EX 2.2
SHARE EXCHANGE AGREEMENT
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THIS SHARE EXCHANGE AGREEMENT (the "Agreement") is made and entered
into as of this ____ day of January, 2004 (the "Effective Date") by and between
TELS Corporation, a Utah corporation (the "Company") and, Pathway Advisors,
Inc., a ______________ corporation, ("Pathway") and Xxxxx Pathway, the sole
shareholder of Pathway (the "Shareholder").
WHEREAS, the respective Board of Directors of Pathway and the Company
deem the acquisition by the Company of all of the issued and outstanding capital
stock of Pathway on the terms set forth in this Agreement to be desirable,
generally to the welfare and advantage of each, and in the best interests of the
shareholders of each;
NOW THEREFORE, in consideration of the mutual promises and the
covenants and promises hereinafter contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as follows:
SECTION 1. EXCHANGE OF SHARES.
1.1 Exchange. On the terms and subject to the conditions set forth in
this Agreement, at the Closing the Shareholder will sell, convey, transfer and
assign to the Company, and the Company will purchase and accept from the
Shareholder all right, title and interest in and to the issued and outstanding
shares of common stock of Pathway, owned by Shareholder in exchange for three
million shares of restricted common stock of the Company.
1.2 Assets. As of the date of Closing, the assets of Pathway shall
consist of the Contracts, Intellectual Property, Tangible and Intangible Assets
and Records and Documents described in Section 1.2 (a) through (d) hereof
(collectively, the "Assets"), free and clear of all liens.
(a) Contracts. All rights and benefits of the Shareholder
under all agreements associated with the Assets, any and all other license and
other agreements (if any), including, without limitation, those set forth on
Schedule 1.2 (a). "Contracts" means all contracts, agreements and other
arrangements whether written or oral, to which Pathway is a party as to which
the breach, non-performance, failure to renew, or cancellation could have a
material adverse effect on the Assets.
(b) Intellectual Property. All rights, title and interest in
and to, all United States and foreign licenses, copyrights (registered and
unregistered) and copyright applications, and Computer Software and other rights
associated with the foregoing, existing now or in the future with respect to the
Assets, including, without limitation the right to xxx for past infringement
thereof and all other proprietary rights that Pathway owns, licenses, or
possesses the right to use with respect to the Assets (collectively, the
"Intellectual Property"). The Intellectual Property is listed on Schedule 1.2
(b). "Computer Software" means all computer
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source codes, programs, data files, and other software (including both
applications software and operating software), including all machine readable
code, printed listings of code, documentation, and related property and
information relating to the Assets.
(c) Tangible and Intangible Assets. All tangible and
intangible personal property rights of Pathway in and to the Assets (the
"Tangible and Intangible Assets"), which are reflected on Schedule1.2 (c).
(d) Records and Documents. All books, records, files, papers,
databases, and other data (whether such information is stored in print, on
electronic media, or pursuant to any audio or video recording) located at
Pathway's facilities or elsewhere in Pathway's custody or control (directly or
indirectly), or pertaining to the Assets, all of which are reflected on Schedule
1.2(d).
(e) Bank Accounts. Attached hereto as Schedule 1.2(e) is a
listing of all bank accounts and account numbers which are currently held by
Pathway The Shareholder shall take such steps as necessary in order for the
Company or its designees to be named as signatories.
(f) Financial Statements. Attached hereto as Schedule 1.2(f)
are the Financial statements for Pathway dated December 31, 2003. Said
statements have been prepared using Generally Accepted Accounting Principles.
These financial statements fairly present the financial position of Pathway as
of the dates set forth in the unaudited financial statements. The unaudited
financial statements have been prepared in conformity with generally accepted
accounting principles consistently applied and consistent with the books and
records of Pathway. There has been no material change in the financial condition
of Pathway since the date of the financial statements. All known liabilities of
the Company are set forth in the financial statements and there are not
undisclosed liabilities of any kind or nature.
If the December 31, 2003 audited financial statements reflect a
material change in the financial condition of Pathway from that which was
previously represented in the unaudited December 31, 2003 financial statements
which have previously been delivered to the Company, the Company may, in its
sole and absolute discretion choose not to proceed with Closing and this
Agreement will be of no further force or effect and each party shall be liable
for their respective costs.
1.3 Closing Date. The closing ("Closing") shall occur on or before
January ___, 2004 (the "Closing Date"). The Closing will take place at 10:00
a.m. at the offices of Xxxxxx, Xxxxxxx & Xxxxx, LLP, 0000 XX Xxxxxxxxx Xxxx.,
Xxxxx 000, Xxxx Xxxxx, XX 00000, or, at such other date, time and place or
manner, as may be agreed upon by the parties.
1.4 Delivery of Shares.
(a) At the Closing, the Shareholder shall deliver to the
Company a validly issued certificate representing the Pathway Shares duly
endorsed in blank or accompanied by stock powers duly executed in blank, with
all necessary stock transfer stamps affixed.
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(b) At the Closing, the Company shall deliver to the
Shareholder a validly issued certificate representing the TELS Shares duly
endorsed in blank or accompanied by stock powers duly executed in blank, with
all necessary stock transfer stamps affixed.
SECTION 2. PURCHASE PRICE.
2.1 Purchase Price. The Company shall convey, transfer, assign three
million unregistered shares of common stock of the Company ("Common Stock") in
exchange for all of the issued and outstanding shares of common stock of Pathway
held by Shareholder. The shares of Common Stock may only be resold in the future
under Rules 144 or 144A under the Securities Act of 1933 (the "Securities Act"),
subject to compliance with all of the provisions of the Rules. Rule 144 provides
that securities may be resold after a one-year holding period from the date of
payment subject to compliance with the Rule. Among other things, an order to
sell the securities may only be placed after Form 144 has been mailed to the
Securities and Exchange Commission, the securities must be sold to or through a
broker-dealer, the volume limitations must be met (i.e., the greater of 1% of
the outstanding shares or the average weekly trading volume for the four weeks
preceding the filing of Form 144) and there can be no solicitation of any buy
orders. Rule 144A applies to sales to institutions which are "qualified
institutional buyers".
The share certificate to be delivered to the law firm of Xxxxxx,
Xxxxxxx & Xxxxx, LLP to be held in escrow subject to Pathway completing any and
all required audit requirements as set forth in this Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
3.1 Pathway and Shareholder's Representations and Warranties. Pathway
and the Shareholder hereby represent and warrant to the Company, all of which
representations and warranties are true, complete, and correct in all respects
as of the date hereof and will be as of the Closing Date, as follows:
(a) Organization and Qualification. Pathway is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Pathway has all requisite power and authority
to own those properties and conduct those businesses presently owned or
conducted by it, and is duly qualified to do business as it is now being
conducted and is in good standing as a foreign corporation in each other
jurisdiction where the property owned, leased or used by it or the conduct of
its business makes such qualification necessary. The copies of the articles of
incorporation and bylaws of Pathway, which have been (or will be, at least two
days before the Closing Date) delivered to the Company, are complete and correct
and are in full force and effect at the date hereof. There are, and at the
Closing will be, no outstanding subscriptions, options, warrants, convertible
securities, calls, commitments or agreements calling for or requiring issuance
or transfer, sale or other disposition of any shares of capital stock of the
Company or calling for or requiring the issuance of any securities or rights
convertible into or exchangeable (including on a contingent basis) for shares of
capital stock.
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(b) Authorization; No Restrictions, Consents or Approvals.
Pathway and the Shareholder have full power and authority to enter into and
perform this Agreement. This Agreement has been duly executed by Pathway and the
Shareholder and constitutes the legal, valid, binding and enforceable obligation
of Pathway and the Shareholder, enforceable against Pathway and the Shareholder
in accordance with its terms. The execution and delivery of this Agreement, the
exchange of Shares and the consummation by Pathway of the transactions
contemplated herein, do not and will not on the Closing Date (i) conflict with
or violate any of the terms of the articles of incorporation and bylaws of
Pathway or any applicable law relating to the Shareholder or Pathway, (ii)
conflict with, or result in a breach of any of the terms of, or result in the
acceleration of any indebtedness or obligations under, any agreement, obligation
or instrument by which the Shareholder or Pathway is bound or to which any
property of the Shareholder or Pathway is subject, or constitute a default
thereunder, (iii) result in the creation or imposition of any lien on any of the
assets of the Shareholder or Pathway, (iv) constitute an event permitting
termination of any agreement or instrument to which the Shareholder or Pathway
is a party or by which any property or asset of the Shareholder or Pathway is
bound or affected, pursuant to the terms of such agreement or instrument, or (v)
conflict with, or result in or constitute a default under or breach or violation
of or grounds for termination of, any license, permit or other governmental
authorization to which the Shareholder or Pathway is a party or by which the
Shareholder or Pathway may be bound, or result in the violation by the
Shareholder or Pathway of any laws to which the Shareholder or Pathway may be
subject, which would materially adversely affect the transactions contemplated
herein. No authorization, consent or approval of, notice to, or filing with, any
public body or governmental authority or any other person is necessary or
required in connection with the execution and delivery by Pathway and the
Shareholder of this Agreement or the performance by Pathway or the Shareholder
of his obligations hereunder.
(c) Capitalization. The authorized capitalization of Pathway
consists of __________ shares of common stock, $ ____ par value, __________ of
which are issued and outstanding and owned by the Shareholder. There are, and at
the Closing will be no outstanding subscriptions, options, warrants, convertible
securities, calls, commitments or agreements calling for or requiring issuance
or transfer, sale or other disposition of any shares of capital stock of the
Company or calling for or requiring the issuance of any securities or rights
convertible into or exchangeable (including on a contingent basis) for shares of
capital stock. All of the outstanding shares of the Company are duly authorized,
validly issued, fully paid and non-assessable. There are no dividends due, to be
paid or are in arrears with respect to any of the capital stock of Company.
(d) Subsidiaries. Pathway has no subsidiaries and does not own
any interest in any corporation, partnership, joint venture, limited liability
company, association, trust or entity.
(e) Brokers' Fees. Pathway has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Company could become
liable or obligated.
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(f) Litigation. There are no actions, suits, proceedings, or
investigations pending or, to the best of its knowledge, threatened or
contemplated against Pathway
(g) Assets. Pathway has good and marketable title to the
Assets, free and clear of any lien, which Assets are reflected on Schedules 1.2
(a), (b), (c) and (d). Such Assets are not subject to any Contracts other than
those listed on Schedule 1.2 (a).
(h) Employees. Attached hereto as schedule 3.1(h) is a list of
all Pathway employees together with the salaries of each and any agreed to
benefit packages. Except as noted in the schedule, there are no outstanding
employment agreements which cannot be terminated on 30 days prior written
notice.
(i) No Material Adverse Change. Since the Pathway Balance
Sheet Date, there has not been any material adverse change in the condition,
financial or otherwise, of Pathway's business, nor has there been any material
transaction entered into by Pathway Pathway has not incurred any material
obligations, contingent or otherwise except for legal and accounting fees and
expenses in connection with the transactions contemplated by this Agreement.
(j) Disclosure. No statement, representation or warranty by
Pathway and the Shareholder in this Agreement, including the Schedules hereto,
contains any untrue statement of material fact, or omits to state a material
fact, necessary to make such statements, representations and warranties not
misleading. There is no fact known to Pathway or the Shareholder which has
specific application to the Assets, and, so far as Pathway and the Shareholder
can reasonably foresee, materially threatens in the future, the Assets which has
not been set forth in this Agreement or the Schedules hereto.
(k) Ownership of the Shares. The Shareholder owns 100% of the
issued and outstanding shares of stock of Pathway. These Shares are owned free
and clear of any liens or encumbrances and that the Shareholder is free to
transfer these Shares without the consent of any third party.
(l) Restricted Securities. The Shareholder understands that
(a) the TELS Shares to be received by the Shareholder hereunder are
characterized as "restricted securities" under the federal securities laws
inasmuch as such securities are being acquired from the Company in a transaction
not involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under the
Securities Act only in certain limited circumstances and (b) the certificate(s)
representing the TELS Shares shall bear the following legends:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
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AMENDED. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR A WRITTEN OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO
THE ISSUER IN FORM AND SUBSTANCE, THAT SUCH TRANSFER IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT OF 1933.
(m) Suitability Standards.
(i) Shareholder is acquiring the TELS Shares for
investment purposes only and solely for his own accounts and not with a view to,
or for resale in connection with, the distribution or disposition thereof,
except for such distributions or dispositions which are effected in compliance
with the Securities Act;
(ii) Shareholder understands that the TELS Shares
have not been registered under the Securities Act or under any state securities
or "blue sky" laws;
(iii) Shareholder will not directly or indirectly
offer, sell, transfer, assign, pledge, hypothecate or otherwise dispose of, or
solicit any offers to purchase or otherwise acquire or take a pledge of, any of
the TELS Shares, except in accordance with the Securities Act and all applicable
state securities or "blue sky" laws;
(iv) The financial situation of the Shareholder is
such that he can afford to bear the economic risk of holding the TELS Shares for
an indefinite period of time and suffer complete loss of his investment in the
TELS Shares;
(v) Shareholder has such knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks relating to his investment in the TELS Shares;
(vi) Shareholder acknowledges that the TELS Shares
must be held indefinitely and Shareholder must continue to bear the economic
risk of his investments in the TELS Shares until the TELS Shares are
subsequently registered under the Securities Act or an exemption from such
registration is available;
(vii) Shareholder understands that the TELS Shares
represent a speculative investment which involves a high degree of risk of loss
of his investment therein;
(viii) In making his decision to receive the TELS
Shares under this Agreement, Shareholder has relied upon independent
investigations made by him and, to the extent believed by him to be appropriate,
his representatives, including his own professional, tax and other advisors;
(ix) In making his decision to receive the TELS
Shares under this
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Agreement, Shareholder has not received or relied upon any information relating
the TELS from Company and Shareholder has relied solely upon the public filings
of TELS to evaluate the risks associated with ownership of the TELS Shares; and
(x) All information that Shareholder has provided to
Company concerning himself and his financial position is true, complete and
correct as of the date of this Agreement.
(n) Taxes. Pathway and the Shareholder have no knowledge of
any tax deficiency which has been or might be asserted against Pathway which
would materially and adversely affect the business or operations of Pathway.
(o) Corporate Action of Company. The Board of Directors of
Pathway has duly authorized the execution and delivery of this Agreement.
Subject to the approval of the stockholders of Pathway as provided herein, this
Agreement constitutes a valid, legal and binding agreement of Pathway and is
enforceable in accordance with its terms.
(p) Licenses. Pathway has obtained all required licenses,
permits or other governmental authorization for the conduct of its business as
now being conducted.
3.2 Company's Representations and Warranties. The Company hereby
represents and warrants to the Shareholder, all of which representations and
warranties are true, complete, and correct in all respects as of the date hereof
and will be as of the Closing Date, as follows:
(a) Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. The Company has all requisite power
and authority to own those properties and conduct those businesses presently
owned or conducted by it, and is duly qualified to do business as it is now
being conducted and is in good standing as a foreign corporation in each other
jurisdiction where the property owned, leased or used by it or the conduct of
its business makes such qualification necessary, except in any case where a
failure so to qualify would not have a material adverse effect on the Company.
The copies of the articles of incorporation and bylaws of the Company, which
have been delivered to the Shareholder, are complete and correct and are in full
force and effect at the date hereof.
(b) Authorization; No Restrictions, Consents or Approvals. The
Company has full power and authority to enter into and perform this Agreement
and all corporate action necessary to authorize the execution and delivery of
this Agreement and the performance its obligations hereunder has been duly
taken. This Agreement has been duly executed by the Company and constitutes the
legal, valid, binding and enforceable obligation of the Company, enforceable
against the Company in accordance with its terms.
(c) Disclosure. No statement by the Company in the documents
described in the receipt attached hereto, contains any untrue statement of a
material fact, or omits to state any
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material fact, necessary to make such statements, in the light of the
circumstances under which they were made, not misleading. The Company knows of
no material fact which specifically applies to the Company and (so far as the
Company can reasonably foresee) materially threatens the Company or its
business, which has not been disclosed in such documents, or disclosed to the
shareholder.
(d) No Broker. The Company has used no broker, and knows of no broker,
which may have a claim against Shareholder for brokerage of this transaction.
SECTION 4. COVENANTS PRIOR TO CLOSING.
Pathway and the Shareholder covenant that, except as otherwise
consented to in writing by the Company, from and after the date hereof until the
Closing or the earlier termination of this Agreement Pathway and the Shareholder
(i) will use reasonable efforts consistent with past practice to preserve the
Assets, (ii) shall not shall not enter into any contract, lease, license,
obligation, indebtedness, commitment, purchase or sale relating to the Assets;
and (iii) shall not enter into or assume any mortgage, pledge, conditional sale
or other title retention agreement, or permit any Lien to be placed upon the
Assets without the prior written consent of the Company..
SECTION 5. CLOSING.
5.1 Conditions to the Company's Obligations. The obligations of the
Company under this Agreement, (including, without limitation, the obligation to
consummate and effect the exchange of shares), shall be subject to satisfaction
of the following conditions, unless waived by the Company:
(a) Pathway and the Shareholder shall have performed in all
material respects all agreements, and satisfied in all material respects all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date.
(b) All representations and warranties of Pathway and the
Shareholder herein shall have been true and correct in all material respects
when made (or will have been made true and correct by the Closing Date), shall
have continued to have been true and correct in all material respects at all
times subsequent thereto, and shall be true and correct in all material respects
on and as of the Closing Date as though made on, as of and with reference to
such Closing Date.
(c) There shall not have occurred any material adverse change
with respect to the Assets or Pathway
(d) Pathway and the Shareholder shall have executed and
delivered to the Company all documents necessary to transfer all issued and
outstanding shares of common stock of Pathway to the Company, as contemplated by
this Agreement.
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(e) Pathway and the Shareholder shall have delivered to
Company an opinion, dated the Closing Date, substantially in a form reasonably
satisfactory to the Company which shall include the subject matter contained in
Section 3.1 (a) (b), (c) and (g).
(f) Pathway and the Shareholder agree to file or cause to have
filed any federal, state, and local tax returns as required for the Company from
the time of its incorporation until the Closing Date. A copy of all such returns
will be provided to the Company as soon as practicable after their filing.
Notwithstanding anything else contained herein to the contrary, in the
event that Pathway is not able to provide the Company within 75 days of Closing
with audited financial statements for the year end December 31, 2003 in
compliance with the rules and regulation of the Securities and Exchange
Commission, this Agreement may be rescinded and the Company shall instruct the
transfer agent to return the share certificates to Tels and Tels shall be
obligated to return to Pathway the share certificates delivered by the
Shareholder to Pathway.
(g) At Closing, Pathway shall deliver to Tels a Board
resolution appointing Xxx Xxxxxxxxx and Xxxxx Xxxxxx to the Board of Directors
of Pathway
5.2 Conditions to Pathway and the Shareholder's Obligations. The
obligations of Pathway and the Shareholder under this Agreement, (including,
without limitation, the obligation to consummate and effect the share exchange)
shall be subject to satisfaction of the following conditions, unless waived by
Pathway and the Shareholder:
(a) The Company shall have performed in all material respects
all agreements, and satisfied in all material respects all conditions on its
part to be performed or satisfied hereunder, at or prior to the Closing Date.
(b) All of the representations and warranties of the Company
herein shall have been true and correct in all material respects when made,
shall have continued to have been true and correct in all material respects at
all times subsequent thereto, and shall be true and correct in all material
respects on and as of the Closing Date as though made on, as of, and with
reference to such Closing Date.
5.3 Pathway and the Shareholder's Closing Documents. At the Closing,
Pathway and the Shareholder shall deliver to the Company, in form and substance
reasonably satisfactory to the Company, all consents required under the
Contracts, and appropriate documents to effect or evidence the sale, conveyance,
assignment and transfer to the Company of the issued and outstanding shares of
common stock of Pathway as contemplated hereby and necessary to place the
Company, in full possession and enjoyment of all issued of outstanding shares of
common stock of Pathway as contemplated hereby, including the following:
(a) A certificate evidencing the issued Pathway outstanding
shares of common stock of Pathway, registered in the name of the Company.
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(b) Copies of Pathway's bylaws and resolutions adopted by the
board of directors of Pathway authorizing the execution and delivery of, and
performance of Pathway and the Shareholder's obligations under, this Agreement,
certified by the Secretary or an Assistant Secretary of Pathway.
(c) A certified copy of Pathway's articles of incorporation,
including amendments, if any, together with a certificate of good standing for
Pathway issued by the Secretary of State of the jurisdiction of its
incorporation and dated not more than 20 business days prior to the Closing
Date.
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
6.1 Survival of Representations and Warranties and Covenants. The
representations, warranties, covenants, and obligations of the Company, Pathway
and the Shareholder set forth in this Agreement and in any certificate,
agreement, or instrument delivered in connection with the transactions
contemplated hereby, shall survive the Closing for a period of three years.
6.2 Indemnification by Pathway and the Shareholder. In addition to and
not in limitation of Pathway and the Shareholder's indemnification obligations
set forth elsewhere in this Agreement, Pathway and the Shareholder shall,
defend, indemnify, and hold harmless the Company and its affiliates and its
respective officers, directors, shareholders, agents and employees
(individually, a "Company Indemnitee" and collectively the "Company
Indemnitees"), from and against any and all claims, losses, deficiencies,
liabilities, obligations, damages, penalties, punitive damages, costs, and
expenses (including, without limitation, reasonable legal, accounting and
consulting fees), whether or not resulting from third party claims
(collectively, "Losses"), suffered by a Company Indemnitee, which arise out of
or result from:
(a) any inaccuracy or misrepresentation in or breach of any of
the representations, warranties, covenants or agreements made by Pathway and the
Shareholder in this Agreement or in any document, certificate or affidavit
delivered by Pathway or the Shareholder pursuant to the provisions of this
Agreement;
(b) any obligation, liability, debt or commitment of Pathway
which is not disclosed herein, whether or not paid by the Company; and
(c) any other matter related to the use or ownership of the
Assets prior to the Closing (including, but not limited to, all acts, omissions
and conditions existing or occurring prior to the Closing for which any of the
Company Indemnitees is alleged to be liable pursuant to any successor or similar
theory of liability).
6.3 Indemnification By The Company. The Company shall defend, indemnify
and
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hold harmless, the Shareholder from and against any and all Losses, suffered by
the Shareholder, which arise out of or result from any inaccuracy or
misrepresentation in or breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in any
document, certificate or affidavit delivered by the Company pursuant to the
provisions of this Agreement.
6.4 Indemnification Payments. All indemnity payments, whether by the
Company, Pathway or the Shareholder, to be made under this Agreement, shall be
made in immediately available funds.
6.5 Procedure for Third Party Claims.
(a) Notice to the indemnifying party shall be given promptly
after receipt by the Shareholder or the Company Indemnitee of actual knowledge
of the commencement of any action or the assertion of any claim that will likely
result in a claim by it for indemnity pursuant to this Agreement. Such notice
shall set forth in reasonable detail the nature of such action or claim to the
extent known, and include copies of any written correspondence or pleadings from
the party asserting such claim or initiating such action. The indemnified party
shall be entitled, at its own expense, to assume or participate in the defense
of such action or claim. If the indemnifying party assumes the defense of such
action or claim, it shall be conducted by counsel chosen by such party and
approved by the party seeking indemnification, which approval shall not be
unreasonably withheld.
(b) For actions where the indemnifying party does not exercise
its right to assume the defense, the party seeking indemnification shall assume
and control the defense of and contest such action with counsel chosen by it and
approved by the indemnifying party, which approval shall not be unreasonably
withheld. The indemnifying party shall be entitled to participate in the defense
of such action, the cost of such participation to be at its own expense. The
indemnifying party shall pay the reasonable attorneys' fees and expenses of the
party seeking indemnification to the extent that such fees and expenses relate
to claims as to which indemnification is payable under Sections 6.2 or 6.3, as
such expenses are incurred.
(c) Both the indemnifying party and the indemnified party
shall cooperate fully with one another in connection with the defense,
compromise, or settlement of any such claim or action, including, without
limitation, by making available to the other all pertinent information and
witnesses within its control.
(d) No indemnified party shall have the right to settle any
action brought against it without the consent of the indemnifying party. The
indemnifying party shall have the right to settle any action brought against an
indemnified party as long as the indemnified party has been delivered a complete
release as a condition of the settlement.
6.6 Remedies Cumulative. The remedies provided for herein shall be
cumulative and shall not preclude assertion by any party of any other rights or
the seeking of any other remedies
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against any other party. Section 6.6 shall not limit, impair or modify any
provisions of this Agreement or otherwise impose any additional liability or
obligation on the Company for any liability or obligation of the Shareholder,
other than the Company's obligation to indemnify the Shareholder hereunder.
6.7 Successors. The merger, consolidation, liquidation, dissolution or
winding up of, or any similar transaction with respect to the parties hereto,
shall not affect in any manner the obligations of the parties pursuant to
Section 6 or any other term or provision of this Agreement, and the parties
covenant and agree to make adequate provision for their liabilities and
obligations hereunder in the event of any such transaction.
SECTION 7. GENERAL PROVISIONS.
7.1 Documentary Taxes. Each party shall pay any documentary or other
taxes, arising from the issuance of any capital stock by such party.
7.2 No Third Party Beneficiaries. Nothing in this Agreement shall it be
construed, to confer any rights or benefits upon any person (including, but not
limited to, any employee or former employee of the Shareholder) other than the
parties hereto, and solely to the extent provided in Section 6, the Shareholder
and the Company Indemnitees, and no other person ,shall have any rights or
remedies hereunder.
7.3 Specific Performance. Each of the parties acknowledges and agrees
that the other parties would be damaged irreparably if any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each party agrees that the other party
shall be entitled, without the necessity of pleading or proving irreparable harm
or lack of an adequate remedy at law or posting any bond or other security, to
an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof. Any such claim for specific performance shall be brought and
determined in the appropriate federal or state court, in the State of Florida
and in no other forum. The parties hereby irrevocably submit to the jurisdiction
of any such Florida state court or federal court in Florida, in connection with
such claim for a specific performance.
7.4 Severability. If any parts of this Agreement are found to be void,
the remaining provisions of this Agreement shall nevertheless be binding with
the same effect as though the void parts were deleted.
7.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
7.6 Benefit. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their legal representatives, successors, heirs
and permitted assigns.
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7.7 Notices. Any notice, report, demand, waiver, consent or other
communication given by a party under this Agreement shall be in writing, may be
given by a party or its legal counsel, and shall deemed to be duly given upon
delivery by Federal Express or similar overnight courier service which provides
evidence of delivery, or when delivered by facsimile transmission if a copy
thereof is also delivered in person or by overnight courier. Notices of address
change shall be effective only upon receipt notwithstanding the provisions of
the foregoing sentence.
Notice to the Shareholder shall be sufficient if given to:
Xxxxx Xxxxxxx
000 Xxxxx Xxxx Xxxxxx
Xxxxx, XX 00000
Facsimile: (___) ___-____
With a copy to:
Notice to the Company shall be sufficient if given to:
TELS Corporation
0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxx, XX 00000
Facsimile: (___) ___-____
Attention: Xxx Xxxxxxxxx, Xx. President
With a copy to: Xxxxxx, Xxxxxxx & Xxxxx, LLP
0000 XX Xxxxxxxxx Xxxx., Xxxxx 000
Xxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
7.8 Oral Evidence. This Agreement constitutes the entire agreement
between the parties and supersedes all prior oral and written agreements between
the parties hereto with respect to the subject matter hereof.
7.9 Governing Law. This Agreement and any dispute, disagreement, or
issue of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided herein or performance
shall be governed or interpreted according to the internal laws of the State of
Florida without regard to choice of law considerations.
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7.10 Arbitration. Any controversy, dispute or claim arising out of or
relating to this Agreement, or its interpretation, application, implementation,
breach or enforcement which the parties are unable to resolve by mutual
agreement, shall be settled by submission by either party of the controversy,
claim or dispute to binding arbitration in Palm Beach County, Florida (unless
the parties agree in writing to a different location), before a single
arbitrator in accordance with the rules of the American Arbitration Association
then in effect. In any such arbitration proceeding the parties agree to provide
all discovery deemed necessary by the arbitrator. The decision and award made by
the arbitrator shall be final, binding and conclusive on all parties hereto for
all purposes, and judgment may be entered thereon in any court having
jurisdiction thereof.
7.11 Expenses. Except as otherwise specifically provided in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transaction contemplated hereby shall be
paid by the party incurring such costs and expenses, whether or not the Closing
shall have occurred.
7.12 Tax Status This Agreement is designed to be construed as a
tax-free exchange under Section 368 of the Internal Revenue Code.
7.13 Waivers. Any failure of either party hereto to comply with any of
its obligations or agreements, or to fulfill conditions herein contained may be
waived in writing by the other party. No waiver by any party of any condition or
the breach of any provision, term, covenant, representation or warranty
contained in this Agreement, whether by conduct or otherwise, shall be deemed to
be or construed as a further or continuing waiver of any such condition or of
the breach of any other provision, term, covenant, representation, or warranty
of this Agreement.
7.14 Captions. The captions of Articles and Sections of Articles hereof
are for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed under seal as of the date first above written.
TELS Corporation
By: /s/ Xxx Xxxxxxxxx
---------------------
Its: President
Pathway Advisors, Inc.
By: /s/ Xxxxx Xxxxxxx
-----------------
Its: president
Xxxxx Xxxxxxx
/s/ Xxxxx Xxxxxxx
---------------------
By: Xxxxx Xxxxxxx , sole shareholder
of Pathway Advisors, Inc.
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