Exhibit 2.4
THE STATE OF TEXAS ss.
ss. AGREEMENT OF REORGANIZATION
COUNTY OF PECOS ss.
This Agreement of Reorganization is made and entered into this the _____
day of May, 2003, by and between WIRELESS FRONTIER INTERNET, INC., a Texas
corporation (hereinafter referred to as "Buyer") and MOMENTUM ONLINE COMPUTER
SERVICES, INC. (hereinafter referred to as "Seller"), and is as follows:
WITNESSETH:
WHEREAS, Seller is the owner and holder of certain personal property,
equipment and assets operated under the name of MOMENTUM ONLINE COMPUTER
SERVICES, INC. (the "Business"); and
WHEREAS, Buyer desires to purchase and acquire certain assets as well as
assume certain debts and lease certain assets incidental to the Business in
exchange for 436,856 shares (69,214 of which are free trading shares) of Buyers
stock.
NOW, THEREFORE, FOR AND IN CONSIDERATION of the terms and provisions
hereof, Seller and Buyer do hereby and herein covenant and agree as follows:
I.
PURCHASE AND SALE OF ASSETS
On the terms and subject to the conditions herein set forth, on the
Closing Date (hereinafter defined), Seller shall, and does hereby agree to,
convey, transfer, sell and deliver unto Buyer, for the consideration hereinafter
provided for, all assets owned, held or claimed by Seller described or
referenced in Exhibit "A" (the "Assets") attached hereto including, but not
limited to, the user base, the client lists, files and information, itemized
equipment, accounts receivable, trademarks, if any, trade name, goodwill,
exclusive five year license for the use of the name "Momentum Online" or
"Momentum Online Computer Services" or any variation thereof using the word
"Momentum," all of Seller's rights under its contracts, licenses and agreements,
and any and all other assets or rights used, owned or held in connection with
the operation of the business known as "MOMENTUM ONLINE COMPUTER SERVICES, INC."
at the locations hereinafter delineated as well as the assumption of the debts
delineated in Exhibit "B" attached hereto.
II.
PURCHASE PRICE
The purchase price for the Assets shall be the exchange of 436, 856 shares
of Buyer's stock of which, 64,214 shall be free trading.
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III.
EXCHANGE OF SECURITIES
1. Issuance of Shares. Subject to all of the terms and conditions of this
Agreement, Buyer agrees to exchange 436,856 shares in exchange for 100% of the
Assets of Seller as set forth in Exhibit "A" and the Liabilities as set forth in
Exhibit "B".
2. Exemption from Registration: The parties hereto intend that Seller's
common stock to be issued to Buyer shall be exempt from Registration
requirements of the Securities Act of 1933, as amended (the "Act"), and pursuant
to applicable state statutes.
3. Exemption from Taxes. The parties intend this transaction to qualify as
a type C reorganization under the Internal Revenue Code of 1986 as amended.
IV.
LEASED ASSETS
1. Real Property Lease. On the terms and subject to the conditions herein
set forth, on the Closing Date, Seller shall, and does hereby agree to, lease to
Buyer the real property owned, held or claimed by Seller used in connection with
the operation of the Business and located at 0000 Xxxx Xx, xx Xxxxxx, Xxxxx (the
"Xxxxxx Property"), for $1,200.00 per month, and Sub Lease the property located
at 0000 X, Xxx 000, Xxxxx, xx Xxxxxx Xxxxx, Xxxxx (the "Marble Falls Property"),
for $1,000.00 per month, pursuant to the terms of the Real Property Leases in
substantially the form attached hereto as Exhibit "C" (Real Property Lease).
V.
ADJUSTMENTS AT CLOSING
In addition, Buyer and Seller shall make the following adjustment at
closing:
1. All personal property taxes owed for the year 2003 on the Assets shall
be prorated between Seller and Buyer, as the 1st of June, 2003. Buyer shall
assume the obligation to pay personal property taxes on the Assets for the tax
year 2003 and subsequent years.
2. At Closing, Seller shall credit Buyer the amount of all monthly prepaid
Internet service payments received between April 1 and May 31, 2003 plus any
collected applicable Texas Sales Tax, which will have the effect of lowering the
cash payable to Seller at Closing.
VI.
TIME OF CLOSING
1. The Closing Date pursuant to the terms hereof shall be on or before the
1st day of June, 2003, at 2:00 p.m., but effective as of the close of business
the 31st day of May, 2003 (the "Closing Date"). The closing shall be held at
Strategic Abstract & Title Corporation, 000 X. Xxxx, Xxxx Xxxxxxxx, Xxxxx (the
"Closing"), unless another time and place are mutually agreed upon by the
parties hereto.
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2. At the Closing, Seller and Buyer shall execute and deliver all
documents and payments necessary or desirable to convey to Buyer all right,
title or interest in the Assets in form suitable to both Buyer and Seller and
Buyer's and Seller's counsel including:
a. Seller shall prepare and deliver to Buyer leases, ready for
execution, for the Xxxxxx Property and the Marble Falls Property.
b. Seller shall deliver to Buyer any and all Certificates of Title
necessary for the transfer of title; if any, of the Assets;
c. Seller shall deliver to Buyer a five (5) year license agreement for
the use of the name" Momentum Online" and any derivation of Seller's name
for the benefit of Buyer;
d. Seller shall provide a UCC search of the records of the Secretary of
State of Texas reflecting no liens on the Assets;
e. Seller shall deliver to Buyer a Xxxx of Sale in form and substance
suitable to convey the Assets; and
f. Seller shall prepare, and Buyer and Seller shall execute an
Assignment of Contracts and Assumption of Debts delineated in Exhibit "E"
and Exhibit "B" respectively.
g. Buyer shall instruct stock transfer agent to issue stock to the
Seller as delineated in this Agreement.
h. Buyer shall execute 5-year employment agreement with Xxxxxx XxXxxxx
as shown in Exhibit "D"
VII.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby warrants and represents to Buyer that, as by the date hereof
through the Closing Date, Seller is or shall be:
1. Organization and Standing. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas and
has the requisite power and authority to carry on its business as it is now
being conducted.
2. The sole owner of the Assets referenced and described in Exhibit "A"
attached hereto with full right, power and authority to sell, lease or dispose
of same, and that the Assets shall be conveyed or leased to Buyer free and clear
of any debt, lien or other encumbrance whatsoever.
3. To the extent relating to or affecting the Assets being conveyed or
leased hereby, Seller will operate (up to the Closing Date) the Business in the
usual and ordinary manner and has not:
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a. Except as previously disclosed to Buyer, Seller has not borrowed or
agreed to borrow any funds or incurred, or become subject to, any
obligation or liability (absolute or contingent) covering the Assets
conveyed hereby;
b. Except in the ordinary course of business and consistent with the
past practice of Seller, sold, transferred or otherwise disposed of, or
agreed to sell, transfer or otherwise dispose of, any of the Assets, or
canceled or otherwise terminated, or agreed to cancel or otherwise
terminate, any debts or claims owed to Seller in connection with the
Assets;
c. Entered or agreed to enter into any agreement or arrangement
granting any preferential rights to purchase any of the Assets (including
management and control thereof), or requiring the consent of any party to
the transfer and assignment of the Assets (including management and
control thereof);
d. Suffered any damages, destruction or losses or waived any rights of
value which, in the aggregate, are material considering the Business;
e. Other than in the ordinary course of business, made or permitted any
amendment or termination of any contract, agreement or license to which it
is a party or by which it or any of the Assets are subject;
f. To the best of Seller's knowledge, incurred or become subject to any
claim or liability for damages or alleged damages for actual or alleged
negligence or other tort or breach of contract which is not fully covered
by insurance underwritten by responsible insurers; and
g. Except as previously disclosed to Buyer, Seller has not entered
into, agreed to enter into, or consummated any other transaction other
than in the ordinary course of business.
4. Seller will maintain in a good and workmanlike manner all of the Assets
and will continue to operate and manage said property in a reasonable and
prudent manner.
5. Except as previously disclosed to Buyer, Seller will keep all of the
Assets in its recent condition and state of repair, reasonable wear excepted,
and after the date of this Agreement, Seller will not enter into any lease,
service, maintenance, or management agreement with respect to all or any portion
of the Assets without the written consent of the Buyer.
6. Seller (a) owes no obligations and has contracted no liabilities
affecting the Business, (b) is not in breach or default of any agreement (i)
affecting the Business or to which any of the Assets are subject, or (ii) which
might affect the consummation of the purchase and sale described in this
Agreement, which have not been made known to Buyer in writing.
7. Seller is not conveying the Business or Purchased Assets in
contemplation or anticipation of filing bankruptcy.
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8. To the best of Seller's knowledge, except as disclosed in writing to
Buyer, (a) Seller has not incurred, and neither it nor any of the Assets are
subject to, any liabilities or obligations (accrued, absolute, contingent or
otherwise), other than unsecured trade accounts payable arising in the ordinary
course of business, since May 1, 2003; and (b) there are no facts in existence
on the date hereof and known to Seller that might reasonably serve as the basis
for any material liabilities or obligations of Seller not disclosed in writing
to Buyer.
9. Except as previously disclosed to Buyer, to the best of Seller's
knowledge, (a) all federal, state, county, local and other taxes, including,
without limitation, income taxes, corporate franchise taxes, and sales and ad
valorem taxes, due and payable by Seller on or before the Closing Date have been
paid, and Seller has filed all tax returns and reports required to be filed by
it with all such taxing authorities; (b) the liabilities for federal, state,
county, local and other taxes reflected in the balance sheet represent
reasonable and adequate provision for the payment of all accrued and unpaid
federal, state, county, local and other taxes of Seller for all periods ending
on or prior to September 31, 2001, whether or not disputed; and (c) no
assessments of deficiencies have been made against Seller and no extensions of
time are in effect for the assessment of such deficiencies.
10. To the best of Seller's knowledge, (a) there are no claims, actions,
suits, proceedings or investigations pending or threatened against or affecting
Seller or any of the Assets, at law or in equity, or before or by any court or
federal, state, municipal or other governmental department, commission, board,
agency, or instrumentality; and (b) Seller is not subject to any continuing
court or administrative order, writ, injunction, or decree applicable to it or
to its business, property, or employees, and Seller is not in default with
respect to any order, writ, injunction or decree of any court or federal, state,
municipal or other governmental department, commission, board, agency or
instrumentality.
11. Seller shall. execute and deliver, at Closing, such Bills of Sale,
leases, assignments and other instruments deemed necessary or proper to transfer
to Buyer all of the Assets being sold or leased pursuant to this Agreement, as
is delineated in Section VI of this Agreement. All such documents shall be in
form and substance satisfactory to Seller and Buyer.
12. Seller shall prepare appropriate closing instructions directing
payment, from the Purchase Price due Seller, of all such matters that need to be
considered, such as applicable perorations, if any, which would pertain to the
Assets covered hereunder, and any just claims against Seller received prior to
the time set for consummation of the purchase and sale described in this
Agreement, which should have the effect of reducing the Purchase Price.
VIII.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby warrants and represents to Seller that:
1. Buyer has had access to Seller's books and records and an opportunity
to ask questions concerning the books, records, and Assets and Buyer has
satisfied itself that the Business is consistent with its needs and
expectations; and
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2. Buyer has inspected the Assets of the Business, and has obtained a
third party to inspect the Property and the Business and equipment used therein,
and has found such property to be in good working condition, reasonable wear and
tear accepted, and agrees to accept the same in its "as is" and " where is"
condition.
3. Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas, and has full corporate power and
authority to conduct its business as it is now being conducted and to enter into
and carry out the provisions of this Agreement.
4. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will violate any provision
of the Articles of Incorporation or By-Laws of Buyer, violate any provision of
any agreement or other obligation to which Buyer is a party or by which Buyer is
bound or to which its assets are subject, or violate or result in a breach of,
or constitute a default under, any judgment, order, decree, rule or regulation
of any court or governmental agency to which Buyer is subject.
5. The execution, delivery and performance of this Agreement has been
authorized by the Board of Directors of Buyer, and this Agreement constitutes
the valid and legally binding obligation of Buyer, enforceable in accordance
with its terms.
IX.
RISK OF LOSS
The Assets have been inspected by Buyer and will be accepted by Buyer as
of the Closing Date in their "AS IS" and "WHERE IS" condition. The Assets will
be delivered to Buyer on the Closing Date in their present condition, normal
wear and tear accepted. Sellers makes no representations or warranties as to the
condition of any of the Assets. All risks of ownership and loss as to the
Assets, whether by fire, vandalism, theft, casualty, or otherwise shall remain
with Seller until Closing, as well as all rights under Seller's casualty and
property insurance. If any such destruction, loss or damages amounts to more
than TWENTY-FIVE THOUSAND DOLLARS ($25,000.00), Buyer may, at its option,
terminate this Agreement. All risk of ownership and loss to the Assets, whether
by fire, vandalism, theft, casualty, or otherwise will belong to Buyer after the
Closing
X.
ASSUMPTION OF LIABILITIES
Other than as specifically set forth in this Agreement, Buyer shall not
and does not assume any of Seller's liabilities, including, but not limited to,
any liabilities to any employees of Seller, all taxes of any kind (including,
without limitation, all income, franchise, excise and employment taxes,
including any interest and penalties thereon), and liabilities arising under any
suits, actions or proceedings against Seller or the Assets, and any other debts
or contingencies or any other liabilities of Seller, whether fixed or
contingent, and all such liabilities shall remain the sole obligations of
Seller. From and after the Closing Date, Buyer shall and does assume any
liability under any contracts for products and services currently in effect and
outlined in Exhibit "E", such as telecommunication circuits, which contracts
will be assigned to and
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assumed by Buyer at Closing. Buyer agrees to and shall indemnify Seller against
any default or penalty under these assumed contracts.
XI.
COVENANT NOT TO COMPETE
Buyer and Seller and Xxxxxx XxXxxxx , individually agree that for a period
of two (2) years from and after the termination of employment of Xxxxxx XxXxxxx
hereof (the "Restriction Period"), Seller and any stakeholders, interest
holders, employees or family members of same (which shall be collectively
referred to as seller in this section) shall not engage in the business of
provisioning Internet services within a 150 mile radius of Fort Stockton, Texas,
Xxxxxx, Texas and Marble Falls, Texas as well as any markets entered into during
the employment period of Xxxxxx XxXxxxx and any markets the Seller anticipated
entering into during such tenure. (the "Restricted Area"). The term "Internet
Services, as used herein, is defined as dial up Internet access, web hosting,
broadband wireless Internet access, ISDN, DSL, Cable, and Satellite access, but
not including services or access for Seller's personal or family use (including
web hosting), and Internet-related consulting or network consulting, maintenance
and support services, or systems administration. Further, during the Restriction
Period, Seller shall not, directly or indirectly, whether individually or as an
employee, contractor, agent, officer, director, or owner (directly or
indirectly) of an ownership of any entity, engage in a business providing
Internet Services in or to the Restricted Area. During the Restriction Period
and within the Restricted Area, Seller further agrees that he shall not, either
directly or indirectly, through any person, firm, association or corporation
with which he is now, or may hereafter become, associated cause, induce or
encourage any present or future employee of Buyer or of any of its affiliates to
leave the employ of Buyer or any such affiliate to accept employment with it,
with any such person, firm, association, or corporation, or with any business
that conducts a business in competition with or similar to that to be conducted
by Buyer. The foregoing agreement not to compete shall not be held invalid or
unenforceable because of the scope of the territory or actions subject thereto
or restricted thereby, or the period of time within which such agreement is
operative, but any judgment of a court of competent jurisdiction may define the
maximum territory of action subject to and restricted by this paragraph and the
period of time during which such covenant is enforceable. Seller consents to the
entry against him of injunctive relief in the event of his breach of this
covenant.
XII.
CONDITIONS AND OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement shall, at the option of
Buyer, be subject to the following conditions:
1. Buyer shall not have discovered any material error, misstatement, or
omission in the representations or warranties made by Seller throughout the
provisions of this Agreement.
2. Affidavit of Seller. Buyer shall have received an affidavit of Seller
reasonably satisfactory in form and content to Buyer's counsel to the effect:
(a) that Xxxxxx XxXxxxx is an owner of the Business with full and exclusive
right to sell the Assets; (b) that the Agreement has been validly authorized and
is binding obligation of Seller, (c) that the Assets being acquired by
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Buyer pursuant to this Agreement are (or shall be as of the Closing Date) free
and clear of any liens and encumbrances, and Buyer shall receive good and
indefeasible title from the Seller to the Assets as of the Closing Date; and (d)
such other matters as Purchaser may reasonably require. In rendering such
opinion, Buyer's counsel shall be entitled to rely as to factual matters upon
certificates and other items attached to the affidavit and satisfactory to
Buyer.
3. Seller shall have fully complied with the provisions hereof.
XIII.
INDEMNIFICATION
Other than as specifically set forth herein, Buyer agrees only to acquire
the Assets of the Seller described herein and nothing herein shall be construed
as an assumption by the Buyer of, all of the Seller's liabilities or
obligations. It is specifically agreed that only certain liabilities as set out
in Exhibit "B" will be assumed. Seller agrees to indemnify and hold and save
Buyer free and harmless from any and all claims, demands, damages, suits, causes
of action, lawsuits, liability, costs and expenses (including Buyer's attorney's
fees in defending themselves as necessitated by such action) of any kind or
character incurred in connection with, resulting from or on account of:
1. All obligations or liabilities of the Seller not assumed by Buyer, in
connection with the Business, for all periods prior to the Closing Date only;
2. Any applicable federal, state, county, city, or other taxes of any
nature whatsoever by Seller, incurred, accrued or relating to property owned or
leased for all periods prior to Closing Date, other than those specifically
assumed by Buyer herein; or
3. Any violations, up to the Closing Date, of any federal, state, local or
environmental laws, statutes or regulations applicable to the Business;
provided, however, (a) Seller's indemnity obligation set forth above shall
remain in effect for a period not exceeding two (2) years from the Closing Date,
and (b) the amount of such indemnity obligation hereunder shall be limited to
the amount of the Purchase Price.
XIV.
EMPLOYEES
Seller shall terminate employment of all employees of the Business
effective as of the Closing Date. Seller will pay wages through May 31, 2003,
and Buyer shall be responsible for the rehiring of all current employees
pursuant to employment contracts thereafter. It is further agreed that all
salaries, wages, vacation pay, sick leave pay, all other compensation of any
form whatsoever will be fully and finally paid to all employees, independent
contractors, agents and servants of the Seller, at Closing, at the sole risk,
cost and expense of the Seller.
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XV.
DEFAULT
If either Seller or Buyer defaults in complying with any of the terms
hereof, the non-defaulting party may terminate this Agreement and seek any
relief as may be provided by law.
XVI.
INVALID PROVISIONS
If any provision of this Agreement is held to be illegal, invalid, or
unenforceable under the present or future laws, such provision shall be fully
severable, and the Agreement shall be construed and enforced as if such
provision had never comprised a part of this Agreement, and the remainder of the
Agreement shall not be affected by any such illegal, invalid, or unenforceable
provision or by its severance from this Agreement.
XVII.
ARBITRATION CLAUSE
Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, or any claim or dispute between the parties to this
Agreement, shall be settled by arbitration in accordance with Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon the
award rendered by the arbitrator(s) may be entered in any Court having
jurisdiction thereof. All arbitration proceedings shall be held in Pecos County,
Texas and all arbitrators shall be appointed by the current presiding judge of
the 83rd Judicial District Court, Pecos County, Texas, or if he fails to make
such appointments within 90 days after a notice demanding arbitration has been
delivered, the arbitrators shall be appointed by the American Arbitrators
Association under their rules.
XVIII.
MISCELLANEOUS PROVISIONS
1. This Agreement is performable in Fort Stockton, Pecos County, Texas, in
accordance with the laws of the State of Texas.
2. Each party hereto shall be responsible for its or their own legal
expenses.
3. Buyer acknowledges that this Agreement and its contents are not public
and Buyer agrees to maintain the confidentiality, as best it can, pending
Closing of this Agreement and all its terms, conditions and covenants.
4. This Agreement, along with the Xxxx of Sale, the leases for the Xxxxxx
Property, the Marble Falls Property, and the Employment Agreement as well as the
equipment list attached to Exhibits hereto, shall constitute the entire
agreement between the parties hereto with respect to the subject matter hereof.
This Agreement may not be amended, except by an instrument in writing, signed by
the Buyer and the Seller.
5. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
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6. The paragraph captions in this Agreement are for the sake of
convenience only and shall not in any way limit or be deemed to construe and
interpret the terms and provisions hereof. All words herein in the neuter gender
shall be deemed to include words in the male or female gender, and vice versa,
whenever the context shall so require. Likewise, all words herein in the
singular shall be deemed to include words in the plural, and vice versa,
whenever the context shall so require.
XIX.
NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All statements contained herein, in any exhibit hereto, or in any
certificate or other written instrument delivered by or on behalf of Seller or
Buyer pursuant to this Agreement, or in connection with the transactions
contemplated hereby, shall be deemed representations and warranties by Seller or
Buyer, as the case may be. Regardless of any investigation at any time made by
or on behalf of any party hereto, or of any information any party may have in
respect thereof, all covenants, agreements, representations and warranties made
hereunder, or pursuant hereto, or in connection with the transactions
contemplated hereby, shall survive the Closing and shall continue in effect
thereafter for a period of two(2) years following the Closing Date, and Two (2)
Years with regard to the Covenant Not to Compete.
XX.
NOTICES
Whenever in this Agreement notice is required or permitted to be given by
either party to the other, such notices shall be in writing and sent by
certified or registered mail, return receipt requested, addressed as follows:
If to Buyer, to:
------------------------
------------------------
If to Seller, to: Wireless Frontier Internet, 000 Xxxx Xxxxxxxxx Xx.
--------------------------------------------------
Xxxx Xxxxxxxx, Xxxxx 00000
---------------------------
Notices shall be deemed delivered when deposited in the United States mail
as above provided. Changes of address by either party must be by notice to the
other in the same manner as above specified.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the 31st day of May, 2003.
Seller:
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MOMENTUM ONLINE COMPUTER SERVICES, INC.
By: /s/ Xxxxxx XxXxxxx
--------------------------------------
Xxxxxx XxXxxxx, President
Buyer:
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WIRELESS FRONTIER INTERNET, INC.
By: /s/ Xxxxxx Xxxxx
--------------------------------------
Xxxxxx Xxxxx, President
STATE OF TEXAS ss.
ss.
COUNTY OF PECOS ss.
This instrument was acknowledged before me on this 31st day of May, 2003,
by Xxxxxx XxXxxxx, PRESIDENT of MOMENTUM ONLINE COMPUTER SERVICES, INC.
/s/ Xxxxx Xxxxxxx
----------------------------------------
Notary Public, State of Texas
STATE OF TEXAS ss.
ss. [Notary Seal]
COUNTY OF PECOS ss.
This instrument was acknowledged before me on this 31st day of May, 2003,
by XXXXXX XXXXX, PRESIDENT of WIRELESS FRONTIER INTERNET, INC., a Texas
corporation.
[Notary Seal]
/s/ Xxxxx Xxxxxxx
---------------------------------------
Notary Public, State of Texas
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