Exhibit 10.5
THE STATE OF TEXAS ss.
ss. ASSET PURCHASE AGREEMENT
COUNTY OF PECOS ss.
This Asset Purchase Agreement is made and entered into this the 5th day of
April, 2004, by and between WIRELESS FRONTIER INTERNET, INC., a Delaware
Corporation (hereinafter referred to as "Buyer") and RAYTECH INTERNET, INC., a
Texas Corporation (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 RAYTECH INTERNET, INC. (the
"Seller"); and
WHEREAS, Buyer desires to purchase and acquire all the assets of the
Seller in exchange for $10,000.00 cash and 50,672 shares of Buyers restricted
Rule 144 shares of 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, the
name "RAYTECH INTERNET, INC." or any variation thereof, 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 "RAYTECH INTERNET, INC." at the locations hereinafter delineated.
II.
PURCHASE PRICE
The purchase price for the Assets of Seller shall be $10,000.00 cash and
50,672 shares of Buyer's restricted 144 stock. Additionally, Seller agrees
deliver 100% of Seller's assets to Buyer, free and clear of any liens and
encumbrances except as otherwise stated herein.
III.
EXCHANGE OF SECURITIES
1. Issuance of Shares. Subject to all of the terms and conditions of this
Agreement, Seller agrees to transfer ownership and control of 100% of Seller's
assets, as set forth in Exhibit "A," in exchange for receiving $10,000.00 cash
and 50,672 shares of Buyer's restricted 144 stock.
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IV.
ADJUSTMENTS AT CLOSING
In addition, Buyer and Seller shall make the following adjustment at
closing:
1. All personal property taxes owed for the year 2004 on the Assets shall
be prorated between Seller and Buyer, as of the 30th of April, 2004. Buyer shall
assume the obligation to pay personal property taxes on the Assets for its
proportionate rate for the tax year 2004 and for the full property tax rate for
all subsequent years.
V.
TIME OF CLOSING
1. The Closing Date pursuant to the terms hereof shall be on or before the
16th day of April, 2004, at 2:00 p.m., but effective as of the close of business
the 1st of April, 2004 (the "Closing Date").. The closing shall be held at
Strategic Abstract & Title Corporation, 0000 X. Xxx Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxx (the "Closing"), unless the parties mutually agree upon another time and
place hereto.
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 deliver to Buyer any and all Certificates of Title
necessary for the transfer of title; if any, of the Assets;
b. Seller shall deliver to Buyer a withdrawal or abandonment, ready
for filing, of the name of RAYTECH INTERNET, INC.;
c. Seller shall provide a UCC search of the records of the Secretary
of State of Texas reflecting no liens on the Assets;
d. Seller shall deliver to Buyer a Xxxx of Sale in form and
substance suitable to convey the Assets;
e. Seller shall prepare, and Buyer and Seller shall execute an
Assignment of Contracts delineated in Exhibit "B;"
f. Seller shall, upon retiring all of its existing debt, file
Articles of Dissolution with the Secretary of State of the State of
Texas;
g. Buyer shall instruct stock transfer agent to issue stock to the
Seller as delineated in this Agreement.
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VI.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby warrants and represents to Buyer that, as of the date hereof
through the Closing Date, that:
1. Seller is incorporated 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. Seller is 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 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:
a. 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. Entered into, agreed to enter into, or consummated any other
transaction other than in the ordinary course of business.
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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. 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 selling the Business or conveying the Assets in
contemplation or anticipation of filing bankruptcy.
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; 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. 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 March 31, 2004, 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.
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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 prorations, 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.
13. Seller shall be responsible for terminating all existing agreements
and contracts with any managed internet T-1s, dial T-1s and analogue telephone
service or any such similar service, prior to closing. Any such service not
terminated prior to closing shall remain the exclusive and sole responsibility
of Seller. Seller agrees to indemnify and reimburse Buyer for any such expense
14. At Closing, Buyer shall acquire, as part of the purchase, all annual
and monthly prepaid internet service payments received effective on the date of
the signing of this agreement, plus any collected applicable Texas Sales Tax.
Seller shall tender a cashier's check to Buyer equal to all prepaid annual and
monthly internet service payments and all collected applicable Texas Sales Tax
at the time of closing.
VII.
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.
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 Delaware, 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.
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VIII.
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. Seller 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 FIFTY THOUSAND DOLLARS ($50,000.00), 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
IX.
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 arising after the closing date pursuant to 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 assumed by
Buyer at Closing. Buyer agrees to and shall indemnify Seller against any default
or penalty under these assumed contracts.
X.
COVENANT NOT TO COMPETE
Buyer and Seller agree that for a period of five (5) years from and after
the execution of this agreement 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 any
office or area of service of Seller including City of Beeville, Texas, as well
as any markets entered into during this negotiations and consummation of this
agreement and any markets the Seller anticipated entering into during
negotiations of this agreement (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.
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
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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.
XI.
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 RAYTECH INTERNET, INC. 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 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.
XII.
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 specifically assumed
by Buyer, in connection with the Business, for all periods prior to the Closing
Date only;
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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.
XIII.
EMPLOYEES
Seller shall terminate employment of all employees of the Business
effective as of the Closing Date. Seller will pay wages through the date of the
signing of this agreement and Buyer shall not be responsible thereafter for any
unpaid wages. 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 by the Seller at Closing, at the sole risk, cost and expense of the
Seller.
XIV.
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.
XV.
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.
XVI.
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.
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XVII.
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, and the Employment
Agreement, 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.
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.
XVIII.
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 Five
(5) Years with regard to the Covenant Not to Compete.
XIX.
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:
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If to Buyer, to: Xx. Xxxx X. Xxxxxxxx
000 Xxxx Xxxxxxxxx
Xx. Xxxxxxxx, Xxxxx 00000
If to Seller, to: Xx. Xxxx Xxx, President
000 Xxxx Xxxxxx
Xxx Xxxxxx, 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.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the 5th day of April, 2004, but effective as of the 1st day of
April, 2004.
Seller:
-------
/s/ Xxxx Xxx
------------------------------------
Xx. Xxxx Xxx, President RAYTECH
INTERNET, INC.
Buyer:
------
WIRELESS FRONTIER INTERNET, INC.
By: /s/ Xxxx Xxxxxxxx
------------------------------------
Xxxx Xxxxxxxx, C.E.O.
STATE OF TEXAS ss.
COUNTY OF Xxxxxx xx.
This instrument was acknowledged before me on this 5th day of April, 2004,
by Xx. Xxxx Xxx, President, RAYTECH, INC., a Texas Corporation.
/s/ Xxxxxx Xxxxx
---------------------------------------
Notary Public, State of Texas
[Notary Seal]
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STATE OF TEXAS ss.
COUNTY OF Pecos ss.
This instrument was acknowledged before me on this 5th day of April, 2004,
by XXXX XXXXXXXX, CEO of WIRELESS FRONTIER INTERNET, INC., a Delaware
Corporation.
/s/ Xxxxx Xxxxxxx
---------------------------------------
Notary Public, State of Texas
[Notary Seal]
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