and Fireball agrees to purchase from the
Shareholders, the Shares and Stock Options, and to accept, take delivery of and
pay for, the Shares and Stock Options on the Closing Date in accordance with the
provisions of this Article II.
2.2 TOTAL PURCHASE PRICE. The total Purchase Price to be paid
by Fireball to the Shareholders for the Shares and the Stock Options shall be
One Hundred Thousand and No/100ths Dollars ("Purchase Price").
2.3 ALLOCATION OF PURCHASE PRICE AMONG SHAREHOLDERS. At the
Closing, the Shareholders shall provide written instructions to Fireball
allocating the Purchase Price among the Shareholders pro-rata on the basis of
the number of Shares owned by each of them, and the number of Stock Options
owned by Xxxx Xxxxxx or Xxxx Xxxxxx, respectively, as listed opposite their
respective names on EXHIBIT 2.3 to this Agreement.
2.4 MANNER OF PAYMENT OF PURCHASE PRICE. The Purchase Price
shall be paid by Fireball to the Shareholders at Closing by delivery of
cashier's checks or by such other method of payment mutually acceptable to the
Shareholders and Fireball.
2.5 RELEASE OF OF PERSONAL GUARANTIES. Fireball shall deliver
at Closing releases of Xxxx Xxxxxx and Xxxx Xxxxxx from all liabilities under
any and all personal guaranties that they have executed or delivered to Federal
Bank Centre in Broken Arrow, Oklahoma, to secure the repayment of the
indebtedness of Zenex Telecom, Prestige or Zenex Long Distance, such that Xxxx
Xxxxxx and Xxxx Xxxxxx shall have no further obligations or liabilities,
contingent or otherwise, with regard to the repayment of such indebtedness.
2.6 TERMINATION AND RELEASE OF EMPLOYMENT AGREEMENTS AND
EMPLOYEE BENEFITS. Zenex Telecom will transfer and assign the Eagle Stock and
Eagle Agreement to Xxxx Xxxxxx and Xxxx Xxxxxx on the Closing Date hereunder, in
such proportions as they shall designate on the Closing Date in EXHIBIT 2.6,
which is attached hereto and made an integral part hereof, in exchange for the
full and complete release, satisfaction and acquittance of any and all rights or
claims that either Xxxx Xxxxxx or Xxxx Xxxxxx has, had, may have had, or may
hereafter have had under their respective Employment Agreements with Zenex
Telecom, Prestige or Zenex Long Distance, or with regard to any other document
or agreement, oral or written, between them, or either of them, and Zenex
Telecom, Prestige or Zenex Long Distance concerning their right or entitlement
to any Employee Benefits or payment to be received by them on the termination of
their employment. In this regard, Xxxx Xxxxxx and Xxxx Xxxxxx agree, as the sole
members of the Board of Directors of Zenex Telecom, to expressly approve by
appropriate resolution of the Board of Directors of Zenex Telecom this Agreement
and, in particular, the transfer and assignment to them
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by Zenex Telecom at the Closing hereunder of the Eagle Stock and Eagle Agreement
in the manner provided above. Xxxx Xxxxxx and Xxxx Xxxxxx agree at Closing to
deliver to Fireball a certified copy of the resolutions of the Board of
Directors of Zenex Telecom authorizing transfer of Eagle Stock and Eagle
Agreement to Xxxx Xxxxxx and Xxxx Xxxxxx on the Closing Date.
2.7 DESIGNATION OF NEW MEMBERS AND FILLING CURRENT VACANCY OF
BOARD OF DIRECTORS. Xxxx Xxxxxx and Xxxx Xxxxxx agree to cause the respective
Board of Directors of Zenex Telecom, Prestige and Zenex Long Distance to adopt
resolutions, effective immediately before Closing, to increase the positions on
the respective Board of Directors of Zenex Telecom, Prestige and Zenex Long
Distance from three (3) to five (5) and to designate two of the following named
individuals to fill the two new positions on each of those respective Board of
Directors and the third named individual below to fill the current vacancy on
each of the respective Board of Directors of Zenex Telecom, Prestige and Zenex
Long Distance, effective at Closing:
Xxx Xxxxx
Xxx Xxxxxxxx
Xxxxx X. Xxxxxxxx
2.8 RESIGNATIONS OF XXXX XXXXXX, XXXX XXXXXX. Xxxx Xxxxxx and
Xxxx Xxxxxx agree to tender their executed resignations from all positions which
they hold as an employee, officer or a member of the Board of Directors of Zenex
Telecom, Prestige and Zenex Long Distance to the Boards of Directors of Zenex
Telecom, Prestige, and Zenex Long Distance at Closing, substantially in the form
of the resignations attached hereto as EXHIBIT 2.8 to this Agreement (the
"Resignations").
2.9 RELEASES TO BE EXECUTED AND DELIVERED BY XXXX XXXXXX AND
XXXX XXXXXX AT CLOSING. Xxxx Xxxxxx and Xxxx Xxxxxx agree to execute and deliver
to and for the benefit of Fireball, Zenex Telecom, Prestige and Zenex Long
Distance and their respective officers, directors, employees and agents, at
Closing, releases substantially in the form of EXHIBIT 2.9 to this Agreement
(the "Releases"), which shall be a full and complete general release and
discharge by Xxxx Xxxxxx and Xxxx Xxxxxx of any and all claims or causes of
action which either Xxxx Xxxxxx or Xxxx Xxxxxx has, have, might have had, or
hereafter might have had against Fireball, Zenex Telecom, Prestige, Zenex Long
Distance and/or each of their respective officers, directors, employees and
agents, except: (i) for any indemnification rights that the Xxxx Xxxxxx and Xxxx
Xxxxxx have immediately before Closing as officers or directors of those
respective entities under their current Certificates of Incorporation or
By-Laws, or applicable law, subject to the express terms and conditions thereof;
and (ii) their ability to enforce their rights and entitlements under this
Agreement against the Parties hereto. In addition to the forgoing, in
consideration of the payments being made to them and the other valuable
consideration being provided to them under this Agreement, Xxxx Xxxxxx and Xxxx
Xxxxxx agree: (i) to release and surrender any and all Liens which have been
granted to them, or either of them, on any assets or stock of Zenex Telecom,
Prestige or Zenex Long Distance to include, without limitation, any and all
pledges and security interests granted to them, or either of them, in the
Prestige or Zenex Long Distance common stock; (ii) to obtain the release of all
liens held as to the stock and/or assets of Zenex Telecom, Prestige
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and/or Zenex Long Distance by either Xxxxxx or FuturOmega; and (iii) shall
execute and deliver to Fireball or obtain from Xxxxxx and/or FuturOmega, as the
case may be, and deliver to Fireball at Closing the appropriate UCC termination
statements that are needed in order to effect the release of record of any
financing statements filed by them, or any of them, or by Xxxxxx and/or
FuturOmega, to perfect such security interests.
2.10 CLOSING. Consummation of the transactions contemplated by
this Agreement shall take place on the Closing Date, provided all of the
conditions precedent to the Parties respective obligations under this Agreement
have been fully performed and satisfied in accordance with this Agreement. The
Closing shall be effected on the Closing Date.
2.11 CLOSING DATE DELIVERIES BY FIREBALL AND BY ZENEX TELECOM.
At Closing, each of Fireball and Zenex Telecom shall execute and deliver to the
Shareholders, respectively, the following as indicated below:
2.11.1 The payment of the Purchase Price in the
manner required under the provisions of this Article II to be allocated
among the Shareholders in the manner specified by EXHIBIT 2.3;
2.11.2 The assignment of the Eagle Agreement and the
stock certificates representing all of the shares of Eagle Stock owned
by Zenex Telecom on the Closing Date, duly executed or endorsed for
transfer to Xxxx Xxxxxx and Xxxx Xxxxxx, in such proportions as they
shall designate to Zenex Telecom on EXHIBIT 2.6, by Zenex Telecom, or
with respect to the Eagle Stock accompanied by stock powers duly
executed by Zenex Telecom for transfer of the Eagle Stock to Xxxx
Xxxxxx and Xxxx Xxxxxx in the proportions so indicated.
2.12 CLOSING DATE DELIVERIES BY THE SHAREHOLDERS. At Closing,
the Shareholders shall deliver to Fireball and/or to Zenex Telecom, as the case
may be, the following items, as indicated below:
2.12.1 A certified copy of the Board of Directors
resolutions of Zenex Telecom, Prestige and Zenex Long Distance,
respectively, as applicable, as required and represented under the
provisions of Sections 2.5, 2.6 and 3.1, respectively, of this
Agreement, expressly approving, as applicable, Zenex Telecom entering
into this Agreement, the transfer and assignment by Zenex Telecom to
the Xxxx Xxxxxx and Xxxx Xxxxxx of the Eagle Stock and Eagle Agreement
for the considerations stated in this Agreement and the election of the
persons designated in Section 2.7, above, to each of their respective
Board of Directors;
2.12.2 Certificates evidencing the Shares in the
respective amounts set forth on EXHIBIT 2.3 to this Agreement, duly
endorsed for transfer, in such manner as Fireball may direct by written
instructions, by the Shareholders, or accompanied by stock powers duly
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executed by each of the Shareholders with regard to their respective
Shares for transfer to Fireball;
2.12.3 The transfer and assignment by Xxxx Xxxxxx and
Xxxx Xxxxxx, respectively, of all of their right, title and interest
in, to and under the Stock Option Agreements as set forth and fully
described on EXHIBIT 2.3 to this Agreement, such that Fireball shall
have full rights to exercise the Stock Options in accordance with the
the Stock Option Agreements from and after Closing, as fully as Xxxx
Xxxxxx and Xxxx Xxxxxx could have exercised such Stock Options on the
Closing Date;
2.12.4 The executed Resignations of Xxxx Xxxxxx and
Xxxx Xxxxxx;
2.12.5 Original, executed copies of the Releases and
any and all necessary UCC Termination Statements pertaining to any
financing statements filed with regard to all security interests
granted to Xxxx Xxxxxx or Xxxx Xxxxxx or to Xxxxxx or FuturOmega, in
the stock or assets of Zenex Telecom, Prestige or Zenex Long Distance,
which Releases shall be substantially in the form of EXHIBIT 2.9 to
this Agreement, delivered to Fireball and Zenex Telecom, executed by
Xxxx Xxxxxx and Xxxx Xxxxxx, respectively, and/or Xxxxxx or FuturOmega,
as the case may be (collectively, the "Releases").
2.12.6 Such other documents, assignments, transfers
or officers' certificates as Fireball may deem reasonable and necessary
in order to fully effectuate the transaction contemplated by this
Agreement under the circumstances.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
XXXX XXXXXX AND XXXX XXXXXX
Xxxx Xxxxxx and Xxxx Xxxxxx (collectively referred to in this
Article III as the "Newmans") covenant and agree to prepare and deliver to
Fireball on the Closing Date complete and correct copies of each of the Exhibits
required to be provided to Fireball by this Agreement. Xxxx Xxxxxx and Xxxx
Xxxxxx also do each respectively represent and warrant to Fireball as of the
Closing Date hereunder, as follows:
3.1 ORGANIZATION AND STANDING OF ZENEX TELECOM, PRESTIGE AND
ZENEX LONG DISTANCE. Zenex Telecom is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado, each of
Prestige and Zenex Long Distance is a corporation duly organized, validly
existing and in good standing under the laws of the State of Oklahoma, and each
of Zenex Telecom, Prestige and Zenex Long Distance has all requisite power and
authority (corporate and other), and is duly qualified and licensed and
possesses all respective licenses, franchises, permits and other governmental
authorizations necessary to own, lease and operate its respective assets and
properties and to conduct its respective business as now being conducted by it,
including, without limitation, the full power and authority for Zenex Long
Distance to provide long distance calling cards and service in the
telecommunications industry and for Zenex Telecom, Prestige and Zenex Long
Distance, respectively, to enter into and perform its respective obligations
under this Agreement and the transactions contemplated in this Agreement. Each
of Zenex Telecom, Prestige
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and Zenex Long Distance is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which its respective ownership or leasing
of property or the conduct of its respective business requires such licensing or
qualification and where the failure to be so licensed, qualified or in good
standing would have a material adverse effect on the financial condition,
operations, business or prospects of Zenex Telecom, Prestige or Zenex Long
Distance, respectively. Other than Zenex Telecom's ownership of Prestige and the
Eagle Stock and Prestige's ownership of the issued and outstanding capital stock
of Zenex Long Distance, neither Zenex Telecom, Prestige nor Zenex Long Distance
owns any equity interest, directly or indirectly, in any corporation, limited
liability company, partnership, joint venture, firm or other entity, of any kind
or nature. All approvals of this Agreement required to be obtained from the
Board of Directors or the Shareholders of Zenex Telecom, Prestige or of Zenex
Long Distance under their respective Articles or Certificate of Incorporation or
Bylaws, or under applicable law, have been obtained.
3.2 CAPITALIZATION OF PRESTIGE AND ZENEX. The authorized
capital stock of Zenex Telecom consists of One Hundred Million (100,000,000)
shares of Common Stock, par value, $0.001 per share, ("Zenex Telecom Stock"), of
which Twenty Nine Million Five Hundred Eight Thousand Two Hundred Ninety
(29,508,290) shares are issued and outstanding and Twenty Million (20,000,000)
shares of Preferred Stock, par value, $0.001 per share, of which none are issued
and outstanding. There are not any shares of the capital stock of Zenex Telecom
held in its treasury. All of the issued and outstanding shares of the Zenex
Telecom Stock are duly and validly authorized and issued, fully paid and
non-assessable and have not been issued in violation of any pre-emptive rights.
All of the outstanding capital stock of Prestige is owned by Zenex Telecom and
all of the outstanding capital stock of Zenex Long Distance is owned by
Prestige. All of the issued and outstanding shares of stock of Prestige and of
Zenex Long Distance, respectively, are duly and validly authorized and issued,
fully paid and non-assessable and have not been issued in violation of any
pre-emptive rights. The Shareholders are the record owners of all of the Shares
set forth opposite their names on EXHIBIT 2.3 to this Agreement and at Closing
the Shares will be free and clear of all liens, encumbrances, pledges, options,
charges, claims, security interests, agreements, equities and assessments
whatsoever, with the Shareholders having full right and authority to sell,
assign, transfer and deliver their Shares as provided in this Agreement. The
Shareholders own their Shares in the respective amounts and titled in the manner
set forth opposite their names on EXHIBIT 2.3. The Shares listed on EXHIBIT 2.3
to this Agreement constitute all of the Zenex Telecom Stock owned by or held for
the benefit of the Shareholders or their respective Affiliates, or any other
member of their family, with the sole exception of Xxxx Xxxxxx'x mother. At
Closing, all of the shares of Prestige stock are held by Zenex Telecom free and
clear of all liens, encumbrances, pledges, options, charges, claims, security
interests, agreements, equities and assessments whatsoever. Except as set forth
on EXHIBIT 3.2 to this Agreement, there are no outstanding securities
convertible into or exchangeable for the capital stock of either Zenex Telecom,
Prestige or Zenex Long Distance, respectively, and, except for the Stock
Options, there are no outstanding options, rights (pre-emptive or otherwise), or
warrants to purchase or to subscribe for any equity securities of either Zenex
Telecom, Prestige or Zenex Long Distance, respectively. All outstanding options,
rights or warrants to purchase or subscribe for any equity securities of Zenex
Telecom are set forth and fully described on EXHIBIT 3.2
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to this Agreement. The Stock Option Agreements listed on EXHIBIT 2.3 constitute
all of the Stock Option Agreements owned by, or held for the benefit of, Xxxx
Xxxxxx or Xxxx Xxxxxx or their, respective Affiliates, or any other member of
their family. Xxxx Xxxxxx and Xxxx Xxxxxx hold their respective interests in the
Stock Option Agreements free and clear of all liens, encumbrances, pledges,
options, charges, claims, security interests, agreements, equities and
assessments whatsoever with Xxxx Xxxxxx and Xxxx Xxxxxx having full right and
authority to sell, assign, transfer and deliver the Stock Option Agreements to
Fireball as herein provided. Except as listed on EXHIBIT 3.2 of this Agreement,
there are no outstanding agreements, arrangements, commitments or understandings
of any kind affecting or relating to the voting, issuance, purchase, redemption,
repurchase or transfer of the capital stock of either Zenex Telecom, Prestige or
Zenex Long Distance, respectively, or of any equity securities of either Zenex
Telecom, Prestige or Zenex Long Distance, respectively, except as expressly
provided for and described in this Agreement.
3.3 TRADE NAMES. To the knowledge of the Newmans, no other
person, firm or corporation is presently using or claiming, or has the right to
use or claim, any of the following trade names: "Zenex Telecom," "Prestige
Investments, Inc.," Zenex Long Distance, Inc." or "Zenex Communications, Inc.,"
or to any of the trademarks, logos or symbols used by either Zenex Telecom,
Prestige or Zenex Long Distance in conjunction with said trade names,
respectively. Zenex Telecom, Prestige and Zenex Long Distance have not conferred
any right or license to use any of the aforesaid trade names, trademarks, logos,
or symbols on any other person, firm or corporation. After the Closing Date, the
Shareholders shall forego and not make a claim to any right, title or interest
in or to the use of the trade names listed above in this Section, or any
trademarks, logos or symbols currently used or previously used by Zenex Telecom,
Prestige, Zenex Long Distance or the Shareholders in conjunction with any of
those said trade names or otherwise in any manner in conjunction with the
business being currently conducted by Zenex Telecom or Zenex Long Distance.
3.4 FINANCIAL STATEMENTS. The Shareholders have delivered to
Fireball each of the following financial statements: (i) the unaudited financial
statements of Zenex Telecom and of Zenex Long Distance, respectively (consisting
of a balance sheet and the related income statements), prepared internally by
Zenex Telecom and Zenex Long Distance, respectively, as of and for the year
ending December 31, 2001; and (ii) the unaudited internal financial statements
of Zenex Telecom and Zenex Long Distance, respectively (consisting of a balance
sheet and the related income statements) as of and for the one-month period
ending January 31, 2002 (collectively, the "Financial Statements"). The
Financial Statements fairly present the financial condition and results of
operations of Zenex Telecom and Zenex Long Distance, respectively, as of the
dates and for the periods indicated therein, were prepared in accordance with
the books and records of Zenex Telecom and Zenex Long Distance, respectively.
The respective books and records of Zenex Telecom and Zenex Long Distance, on
the basis of which such Financial Statements were prepared, fully and fairly
reflect all of the respective transactions of Zenex Telecom and Zenex Long
Distance, and are complete and correct in all material respects. The respective
books of account of Zenex Telecom and Zenex Long Distance reflect substantially
all of their respective, material items of income and expense, and substantially
all of their respective, material assets, liabilities and accruals, and are
maintained in form and substance adequate for preparing audited Financial
Statements in accordance with generally accepted accounting principles.
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3.5 LIABILITIES. To the knowledge of the Newmans, neither
Zenex Telecom, Prestige nor Zenex Long Distance has any indebtedness, obligation
or liability, contingent or otherwise, i.e. Liabilities, whether due or to
become due, which is required by generally accepted accounting principles to be
reflected in the Financial Statements, or which is material, except (i) those
reflected in their respective Financial Statements, (ii) those individual
Liabilities subsequently, respectively, incurred by them in the Ordinary Course
of Business, or (iii) those set forth in EXHIBIT 3.5 to this Agreement. Except
as set forth on Exhibit 3.5 to this agreement, all deposit accounts and notes
payable, and other Liabilities of Zenex Telecom, Prestige or of Zenex Long
Distance, respectively, are current and not in default.
3.6 TAXES. Except for calendar year 2001 and 2002, to the best
of the knowledge and belief of the Shareholders, each of Zenex Telecom, Prestige
and Zenex Long Distance has fully filed with the appropriate governmental
agencies, all tax reports and returns required to be filed, including, without
limitation, all federal, state and local income, franchise, sales and property
tax returns. A complete and accurate copy of the 2000 Returns has previously
been provided to Fireball. Each of Zenex Telecom, Prestige and Zenex Long
Distance has duly paid in full, or made adequate provision for the payment of,
all taxes and other charges shown on all Returns to be due or claimed to be due
in regard to such tax returns by federal, state or local taxing authorities.
There are no federal, state or local tax liens upon any of the Property or
assets of either Zenex Telecom, Prestige or Zenex Long Distance. All of such
reports and Returns are true, correct and complete in all material respects. To
the knowledge of the Newmans, all of the tax liabilities of Zenex Telecom,
Prestige and Zenex Long Distance for the current year to date and all prior
years, whether or not they have become due and payable, have been paid in full
and to the extent tax liabilities have accrued but not become payable, they are
properly reflected on the books of Zenex Telecom, Prestige and Zenex Long
Distance, respectively, or in the Financial Statements. No income, franchise,
sales or property tax Return of either Zenex Telecom, Prestige or Zenex Long
Distance is currently being audited by the Internal Revenue Service or any other
taxing authority having jurisdiction over them. Except as set forth on EXHIBIT
3.6 to this Agreement, each of Zenex Telecom, Prestige and Zenex Long Distance
is not a party to, or bound by, or has any obligation under any tax sharing or
similar agreement. There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any state or federal income tax
return of Zenex Telecom, Prestige or Zenex Long Distance for any period. Neither
Zenex Telecom, Prestige nor Zenex Long Distance is a party to any action or
proceeding by any governmental authority for assessment or collection of taxes,
and no claim for assessment or collection of taxes by any governmental authority
has been asserted against either Zenex Telecom, Prestige or Zenex Long Distance.
All federal or state income taxes that either Zenex Telecom, Prestige or Zenex
Long Distance is or was required by applicable laws to withhold or collect have
been duly withheld or collected and, to the extent required, have been paid to
the proper governmental body or other Person who is entitled by law to receive
such withholding.
3.7 PROPERTY AND ASSETS. To the knowledge of the Newmans,
neither Zenex Telecom, Prestige nor Zenex Long Distance owns any real property
and the real property leased by Zenex Telecom or Zenex Long Distance has never
been owned by anyone of them. Zenex Telecom,
12
Prestige and Zenex Long Distance each has good and marketable title to all of
its respective Property. To the knowledge of the Newmans, the Property is in
good operating condition and repair, normal wear and tear excepted.
3.8 LITIGATION AND PROCEEDINGS. Other than the threatened
legal action by Fireball and except as set forth in EXHIBIT 3.8 hereto, (i)
there is not pending any legal, administrative, arbitration, governmental or
other proceeding to which any of the Shareholders, Zenex Telecom, Prestige or
Zenex Long Distance is a party, or, to the knowledge of the Newmans, or of Zenex
Telecom, Prestige or Zenex Long Distance, to which any of them is threatened to
be made a party; (ii) to the knowledge of the Newmans, none of the Shareholders,
Zenex Telecom, Prestige or Zenex Long Distance is under any investigation with
respect to, or is charged with any violation or alleged violation of, any
federal, state, local or other law or regulation; (iii) to the knowledge of the
Newmans, neither any of the Shareholders, Zenex Telecom, Prestige nor Zenex Long
Distance, respectively, is subject to any order of any federal, state, or local
court or other governmental agency not generally applicable to entities engaged
in the same business as Zenex Telecom and/or Zenex Long Distance; (iv) no Person
has asserted, and to the knowledge of the Shareholders, Zenex Telecom, Prestige
or of Zenex Long Distance, no Person has grounds to assert any material claims
against any of the Shareholders, Zenex Telecom, Prestige or Zenex Long Distance,
based upon the wrongful action or inaction of any of the Shareholders, Zenex
Telecom, Prestige or Zenex Long Distance, or any of the respective officers,
directors, agents or employees of Zenex Telecom, Prestige or Zenex Long
Distance; and (v) no one has asserted and, to the knowledge of the Newmans,
Zenex Telecom, Prestige or Zenex Long Distance, there do not exist grounds for
any claims against any of the Shareholders, Zenex Telecom, Prestige or Zenex
Long Distance which have resulted or may result in litigation that will prevent
or delay the consummation of the transactions contemplated by this Agreement.
3.9 AUTHORITY. Each of the Shareholders and Zenex Telecom has
full power and authority to carry out the transactions provided for in this
Agreement on the terms and conditions set forth herein. The respective execution
and delivery by Zenex Telecom of this Agreement and the consummation by it of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action. This Agreement constitutes a valid and legally
binding obligation of Zenex Telecom and each of the Shareholders, respectively,
except that the enforcement of the rights and remedies created by this Agreement
is subject to bankruptcy, insolvency, reorganization and similar laws of general
application affecting the rights and remedies of creditors and that the
availability of the remedy of specific performance or of injunctive or other
equitable relief is subject to the discretion of the court before which any
proceeding therefor may be brought. Except as listed on EXHIBIT 3.9 hereto,
neither the execution and delivery of this Agreement, nor the consummation by
the Shareholders or Zenex Telecom of the contemplated transactions in accordance
with the terms and conditions of this Agreement, nor the respective compliance
by the Shareholders and Zenex Telecom with any of the provisions of this
Agreement, will violate, conflict with, result in a breach of, constitute a
default under, accelerate the performance required by the terms of, or permit
the termination of any order, writ, injunction, decree, statute, rule,
regulation or policy guidelines applicable to the Shareholders, Zenex Telecom,
Prestige or Zenex Long Distance, respectively, or any contract, agreement,
indenture or instrument that any of the Shareholders, Zenex Telecom,
13
Prestige or Zenex Long Distance is a party or by which any of the Shareholders,
Zenex Telecom, Prestige or Zenex Long Distance is bound or committed or the
respective Articles of Incorporation or Bylaws of Zenex Telecom. Except for the
approvals contemplated by this Agreement, each of the Shareholders, Zenex
Telecom, Prestige and Zenex Long Distance is not required to obtain any
consent, approval, order or authorization of, or to effect any registration,
declaration or filing with, any governmental authority, or court, or under any
court order, decree, or contract, agreement, indenture or instrument to which
any of the Shareholders, Zenex Telecom, Prestige or Zenex Long Distance is a
party, or that any of them is bound or committed in connection with the
execution and delivery of, or the consummation of the transactions contemplated
in, this Agreement.
3.10 ABSENCE OF CERTAIN CHANGES. Except as set forth in
EXHIBIT 3.10 to this Agreement or permitted by this Agreement, since December
31, 2001, none of the following actions, changes or matters has been taken by or
transpired with regard to either Zenex Telecom, Prestige or Zenex Long Distance:
3.10.1 any material adverse change in the financial
condition, operations, business or prospects of either Zenex Telecom,
Prestige or Zenex Long Distance, respectively, either individually or
taken as a whole, other than changes which are the result of changes in
laws or regulations, conditions affecting the economy generally or
other factors affecting the telecommunications industry in general;
3.10.2 any sale, assignment, transfer, purchase or
other disposition of any tangible or intangible asset of either Zenex
Telecom, Prestige or Zenex Long Distance, except in the Ordinary Course
of Business consistent with past practice, and for fair and adequate
consideration;
3.10.3 any suffering of any damage, destruction, or
loss, whether as the result of fire, explosion, tornado, earthquake,
accident, casualty, labor trouble, requisition or taking of property by
any government or any agency of any government, flood, windstorm,
embargo, riot or act of God or the enemy, or other similar or
dissimilar casualty or event or otherwise, and whether or not covered
by insurance, materially and adversely affecting the business,
property, or assets of Zenex Telecom, Prestige or Zenex Long Distance;
3.10.4 any increase in the compensation payable or to
become payable by Zenex Telecom, Prestige or Zenex Long Distance to any
of its directors, officers, employees, agents, consultants, or any
bonus granted to any such persons, except in the Ordinary Course of
Business consistent with past practice;
3.10.5 any material change in the method of record
keeping employed by Zenex Telecom, Prestige or Zenex Long Distance;
3.10.6 any issuance or sale by Zenex Telecom,
Prestige or Zenex Long Distance of any corporate debt securities, or
any borrowings of money or other pledging of
14
any of their respective credit, except in the Ordinary Course of
Business consistent with past borrowing practices;
3.10.7 any occurrence of any other material
obligation or liability (absolute or contingent), except normal trade
or business obligations or liabilities incurred in the Ordinary Course
of Business;
3.10.8 any mortgage, pledge, or subjecting to Lien,
claim, security interest, charge, Encumbrance, or restriction (other
than Permitted Title Exceptions) of any of the assets or properties of
Zenex Telecom, Prestige or Zenex Long Distance;
3.10.9 any discharge or satisfaction of any Lien,
mortgage, pledge, claim, security interest, charge, Encumbrance, or
restriction or payment of any obligation or liability (absolute or
contingent), of Zenex Telecom, Prestige or Zenex Long Distance, other
than in the Ordinary Course of Business;
3.10.10 any declaration or payment of dividends by
Zenex Telecom, Prestige or Zenex Long Distance on its respective
capital stock;
3.10.11 any cancellation or compromise by Zenex
Telecom, Prestige or Zenex Long Distance of any material debt or claim,
other than in the Ordinary Course of Business or upon payment in full;
3.10.12 any waiver by Zenex Telecom, Prestige or
Zenex Long Distance of any material rights of value, other than in the
Ordinary Course of Business or upon payment in full;
3.10.13 except in the Ordinary Course of its
Business, any entering into, or agreeing to enter into, any agreement
or arrangement granting any preferential right to purchase any of their
respective assets, properties, or rights or requiring the consent of
any party to the transfer and assignment of any such respective assets,
properties, or rights;
3.10.14 any entering into of any material
transaction, contract, or commitment outside the Ordinary Course of its
Business;
3.10.15 any introduction of any material change with
respect to the operation of its Business, including, without
limitation, its method of accounting (exclusive of changes generally
applicable to the telecommunications industry such as, without
limitation, changes in licensing statutes, rules and regulations,
changes in accounting principles, rules and practices and changes in
tax laws and regulations, and the prevailing interpretation of any
thereof);
15
3.10.16 any receipt of notice or knowledge of, or
reason to believe that any labor unrest exists among any of the
Employees, or that any group, organization or union has attempted to
organize any of the Employees;
3.10.17 any failure to keep and operate Zenex
Telecom's and Zenex Long Distance's business organization intact and to
seek to preserve the goodwill of its customers, suppliers and others
with whom it has business relations;
3.10.18 any making by either Zenex Telecom, Prestige
or Zenex Long Distance of any capital expenditure or capital addition
or betterment in excess of $10,000 per respective project;
3.10.19 any making by Zenex Telecom, Prestige or
Zenex Long Distance of any loan or discount or entering into a
financing lease (A) that was not been made for good, valuable and
adequate consideration in the Ordinary Course of Business, and (B) that
was not been evidenced by notes or other evidences of indebtedness
which are true, genuine and what they purport to be;
3.10.20 any agreement to do any of the foregoing; or
3.10.21 any issuance, transfer, sale, pledge,
assignment or conveyance of any shares of the capital stock of Zenex
Telecom, Prestige or Zenex Long Distance.
3.11 EMPLOYEE BENEFIT PLANS. Except as disclosed on EXHIBIT
3.11 to this Agreement, Zenex Telecom, Prestige and Zenex Long Distance do not
have any Employee Plans. Except as is disclosed in this Agreement, there are no
pending or, to the knowledge of either Zenex Telecom, Prestige or Zenex Long
Distance, any threatened claims by or on behalf of Zenex Telecom, Prestige or
Zenex Long Distance, by any employee involving the alleged breach of fiduciary
duties or violations of other applicable state or federal law which could result
in liability on the part of Zenex Telecom, Prestige or Zenex Long Distance under
ERISA or any other law, nor, to the knowledge of Zenex Telecom, Prestige or
Zenex Long Distance, is there any basis for such a claim.
3.12 NO IMPENDING MATERIAL ADVERSE EVENTS. Except as disclosed
in EXHIBIT 3.12 to this Agreement, as of the date hereof, to the knowledge of
the Newmans, there are no impending loss of Zenex Telecom's or Zenex Long
Distance's Business, or of any other presently existing facts or circumstances
that would be reasonably likely to have a material adverse effect upon the
financial condition, results of operations, business, or prospects of Zenex
Telecom or Zenex Long Distance, other than changes that are the result of
changes in laws or regulations or other factors affecting the telecommunications
industry in general
3.13 BOOKS AND RECORDS. The minute books of Zenex Telecom,
Prestige and of Zenex Long Distance, respectively, reflect accurately all
significant action ever taken by the respective shareholders and Board of
Directors (or any committee thereof), of Zenex Telecom, Prestige or Zenex Long
Distance.
16
3.14 FULL DISCLOSURE. To the knowledge of the Newmans, none of
the information concerning Zenex Telecom, Prestige or Zenex Long Distance
contained in this Agreement and the Exhibits and schedules hereto, or in any of
the lists, documents or instruments attached hereto or to be delivered to
Fireball by or on behalf of Zenex Telecom, Prestige, Zenex Long Distance or the
Shareholders, as contemplated by any provision of this Agreement, or in any of
the applications or documents filed with governmental agencies in connection
with the Tariffs, or for the transactions contemplated hereby, contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary to make the statements contained herein or therein,
taken as a whole with all other such lists, documents, instruments or other
information so furnished in light of the circumstances in which they are made,
not misleading.
3.15 SIGNIFICANT AGREEMENTS. Except as set forth in EXHIBIT
3.15 to this Agreement, neither Zenex Telecom, Prestige nor Zenex Long Distance
is a party to (in its own name or as a successor in interest) nor bound by any
written or oral:
3.15.1 contracts or commitments involving employment,
consulting, deferred compensation, profit sharing, pension, bonus,
retirement, percentage compensation, incentive compensation, service
award, severance payment, employee benefit, or stock options or
warrants;
3.15.2 leases or licenses with respect to any
property, real or personal, as lessor, lessee, licensor, or licensee,
except leases of personal property with Zenex Telecom, Prestige or
Zenex Long Distance, as lessee, with rental payments of less than
$5,000 per annum in the aggregate;
3.15.3 contract or commitment for capital
expenditures in excess of $50,000 for any one project;
3.15.4 material contract or commitment made other
than in the Ordinary Course of Business for the purchase of materials
or supplies or for the performance of services for a period extending
beyond December 31, 2002;
3.15.5 contract or option for the purchase of any
real or personal property other than in the Ordinary Course of
Business;
3.15.6 letter of credit or guarantee agreement;
3.15.7 collective bargaining or other agreement
entered into with any union or other entity representing employees;
3.15.8 contract or commitment to (a) acquire
investment securities in excess of $5,000, or (b) to extend credit in
excess of $5,000, in each case for any one contract or commitment; or
17
3.15.9 contracts, commitments, or agreements not
otherwise described in Subsections 3.15.1 - 3.15.8, above, made other
than in the Ordinary Course of Business, in an amount with a value of
more than $5,000 in the aggregate.
Each of Zenex Telecom, Prestige and Zenex Long Distance has
performed in all material respects all material obligations required to be
performed by it to date, and is not in default under, and no event has occurred
which, with the lapse of time or action by a third party, would result in a
default under, any presently outstanding note, indenture, mortgage, lease,
contract, commitment, or agreement to which either Zenex Telecom, Prestige or
Zenex Long Distance is a party, or by which it is bound and which is material,
or is set forth in EXHIBIT 3.15 hereto, and each such presently outstanding
note, indenture, mortgage, lease, contract, commitment, or agreement is a valid,
legally binding obligation of either Zenex Telecom, Prestige or Zenex Long
Distance, and the other party or parties thereto.
3.16 INSURANCE. EXHIBIT 3.16 hereto lists the insurance
policies which either Zenex Telecom, Prestige or Zenex Long Distance has in full
force and effect with respect to its respective assets and business. Except as
disclosed in EXHIBIT 3.16, since December 31, 2001, to the knowledge of the
Newmans, neither Zenex Telecom, Prestige nor Zenex Long Distance has received
any notice of cancellation with respect to any of its respective insurance
policies or bonds, and within the last three (3) years neither Zenex Telecom,
Prestige nor Zenex Long Distance has been refused any insurance coverage sought
or applied for (except where the refusal of coverage relates to an insurer's
ceasing generally to offer a particular type of coverage), and it has no reason
to believe that existing insurance coverage cannot be renewed as and when the
same shall expire.
3.17 TRANSACTIONS WITH AFFILIATED PERSONS. Except as listed in
EXHIBIT 3.17 hereto, or elsewhere in this Agreement, to the knowledge of the
Newmans, no"Affiliate" of either Zenex Telecom, Prestige or Zenex Long Distance
has engaged in any material transactions with either Zenex Telecom, Prestige or
Zenex Long Distance.
3.18 NO DEFAULT. Each of the Shareholders, Zenex Telecom,
Prestige, and Zenex Long Distance is not in default under and no event has
occurred which, with the lapse of time or action by a third party, would result
in a default under the terms of (i) any judgment, decree, order, or writ of any
agency of any government or court, whether federal, state or local and whether
at law or in equity, or (ii) any license, permit, tariff, rule or regulation of
any federal or state or local governmental agency which default would have a
materially adverse effect upon the financial condition, results of operation,
business, properties or marketing efforts of Zenex Telecom or Zenex Long
Distance.
3.19 BOOKS AND RECORDS. To the knowledge of the Newmans, the
books of account, minutes books, stock record books and other records of Zenex
Telecom, Prestige and of Zenex Long Distance, all of which have been made
available to Fireball, are complete and correct and have been maintained in
accordance with sound business practices. At the Closing hereunder, all of
18
those books and records will be in possession of Zenex Telecom, Prestige and/or
Zenex Long Distance.
3.20 NO INJUNCTIONS OR ORDERS. To the knowledge of the
Newmans, neither Zenex Telecom, Prestige nor Zenex Long Distance is a party to
any agreement, and neither Zenex Telecom, Prestige nor Zenex Long Distance is
subject to or threatened with, any injunctions of any court or orders of any
federal, state or municipal court, governmental department, commission, board,
bureau, agency or instrumentality, that would limit or otherwise adversely
affect Zenex Telecom's and/or Zenex Long Distance's ability to conduct its
business in the ordinary course, or would limit or otherwise adversely affect
its ability to conduct the Business after the Closing substantially as the
Business is currently being conducted by Zenex Telecom and Zenex Long Distance.
3.21 INTELLECTUAL PROPERTY. To the knowledge of the Newmans,
Zenex Telecom and Zenex Long Distance, respectively, own, or have licenses to
use, any and all Know-How, Patents, Technology, trademarks, copyrights or other
Intellectual Property rights required for the operation of the Business.
3.22 TARIFFS. EXHIBIT 3.22 of this Agreement sets forth a list
of all tariffs, licenses, consents, permits, approvals and authorizations of all
governmental authorities (collectively, the "Tariffs") owned by Zenex Telecom or
Zenex Long Distance. All Tariffs are in full force and effect and are all of
such authorizations required for the operation of the Business. Zenex Telecom
and/or Zenex Long Distance have complied with the terms of the Tariffs and there
are no pending matters or actions which could adversely affect the operation of
the Business. To the knowledge of the Newmans, the change in ownership of the
stock of Zenex Telecom from the Shareholders to Fireball will not require the
consent and approval of the governmental authorities which regulate the Tariffs.
3.23 COMPLIANCE WITH LAWS AND ORDERS. Zenex Telecom has duly
filed with the SEC and, to the knowledge of the Newmans, any other applicable
federal or state regulatory authorities, as the case may be, to the knowledge of
the Newmans in correct form, all of the reports required to be filed by, and to
the knowledge of the Newmans, is in material compliance in all material respects
with, all federal and state laws, rules, regulations, policy guidelines, orders
and requirements applicable to it including without limitation all federal and
state securities laws and regulations and, to the knowledge of the Newmans, all
such reports were in all material respects, true, correct, complete and accurate
and in compliance with the requirements of all applicable laws and regulations.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FIREBALL
Fireball hereby makes the following representations and
warranties to each of the Shareholders as of the Closing Date, as follows:
19
4.1 ORGANIZATION AND STANDING OF FIREBALL. Fireball is a
limited liability company organized, validly existing and in good standing under
the laws of the State of Oklahoma. Fireball has the full power and authority to
enter into and perform under this Agreement and the transactions contemplated
hereby.
4.2 AUTHORITY. Fireball has full power and authority to carry
out the transactions provided for in this Agreement on the terms and conditions
set forth herein. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Fireball have been, or
will be prior to the Closing Date, duly and validly authorized by all necessary
action in accordance with Fireball's Operating Agreement and applicable law.
This Agreement constitutes a valid and legally binding obligation of Fireball,
enforceable against Fireball in accordance with its terms, except that the
enforcement of the rights and remedies created hereby is subject to bankruptcy,
insolvency, reorganization and similar laws of general application affecting the
rights and remedies of creditors and that the availability of the remedy of
specific performance or of injunctive relief is subject to the discretion of the
court before which any proceeding therefor may be brought. Neither the execution
and delivery of this Agreement, nor the consummation by Fireball of the
transactions contemplated hereby, will conflict with, require a consent under,
or result in a breach of, any terms, condition or provision of, or constitute a
default under, (a) the Articles of Organization or Operating Agreement of
Fireball, (b) any agreement, indenture, mortgage, deed of trust, lease, license
or other instrument to which Fireball is a party or by which it is bound, or any
license, permit or certificate held by it, or (c) any applicable provision of
law or any rule or regulation of any federal, state or local administrative
agency or governmental authority applicable to Fireball, or material order,
judgment or decree to which Fireball is subject.
4.3 LEGAL PROCEEDINGS. Fireball is not engaged in, nor is
there pending or, to Fireball's knowledge, threatened, any action, dispute,
claim, litigation, arbitration, investigation or other proceeding at law or
equity or before any governmental or other administrative agency that could
materially and adversely affect Fireball's ability to perform any of its payment
or other obligations hereunder or the transactions contemplated by this
Agreement, or that would otherwise materially adversely affect the financial
condition of Fireball, or its opportunity to successfully operate from and after
the Closing Date. To its knowledge, Fireball is not under any investigation with
respect to, or is charged with any violation or alleged violation of, any
federal, state, local or other law or regulation. To its knowledge, Fireball is
not subject to any order of any federal, state or local court or any other
governmental agency not generally applicable to entities engaged in the same
business as Fireball. No Person has asserted, and to the knowledge of Fireball,
no Person has grounds to assert any material claims against Fireball based upon
the wrongful action or inaction of any of Fireball's members, officers, agents
or employees.
4.4 CONSENTS AND APPROVALS. No consents or approvals of or
filings or registrations with, or notices to any governmental agency, commission
or authority are necessary, and no waiting periods related thereto are required
to expire, in connection with (i) the execution and delivery by Fireball of this
Agreement and (ii) the consummation by Fireball of the transactions contemplated
in this Agreement.
20
4.5 ADEQUATE FINANCIAL RESOURCES. The financial resources of
Fireball are sufficient to allow Fireball to fund all of its obligations under
this Agreement.
4.6 FULL DISCLOSURE. To Fireball's knowledge, none of the
information concerning Fireball contained in this Agreement and the exhibits and
schedules hereto, or in any of the lists, documents or instruments attached
hereto or to be delivered by or on behalf of Fireball as contemplated by this
Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make the statements
contained herein or therein, taken as a whole with all other such lists,
documents, instruments or other information so furnished in light of the
circumstances in which they are made, not misleading.
4.7 COMPLIANCE WITH LAWS AND ORDERS. To its knowledge,
Fireball is in material compliance in all material respects with all federal and
state laws, rules, regulations, policy guidelines, orders and requirements
applicable to it to include, without limitation, all federal and state
securities laws and regulations and all such reports were in all material
respects true, correct, complete and accurate and in compliance with the
requirements of applicable laws and regulations, provided that information as of
a later date shall be deemed to modify information as of an earlier date.
4.8 NO DEFAULT. Fireball is not in default under and no event
has occurred which, with the lapse of time or action by a third party, would
result in a default under the terms of: (i) any judgment, decree, order, or writ
of any agency of any government or court, whether federal, state or local and
whether at law or in equity, or (ii) any license, permit, rule or regulation of
any federal or state or local government agency which default would have a
materially adverse effect upon the financial condition, results of operation,
business, properties, assets or marketing efforts of Fireball.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF FIREBALL TO CLOSE
The obligations of Fireball to complete and consummate the
transactions provided for in this Agreement shall be subject to the complete
satisfaction, on or prior to the Closing Date, of each of the following
conditions precedent, provided that any such condition may be expressly waived
in writing by Fireball.
5.1 PERFORMANCE OF AGREEMENTS. Each of the Shareholders, Zenex
Telecom, Prestige and Zenex Long Distance shall have performed all of their
respective conditions, duties and obligations contained in this Agreement
required to be performed by each of them prior to the Closing and specifically
shall have obtained, on or before the date of this Agreement, the resolutions of
the Board of Directors of Zenex Telecom authorizing and approving this Agreement
in all respects. Each of the Shareholders shall be prepared to transfer and
convey to Fireball, or its designee, as directed by Fireball, all of the Shares
and Stock Option Agreements on the Closing Date in the manner required by this
Agreement.
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5.2 ABSENCE OF LITIGATION. There shall not be pending any
action in any court of competent jurisdiction seeking to enjoin consummation of
the transactions contemplated by this Agreement, or any action that, in the
opinion of counsel for Fireball, after an independent review of readily
available facts and applicable law, poses a significant risk of resulting in the
divestiture by Fireball of Zenex Telecom, Prestige or Zenex Long Distance, or of
any material portion of the assets of Zenex Telecom, Prestige or Zenex Long
Distance, or otherwise threatens to significantly impair the value of the assets
of Zenex Telecom, Prestige or Zenex Long Distance, or jeopardizes their
respective ability to conduct the telecommunications business of Zenex Long
Distance, or poses the possible assessment of significant damages against, or
the imposition of any other materially adverse consequences upon, Zenex Telecom,
Prestige or Zenex Long Distance.
5.3 RESIGNATION OF DIRECTORS AND OFFICERS. Shareholders shall
be prepared to deliver to Fireball at Closing the executed originals of the
Resignations in the form attached hereto as EXHIBIT 2.8 effective as of Closing.
5.4 RELEASES OF XXXX XXXXXX, XXXX XXXXXX, XXXXXX AND
FUTUROMEGA. Shareholders shall be prepared to deliver to Fireball the executed
originals of the Releases of Xxxx Xxxxxx and Xxxx Xxxxxx in the form attached
hereto as EXHIBIT 2.9, effective as of Closing, as well as all of the executed
original of the UCC Termination Statements that Xxxx Xxxxxx, Xxxx Xxxxxx, Xxxxxx
and FuturOmega are required to deliver at Closing pursuant to Section 2.9.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS
The obligations of the Shareholders to complete the
transactions provided for in this Agreement shall be subject to complete
satisfaction on the Closing Date, of each of the following conditions precedent
by Fireball, provided that any such condition may be expressly waived in writing
by the Shareholders.
6.1 PERFORMANCE OF AGREEMENTS. Fireball shall have performed
all conditions, agreements, duties and obligations contained in this Agreement
required to be performed by it prior to the Closing Date, and shall be prepared
to pay the Purchase Price to the Shareholders, in proportion to their respective
ownership of the Shares, on the Closing Date in order to fully consummate the
acquisition thereof pursuant to Sections 2.1 and 2.3 of this Agreement. Zenex
Telecom shall be prepared to transfer, assign and convey the Eagle Stock and
Eagle Agreement to Xxxx Xxxxxx and Xxxx Xxxxxx at Closing in the proportions set
forth on EXHIBIT 2.6 in exchange for their execution and delivery to Fireball
and Zenex Telecom of the Releases pursuant to Section 2.9 of this Agreement.
6.2 ABSENCE OF LITIGATION. There shall be no pending or, to
the knowledge of Fireball, threatened litigation or administrative proceeding
against Fireball seeking to restrain, prevent, rescind or change the terms of
the transaction contemplated by this Agreement or to obtain damages in
connection therewith or any preliminary injunction restraining such
transactions, or any
22
other such proceeding which if adjudicated against Fireball could have a
materially adverse effect on the financial condition or prospects of Fireball.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated and the
transactions contemplated in this Agreement abandoned at any time prior to the
Closing (i) by mutual agreement of the Parties, (ii) at the option of Fireball
or the Shareholders in the event the Closing shall not have been completed on or
before March 31, 2002, or (iii) by Fireball, on the one hand, or the
Shareholders, on the other hand, in the event there shall have been entered or
rendered against the Shareholders, Zenex Telecom, Fireball, or any of their
respective directors, officers, members, managers, employees or agents in any
action or proceeding referenced in Sections 5.2 or 6.2 of this Agreement an
injunction or a final judgment having one of the effects specified in such
Sections. In the event of termination by Fireball or the Shareholders, as
provided in this Section 10.1, written notice shall forthwith be given to the
other Parties.
7.2 EFFECT OF TERMINATION. In the event of termination by
Fireball or the Shareholders, as provided in Section 7.1 of this Agreement, (i)
this Agreement shall forthwith become wholly void and of no effect, and there
shall be no obligation or liability on the part of Fireball, the Shareholders
and Zenex Telecom, or their respective officers, directors, members, managers,
employees or agents; provided, however, that such limitation shall not apply in
the event of a willful breach by Fireball or the Shareholders of any of their
respective material agreement and covenants contained in this Agreement in which
case the non-breaching party shall be entitled to recover from the breaching
party all out-of-pocket costs (including without limitation reasonable attorney
fees and expenses) that the non-breaching party incurred in connection with this
Agreement.
7.3 RIGHTS AND REMEDIES OF THE PARTIES. Upon the default or
breach of Fireball or of any of the Shareholders or Zenex Telecom, respectively,
as the case may be, of the terms and conditions of this Agreement, then, and in
such event, the non-defaulting party shall be entitled to pursue any and all
remedies that may then be available to it, whether at law or in equity, as the
result of the default or breach of the defaulting party to include, without
limitation, the right, in lieu of termination, to seek the specific performance
of the obligations of the defaulting party under the Agreement in which event,
the defaulting party agrees that damages will not adequately compensate the
non-defaulting party for the breach or default of the defaulting party hereunder
and that the non-defaulting party is entitled to seek equitable relief and the
specific performance of the obligations of the defaulting party under this
Agreement. All of the non-defaulting party's remedies hereunder shall be deemed
cumulative and not exclusive and the exercise of any one of such remedies shall
not be deemed to be a waiver of any other right, remedy or privilege provided
for herein or at law or in equity to the non-defaulting party.
7.4 AMENDMENT. This Agreement may be amended or modified in
whole or in part at any time by an agreement in writing executed by all of the
Parties hereto.
23
7.5 WAIVER. At any time prior to the Closing Date, any of the
Parties may, on their own respective behalf:
7.5.1 waive any inaccuracies in the representations
and warranties by the other party contained herein or in any document
delivered by the other party pursuant hereto; or
7.5.2 waive compliance by the other party with the
covenants, agreements or conditions contained herein.
7.5.3 Any agreement to such waiver shall be valid
only if set forth in an instrument in writing executed by a duly
authorized officer or representative of the party granting such waiver.
ARTICLE VIII
FURTHER AGREEMENTS
8.1 BOOKS AND RECORDS AFTER CLOSING. From and after the
Closing, all books and records of Zenex Telecom, Prestige and Zenex Long
Distance pertaining to the Business of Zenex Telecom or Zenex Long Distance, or
relating in any manner to the assets and operations of Zenex Telecom, Prestige
or Zenex Long Distance, shall remain in their respective possession and control,
but for two (2) years after the Closing, the Shareholders shall have the right,
from time to time and at any time, to examine and copy, at their own expense and
upon request during normal business hours, the books and records of either Zenex
Telecom, Prestige or Zenex Long Distance pertaining to its Business and relating
to any period prior to the Closing. The only expenses that will be charged to
the Shareholders in connection with examining the respective books and records
of Zenex Telecom, Prestige or Zenex Long Distance pertaining to its Business and
relating to any period prior to the Closing pursuant to this Section 8.1, shall
be the copying expenses for any of such books and records which the Shareholders
request be copied.
8.2 COOPERATION AND RECORDS RETENTION. After Closing, each
Party (considering, for purposes of this Section 8.2., the Shareholders, as one
Party, and Fireball, as the other Party) shall (i) each provide to the other
such assistance as may reasonably be requested by any of them in connection with
the preparation of any income tax return, audit or other examination by any
taxing authority or judicial or administrative proceedings relating to liability
for taxes, (ii) each retain and provide the other with any records or other
information that may be relevant to such tax return, audit or examination,
proceeding or determination, and (iii) each provide the other with any final
determination of any such audit or examination, or proceeding or determination
that affects any amount required to be shown on any income tax return of the
other for any period. Without limiting the generality of the foregoing: (i) Xxxx
Xxxxxx and/or Xxxx Xxxxxx specifically covenant and agree to promptly execute
and deliver to any accounting firm preparing the audit of Zenex Telecom's and/or
Zenex Long Distance's financial statements for calendar year 2001 any audit
representation letter required by that accounting firm to be provided to it with
regard to its conduct, completion and execution of that audit; (ii) Zenex
Telecom shall retain until the applicable statutes of limitations
24
(including any extensions) have expired, copies of all income tax returns,
supporting work schedules and other records or information which are relevant to
such income tax return filed for all tax periods or portions thereof ending
before or including the Closing Date, and shall not destroy or otherwise dispose
of any such records without first providing the other Parties with a reasonable
opportunity to review and copy the same. This Section 8.2 shall expressly
survive the Closing of the transaction contemplated by this Agreement and shall
be fully enforceable thereafter by the Parties, including, specifically, without
limitation, the right of the non-defaulting Party to seek injunctive relief to
enforce the performance of this Section 8.2 by the defaulting Party, in which
event the defaulting Party agrees that such an equitable remedy is necessary and
appropriate in view of the irreparable harm caused by a breach of this Section
8.2 and that a remedy at law would not be adequate.
8.3 COVENANTS NOT TO COMPETE OR SOLICIT BY XXXX XXXXXX AND
XXXX XXXXXX. Xxxx Xxxxxx and Xxxx Xxxxxx each covenant and agree that neither of
them will, without the express prior written consent of Fireball, directly or
indirectly, compete with, or own, manage, operate, control, lend to, consult
with, engage or participate in the ownership, management, operation or control,
or be connected with, whether as employee, agent, consultant or otherwise, any
person, entity or corporation which is in competition with Zenex Telecom or
Zenex Long Distance in the telecommunications industry with regard to the
Business within the geographic area constituting the State of Oklahoma for a
period of five (5) years beginning on the Closing Date and ending on the fifth
anniversary of that date. This covenant not to compete is being acquired by
Fireball from Xxxx Xxxxxx and Xxxx Xxxxxx as a material, valuable and integral
part of Fireball's agreement to purchase the Shares and Stock Option Agreements
as a part of the good will associated with the Business being conducted by Zenex
Telecom and Zenex Long Distance. In addition to the foregoing, for the same five
(5) year period of time between the Closing Date and the fifth anniversary of
that date, neither Xxxx Xxxxxx nor Xxxx Xxxxxx shall, directly or indirectly,
solicit business from, divert business from, or attempt to convert to other
methods of using the same services as provided by Zenex Telecom or Zenex Long
Distance in performance of the Business, any client or account of Zenex Telecom
or Zenex Long Distance or their respective Affiliates and, in addition, shall
not, directly or indirectly, solicit for employment or employ any person who was
an employee of Zenex Telecom, Prestige, or Zenex Long Distance, or their
respective Affiliates, on March 1, 2002. For purposes of the application of this
covenant not to solicit, the term "client or account" shall mean any Person or
entity, any corporation, joint venture, partnership, individual or other legal
entity who used the services provided by the Business of Zenex Telecom and Zenex
Long Distance within the two (2) years prior to the Closing Date, or which
maintains a customer relationship with the Business of Zenex Telecom and/or
Zenex Long Distance on the Closing Date. Each of Xxxx Xxxxxx and Xxxx Xxxxxx has
carefully read and considered the provisions of this Section 8.3 and having done
so agrees that the restrictions set forth in this Section 8.3 as to the time
period and the geographic area restriction of these covenants not to compete and
not to solicit are fair and reasonable and are reasonably required for the
protection of the interests of Fireball in acquiring the Shares and the Stock
Option Agreements. In the event that, notwithstanding the foregoing, any of the
provisions of this Section 8.3 shall be held to be invalid or unenforceable, the
remaining provisions of this Section 8.3 shall nevertheless continue to be valid
and enforceable as though the invalid or unenforceable provision had not been
included therein. In the event that any of the above provisions relating to the
time period and/or geographical area of
25
restriction shall be declared by a court of competent jurisdiction to exceed the
maximum time period or geographical area such court deems reasonable and
enforceable, said time period and/or geographical area of restriction shall be
deemed to become and thereafter be the maximum time period and/or geographical
area which such court deems reasonable and enforceable under the applicable law.
Xxxx Xxxxxx and Xxxx Xxxxxx each agree, in the event of a breach of the
foregoing covenants not to compete and not to solicit by them, or either of
them, that Zenex Telecom and Zenex Long Distance would be irreparably harmed
and, accordingly, either of them shall be entitled to obtain the equitable
remedy of injunctive relief against Xxxx Xxxxxx and Xxxx Xxxxxx, or either of
them, to enjoin such breach, since an adequate remedy of law would not exist.
8.4 COVENANTS OF XXXX XXXXXX AND XXXX XXXXXX NOT TO XXX OR
PARTICIPATE IN ADVERSE LITIGATION AGAINST ZENEX TELECOM OR ITS AFFILIATES. As
further consideration for Fireball agreeing to purchase the Shares and the Stock
Option Agreements and as a material, valuable and integral part of this
Agreement, Xxxx Xxxxxx and Xxxx Xxxxxx each agree, covenant and contract not to
xxx or otherwise institute or prosecute any action, claim or lawsuit in any form
or forum against Fireball, Zenex Telecom, Prestige and/or Zenex Long Distance,
and/or their respective Affiliates, or any member of the Board of Directors,
officer, employee or agent of Zenex Telecom, Prestige, Zenex Long Distance
and/or their respective Affiliates, save and except as may be necessary for Xxxx
Xxxxxx or Xxxx Xxxxxx to enforce all of their respective rights, title and
interests under this Agreement and save and further except their respective
right to enforce and obtain the benefit of any and all indemnification rights to
which they may be entitled under the respective Articles or Certificates of
Incorporation or Bylaws of Zenex Telecom, Prestige and/or Zenex Long Distance,
or under applicable law. Xxxx Xxxxxx and Xxxx Xxxxxx each further agree that he
will not voluntarily participate in or aid, assist or abet in any manner any
shareholder-related litigation involving the shareholders of Zenex Telecom, to
include any lawsuit filed by any shareholders against Zenex Telecom, Fireball,
or any members of the Board of Directors, officers, employees or agents of Zenex
Telecom or its Affiliates. Xxxx Xxxxxx and Xxxx Xxxxxx further covenant and
agree that in the event of the breach of the above and foregoing covenants in
this Section 8.4 by them, or either of them, that Fireball and Zenex Telecom
would be irreparably harmed and that either of them shall be entitled to seek an
equitable remedy in the form of injunctive relief in order to enforce the
provisions of this Section 8.4 against them since an adequate remedy at law
would not be available.
8.5 XXXX XXXXXX AND XXXX XXXXXX TO PROMOTE THE GOOD WILL AND
BEST INTERESTS OF ZENEX TELECOM AND ITS AFFILIATES. Xxxx Xxxxxx and Xxxx Xxxxxx
each agree, as a material inducement to Fireball to enter into and perform this
Agreement and to purchase the Shares and the Stock Option Agreements pursuant to
this Agreement, that each of them will actively promote and xxxxxx the best
interests of Zenex Telecom and its Affiliates and make all appropriate efforts
to maintain good will toward Zenex Telecom and its Affiliates, in all of his
respective business and personal dealings. Specifically, without limitation,
Xxxx Xxxxxx and Xxxx Xxxxxx agree that neither of them shall in any way
denigrate the performance, condition or abilities of Zenex Telecom or any of its
Affiliates with any of its existing, potential or future customers.
26
ARTICLE IX
INDEMNIFICATION AND NATURE AND SURVIVAL
OF REPRESENTATIONS AND WARRANTIES
9.1 INDEMNITIES BY THE SHAREHOLDERS. The Shareholders hereby
covenant and agree from and after the Closing Date hereunder, to indemnify,
defend and hold harmless Fireball and its members, managers, employees and
agents ("Fireball Indemnified Parties") from and against and in respect of any
and all Damages, as that term is defined in Section 9.2 below, that any of the
Fireball Indemnified Parties shall incur, suffer or have asserted against it or
them following the Closing Date, which arise, result from or relate to:
9.1.1 Any breach of the Shareholders' representations
or warranties contained in the Agreement, that survive the Closing, or
in the Schedules or Exhibits of this Agreement, or in the documents or
information provided by the Shareholders to Fireball with regard to the
due diligence performed by Fireball since February 21, 2002, to the
Closing Date.
9.1.2 Any claims asserted against any of the Fireball
Indemnified Parties with respect to any actions or omissions of Xxxx
Xxxxxx or Xxxx Xxxxxx occurring before the Closing Date with regard to
the Business of Zenex Telecom or Zenex Long Distance, including,
without limitation, all liabilities, claims and causes of action
relating to the operation of the Business prior to the Closing Date,
except that any indemnification liability of the Newmans under this
subsection as to the operations of Prestige or Zenex Long Distance
shall be limited solely to claims pertaining to the operation of those
entities by the Newmans during the period of time commencing June 20,
2000, when Zenex Telecom acquired ownership of Prestige and Zenex Long
Distance, and ending on the Closing Date.
9.2 NOTICE OF INDEMNIFICATION CLAIM BY FIREBALL
INDEMNIFIED PARTIES; DEFINITION OF DAMAGES. Any action reasonably
brought by any of the Fireball Indemnified Parties seeking
indemnification from the Shareholders pursuant to the provisions of
Section 9.1, above, can be brought only if the Fireball Indemnified
Party has given the Shareholders reasonably timely written notice
specifying the basis for such indemnification claim under the
provisions of Section 9.1, above, which the Fireball Indemnified Party
believes is probable of resulting in indemnification based on any then
existing set of facts or circumstances known to the Fireball
Indemnified Party. For all purposes under this Agreement including,
specifically, the provisions of this Article IX, the term "DAMAGES"
shall mean the amount of the damages, costs, expenses or losses
incurred by the Fireball Indemnified Party, or the Shareholders'
Indemnified Party, as that term is defined below, as the case may be,
including court costs and attorney fees, by reason of the act or
failure to act that gave rise to such claim for indemnity under
Sections 9.1, above, or 9.3, below: (i) net of any recoveries from
third parties or insurance proceeds received by the Fireball
Indemnified Party or the Shareholders' Indemnified Party, as the case
may be, relating to the respective Damages, but the Fireball
Indemnified Parties or the Shareholders' Indemnified Parties, as the
case may be, shall not be obligated to commence any legal action to
seek any such recoveries or insurance proceeds, and (ii) net of any tax
savings realized by the Fireball Indemnified Party or the Shareholders'
Indemnified Party, as the case may be, or by the Business of Zenex
Telecom or Zenex Long Distance, relating to the same or any other tax
period by reason of or relating to the matter giving rise to the
Damages. The obligations of the Shareholders and of Fireball under this
27
Article IX shall not be impaired by the bankruptcy, insolvency,
receivership or other accommodation for the benefit of creditors of the
Shareholders or of Fireball, respectively, as the case may be.
9.3 INDEMNITIES BY FIREBALL. Fireball shall
indemnify, defend and hold harmless the Shareholders and their
respective employees and agents ("Shareholders' Indemnified Parties")
from and against and in respect of any and all Damages, as defined in
Section 9.2 of this Agreement that any of the Shareholders' Indemnified
Parties shall incur, suffer or have asserted against them following the
Closing Date, which arise, result from or relate to:
9.3.1 Any breach of the representations and
warranties of Fireball in Article IV, above, of this Agreement, that
survive the Closing hereunder;
9.3.2 Any claims asserted against any of the
Shareholders' Indemnified Parties with respect to any actions or
omissions of Fireball occurring after the Closing Date with regard to
the Business of Zenex Telecom or Zenex Long Distance including, without
limitation, all liabilities, claims and causes of action relating to
the operation of the Business by Fireball after the Closing Date.
9.3.3 Any and all liability for costs or expenses of
whatsoever kind or nature with regard to the repayment in full of all
indebtedness owed by Zenex Telecom to the Federal Bank Centre in Broken
Arrow, Oklahoma, the repayment of which has been personally guaranteed
by Xxxx Xxxxxx and Xxxx Xxxxxx, jointly and severally.
9.4 NOTICE OF INDEMNIFICATION CLAIM BY SHAREHOLDERS'
INDEMNIFIED PARTIES. Any action reasonably brought by any of the Shareholders'
Indemnified Parties seeking indemnification from Fireball pursuant to the
provisions of Section 9.3, above, can be brought only if the Shareholders'
Indemnifying Party has given Fireball reasonably timely written notice
specifying the basis for such indemnification claim under the provisions of
Section 9.3, above, which the Shareholders' Indemnified Party believes is
probable of resulting in indemnification based on any then existing set of facts
or circumstances known to the Shareholders' Indemnified Party.
9.5 INDEMNIFICATION PROCEDURES. All claims for indemnification
by a party under this Article IX (the party claiming indemnification and the
party against whom such claims are being asserted being referred to hereinafter
the "Indemnified Party" or the "Indemnifying Party," respectively), shall be
asserted and resolved as follows:
In the event that any claim or demand for which an
Indemnifying Party would be liable to an Indemnified Party is asserted against
or sought to be collected from such Indemnified Party by a third party, such
Indemnified Party shall with reasonable promptness give notice (the "Claim
Notice") to the Indemnifying Party of such claim or demand, specifying the
nature of and a specific basis for such claim or demand and the amount or the
estimated amount thereof to the extent then feasible (which estimate shall not
be conclusive of the final amount of such claim or demand). The Indemnifying
Party shall not be obligated to indemnify the Indemnified Party under this
Agreement with respect to any such claim or demand if the Indemnified Party
fails to notify the
28
Indemnifying Party thereof in accordance with the terms of this Agreement, and
as a result of such failure, the Indemnifying Party's ability to defend against
the claim or demand is materially prejudiced. The Indemnifying Party shall have
twenty (20) days from the day of its receipt of the Claim Notice (the "Notice
Period") to notify the Indemnified Party (i) whether or not it disputes the
liability of the Indemnifying Party to the Indemnified Party hereunder, with
respect to such claim or demand, and (ii) whether or not it desires, at the cost
and expense of the Indemnifying Party, to defend the Indemnified Party against
such claim or demand; provided, however, that any Indemnified Party is hereby
authorized, but is not obligated, prior to and during the Notice Period, to file
any motion, answer or other pleading that it shall deem necessary or appropriate
to protect its interests or those of the Indemnifying Party. If the Indemnifying
Party notifies the Indemnified Party within the Notice Period that it desires to
defend the Indemnified Party against such claim or demand, the Indemnifying
Party shall have the right to control the defense against the claim by all
appropriate proceedings and any settlement negotiations, provided that to the
satisfaction of the Indemnified Party, the Indemnifying Party shall secure the
Indemnified Party against such contested claims by providing adequate security.
If the Indemnified Party desires to participate in, but not control, any such
defense or settlement, it may do so at its sole cost and expense. If the
Indemnifying Party fails to respond to the Indemnified Party within the Notice
Period, elects not to defend the Indemnified Party, or after electing to defend,
fails to commence or reasonably pursue such defense, then, the Indemnified Party
shall have the right, but not the obligation, to undertake or continue the
defense of, and to compromise or settle (exercising reasonable business
judgment), the claim or other matter all on behalf of, for the account and at
the risk of the Indemnifying Party. If requested by the Indemnifying Party, the
Indemnified Party agrees, at the Indemnifying Party's expense and upon
presentation of adequate security for the payment of such expenses, to cooperate
with the Indemnifying Party and its counsel in contesting any claim or demand
which the Indemnifying Party elects to contest, or, if appropriate and related
to the matter in question, in making any counterclaim against the person
asserting the third party claim or demand, or any cross-complaint against any
such person. Notwithstanding the foregoing, no claim as to which indemnification
is sought under the provisions of this Agreement may be settled in any event
without the prior written consent of the Indemnifying Party, which shall not be
unreasonably delayed, denied or withheld.
ARTICLE X
GENERAL AND MISCELLANEOUS PROVISIONS
10.1 ENTIRE AGREEMENT. The terms and conditions of this
Agreement (i) constitute the entire agreement and understanding between Fireball
and the Shareholders, and Zenex Telecom; (ii) supersede all prior agreements and
understandings, written or oral, between Fireball and the Shareholders, to
include, without limitation, the February 21, 2002 letter of intent entered into
by and among the Parties; and (iii) may not be modified or amended except by an
instrument mutually executed and delivered by the Parties.
10.2 GOVERNING LAW. The terms and conditions of this Agreement
shall be governed by and construed in accordance with the laws and decisions of
the State of Oklahoma and by federal law, to the extent applicable.
10.3 NOTICES. Any notice or other communication required or
permitted under this Agreement, or convenient to Fireball or the Shareholders in
the consummation of the transactions
29
contemplated hereby, shall be deemed delivered when (i) three days after
deposited in a receptacle of the United States Postal Service, as registered or
certified mail, return receipt requested, postage prepaid, (ii) sent by
electronic facsimile transmission (if receipt is verified), (iii) personally
delivered, or (iv) one (1) day after received by an overnight courier service
(which obtains a receipt evidencing delivery) and shall be addressed as follows:
(i) If to the Shareholders: c/o Xxxx Xxxxxx
00000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Telephone: (___) __________
Facsimile: (___) __________
with a copy to: Xxxxxxx X. Xxxx, Esq.
Xxxx, Swan & Xxxxxxxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(ii) If to Fireball: Xxx Xxxxxxxx, Member
Fireball Enterprises, LLC
c/x Xxxxxx & Xxxxxx, PLLC
0000 X.X. 00xx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
with a copy to: Xxxxxxx X. Xxxx, Esq.
Fellers, Snider, Xxxxxxxxxxx,
Xxxxxx & Xxxxxxx
Bank One Tower
000 X. Xxxxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Notwithstanding the foregoing, a notice of a change of address
by a party hereto shall not be effective until received by the party to whom
such notice of a change of address is sent. In addition, notwithstanding the
foregoing, with respect to any Notice given or made by electronic facsimile
transmission or similar device, such Notice shall not be effective unless and
until (i) the electronic facsimile machine being used prints a written
confirmation of the successful completion of such communication by the party
sending the Notice, and (ii) a copy of such Notice is deposited in first class
mail to the appropriate address for the party to whom the Notice is sent.
10.4 SUCCESSORS. The terms and conditions hereof shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs and personal representatives of the Shareholders and Fireball.
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10.5 ATTORNEY FEES, COSTS AND EXPENSES. Except as otherwise
expressly provided herein, Fireball and the Shareholders shall each pay its or
their own respective legal and accounting fees and all other expenses and fees
incurred by it or them in connection with the consummation of the transactions
contemplated by this Agreement and the negotiation and execution thereof.
Provided, however, to the extent there are any closing costs associated with the
closing of the transaction contemplated by this Agreement, those shall be shared
evenly by Fireball and the Shareholders. Should any of the Parties employ an
attorney or attorneys to enforce any of the terms and conditions hereof, or to
protect any right, title or interest created or evidenced hereby, the
non-prevailing party in any action pursued in courts of competent jurisdiction
shall pay to the prevailing party all reasonable costs, damages, and expenses,
including reasonable attorneys' fees, expended or incurred by the prevailing
party.
10.6 PRESS RELEASES AND PUBLIC STATEMENTS. No party to this
Agreement shall make, issue or release any public announcement, statement or
acknowledgment of the existence of, or publicly reveal the terms, conditions or
the status of, the transactions provided for herein without first obtaining the
consent to such announcement, statement, acknowledgment, or revelation from the
other Parties hereto, provided, however, that, from and after the Closing Date,
Zenex Telecom, or its Affiliates, may make any such release or announcement
which, in the opinion of counsel for Zenex Telecom, is necessary or appropriate
for Zenex Telecom, or its Affiliates, to make in order to comply with applicable
laws or regulations, to include, without limitation, any such release,
announcement or filing which Zenex Telecom, or its Affiliates are required to
make pursuant to the applicable provisions of federal or state securities laws,
or the rules and requirements of the SEC.
10.7 SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES.
All of the representations, warranties, covenants and agreements made by the
Shareholders, Zenex Telecom, and by Fireball, respectively, in this Agreement
shall survive the consummation and closing of the transactions contemplated by
this Agreement on the Closing Date hereunder and also survive and shall be
unaffected by (and shall not be deemed waived by) any investigation, audit,
appraisal or inspection at any time made by or on behalf of Fireball.
10.8 ASSIGNMENT AND LEGAL EFFECT. Fireball shall be entitled
to assign any part or all of its right, title, interest, duties or obligations
under this Agreement to any other Person without the prior written consent of
the Shareholders. The Shareholders shall not be entitled to assign any part or
all of their respective right, title, interest, duties or obligations under this
Agreement to any Person without the prior written consent of Fireball. Anything
in this Agreement to the contrary notwithstanding, the Parties hereto shall not
be required to take any action under this Agreement which is found by the final
decision of appropriate federal or state governmental authorities to be
inconsistent or in conflict with applicable federal or state laws or regulations
pertaining to any of the Parties hereto.
10.9 NO THIRD-PARTY BENEFICIARIES. Execution of this Agreement
by the Parties hereto is not intended to and does not confer any benefits or
rights on (contractually or otherwise) any person or entity not a party to this
Agreement.
10.10 TIME; GOOD FAITH. Time is of the essence to the
performance of all of the terms and conditions of this Agreement; provided,
however, that if the final date of any period which is set for a time provision
under this Agreement falls on a Saturday, Sunday or legal holiday under
31
the laws of the United States of America or the State of Oklahoma, in such event
the time of such period shall be extended to the next day which is not a
Saturday, Sunday or legal holiday. The Parties covenant and agree to act in good
faith to expeditiously perform all of their respective duties and obligations
under this Agreement and to achieve the consummation of the transaction
contemplated hereunder.
10.11 SEVERABILITY. If any of the terms and conditions of this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other of the terms and conditions hereof and the terms and conditions hereof
shall be thereafter construed as if such invalid, illegal or unenforceable term
or conditions had never been contained herein.
10.12 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, and each counterpart hereof shall be deemed to be an
original instrument, but all counterparts hereof taken together shall constitute
one and the same instrument.
10.13 ADDITIONAL ACTS. In addition to the acts and deeds
recited herein and contemplated hereby to be performed, executed and/or
delivered by them, each of the Parties hereby agrees to perform, execute and/or
deliver or cause to be performed, executed and/or delivered at the Closing
hereunder and thereafter any and all such further acts, deeds and assurances as
that may reasonably required to (i) vest in Fireball the complete ownership of
and clear title to all of the Shares and Stock Option Agreements, (ii) to vest
in the Shareholders complete ownership of and clear title to the Eagle Stock and
the Eagle Agreement and (iii) to consummate the transactions contemplated by
this Agreement.
10.14 HEADINGS. The headings herein are for reference purposes
only and shall not affect the meanings or interpretation of the terms and
conditions of this Agreement.
10.15 INTERPRETATION. Whenever the context hereof shall so
require, the singular shall include the plural, the male gender shall include
the female gender and neuter, and vice-versa. The words "hereof," "herein" and
"hereunder" and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. Article, section, subsection and paragraph references in this
Agreement are to articles, sections, subsections and paragraphs of this
Agreement, unless otherwise specified. The article, section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement. The meanings given to terms
defined herein shall be equally applicable to both the singular and plural forms
of such terms.
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IN WITNESS WHEREOF, this Agreement has been executed and
delivered by one to the other by the Shareholders, Zenex Telecom and by
Fireball, respectively, on the date first recited, effective as of the date last
executed by any party hereto.
SHAREHOLDERS: /s/ Xxxx X. Xxxxxx
------------------------------------------
XXXX X. XXXXXX
Date: 3-7-02
-------------------------------------
/s/ Xxxxxxx X. Xxxxxx
------------------------------------------
XXXXXXX X. XXXXXX
Date: 3-7-02
-------------------------------------
NEWBOY, INC.,
a corporation
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Xxxx X. Xxxxxx, President
Date: 3-7-02
-------------------------------------
/s/ Xxx Xxxxxx
------------------------------------------
XXX XXXXXX, formerly known as Xxx Xxxxxxxx
Date: 3-7-02
-------------------------------------
33
ZENEX TELECOM: ZENEX TELECOM, INC.,
a Colorado corporation
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Xxxx X. Xxxxxx, President
Date: 3-7-02
-------------------------------------
FIREBALL: FIREBALL ENTERPRISES, LLC,
an Oklahoma limited liability company
By: /s/ Xxx Xxxxxxxx
---------------------------------------
Xxx Xxxxxxxx, Member
- and -
/s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxxxx, Member
34
LIST OF EXHIBITS
Exhibit 2.3 List of Shareholders and Common Stock
Exhibit 2.6 List of Eagle Stock
Exhibit 2.8 Resignations
Exhibit 2.9 Releases
Exhibit 3.2 Stock Options
Exhibit 3.5 Liabilities
Exhibit 3.6 List of Tax Liabilities
Exhibit 3.8 Pending Litigation and Proceedings
Exhibit 3.9 Authority
Exhibit 3.10 Change in Financial Condition
Exhibit 3.11 Employee Benefit Plans
Exhibit 3.12 Material Adverse Events
Exhibit 3.15 Significant Agreements
Exhibit 3.16 Insurance
Exhibit 3.17 Transactions with Affiliated Persons
Exhibit 3.22 Tariffs
35
