EXHIBIT 2.1
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (the "AGREEMENT") dated as of February 26,
2006, is entered into by and among Vocalscape Networks, Inc., a Nevada
corporation ("VOCALSCAPE"), Azatel Communications Inc., a British Columbia
corporation ("AZATEL"), and the shareholders of AZATEL listed on Schedule 1 to
this Agreement (each, a "SHAREHOLDER" and, collectively, the "SHAREHOLDERS").
RECITALS
A. The Shareholders own the number of shares of capital stock of AZATEL
(the "SHARES") set forth opposite each Shareholder's name on Schedule 1, which
Shares collectively constitute all of the issued and outstanding shares of
capital stock in AZATEL.
B. VOCALSCAPE desires to purchase from the Shareholders, and the
Shareholders desire to sell to VOCALSCAPE, the Shares in exchange for shares of
VOCALSCAPE Common Stock, all on the terms and subject to the conditions set
forth in this Agreement (the "Exchange").
D. As a result of the Exchange, VOCALSCAPE will become the sole
shareholder of AZATEL.
E. Certain capitalized terms used in this Agreement are defined on Exhibit
A hereto.
AGREEMENT
In consideration of the agreements, provisions and covenants set forth
below, VOCALSCAPE, AZATEL and the Shareholders, hereby agree as follows:
ARTICLE I.
EXCHANGE OF SHARES
1.1 AGREEMENT TO SELL.
Upon the terms and subject to all of the conditions contained herein, each
of the Shareholders hereby agrees to sell, assign, transfer and deliver to
VOCALSCAPE, and VOCALSCAPE hereby agrees to purchase and accept from each of the
Shareholders, on the Closing Date, the Shares.
1.2 PURCHASE PRICE.
As full consideration for the sale, assignment, transfer and delivery of
the Shares by the Shareholders to VOCALSCAPE, and upon the terms and subject to
all of the conditions contained herein, VOCALSCAPE shall issue to the
Shareholders an aggregate of 200,000 shares VOCALSCAPE common stock (the
"ACQUISITION SHARES") on a pro rata basis based upon their respective beneficial
ownership interest in AZATEL, as certified by the President of AZATEL, at the
Closing.
1.3 MECHANICS OF EXCHANGE.
(a) At the Closing, each Shareholder shall be entitled to surrender the
certificate or certificates that immediately prior to the Closing represented
the AZATEL COMMON SHARES (the "CERTIFICATES") to the exchange agent designated
by VOCALSCAPE in exchange for the Acquisition Shares.
(b) Promptly after the Closing, VOCALSCAPE or its designated exchange
agent shall make available to each Shareholder a letter of transmittal and
instructions for use in effecting the surrender of Certificates in exchange for
the Acquisition Shares. Upon surrender of a Certificate to such exchange agent
together with the letter of transmittal, duly executed, the Shareholder shall be
entitled to receive in exchange therefore such number of Acquisition Shares as
such Shareholder has the right to receive in respect of the Certificate so
surrendered pursuant to the provisions of this Article I.
1.4 NO FRACTIONAL SHARES.
No fraction of a share of VOCALSCAPE Common Stock shall be issued in the
Exchange. In lieu of fractional shares, the Shareholders upon surrender of their
Certificates as set forth in Section 1.3 shall be issued that number of shares
of common stock resulting by rounding up to the nearest whole number of shares
of Acquisition Shares that each such Shareholder shall receive as a result of
the Exchange.
1.5 CLOSING.
The closing of the transactions contemplated by this Agreement (the "CLOSING")
shall take at 9:00 a.m., Pacific Standard Time, place at the principal
administrative offices of Vocalscape located at 305 - 0000 Xxxx Xxxxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx on or before February 27, 2006 (the "CLOSING DATE");
provided, however, that if all of the other conditions set forth in Articles VI
and VII hereof are not satisfied or waived, unless this agreement has been
terminated under Section 9 hereof, or at such date, the Closing Date shall be
the business day following the day on which all such conditions have been
satisfied or waived, or at such other date, time and place as VOCALSCAPE, AZATEL
and the Shareholders shall agree.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF AZATEL
Except as set forth in the Disclosure Schedule attached hereto provided by
AZATEL (the "AZATEL DISCLOSURE SCHEDULE"), the parts of which are numbered to
correspond to the section numbers of this Agreement, each of AZATEL and the
Shareholders represents and warrants jointly and severally to VOCALSCAPE as
follows:
2.1 ORGANIZATION AND QUALIFICATION.
AZATEL is duly incorporated, validly and in good standing existing under
the laws of British Columbia, has all requisite authority and power (corporate
and other), governmental licenses, authorizations, consents and approvals to
carry on its business as presently conducted and as contemplated to be
conducted, to own, hold and operate its properties and assets as now owned, held
and operated by it, to enter into this Agreement, to carry out the provisions
hereof except where the failure to be in good standing or to have such
governmental licenses, authorizations, consents and approvals will not, in the
aggregate, either (i) have a Material Adverse Effect on the business, assets or
financial condition of AZATEL, or (ii) impair the ability of AZATEL to perform
its material obligations under this Agreement. AZATEL is duly qualified,
licensed or domesticated as a foreign corporation in good standing in each
jurisdiction wherein the nature of its activities or its properties owned or
leased requires such qualification, licensing or domestication, except where the
failure to be so qualified, licensed or domesticated will not have a Material
Adverse Effect. Set forth on Part 2.1 of the AZATEL DISCLOSURE SCHEDULE is a
list of those jurisdictions in which each of AZATEL presently conducts its
business, owns, holds and operates its properties and assets.
2.2 SUBSIDIARIES.
AZATEL does not own directly or indirectly, any equity or other ownership
interest in any corporation, partnership, joint venture or other entity or
enterprise. AZATEL does not have any direct or indirect interests of stock
ownership or otherwise in any corporation, partnership, joint venture, firm,
association or business enterprise, and is not party to any agreement to acquire
such an interest.
2.3 ARTICLES OF INCORPORATION AND BYLAWS.
The copies of the charter document and corporate governance document of
AZATEL (collectively, the "ORGANIZATIONAL DOCUMENTS") that have been delivered
to VOCALSCAPE prior to the execution of this Agreement are true and complete and
have not been amended or repealed. AZATEL is not in violation or breach of any
of the provisions of the Organizational Documents, except for such violations or
breaches which, in the aggregate, will not have a Material Adverse Effect on
AZATEL.
2.4 AUTHORIZATION AND VALIDITY OF THIS AGREEMENT.
This Agreement and each of the Transaction Agreements constitute the
legal, valid and binding obligation of each person or entity who is a party
thereto (other than VOCALSCAPE), enforceable against each such person or entity
in accordance with its terms, except as such enforcement is limited by general
equitable principles, or by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors rights generally. Each of AZATEL, the
Shareholders has all requisite legal capacity to execute and deliver this
Agreement and the Transaction Agreements to which he or she is a party, and to
perform its, his or her obligations hereunder and thereunder. The execution and
delivery by each of AZATEL and each of the Shareholders of this Agreement and
the Transaction Agreements (to the extent either is a party thereto), and the
consummation of the transactions contemplated herein and therein (the
"Transactions") have been authorized by all necessary corporate or other action
on the part of AZATEL and each of the Shareholders. This Agreement and the
Transaction Agreements have been duly executed and delivered by the parties
thereto (other than VOCALSCAPE).
2.5 NO VIOLATION.
Neither the execution nor delivery of this Agreement or the Transaction
Agreements, nor the consummation or performance of any of the Transactions by
AZATEL or the Shareholders will directly or indirectly:
(i) violate or conflict with any provision of the Organizational Documents
of AZATEL; (B) result in (with or without notice or lapse of time) a violation
or breach of, or conflict with or constitute a default or result in the
termination or in a right of termination or cancellation of, or accelerate the
performance required by, or require notice under, any agreement, promissory
note, lease, instrument or arrangement to which AZATEL or any of its assets are
bound or result in the creation of any Liens upon AZATEL or any of its assets;
(C) violate any order, writ, judgment, injunction, ruling, award or decree of
any Governmental Body; ("Governmental Body"); (D) violate any statute, law or
regulation of any jurisdiction as such statute, law or regulation that relates
to the Shareholders or AZATEL or any of the assets of AZATEL; or (E) result in
cancellation, modification, revocation or suspension of any permits, licenses,
registrations, consents, approvals, authorizations or certificates issued or
granted by any Governmental Body which are held by or granted to the
Shareholders or AZATEL or which are necessary for the conduct of AZATEL's
business; or
(ii) to the knowledge of AZATEL or any of the Shareholders, cause AZATEL
to become subject to, or to become liable for the payment of, any Tax (as
hereinafter defined) or cause any of the assets owned by AZATEL to be reassessed
or revalued by any taxing authority or other Governmental Body.
None of AZATEL or the Shareholders is or will be required to give any
notice to or obtain any approval, consent, ratification, waiver or other
authorization (a "Consent") from any person or entity (including, without
limitation, any Governmental Body) in connection with (i) the execution and
delivery of this Agreement or any of the Transaction Agreements, or (ii) the
consummation or performance of any of the Transactions.
2.6 CAPITALIZATION AND RELATED MATTERS.
(a) Capitalization. AZATEL has issued and outstanding seventy-five
thousand (75,000) common shares. Except as set forth in the preceding sentence,
no other class of capital stock or other security of AZATEL is authorized,
issued, reserved for issuance or outstanding. The Shareholders, as of the
Closing Date, are the lawful, record and beneficial owners of the number of
AZATEL COMMON SHARES set forth opposite each Seller's name on Schedule 1
attached hereto. The Shareholders have, as of the date hereof and as of the
Closing Date, valid and marketable title to their respective Shares, free and
clear of all Liens (including, without limitation, any claims of spouses under
applicable community property laws) and are the lawful, record and beneficial
owners of all of the Shares. Except as is issued to and held by the Shareholders
or AZATEL, no other class of capital stock or other security of AZATEL, as
applicable, is authorized, issued, reserved for issuance or outstanding. At the
Closing, VOCALSCAPE will be vested with good and marketable title to the Shares,
free and clear of all Liens (including, without limitation, any claims of
spouses under applicable community property laws). No legend or other reference
to any purported Lien appears upon any certificate representing the Shares. Each
of the Shares has been duly authorized and validly issued and is fully paid and
nonassessable. None of the outstanding capital or other securities of AZATEL was
issued, redeemed or repurchased in violation of the Securities Act of 1933, as
amended (the "Securities Act"), or any other securities or "blue sky" laws.
(b) No Redemption Requirements. There are no authorized or outstanding
options, warrants, equity securities, calls, rights, commitments or agreements
of any character by which AZATEL or any of the Shareholders is obligated to
issue, deliver or sell, or cause to be issued, delivered or sold, any shares of
capital stock or other securities of AZATEL. There are no outstanding
contractual obligations (contingent or otherwise) of AZATEL to retire,
repurchase, redeem or otherwise acquire any outstanding shares of capital stock
of, or other ownership interests in, AZATEL or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
other entity.
2.7 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS.
Except as would not have a Material Adverse Effect, the business and
operations of AZATEL has been and are being conducted in accordance with all
applicable foreign, federal, provincial and local laws, rules and regulations
and all applicable orders, injunctions, decrees, writs, judgments,
determinations and awards of all courts and governmental agencies and
instrumentalities. There are no permits, bonuses, registrations, consents,
approvals, authorizations, certificates, or any waiver of the foregoing, which
are required to be issued or granted by a Governmental Body for the conduct of
the Business as presently conducted or the ownership of the assets of AZATEL.
Except as would not have a Material Adverse Effect, AZATEL is not, and has not
received notice alleging that it is, in violation of, or (with or without notice
or lapse of time or both) in default under, or in breach of, any term or
provision of the Organizational Documents or of any indenture, loan or credit
agreement, note, deed of trust, mortgage, security agreement or other material
agreement, lease, license or other instrument, commitment, obligation or
arrangement to which AZATEL is a party or by which any of AZATEL's properties,
assets or rights are bound or affected. To the knowledge of AZATEL, no other
party to any material contract, agreement, lease, license, commitment,
instrument or other obligation to which AZATEL is a party is (with or without
notice or lapse of time or both) in default thereunder or in breach of any term
thereof. AZATEL is not subject to any obligation or restriction of any kind or
character, nor is there, to the knowledge of AZATEL, any event or circumstance
relating to AZATEL that materially and adversely affects in any way its
business, properties, assets or prospects or that prohibits AZATEL from entering
into this Agreement and the Transaction Agreements or would prevent or make
burdensome its performance of or compliance with all or any part of this
Agreement, the Transaction Agreements or the consummation of the Transactions
contemplated hereby or thereby.
2.8 CERTAIN PROCEEDINGS.
There are no outstanding or pending Proceeding that has been commenced
against or involving AZATEL or any of its assets and, to the knowledge of AZATEL
and the Shareholders, no matters of the foregoing nature are contemplated or
threatened. None of AZATEL or the Shareholders have been charged with, and is
not threatened with, or under any investigation with respect to, any allegation
concerning any violation of any provision of any federal, provincial, local or
foreign law, regulation, ordinance, order or administrative ruling, and is not
in default with respect to any order, writ, injunction or decree of any
Governmental Body.
2.9 NO BROKERS OR FINDERS.
None of AZATEL the Shareholders, or any officer, director, independent
contractor, consultant, agent or employee of AZATEL has agreed to pay, or has
taken any action that will result in any person or entity becoming obligated to
pay or entitled to receive, any investment banking, brokerage, finder's or
similar fee or commission in connection with this Agreement or the Transactions.
AZATEL and the Shareholders shall jointly and severally indemnify and hold
VOCALSCAPE harmless against any liability or expense arising out of, or in
connection with, any such claim.
2.10 TITLE TO AND CONDITION OF PROPERTIES.
AZATEL has good, valid and marketable title to all of its properties and
assets (whether real, personal or mixed, and whether tangible or intangible)
reflected as owned in its books and records, free and clear of all Liens. AZATEL
owns or holds under valid leases or other rights to use all real property,
plants, machinery, equipment and all assets necessary for the conduct of its
business as presently conducted, except where the failure to own or hold such
property, plants, machinery, equipment and assets would not have a Material
Adverse Effect on AZATEL. No Person other than AZATEL owns or has any right to
the use or possession of the assets used in AZATEL's business. The material
buildings, plants, machinery and equipment necessary for the conduct of the
business of AZATEL as presently conducted are structurally sound, are in good
operating condition and repair and are adequate for the uses to which they are
being put or would be put in the Ordinary Course of Business, in each case,
taken as a whole, and none of such buildings, plants, machinery or equipment is
in need of maintenance or repairs, except for ordinary, routine maintenance and
repairs that are not material in nature or cost.
2.11 ABSENCE OF UNDISCLOSED LIABILITIES.
AZATEL has no debt, obligation or liability (whether accrued, absolute,
contingent, liquidated or otherwise, whether asserted or unasserted, whether due
or to become due, whether or not known to AZATEL) arising out of any transaction
entered into prior to the Closing Date or any act or omission prior to the
Closing Date which individually or taken together would constitute a Material
Adverse Effect on AZATEL and have no debt, obligation or liability to each other
or any of the Shareholders or their affiliates, except to the extent
specifically set forth on or reserved against on the Balance Sheet of AZATEL.
The financial statements are consistent with the books and records of
AZATEL and fairly present in all material respects the financial condition,
assets and liabilities of AZATEL, as applicable, taken as a whole, as of the
dates and periods indicated, and were prepared in accordance with GAAP (except
as otherwise indicated therein or in the notes thereto).
2.12 CHANGES.
AZATEL has not, since February 14, 2006:
(a) Ordinary Course of Business. Conducted its business or entered into
any transaction other than in the Ordinary Course of Business, except for this
Agreement.
(b) Adverse Changes. Suffered or experienced any change in, or affecting,
its condition (financial or otherwise), properties, assets, liabilities,
business, operations, results of operations or prospects which would have a
Material Adverse Effect;
(c) Loans. Made any loans or advances to any Person other than travel
advances and reimbursement of expenses made to employees, officers and directors
in the Ordinary Course of Business;
(d) Compensation and Bonuses. Made any payments of any bonuses or
compensation other than regular salary payments, or increase in the salaries, or
payment on any of its debts in the Ordinary Course of Business, to any of its
shareholders, directors, officers, employees, independent contractors or
consultants or entry into by it of any employment, severance, or similar
contract with any director, officer, or employee, independent contractor or
consultant; Adopted, or increased in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any of its employees;
(e) Liens. Created or permitted to exist any Lien on any of its properties
or assets other than Permitted Liens;
(f) Capital Stock. Issued, sold, disposed of or encumbered, or authorized
the issuance, sale, disposition or encumbrance of, or granted or issued any
option to acquire any shares of its capital stock or any other of its securities
or any Equity Security, or altered the term of any of its outstanding securities
or made any change in its outstanding shares of capital stock or its
capitalization, whether by reason of reclassification, recapitalization, stock
split, combination, exchange or readjustment of shares, stock dividend or
otherwise; changed its authorized or issued capital stock; granted any stock
option or right to purchase shares of its capital stock; issued any security
convertible into any of its capital stock; granted any registration rights with
respect to shares of its capital stock; purchased, redeemed, retired, or
otherwise acquired any shares of its capital stock; declared or paid any
dividend or other distribution or payment in respect of shares of capital stock
of any other entity;
(g) Dividends. Declared, set aside, made or paid any dividend or other
distribution to any of its shareholders;
(h) Material Contracts. Terminated or modified any of its Material
Contract except for termination upon expiration in accordance with the terms of
such agreements, a description of which is included in the AZATEL's Disclosure
Schedule;
(i) Claims. Released, waived or cancelled any claims or rights relating to
or affecting AZATEL in excess of $1,000 in the aggregate or instituted or
settled any Proceeding involving in excess of $10,000 in the aggregate;
(j) Discharged Liabilities. Paid, discharged, cancelled, waived or
satisfied any claim, obligation or liability in excess of $1,000 in the
aggregate, except for liabilities incurred prior to the date of this Agreement
in the Ordinary Course of Business;
(k) Indebtedness. Created, incurred, assumed or otherwise become liable
for any Indebtedness or commit to any endeavor involving a commitment in excess
of $1,000 in the aggregate, other than contractual obligations incurred in the
Ordinary Course of Business;
(l) Guarantees. Guaranteed or endorsed in a material amount any obligation
or net worth of any Person;
(m) Acquisitions. Acquired the capital stock or other securities or any
ownership interest in, or substantially all of the assets of, any other Person;
(n) Accounting. Changed its method of accounting or the accounting
principles or practices utilized in the preparation of its financial statements,
other than as required by GAAP;
(o) Agreements. Entered into any agreement, or otherwise obligated itself,
to do any of the foregoing.
2.13 MATERIAL CONTRACTS.
AZATEL has delivered to VOCALSCAPE, prior to the date of this Agreement,
true, correct and complete copies of each of its Material Contracts.
(a) No Defaults. The Material Contracts of AZATEL are valid and binding
agreements of AZATEL, as applicable, and are in full force and effect and are
enforceable in accordance with their terms. Except as would not have a Material
Adverse Effect, AZATEL is not in breach or default of any of its Material
Contracts to which it is a party and, to the knowledge of AZATEL, no other party
to any of its Material Contracts is in breach or default thereof. Except as
would not have a Material Adverse Effect, no event has occurred or circumstance
has existed that (with or without notice or lapse of time) would (a) contravene,
conflict with or result in a violation or breach of, or become a default or
event of default under, any provision of any of its Material Contracts or (b)
permit AZATEL or any other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate or modify any of its Material Contracts. AZATEL has not received any
notice and have no knowledge of any pending or threatened cancellation,
revocation or termination of any of its Material Contracts to which it is a
party, and there are no renegotiations of, or attempts to renegotiate.
2.14 TAX RETURNS AND AUDITS.
(a) Tax Returns. (a) All material Tax Returns required to be filed by or
on behalf of AZATEL have been timely filed and all such Tax Returns were (at the
time they were filed) and are true, correct and complete in all material
respects; (b) all Taxes of AZATEL required to have been paid (whether or not
reflected on any Tax Return) have been fully and timely paid, except those Taxes
which are presently being contested in good faith or for which an adequate
reserve for the payment of such Taxes has been established on AZATEL's balance
sheet; (c) no waivers of statutes of limitation have been given or requested
with respect to AZATEL in connection with any Tax Returns covering AZATEL or
with respect to any Taxes payable by it; (d) no Governmental Body in a
jurisdiction where AZATEL does not file Tax Returns has made a claim, assertion
or threat to AZATEL that AZATEL is or may be subject to taxation by such
jurisdiction; (e) AZATEL has duly and timely collected or withheld, paid over
and reported to the appropriate Governmental Body all amounts required to be so
collected or withheld for all periods under all applicable laws; (f) there are
no Liens with respect to Taxes on the property or assets of AZATEL other than
Permitted Liens; (g) there are no Tax rulings, requests for rulings, or closing
agreements relating to AZATEL for any period (or portion of a period) that would
affect any period after the date hereof; and (h) any adjustment of Taxes of
AZATEL made by a Governmental Body in any examination that AZATEL is required to
report to the appropriate provincial, local or foreign taxing authorities has
been reported, and any additional Taxes due with respect thereto have been paid.
No state of fact exists or has existed which would constitute ground for the
assessment of any tax liability by any Governmental Body. All Tax Returns filed
by AZATEL are true, correct and complete.
(b) No Adjustments, Changes. Neither AZATEL nor any other Person on behalf
of AZATEL (a) has executed or entered into a closing agreement pursuant to
Section 7121 of the Code or any predecessor provision thereof or any similar
provision of provincial, local or foreign law; or (b) has agreed to or is
required to make any adjustments pursuant to Section 481(a) of the Code or any
similar provision of provincial, local or foreign law.
(c) No Disputes. There is no pending audit, examination, investigation,
dispute, proceeding or claim with respect to any Taxes of or Tax Return filed or
required to be filed by AZATEL, nor is any such claim or dispute pending or
contemplated. AZATEL has made available to VOCALSCAPE true, correct and complete
copies of all Tax Returns, examination reports and statements of deficiencies
assessed or asserted against or agreed to by AZATEL since January 1, 2001, and
any and all correspondence with respect to the foregoing. AZATEL does not have
any outstanding closing agreement, ruling request, request for consent to change
a method of accounting, subpoena or request for information to or from a
Governmental Body in connection with any Tax matter.
(d) No Tax Allocation, Sharing. AZATEL is not a party to any Tax
allocation or sharing agreement. AZATEL (a) has not been a member of a Tax Group
filing a consolidated income Tax Return under Section 1501 of the Code (or any
similar provision of provincial, local or foreign law), and (b) does not have
any liability for Taxes for any Person under Treasury Regulations Section
1.1502-6 (or any similar provision of provincial, local or foreign law) as a
transferee or successor, by contract or otherwise.
2.15 MATERIAL ASSETS.
The financial statements of AZATEL reflect the material properties and
assets (real and personal) owned or leased by them.
2.16 INSURANCE COVERAGE.
AZATEL has no insurance or general liability policies maintained by AZATEL
on its properties and assets.
2.17 LITIGATION; ORDERS.
There is no Proceeding (whether federal, provincial, local or foreign)
pending or, to the knowledge of AZATEL, threatened or appealable against or
affecting AZATEL or any of its properties, assets, business or employees. To the
knowledge of AZATEL, there is no fact that might result in or form the basis for
any such Proceeding. AZATEL is not subject to any Orders and have not received
any written opinion or memorandum or legal advice from their legal counsel to
the effect that AZATEL is exposed, from a legal standpoint, to any liability
which would be material to its business. AZATEL is not engaged in any legal
action to recover monies due it or for damages sustained by any of them.
2.18 LICENSES.
Except as would not have a Material Adverse Effect, AZATEL possesses from
the appropriate Governmental Body all licenses, permits, authorizations,
approvals, franchises and rights that are necessary for it to engage in its
business as currently conducted and to permit it to own and use its properties
and assets in the manner in which it currently owns and uses such properties and
assets (collectively, "PERMITS"). Except as would not have a Material Adverse
Effect, AZATEL has not received any written notice from any Governmental Body or
other Person that there is lacking any license, permit, authorization, approval,
franchise or right necessary for AZATEL to engage in its business as currently
conducted and to permit AZATEL to own and use its properties and assets in the
manner in which it currently owns and uses such properties and assets. Except as
would not have a Material Adverse Effect, the Permits are valid and in full
force and effect. Except as would not have a Material Adverse Effect, no event
has occurred or circumstance exists that may (with or without notice or lapse of
time): (a) constitute or result, directly or indirectly, in a violation of or a
failure to comply with any Permit; or (b) result, directly or indirectly, in the
revocation, withdrawal, suspension, cancellation or termination of, or any
modification to, any Permit. AZATEL has not received any written notice from any
Governmental Body or any other Person regarding: (a) any actual, alleged,
possible or potential contravention of any Permit; or (b) any actual, proposed,
possible or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to, any Permit. All applications required to
have been filed for the renewal of such Permits have been duly filed on a timely
basis with the appropriate Persons, and all other filings required to have been
made with respect to such Permits have been duly made on a timely basis with the
appropriate Persons. All Permits are renewable by their terms or in the Ordinary
Course of Business without the need to comply with any special qualification
procedures or to pay any amounts other than routine fees or similar charges, all
of which have, to the extent due, been duly paid.
2.19 INTERESTED PARTY TRANSACTIONS.
No officer, director or shareholder of AZATEL or any Affiliate, Related
Person or "associate" (as such term is defined in Rule 405 of the Commission
under the Securities Act) of any such Person, either directly or indirectly, (1)
has an interest in any Person which (a) furnishes or sells services or products
which are furnished or sold or are proposed to be furnished or sold by AZATEL,
or (b) purchases from or sells or furnishes to, or proposes to purchase from,
sell to or furnish AZATEL any goods or services; (2) has a beneficial interest
in any contract or agreement to which AZATEL is a party or by which it may be
bound or affected; or (3) is a party to any material agreements, contracts or
commitments in effect as of the date hereof with AZATEL. "Related Person" means:
(i) with respect to a particular individual, the individual's immediate family
which shall include the individual's spouse, parents, children, siblings,
mothers and fathers-in-law, sons and daughters-in-law, and brothers and
sisters-in-law; and (ii) with respect to a specified individual or entity, any
entity or individual that, directly or indirectly, controls, is controlled by,
or is under common control with such specified entity or individual.
2.20 GOVERNMENTAL INQUIRIES.
AZATEL has made available to VOCALSCAPE a copy of each material written
inspection report, questionnaire, inquiry, demand or request for information
received by AZATEL from (and the response of AZATEL thereto), and each material
written statement, report or other document filed by AZATEL with, any
Governmental Body since January 1, 2003.
2.21 BANK ACCOUNTS AND SAFE DEPOSIT BOXES.
Part 2.22 of the AZATEL DISCLOSURE SCHEDULE discloses the title and number
of each bank or other deposit or financial account, and each lock box and safety
deposit box used by AZATEL, the financial institution at which that account or
box is maintained and the names of the persons authorized to draw against the
account or otherwise have access to the account or box, as the case may be.
2.22 INTELLECTUAL PROPERTY.
Any Intellectual Property AZATEL uses in its business as presently
conducted is owned by AZATEL or properly licensed.
2.23 STOCK OPTION PLANS; EMPLOYEE BENEFITS.
(a) AZATEL does not have any employee benefit plans or arrangements
covering their present and former employees or providing benefits to such
persons in respect of services provided to AZATEL. AZATEL has no commitment,
whether formal or informal and whether legally binding or not, to create any
additional plan, arrangement or practice similar to the Approved Plans.
2.24 EMPLOYEE MATTERS
(a) No former or current employee of AZATEL is a party to, or is otherwise
bound by, any agreement or arrangement (including, without limitation, any
confidentiality, non-competition or proprietary rights agreement) that in any
way adversely affected, affects, or will affect (i) the performance of his, her
or its duties to AZATEL, or (ii) the ability of AZATEL to conduct its business.
(b) AZATEL has no employees, directors, officers, consultants, independent
contractors, representatives or agents whose contract of employment or
engagement cannot be terminated by three months' notice. (c) AZATEL is not
required or obligated to pay, and since January 1, 2001, have not paid any
moneys to or for the benefit of, any director, officer, employee, consultant,
independent contractor, representative or agent of AZATEL. (d) AZATEL is in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions or employment and wages and hours, and are not
engaged in any unfair labor practice. There is no labor strike, dispute,
shutdown or stoppage actually pending or, to the knowledge of AZATEL or the
Shareholders, threatened against or affecting AZATEL.
2.25 ENVIRONMENTAL AND SAFETY MATTERS.
Except as would not have a Material Adverse Effect:
(a) AZATEL has at all time been and is in compliance with all
Environmental Laws and Orders applicable to AZATEL, as applicable.
(b) There are no Proceedings pending or, to the knowledge of AZATEL,
threatened against AZATEL alleging the violation of any Environmental Law or
Environmental Permit applicable to AZATEL or alleging that AZATEL is a
potentially responsible party for any environmental site contamination. None of
AZATEL or the Shareholders are aware of, or has ever received notice of, any
past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans which may interfere with or prevent
continued compliance, or which may give rise to any common law or legal
liability, or otherwise form the basis of any claim, action, suit, proceeding,
hearing or investigation, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or the
emission, discharge, release or threatened release into the environment, of any
pollutant, contaminant, or hazardous or toxic material or waste.
(c) Neither this Agreement nor the consummation of the transactions
contemplated by this Agreement shall impose any obligations to notify or obtain
the consent of any Governmental Body or third Persons under any Environmental
Laws applicable to AZATEL.
2.26 MATERIAL CUSTOMERS.
Since January 1, 2001, none of the Material Customers (as hereinafter
defined) of AZATEL has notified any of AZATEL or the Shareholders of their
intent to terminate their business with AZATEL business because of any
dissatisfaction on the part of any such person or entity. The Transactions have
not caused any of the Material Customers of AZATEL to terminate or provide
notice of their intent or threaten to terminate their business with AZATEL or to
notify AZATEL or the Shareholders of their intent not to continue to do such
business with AZATEL after the Closing. As used herein, "Material Customers"
means those customers from whom AZATEL derives annual revenues in excess of US
$5,000.
2.27 INVENTORIES.
All inventories of AZATEL are of good, usable and merchantable quality in
all material respects, and, except as set forth in the AZATEL DISCLOSURE
SCHEDULE, do not include a material amount of obsolete or discontinued items.
Except as set forth in the AZATEL DISCLOSURE SCHEDULE, (a) all such inventories
are of such quality as to meet in all material respects the quality control
standards of AZATEL, (b) all such inventories are recorded on the books at the
lower of cost or market value determined in accordance with GAAP, and (c) no
write-down in inventory has been made or should have been made pursuant to GAAP
during the past two years.
2.28 MONEY LAUNDERING LAWS.
The operations of AZATEL are and have been conducted at all times in
compliance with applicable financial record-keeping and reporting requirements
of the money laundering statutes of all U.S. and non-U.S. jurisdictions, the
rules and regulations thereunder and any related or similar rules, regulations
or guidelines, issued, administered or enforced by any Governmental Body
(collectively, the "MONEY LAUNDERING LAWS") and no Proceeding involving AZATEL
with respect to the Money Laundering Laws is pending or, to the knowledge of
AZATEL, threatened.
2.29 DISCLOSURE.
(a) Any information set forth in this Agreement, the AZATEL DISCLOSURE
SCHEDULE, or the Transaction Agreements shall be true, correct and complete in
all material respects.
(b) No statement, representation or warranty of AZATEL or the Shareholders
in this Agreement (taken with the Schedules) or the Transaction Agreements or
any exhibits or schedules thereto contain any untrue statement of a material
fact or omits to state a material fact necessary to make the statements herein
or therein, taken as a whole, in light of the circumstances in which they were
made, not misleading.
(c) Except as set forth in the AZATEL DISCLOSURE SCHEDULE, the
Shareholders and AZATEL have no knowledge of any fact that has specific
application to AZATEL (other than general economic or industry conditions) and
that adversely affects the assets or the business, prospects, financial
condition, or results of operations of AZATEL.
(d) In the event of any inconsistency between the statements in the body
of this Agreement and those in the Schedules (other than an exception expressly
set forth as such in the Schedules with respect to a specifically identified
representation or warranty), the statements in the Schedules shall control.
(e) The books of account, minute books and stock record books of AZATEL,
all of which have been made available to VOCALSCAPE, are complete and accurate
and have been maintained in accordance with sound business practices. Without
limiting the generality of the foregoing, the minute books of AZATEL contain
complete and accurate records of all meetings held, and corporate action taken,
by the shareholders, the boards of directors, and committees of the boards of
directors of AZATEL, as applicable, and no meeting of any such shareholders,
board of directors, or committee has been held for which minutes have not been
prepared and are not contained in such minute books.
2.30 FINDERS AND BROKERS.
(a) None of AZATEL or the Shareholders or any Person acting on behalf of
AZATEL or the Shareholders has engaged any finder, broker, intermediary or any
similar Person in connection with the Exchange.
(b) None of AZATEL the Shareholders nor any Person acting on behalf of
AZATEL or the Shareholders has entered into a contract or other agreement that
provides that a fee shall be paid to any Person or Entity if the Exchange is
consummated.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF VOCALSCAPE
VOCALSCAPE hereby represents and warrants to the Shareholders as of the
date hereof:
3.1 ORGANIZATION; GOOD STANDING.
VOCALSCAPE is duly incorporated, validly and in good standing existing
under the laws of Nevada, has all requisite authority and power (corporate and
other), governmental licenses, authorizations, consents and approvals to carry
on its business as presently conducted and as contemplated to be conducted, to
own, hold and operate its properties and assets as now owned, held and operated
by it, to enter into this Agreement, to carry out the provisions hereof except
where the failure to be in good standing or to have such governmental licenses,
authorizations, consents and approvals will not, in the aggregate, either (i)
have a Material Adverse Effect on the business, assets or financial condition of
VOCALSCAPE, or (ii) impair the ability of VOCALSCAPE to perform its material
obligations under this Agreement. VOCALSCAPE is duly qualified, licensed or
domesticated as a foreign corporation in good standing in each jurisdiction
wherein the nature of its activities or its properties owned or leased requires
such qualification, licensing or domestication, except where the failure to be
so qualified, licensed or domesticated will not have a Material Adverse Effect.
3.2 VOCALSCAPE COMMON STOCK.
As of February 24, 2006, there were 1,388,878 shares of VOCALSCAPE's
common stock issued and outstanding and 20,000 shares of Series A Convertible
Preferred Stock issued an outstanding. The Acquisition Shares, when issued in
connection with this Agreement and the other Transactional Agreements, will be
duly authorized, validly issued, fully paid and nonassessable.
3.3 AUTHORITY; BINDING NATURE OF AGREEMENTS.
(a) The execution, delivery and performance of this Agreement, the
Transactional Agreements, and all other agreements and instruments contemplated
to be executed and delivered by VOCALSCAPE in connection herewith have been duly
authorized by all necessary corporate action on the part of VOCALSCAPE and its
board of directors.
(b) This Agreement, the Transactional Agreements, and all other agreements
and instruments contemplated to be executed and delivered by VOCALSCAPE
constitute the legal, valid and binding obligation of VOCALSCAPE, enforceable
against VOCALSCAPE in accordance with their terms, except to the extent that
enforceability may be limited by applicable bankruptcy, Exchange, insolvency,
moratorium or other laws affecting the enforcement of creditors' rights
generally and by general principles of equity regardless of whether such
enforceability is considered in a proceeding in law or equity.
(c) There is no pending Proceeding, and, to VOCALSCAPE's knowledge, no
Person has threatened to commence any Proceeding that challenges, or that may
have the effect of preventing, delaying, making illegal or otherwise interfering
with, the Exchange or VOCALSCAPE's ability to comply with or perform its
obligations and covenants under the Transactional Agreements, and, to the
knowledge of VOCALSCAPE, no event has occurred, and no claim, dispute or other
condition or circumstance exists, that might directly or indirectly give rise to
or serve as a basis for the commencement of any such Proceeding.
3.4 NON-CONTRAVENTION; CONSENTS.
The execution and delivery of this Agreement and the other Transactional
Agreements, and the consummation of the Exchange, by VOCALSCAPE will not,
directly or indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a material violation of (i)
VOCALSCAPE's Certificate of Incorporation or Bylaws, or (ii) any resolution
adopted by VOCALSCAPE Board or any committee thereof or the stockholders of
VOCALSCAPE;
(b) to the knowledge of VOCALSCAPE, contravene, conflict with or result in
a material violation of, or give any Governmental Body the right to challenge
the Exchange or to exercise any remedy or obtain any relief under, any legal
requirement or any Order to which VOCALSCAPE or any material assets owned or
used by it are subject;
(c) to the knowledge of VOCALSCAPE, cause any material assets owned or
used by VOCALSCAPE to be reassessed or revalued by any taxing authority or other
Governmental Body;
(d) to the knowledge of VOCALSCAPE, contravene, conflict with or result in
a material violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or
modify, any Governmental Authorization that is held by VOCALSCAPE or that
otherwise relates to VOCALSCAPE's business or to any of the material assets
owned or used by VOCALSCAPE, where such contraventions, conflict, violation,
revocation, withdrawal, suspension, cancellation, termination or modification
would have a Material Adverse Effect on VOCALSCAPE;
(e) contravene, conflict with or result in a material violation or
material breach of, or material default under, any Contract to which VOCALSCAPE
is a party;
(f) give any Person the right to any payment by VOCALSCAPE or give rise to
any acceleration or change in the award, grant, vesting or determination of
options, warrants, rights, severance payments or other contingent obligations of
any nature whatsoever of VOCALSCAPE in favor of any Person, in any such case as
a result of the Exchange; or
(g) result in the imposition or creation of any material Lien upon or with
respect to any material asset owned or used by VOCALSCAPE.
Except for Consents, filings or notices required under the state and
federal securities laws or any other laws or regulations or as otherwise
contemplated in this Agreement and the other Transactional Agreements,
VOCALSCAPE will not be required to make any filing with or give any notice to,
or obtain any Consent from, any Person in connection with the execution and
delivery of this Agreement and the other Transactional Agreements or the
consummation or performance of the Exchange.
3.5 FINDERS AND BROKERS.
(a) Neither VOCALSCAPE nor any Person acting on behalf of VOCALSCAPE has
engaged any finder, broker, intermediary or any similar Person in connection
with the Exchange.
(b) VOCALSCAPE has not entered into a contract or other agreement that
provides that a fee shall be paid to any Person or Entity if the Exchange is
consummated.
3.6 REPORTS AND FINANCIAL STATEMENTS; ABSENCE OF CERTAIN CHANGES.
(a) Except with respect to a Form 8-K/A disclosing current audited
financial statements of VOCALSCAPE, VOCALSCAPE has filed all reports required to
be filed with the SEC pursuant to the Exchange Act since DECEMBER 31, 2003 (all
such reports, including those to be filed prior to the Closing Date and all
registration statements and prospectuses filed by VOCALSCAPE with the SEC, are
collectively referred to as the "VOCALSCAPE SEC REPORTS). All of the VOCALSCAPE
SEC Reports, as of their respective dates of filing (or if amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
filing): (i) complied in all material respects as to form with the applicable
requirements of the Securities Act or Exchange Act and the rules and regulations
thereunder, as the case may be, and (ii) did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited financial
statements of VOCALSCAPE included in the VOCALSCAPE SEC Reports comply in all
material respects with the published rules and regulations of the SEC with
respect thereto, and such audited financial statements (i) were prepared from
the books and records of VOCALSCAPE, (ii) were prepared in accordance with GAAP
applied on a consistent basis (except as may be indicated therein or in the
notes or schedules thereto) and (iii) present fairly the financial position of
VOCALSCAPE as of the dates thereof and the results of operations and cash flows
for the periods then ended. The unaudited financial statements included in the
VOCALSCAPE SEC Reports comply in all material respects with the published rules
and regulations of the SEC with respect thereto; and such unaudited financial
statements (i) were prepared from the books and records of VOCALSCAPE, (ii) were
prepared in accordance with GAAP, except as otherwise permitted under the
Exchange Act and the rules and regulations thereunder, on a consistent basis
(except as may be indicated therein or in the notes or schedules thereto) and
(iii) present fairly the financial position of VOCALSCAPE as of the dates
thereof and the results of operations and cash flows (or changes in financial
condition) for the periods then ended, subject to normal year-end adjustments
and any other adjustments described therein or in the notes or schedules
thereto.
(b) Except as specifically contemplated by this Agreement or reflected in
the VOCALSCAPE SEC Reports, since June 30, 2004, there has not been (i) any
material adverse change in VOCALSCAPE's business, assets, liabilities,
operations, and, to the knowledge of VOCALSCAPE, no event has occurred that is
likely to have a material adverse effect on VOCALSCAPE's business, assets,
liabilities or operations, (ii) any declarations setting aside or payment of any
dividend or distribution with respect to the VOCALSCAPE Common Stock other than
consistent with past practices, (iii) any material change in VOCALSCAPE's
accounting principles, procedures or methods, (iv) cancellation in writing of
any material customer contract or (v) the loss of any customer relationship
which would have a material adverse effect on VOCALSCAPE's business, assets,
liabilities or operations.
3.7 COMPLIANCE WITH APPLICABLE LAW.
Except as disclosed in the VOCALSCAPE SEC Reports filed prior to the date
of this Agreement and except to the extent that the failure or violation would
not in the aggregate have a Material Adverse Effect on the business, results of
operations or financial condition of VOCALSCAPE, to VOCALSCAPE's knowledge
VOCALSCAPE holds all Governmental Authorizations necessary for the lawful
conduct of its business under and pursuant to, and the business of VOCALSCAPE is
not being conducted in violation of, any Governmental Authorization applicable
to VOCALSCAPE.
3.8 COMPLETE COPIES OF REQUESTED REPORTS.
VOCALSCAPE has delivered or made available true and complete copies of
each document that has been reasonably requested by AZATEL or the Shareholders.
3.9 FULL DISCLOSURE.
(a) Neither this Agreement (including all Schedules and exhibits hereto)
nor any of the Transactional Agreements contemplated to be executed and
delivered by VOCALSCAPE in connection with this Agreement contains any untrue
statement of material fact; and none of such documents omits to state any
material fact necessary to make any of the representations, warranties or other
statements or information contained therein not misleading.
(b) All of the information set forth in the prospectus and all other
information regarding VOCALSCAPE and the business, condition, assets,
liabilities, operations, financial performance, net income and prospects of
either that has been furnished to AZATEL or the Shareholders by or on behalf of
VOCALSCAPE or any of the VOCALSCAPE's Representatives, is accurate and complete
in all material respects.
ARTICLE IV.
COVENANTS OF AZATEL
4.1 ACCESS AND INVESTIGATION.
AZATEL shall ensure that, at all times during the Pre-Closing Period:
(a) AZATEL and their Representatives provide VOCALSCAPE and its
Representatives access, at reasonable times and with twenty-four (24) hours
notice from VOCALSCAPE to AZATEL, to all of the premises and assets of AZATEL,
to all existing books, records, Tax Returns, work papers and other documents and
information relating to AZATEL, and to responsible officers and employees of
AZATEL, and AZATEL and its Representatives provide VOCALSCAPE and its
Representatives with copies of such existing books, records, Tax Returns, work
papers and other documents and information relating to AZATEL as VOCALSCAPE may
request in good faith;
(b) Each of AZATEL and its Representatives confer regularly with
VOCALSCAPE upon its request, concerning operational matters and otherwise report
regularly (not less than semi-monthly and as VOCALSCAPE may otherwise request)
to VOCALSCAPE and discuss with VOCALSCAPE and its Representatives concerning the
status of the business, condition, assets, liabilities, operations, and
financial performance of AZATEL, and promptly notify VOCALSCAPE of any material
change in the business, condition, assets, liabilities, operations, and
financial performance of AZATEL, or any event reasonably likely to lead to any
such change.
4.2 OPERATION OF BUSINESS.
AZATEL shall ensure that, during the Pre-Closing Period:
(a) It conducts its operations in the Ordinary Course of Business and in
the same manner as such operations have been conducted prior to the date of this
Agreement;
(b) It uses its commercially reasonable efforts to preserve intact its
current business organization, keep available and not terminate the services of
its current officers and employees and maintain its relations and goodwill with
all suppliers, customers, landlords, creditors, licensors, licensees, employees
and other Persons having business relationships with AZATEL;
(c) It does not declare, accrue, set aside or pay any dividend or make any
other distribution in respect of any shares of its capital stock, and does not
repurchase, redeem or otherwise reacquire any shares of its capital stock or
other securities, except with respect to the repurchase of shares of AZATEL
Common Stock upon termination of employees at the original purchase price
pursuant to agreements existing at the date hereof;
(d) It does not sell or otherwise issue (or grant any warrants, options or
other rights to purchase) any shares of capital stock or any other securities,
except the issuance of AZATEL Common Shares pursuant to option grants to
employees made under the Option Plan in the Ordinary Course of Business;
(e) It does not amend its charter document, corporate governance document
or other Organizational Documents, and does not effect or become a party to any
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(f) It does not form any subsidiary or acquire any equity interest or
other interest in any other Entity;
(g) It does not establish or adopt any Employee Benefit Plan, and does not
pay any bonus or make any profit sharing or similar payment to, or increase the
amount of the wages, salary, commissions, fringe benefits or other compensation
or remuneration payable to, any of its directors, officers or employees;
(h) It does not change any of its methods of accounting or accounting
practices in any respect;
(i) It does not make any Tax election;
(j) It does not commence or take any action or fail to take any action
which would result in the commencement of any Proceeding;
(k) It does not (i) acquire, dispose of, transfer, lease, license,
mortgage, pledge or encumber any fixed or other assets, other than in the
Ordinary Course of Business; (ii) incur, assume or prepay any indebtedness,
Indebtedness or obligation or any other liabilities or issue any debt
securities, other than in the Ordinary Course of Business; (iii) assume,
guarantee, endorse for the obligations of any other person, other than in the
Ordinary Course of Business; (iv) make any loans, advances or capital
contributions to, or investments in, any other Person, other than in the
Ordinary Course of Business; or (v) fail to maintain insurance consistent with
past practices for its business and property;
(l) It pays all debts and Taxes, files all of its Tax Returns (as provided
herein) and pays or performs all other obligations, when due;
(m) It does not enter into or amend any agreements pursuant to which any
other Person is granted distribution, marketing or other rights of any type or
scope with respect to any of its services, products or technology;
(n) It does not hire any new officer-level employee;
(o) It does not revalue any of its assets, including, without limitation,
writing down the value of inventory or writing off notes or accounts receivable,
except as required under GAAP and in the Ordinary Course of Business;
(p) Except as otherwise contemplated hereunder, it does not enter into any
transaction or take any other action outside the Ordinary Course of Business;
and
(q) It does not enter into any transaction or take any other action that
likely would cause or constitute a Breach of any representation or warranty made
by it in this Agreement.
4.3 FILINGS AND CONSENTS; COOPERATION.
AZATEL shall ensure that:
(a) Each filing or notice required to be made or given (pursuant to any
applicable Law, Order or contract, or otherwise) by AZATEL or the Shareholders
in connection with the execution and delivery of any of the Transactional
Agreements, or in connection with the consummation or performance of the
Exchange, is made or given as soon as possible after the date of this Agreement;
(b) Each Consent required to be obtained (pursuant to any applicable Law,
Order or contract, or otherwise) by AZATEL or the Shareholders in connection
with the execution and delivery of any of the Transactional Agreements, or in
connection with the consummation or performance of the Exchange, is obtained as
soon as possible after the date of this Agreement and remains in full force and
effect through the Closing Date;
(c) It promptly delivers to VOCALSCAPE a copy of each filing made, each
notice given and each Consent obtained by AZATEL during the Pre-Closing Period;
and
(d) During the Pre-Closing Period, it and its Representatives cooperate
with VOCALSCAPE and VOCALSCAPE's Representatives, and prepare and make available
such documents and take such other actions as VOCALSCAPE may request in good
faith, in connection with any filing, notice or Consent that VOCALSCAPE is
required or elects to make, give or obtain.
4.4 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULES.
(a) During the Pre-Closing Period, AZATEL shall promptly notify VOCALSCAPE
in writing of:
(i) the discovery by it of any event, condition, fact or circumstance that
occurred or existed on or prior to the date of this Agreement which is contrary
to any representation or warranty made by it in this Agreement or in any of the
other Transactional Agreements, or that would upon the giving of notice or lapse
of time, result in any of its representations and warranties set forth in this
agreement to become untrue or otherwise cause any of the conditions of Closing
set forth in Article VI or Article VII not to be satisfied;
(ii) any event, condition, fact or circumstance that occurs, arises or
exists after the date of this Agreement (except as a result of actions taken
pursuant to the express written consent of VOCALSCAPE) and that is contrary to
any representation or warranty made by it in this Agreement, or that would upon
the giving of notice or lapse of time, result in any of its representations and
warranties set forth in this agreement to become untrue or otherwise cause any
of the conditions of Closing set forth in Article VI or Article VII not to be
satisfied;
(b) If any event, condition, fact or circumstances that is required to be
disclosed pursuant to Section 4.4(a) requires any material change in the AZATEL
DISCLOSURE SCHEDULE, or if any such event, condition, fact or circumstance would
require such a change assuming the AZATEL DISCLOSURE SCHEDULE were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstances, then AZATEL, as applicable, shall promptly deliver to
VOCALSCAPE an update to the AZATEL DISCLOSURE SCHEDULE specifying such change (a
"DISCLOSURE SCHEDULE UPDATE").
(c) It will promptly update any relevant and material information provided
to VOCALSCAPE after the date hereof pursuant to the terms of this Agreement.
4.5 COMMERCIALLY REASONABLE EFFORTS.
During the Pre-Closing Period, AZATEL shall use its commercially
reasonable efforts to cause the conditions set forth in Article VI and Article
VII to be satisfied on a timely basis and so that the Closing can take place on
or before February 27, 2006, in accordance with Section 1.5, and shall not take
any action or omit to take any action, the taking or omission of which would or
could reasonably be expected to result in any of the representations and
warranties of AZATEL set forth in this Agreement becoming untrue, or in any of
the conditions of Closing set forth in Article VI or Article VII not being
satisfied.
4.6 CONFIDENTIALITY; PUBLICITY.
AZATEL shall ensure that:
(a) It and its Representatives keep strictly confidential the existence
and terms of this Agreement prior to the issuance or dissemination of any
mutually agreed upon press release or other disclosure of the Exchange; and
(b) neither it nor any of its Representatives issues or disseminates any
press release or other publicity or otherwise makes any disclosure of any nature
(to any of its suppliers, customers, landlords, creditors or employees or to any
other Person) regarding any of the Exchange; except in each case to the extent
that it is required by law to make any such disclosure regarding such
transactions or as separately agreed by the parties; provided, however, that if
it is required by law to make any such disclosure, AZATEL advises VOCALSCAPE, at
least five business days before making such disclosure, of the nature and
content of the intended disclosure.
ARTICLE V.
COVENANTS OF VOCALSCAPE
5.1 NOTIFICATION.
During the Pre-Closing Period, VOCALSCAPE shall promptly notify AZATEL in
writing of:
(a) the discovery by VOCALSCAPE of any event, condition, fact or
circumstance that occurred or existed on or prior to the date of this Agreement
which is contrary to any representation or warranty made by VOCALSCAPE in this
Agreement; and,
(b) any event, condition, fact or circumstance that occurs, arises or
exists after the date of this Agreement (except as a result of actions taken
pursuant to the written consent of AZATEL) and that is contrary to any
representation or warranty made by VOCALSCAPE in this Agreement;
5.2 FILINGS AND CONSENTS; COOPERATION.
VOCALSCAPE shall ensure that:
(a) Each filing or notice required to be made or given (pursuant to any
applicable Law, Order or contract, or otherwise) by VOCALSCAPE in connection
with the execution and delivery of any of the Transactional Agreements, or in
connection with the consummation or performance of the Exchange, is made or
given as soon as possible after the date of this Agreement;
(b) Each Consent required to be obtained (pursuant to any applicable Law,
Order or contract, or otherwise) by VOCALSCAPE in connection with the execution
and delivery of any of the Transactional Agreements, or in connection with the
consummation or performance of the Exchange, is obtained as soon as possible
after the date of this Agreement and remains in full force and effect through
the Closing Date;
(c) VOCALSCAPE promptly delivers to AZATEL and a copy of each filing made,
each notice given and each Consent obtained by VOCALSCAPE during the Pre-Closing
Period; and
(d) During the Pre-Closing Period, VOCALSCAPE and its Representatives
cooperate with AZATEL and their Representatives, and prepare and make available
such documents and take such other actions as AZATEL may request in good faith,
in connection with any filing, notice or Consent that AZATEL is required or
elects to make, give or obtain.
5.3 COMMERCIALLY REASONABLE EFFORTS.
During the Pre-Closing Period, VOCALSCAPE shall use its commercially
reasonable efforts to cause the conditions set forth in Article VI and Article
VII to be satisfied on a timely basis and so that the Closing can take place on
or before February 27, 2006 or as soon thereafter as is reasonably practical, in
accordance with Section 1.5, and shall not take any action or omit to take any
action, the taking or omission of which would or could reasonably be expected to
result in any of the representations and warranties or VOCALSCAPE set forth in
this Agreement becoming untrue or in any of the conditions of closing set forth
in Article VI or Article VII not being satisfied.
5.4 DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) Each of VOCALSCAPE and the Shareholders acknowledges and agrees that
it may receive Confidential Information in connection with this Transaction
including without limitation, the AZATEL DISCLOSURE SCHEDULE and any information
disclosed during the due diligence process, the public disclosure of which will
harm the disclosing party's business. The Receiving Party may use Confidential
Information only in connection with the Transaction. The results of the due
diligence review may not be used for any other purpose other than in connection
with the Transaction. Except as expressly provided in this Agreement, the
Receiving Party shall not disclose Confidential Information to anyone without
the Disclosing Party's prior written consent. The Receiving Party shall take all
reasonable measures to avoid disclosure, dissemination or unauthorized use of
Confidential Information, including, at a minimum, those measures it takes to
protect its own confidential information of a similar nature. The Receiving
Party shall not export any Confidential Information in any manner contrary to
the export regulations of the governmental jurisdiction to which it is subject.
(b) The Receiving Party may disclose Confidential Information as required
to comply with binding orders of governmental entities that have jurisdiction
over it, provided that the Receiving Party (i) gives the Disclosing Party
reasonable notice (to the extent permitted by law) to allow the Disclosing Party
to seek a protective order or other appropriate remedy, (ii) discloses only such
information as is required by the governmental entity, and (iii) uses
commercially reasonable efforts to obtain confidential treatment for any
Confidential Information so disclosed.
(c) All Confidential Information shall remain the exclusive property of
the Disclosing Party. The Disclosing Party's disclosure of Confidential
Information shall not constitute an express or implied grant to the Receiving
Party of any rights to or under the Disclosing Party's patents, copyrights,
trade secrets, trademarks or other intellectual property rights.
(d) The Receiving Party shall notify the Disclosing Party immediately upon
discovery of any unauthorized use or disclosure of Confidential Information or
any other breach of this Agreement by the Receiving Party. The Receiving Party
shall cooperate with the Disclosing Party in every reasonable way to help the
Disclosing Party regain possession of such Confidential Information and prevent
its further unauthorized use.
(e) The Receiving Party shall return or destroy all tangible materials
embodying Confidential Information (in any form and including, without
limitation, all summaries, copies and excerpts of Confidential Information)
promptly following the Disclosing Party's written request; provided, however,
that, subject to the provisions of this Agreement, the Receiving Party may
retain one copy of such materials in the confidential, restricted access files
of its legal department for use only in the event a dispute arises between the
parties related to the Transaction and only in connection with that dispute. At
the Disclosing Party's option, the Receiving Party shall provide written
certification of its compliance with this Section.
5.5 INDEMNIFICATION.
(a) Each of AZATEL and the Shareholders, jointly and severally, each shall
defend, indemnify and hold harmless VOCALSCAPE, and its respective employees,
officers, directors, stockholders, controlling persons, affiliates, agents,
successors and assigns (collectively, the "VOCALSCAPE Indemnified Persons"), and
shall reimburse the VOCALSCAPE Indemnified Person, for, from and against any
loss, liability, claim, damage, expense (including costs of investigation and
defense and reasonable attorneys' fees) or diminution of value, whether or not
involving a third-party claim (collectively, "Damages"), directly or indirectly,
relating to, resulting from or arising out of:
(i) any untrue representations, misrepresentations or breach of warranty
by or of AZATEL or the Shareholders contained in or pursuant to this Agreement,
and the AZATEL DISCLOSURE SCHEDULE; (ii) any breach or nonfulfillment of any
covenant, agreement or other obligation by or of AZATEL or the Shareholders
(only to the extent made or occurring prior to or at the Closing) contained in
or pursuant to this Agreement, the Transaction Agreements executed by AZATEL or
any of the Shareholders in their individual capacity, the AZATEL DISCLOSURE
SCHEDULE, or any of the other agreements, documents, schedules or exhibits to be
entered into by AZATEL or any of the Shareholders in their individual capacity
pursuant to or in connection with this Agreement;
(iii) all of Pre-Closing liabilities of AZATEL or the Shareholders; and
(iv) any liability, claim, action or proceeding of any kind whatsoever,
whether instituted or commenced prior to or after the Closing Date, which
directly or indirectly relates to, arises or results from, or occurs in
connection with facts or circumstances relating to the conduct of business of
AZATEL or the assets of AZATEL, or events or circumstances existing on or prior
to the Closing Date.
(b) VOCALSCAPE shall defend, indemnify and hold harmless AZATEL and its
respective affiliates, agents, successors and assigns (collectively, the "AZATEL
Indemnified Persons"), and shall reimburse the AZATEL Indemnified Persons, for,
from and against any Damages, directly or indirectly, relating to, resulting
from or arising out of:
(i) any untrue representation, misrepresentation or breach of
warranty by or of VOCALSCAPE contained in or pursuant to this Agreement;
(ii) any breach or nonfulfillment of any covenant, agreement
or other obligations by or of VOCALSCAPE contained in or pursuant to this
Agreement, the Transaction Agreements or any other agreements, documents,
schedules or exhibits to be entered into or delivered to pursuant to or in
connection with this Agreement.
(c) Promptly after receipt by an indemnified Party under Section 5.6 of
this Agreement of notice of a claim against it ("Claim"), such indemnified Party
shall, if a claim is to be made against an indemnifying Party under such
Section, give notice to the indemnifying Party of such Claim, but the failure to
so notify the indemnifying Party will not relieve the indemnifying Party of any
liability that it may have to any indemnified Party, except to the extent that
the indemnifying Party demonstrates that the defense of such action is
prejudiced by the indemnified Party's failure to give such notice.
(d) A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the Party from whom indemnification is
sought.
ARTICLE VI.
CLOSING CONDITIONS OF VOCALSCAPE
VOCALSCAPE's obligations to effect the Closing and consummate the Exchange
are subject to the satisfaction of each of the following conditions:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties of AZATEL and the Shareholders in this
Agreement shall have been true and correct as of the date of this Agreement and
shall be true and correct on and as of the Closing. AZATEL and the Shareholders
shall have performed all obligations in this Agreement required to be performed
or observed by them on or prior to the Closing.
6.2 ADDITIONAL CONDITIONS TO CLOSING.
(a) All necessary approvals under federal and state securities laws and
other authorizations relating to the issuance of the Acquisition Shares and the
transfer of the Shares shall have been received.
(b) VOCALSCAPE shall have obtained an opinion stating that the terms of
the Exchange are fair, just and equitable to VOCALSCAPE and its shareholders.
(c) No preliminary or permanent injunction or other order by any federal,
state or foreign court of competent jurisdiction which prohibits the
consummation of the Exchange shall have been issued and remain in effect. No
statute, rule, regulation, executive order, stay, decree, or judgment shall have
been enacted, entered, issued, promulgated or enforced by any court or
governmental authority which prohibits or restricts the consummation of the
Exchange. All authorizations, consents, orders or approvals of, or declarations
or filings with, and all expirations of waiting periods imposed by, any
Governmental Body which are necessary for the consummation of the Exchange,
other than those the failure to obtain which would not materially adversely
affect the consummation of the Exchange or in the aggregate have a material
adverse effect on VOCALSCAPE and its subsidiaries, taken as a whole, shall have
been filed, occurred or been obtained (all such permits, approvals, filings and
consents and the lapse of all such waiting periods being referred to as the
"REQUISITE REGULATORY APPROVALS") and all such Requisite Regulatory Approvals
shall be in full force and effect.
(d) There shall not be any action taken, or any statute, rule, regulation
or order enacted, entered, enforced or deemed applicable to the Exchange, by any
Governmental Body which, in connection with the grant of a Requisite Regulatory
Approval, imposes any material condition or material restriction upon VOCALSCAPE
or its subsidiaries or AZATEL, including, without limitation, requirements
relating to the disposition of assets, which in any such case would so
materially adversely impact the economic or business benefits of the Exchange as
to render inadvisable the consummation of the Exchange.
6.3 PERFORMANCE OF AGREEMENTS.
AZATEL or the Shareholders, as the case may be, shall have executed and
delivered each of the agreements, instruments and documents required to be
executed and delivered, and performed all actions required to be performed by
AZATEL or any of the Shareholders, as the case may be, pursuant to this
Agreement, except as VOCALSCAPE has otherwise consented in writing.
6.4 CONSENTS.
Each of the Consents identified or required to have been identified in the
AZATEL DISCLOSURE SCHEDULE shall have been obtained and shall be in full force
and effect, other than those Consents, which have been expressly waived by
VOCALSCAPE.
6.5 NO MATERIAL ADVERSE CHANGE AND SATISFACTORY DUE DILIGENCE.
There shall not have been any material adverse change in the business,
condition, assets, liabilities, operations or financial performance of AZATEL
since the date of this Agreement as determined by VOCALSCAPE in its discretion.
VOCALSCAPE shall be satisfied in all respects with the results of its due
diligence review of AZATEL.
6.6 AZATEL CLOSING CERTIFICATE.
In addition to the documents required to be received under this Agreement,
VOCALSCAPE shall also have received the following documents:
(a) copies of resolutions of AZATEL, certified by a Secretary, Assistant
Secretary or other appropriate officer of AZATEL, authorizing the execution,
delivery and performance of this Agreement and other Transactional Agreements;
(b) good standing certificate of AZATEL; and
(c) such other documents as VOCALSCAPE may request in good faith for the
purpose of (i) evidencing the accuracy of any representation or warranty made by
AZATEL, (ii) evidencing the compliance by AZATEL, or the performance by AZATEL
of, any covenant or obligation set forth in this Agreement or any of the other
Transactional Agreements, (iii) evidencing the satisfaction of any condition set
forth in Article VII or this Article VI, or (iv) otherwise facilitating the
consummation or performance of the Exchange.
6.7 TRANSACTIONAL AGREEMENTS.
Each Person (other than VOCALSCAPE) shall have executed and delivered
prior to or on the Closing Date all Transactional Agreements to which it is to
be a party.
6.8 RESIGNATION OF DIRECTORS AND OFFICERS.
VOCALSCAPE shall have received a written resignation from each of the
directors and officers of AZATEL effective as of the Closing.
6.9 DELIVERY OF STOCK CERTIFICATES, MINUTE BOOK AND CORPORATE SEAL.
The Shareholders shall have delivered to VOCALSCAPE the stock books, stock
ledgers, minute books and corporate seals of AZATEL.
ARTICLE VII.
CLOSING CONDITIONS OF THE SHAREHOLDERS
The Shareholders' obligations to effect the Closing and consummate the
Exchange are subject to the satisfaction of each of the following conditions:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties of VOCALSCAPE in this Agreement shall have
been true and correct as of the date of this Agreement and shall be true and
correct on and as of the Closing and VOCALSCAPE shall have performed all
obligations in this Agreement required to be performed or observed by them on or
prior to the Closing.
7.2 ADDITIONAL CONDITIONS TO CLOSING.
(a) All necessary approvals under federal and state securities laws and
other authorizations relating to the issuance and transfer of the Acquisition
Shares by VOCALSCAPE and the transfer of the Shares by AZATEL shall have been
received.
(b) No preliminary or permanent injunction or other order by any federal,
state or foreign court of competent jurisdiction which prohibits the
consummation of the Exchange shall have been issued and remain in effect. No
statute, rule, regulation, executive order, stay, decree, or judgment shall have
been enacted, entered, issued, promulgated or enforced by any court or
governmental authority which prohibits or restricts the consummation of the
Exchange. All Requisite Regulatory Approvals shall have been filed, occurred or
been obtained and all such Requisite Regulatory Approvals shall be in full force
and effect.
(c) There shall not be any action taken, or any statute, rule, regulation
or order enacted, entered, enforced or deemed applicable to the Exchange, by any
federal or state Governmental Body which, in connection with the grant of a
Requisite Regulatory Approval, imposes any condition or restriction upon the
Surviving Corporation or its subsidiaries (or, in the case of any disposition of
assets required in connection with such Requisite Regulatory Approval, upon
VOCALSCAPE, its subsidiaries, AZATEL or any of their subsidiaries), including,
without limitation, requirements relating to the disposition of assets, which in
any such case would so materially adversely impact the economic or business
benefits of the Exchange as to render inadvisable the consummation of the
Exchange.
7.3 VOCALSCAPE CLOSING CERTIFICATES.
The Shareholders shall have received the following documents:
(a) copies of resolutions of VOCALSCAPE, certified by a Secretary,
Assistant Secretary or other appropriate officer of VOCALSCAPE, authorizing the
execution, delivery and performance of the Transactional Agreements and the
Exchange;
(b) good standing certificates for the State of Nevada; and
(c) such other documents as AZATEL may request in good faith for the
purpose of (i) evidencing the accuracy of any representation or warranty made by
VOCALSCAPE, (ii) evidencing the compliance by VOCALSCAPE with, or the
performance by VOCALSCAPE of, any covenant or obligation set forth in this
Agreement or any of the other Transactional Agreements, (iii) evidencing the
satisfaction of any condition set forth in Article VI or this Article VII, or
(iv) otherwise facilitating the consummation or performance of the Exchange.
7.4 NO MATERIAL ADVERSE CHANGE.
There shall not have been any material adverse change in VOCALSCAPE's
business, condition, assets, liabilities, operations or financial performance
since the date of this Agreement.
7.5 PERFORMANCE OF AGREEMENTS.
VOCALSCAPE shall have executed and delivered each of the agreements,
instruments and documents required to be executed and delivered, and performed
all actions required by VOCALSCAPE pursuant to this Agreement, except as AZATEL
and the Shareholders have otherwise consented in writing.
7.6 CONSENTS.
Each of the Consents identified or required to have been identified in
Section 3.4 shall have been obtained and shall be in full force and effect,
other than those Consents the absence of which shall not have a material adverse
effect on VOCALSCAPE.
7.7 VOCALSCAPE STOCK.
On the Closing Date, shares of VOCALSCAPE Common Stock shall be eligible
for quotation on the Over-the-Counter Bulletin Board.
ARTICLE VIII.
FURTHER ASSURANCES
Each of the parties hereto agrees that it will, from time to time after
the date of the Agreement, execute and deliver such other certificates,
documents and instruments and take such other action as may be reasonably
requested by the other party to carry out the actions and transactions
contemplated by this Agreement, including the closing conditions described in
Articles VI and VII. AZATEL and the Shareholders shall reasonably cooperate with
VOCALSCAPE in its of the books and records of AZATEL, or in preparing any
solicitation materials to be sent to the shareholders of VOCALSCAPE in
connection with the approval of the Exchange and the transactions contemplated
by the Transactional Agreements.
ARTICLE IX.
TERMINATION
9.1 TERMINATION.
This Agreement may be terminated and the Exchange abandoned at any time
prior to the Closing Date:
(a) by mutual written consent of VOCALSCAPE, AZATEL and the Shareholders;
(b) by VOCALSCAPE if (i) there is a material Breach of any covenant or
obligation of AZATEL or the Shareholders; provided however, that if such Breach
or Breaches are capable of being cured prior to the Closing Date, such Breach or
Breaches shall not have been cured within 10 days of delivery of the written
notice of such Breach, or (ii) VOCALSCAPE reasonably determines that the timely
satisfaction of any condition set forth in Article VI has become impossible or
impractical (other than as a result of any failure on the part of VOCALSCAPE to
comply with or perform its covenants and obligations under this Agreement or any
of the other Transactional Agreements);
(b) by AZATEL if (i) there is a material Breach of any covenant or
obligation of VOCALSCAPE; provided, however, that if such Breach or Breaches are
capable of being cured prior to the Closing Date, such Breach or Breaches shall
not have been cured within 10 days of delivery of the written notice of such
Breach, or (ii) AZATEL reasonably determines that the timely satisfaction of any
condition set forth in Article VII has become impossible or impractical (other
than as a result of any failure on the part of AZATEL or any Shareholder to
comply with or perform any covenant or obligation set forth in this Agreement or
any of the other Transactional Agreements);
(d) by VOCALSCAPE if the Closing has not taken place on or before February
27, 2006 (except if as a result of any failure on the part of VOCALSCAPE to
comply with or perform its covenants and obligations under this Agreement or in
any other Transactional Agreement);
(e) by AZATEL if the Closing has not taken place on or before February 27,
2006 (except if as a result of the failure on the part of AZATEL or the
Shareholders to comply with or perform any covenant or obligation set forth in
this Agreement or in any other Transactional Agreement);
(f) by any of VOCALSCAPE, on the one hand or AZATEL, on the other hand, if
any court of competent jurisdiction in the United States or other United States
governmental body shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the Exchange and
such order, decree, ruling or any other action shall have become final and
non-appealable; provided, however, that the party seeking to terminate this
Agreement pursuant to this clause (f) shall have used all commercially
reasonable efforts to remove such order, decree or ruling; or
(g) The parties hereby agree and acknowledge that a breach of the
provisions of Articles 4.1, 4.2, 4.3, 4.4 and 4.6 are, without limitation,
material Breaches of this Agreement.
9.2 TERMINATION PROCEDURES.
If VOCALSCAPE wishes to terminate this Agreement pursuant to Section 9.1,
VOCALSCAPE shall deliver to the Shareholders and AZATEL a written notice stating
that VOCALSCAPE is terminating this Agreement and setting forth a brief
description of the basis on which VOCALSCAPE is terminating this Agreement. If
AZATEL wishes to terminate this Agreement pursuant to Section 9.1, AZATEL shall
deliver to VOCALSCAPE a written notice stating that AZATEL is terminating this
Agreement and setting forth a brief description of the basis on which AZATEL is
terminating this Agreement.
9.3 EFFECT OF TERMINATION.
In the event of termination of this Agreement as provided above, this
Agreement shall forthwith have no further effect. Except for a termination
resulting from a Breach by a party to this Agreement, there shall be no
liability or obligation on the part of any party hereto. In the event of a
breach, the remedies of the non-breaching party shall be to seek damages from
the breaching party or to obtain an order for specific performance, in addition
to or in lieu of other remedies provided herein. Upon request after termination,
each party will redeliver or, at the option of the party receiving such request,
destroy all reports, work papers and other material of any other party relating
to the Exchange, whether obtained before or after the execution hereof, to the
party furnishing same; provided, however, that AZATEL and the Shareholders
shall, in all events, remain bound by and continue to be subject to Section 4.6
and all parties shall in all events remain bound by and continue to be subject
to Section 5.4 and 5.5.
Notwithstanding the above, both VOCALSCAPE, on the one hand, and AZATEL
and the Shareholders, on the other hand, shall be entitled to announce the
termination of this Agreement by means of a mutually acceptable press release.
ARTICLE X.
MISCELLANEOUS
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties of AZATEL and the Shareholders in this
Agreement and the AZATEL DISCLOSURE SCHEDULE shall survive shall survive
indefinitely. The right to indemnification, reimbursement or other remedy based
on such representations and warranties will not be affected by any investigation
conducted by the parties.
10.2 EXPENSES.
Except as otherwise set forth herein, each of the parties to the Exchange
shall bear its own expenses incurred in connection with the negotiation and
consummation of the transactions contemplated by this Agreement.
10.3 ENTIRE AGREEMENT.
This Agreement and the other Transactional Agreements contain the entire
agreement of the parties hereto, and supersede any prior written or oral
agreements between them concerning the subject matter contained herein, or
therein. There are no representations, agreements, arrangements or
understandings, oral or written, between the parties to this Agreement, relating
to the subject matter contained in this Agreement and the other Transaction
Agreements, which are not fully expressed herein or therein. The schedules and
each exhibit attached to this Agreement or delivered pursuant to this Agreement
are incorporated herein by this reference and constitute a part of this
Agreement.
10.4 COUNTERPARTS
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.
10.5 DESCRIPTIVE HEADINGS.
The Article and Section headings in this Agreement are for convenience
only and shall not affect the meanings or construction of any provision of this
Agreement.
10.6 NOTICES.
Any notices required or permitted to be given under this Agreement shall
be in writing and shall be deemed sufficiently given on the earlier to occur of
the date of personal delivery, the date of receipt or three (3) days after
posting by overnight courier or registered or certified mail, postage prepaid,
addressed as follows:
If to VOCALSCAPE:
Vocalscape Networks, Inc.
000 - 0000 X. Xxxxxxxx
Xxxxxxxxx, XX
Xxxxxx X0X 0X0
If to AZATEL:
Azatel Communications Inc.
0000 X. 0xx Xxxxxx
Xxxxxxxxx XX
Xxxxxx X0X 0X0
If to the Shareholders:
To such address or addresses as a party shall have previously designated
by notice to the sender given in accordance with this section.
10.7 CHOICE OF LAW
This Agreement shall be construed in accordance with and governed by the
laws of the State of Washington without regard to choice of law principles. The
parties hereto each consent to the jurisdiction of the courts of the state of
Washington, county of King and to the federal courts located in the county of
King, State of Washington.
10.8 BINDING EFFECT; BENEFITS
This Agreement shall inure to the benefit of and be binding upon the
parties and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer on any Person other than
the parties or their respective successors and permitted assigns, the
Shareholders and other Persons expressly referred to herein, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
10.9 ASSIGNABILITY
Neither this Agreement nor any of the parties' rights hereunder shall be
assignable by any party without the prior written consent of the other parties
and any attempted assignment without such consent shall be void.
10.10 WAIVER AND AMENDMENT
Any term or provision of this Agreement may be waived at any time by the
party, which is entitled to the benefits thereof. The waiver by any party of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach. The parties may, by mutual agreement in
writing, amend this Agreement in any respect. AZATEL and the Shareholders hereby
acknowledge their intent that this Agreement includes as a party any holder of
capital stock in AZATEL at the time of Closing. VOCALSCAPE, AZATEL and the
Shareholders therefore agree that this Agreement may be amended, without the
further consent of any party to this Agreement, (i) to add as a new Shareholder
any existing shareholder of AZATEL and (ii) to modify Schedule 1 to reflect the
addition of such shareholder.
10.11 ATTORNEYS' FEES.
In the event of any action or proceeding to enforce the terms and
conditions of this Agreement, the prevailing party shall be entitled to an award
of reasonable attorneys' and experts' fees and costs, in addition to such other
relief as may be granted.
10.12 SEVERABILITY.
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
10.13 CONSTRUCTION.
In executing this Agreement, the parties severally acknowledge and
represent that each: (a) has fully and carefully read and considered this
Agreement; (b) has or has had the opportunity to consult independent legal
counsel regarding the legal effect and meaning of this document and all terms
and conditions hereof; (c) has been afforded the opportunity to negotiate as to
any and all terms hereof; and (d) is executing this Agreement voluntarily, free
from any influence, coercion or duress of any kind. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rule of strict construction will be applied against
any party.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
as of the day and year first above written.
VOCALSCAPE:
VOCALSCAPE NETWORKS, INC.
By:
------------------------------
Name: Xxxxxx Xxxx
Title: Chief Executive Officer
AZATEL:
AZATEL COMMUNICATIONS INC.
By:
------------------------------
Name: Xxxxx Xxxxxx
Title: President
SHAREHOLDERS:
By:
------------------------------
Name: Xxxx Xxxxxxxx
By:
------------------------------
Name: Xxxxx Xxxxxx
By:
------------------------------
Name: Xxxxx Xxxxxx
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
AGREEMENT. "Agreement" shall mean the Share Exchange Agreement to which
this Exhibit A is attached (including all Disclosure Schedules and all
Exhibits), as it may be amended from time to time.
APPROVED PLANS. "Approved Plans" shall mean a stock option or similar plan
for the benefit of employees or others, which has been approved by the
shareholders of AZATEL.
AZATEL COMMON SHARES. "AZATEL COMMON SHARES" shall mean the common shares
of AZATEL.
BREACH. There shall be deemed to be a "Breach" of a representation,
warranty, covenant, obligation or other provision if there is or has been any
inaccuracy in or breach of, or any failure to comply with or perform, such
representation, warranty, covenant, obligation or other provision.
CERTIFICATES. "Certificates" shall have the meaning specified in Section
1.3 of the Agreement.
VOCALSCAPE. "VOCALSCAPE" shall have the meaning specified in the first
paragraph of the Agreement.
VOCALSCAPE COMMON STOCK. "VOCALSCAPE Common Stock" shall mean the shares
of common stock of VOCALSCAPE.
VOCALSCAPE SEC REPORTS. "VOCALSCAPE SEC Reports" shall have the meaning
specified in Section 4.6 of the Agreement.
CLOSING. "Closing" shall have the meaning specified in Section 1.5 of the
Agreement.
CLOSING DATE. "Closing Date" shall have the meaning specified in Section
1.5 of the Agreement.
CODE. "Code" shall mean the Internal Revenue Code of 1986 or any successor
law, and regulations issued by the IRS pursuant to the Internal Revenue Code or
any successor law.
CONFIDENTIAL INFORMATION. "Confidential Information" shall mean all
nonpublic information disclosed by one party or its agents (the "Disclosing
Party") to the other party or its agents (the "Receiving Party") that is
designated as confidential or that, given the nature of the information or the
circumstances surrounding its disclosure, reasonably should be considered as
confidential. Confidential Information includes, without limitation (i)
nonpublic information relating to the Disclosing Party's technology, customers,
vendors, suppliers, business plans, intellectual property, promotional and
marketing activities, finances, agreements, transactions, financial information
and other business affairs, and (ii) third-party information that the Disclosing
Party is obligated to keep confidential.
Confidential Information does not include any information that (i) is or
becomes publicly available without breach of this Agreement, (ii) can be shown
by documentation to have been known to the Receiving Party at the time of its
receipt from the Disclosing Party, (iii) is received from a third party who, to
the knowledge of the Receiving Party, did not acquire or disclose such
information by a wrongful or tortious act, or (iv) can be shown by documentation
to have been independently developed by the Receiving Party without reference to
any Confidential Information.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
DISCLOSURE SCHEDULE UPDATE. "Disclosure Schedule Update" shall have the
meaning specified in Section 4.4 of the Agreement.
BALANCE SHEET of AZATEL. "AZATEL Balance Sheet" shall mean AZATEL's
audited balance sheet at December 31, 2005.
AZATEL DISCLOSURE SCHEDULE. "AZATEL DISCLOSURE SCHEDULE" shall have the
meaning specified in introduction to Article II of the Agreement.
ENTITY. "Entity" shall mean any corporation (including any non profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, society,
political party, union, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.
ENVIRONMENTAL LAWS. "Environmental Laws" shall mean any Law or other
requirement relating to the protection of the environment, health, or safety
from the release or disposal of hazardous materials.
ENVIRONMENTAL PERMIT. "Environmental Permit" means all licenses, permits,
authorizations, approvals, franchises and rights required under any applicable
Environmental Law or Order.
EQUITY SECURITIES. "Equity Security" shall mean any stock or similar
security, including, without limitation, securities containing equity features
and securities containing profit participation features, or any security
convertible into or exchangeable for, with or without consideration, any stock
or similar security, or any security carrying any warrant, right or option to
subscribe to or purchase any shares of capital stock, or any such warrant or
right.
EXCHANGE ACT. "Exchange Act" means the United States Securities Exchange
Act of 1934, as amended.
GAAP. "GAAP" shall mean United States Generally Accepted Accounting
Principles, applied on a consistent basis.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, concession, approval,
consent, ratification, permission, clearance, confirmation, endorsement, waiver,
certification, designation, rating, registration, qualification or authorization
that is issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Law; or
(b) right under any contract with any Governmental Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any:
(a) nation, principality, state, commonwealth, province, territory,
county, municipality, district or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other government;
(c) governmental or quasi-governmental authority of any nature (including
any governmental division, subdivision, department, agency, bureau, branch,
office, commission, council, board, instrumentality, officer, official,
representative, organization, unit, body or Entity and any court or other
tribunal); or
(d) individual, Entity or body exercising, or entitled to exercise, any
executive, legislative, judicial, administrative, regulatory, police, military
or taxing authority or power of any nature, including any court, arbitrator,
administrative agency or commissioner, or other governmental authority or
instrumentality.
INDEBTEDNESS. "Indebtedness" shall mean any obligation, contingent or
otherwise. Any obligation secured by a Lien on, or payable out of the proceeds
of, or production from, property of the relevant party will be deemed to be
Indebtedness.
INTELLECTUAL PROPERTY. "Intellectual Property" means all industrial and
intellectual property, including, without limitation, all U.S. and non-U.S.
patents, patent applications, patent rights, trademarks, trademark applications,
common law trademarks, Internet domain names, trade names, service marks,
service xxxx applications, common law service marks, and the goodwill associated
therewith, copyrights, in both published and unpublished works, whether
registered or unregistered, copyright applications, franchises, licenses,
know-how, trade secrets, technical data, designs, customer lists, confidential
and proprietary information, processes and formulae, all computer software
programs or applications, layouts, inventions, development tools and all
documentation and media constituting, describing or relating to the above,
including manuals, memoranda, and records, whether such intellectual property
has been created, applied for or obtained anywhere throughout the world.
KNOWLEDGE. A corporation shall be deemed to have "knowledge" of a
particular fact or matter only if a director or officer of such corporation has,
had or should have had knowledge of such fact or matter.
LAWS. "Laws" means, with respect to any Person, any U.S. or non-U.S.
federal, national, state, provincial, local, municipal, international,
multinational or other law (including common law), constitution, statute, code,
ordinance, rule, regulation or treaty applicable to such Person.
LIEN. "Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge, right of first refusal, encumbrance or other
adverse claim or interest of any kind, including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof and the filing of or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction and including any lien or charge
arising by Law.
MATERIAL ADVERSE EFFECT. "Material Adverse Effect" means any change,
effect or circumstance which, individually or in the aggregate, would reasonably
be expected to (a) have a material adverse effect on the business, assets,
financial condition or results of operations of the affected party, in each case
taken as a whole or (b) materially impair the ability of the affected party to
perform its obligations under this Agreement and the Transaction Agreements,
excluding any change, effect or circumstance resulting from (i) the
announcement, pendency or consummation of the transactions contemplated by this
Agreement, (ii) changes in the United States securities markets generally, or
(iii) changes in general economic, currency exchange rate, political or
regulatory conditions in industries in which the affected party operates.
MATERIAL CONTRACT. "Material Contract" means any and all agreements,
contracts, arrangements, understandings, leases, commitments or otherwise,
providing for potential payments by or to the company in excess of $1,000, and
the amendments, supplements and modifications thereto.
ORDER. "Order" shall mean any award, decision, injunction, judgment,
order, ruling, subpoena, or verdict entered, issued, made, or rendered by any
Governmental Body.
ORDINARY COURSE OF BUSINESS. "Ordinary Course of Business" shall mean an
action taken by AZATEL if (i) such action is taken in normal operation,
consistent with past practices, (ii) such action is not required to be
authorized by the Shareholders, Board of Directors or any committee of the Board
of the Directors or other governing body of AZATEL and (iii) does not require
any separate or special authorization or consent of any nature by any
Governmental Body or third party.
PERMITTED LIENS. "Permitted Liens" shall mean (a) Liens for Taxes not yet
payable or in respect of which the validity thereof is being contested in good
faith by appropriate proceedings and for the payment of which the relevant party
has made adequate reserves; (b) Liens in respect of pledges or deposits under
workmen's compensation laws or similar legislation, carriers, warehousemen,
mechanics, laborers and materialmen and similar Liens, if the obligations
secured by such Liens are not then delinquent or are being contested in good
faith by appropriate proceedings conducted and for the payment of which the
relevant party has made adequate reserves; and (c) statutory Liens incidental to
the conduct of the business of the relevant party which were not incurred in
connection with the borrowing of money or the obtaining of advances or credits
and that do not in the aggregate materially detract from the value of its
property or materially impair the use thereof in the operation of its business.
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
PRE-CLOSING PERIOD. "Pre-Closing Period" shall mean the period commencing
as of the date of the Agreement and ending on the Closing Date.
PROCEEDING. "Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding), prosecution,
contest, hearing, inquiry, inquest, audit, examination or investigation,
commenced, brought, conducted or heard by or before, or otherwise has involved,
any Governmental Body or any arbitrator or arbitration panel.
REPRESENTATIVES. "Representatives" of a specified party shall mean
officers, directors, employees, attorneys, accountants, advisors and
representatives of such party, including, without limitation, all subsidiaries
of such specified party, and all such Persons with respect to such subsidiaries.
The Related Persons of AZATEL shall be deemed to be "Representatives" of AZATEL,
as applicable.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "Securities Act" shall mean the United States Securities
Act of 1933, as amended.
TAXES. "Taxes" shall mean all foreign, federal, state or local taxes,
charges, fees, levies, imposts, duties and other assessments, as applicable,
including, but not limited to, any income, alternative minimum or add-on,
estimated, gross income, gross receipts, sales, use, transfer, transactions,
intangibles, ad valorem, value-added, franchise, registration, title, license,
capital, paid-up capital, profits, withholding, payroll, employment,
unemployment, excise, severance, stamp, occupation, premium, real property,
recording, personal property, federal highway use, commercial rent,
environmental (including, but not limited to, taxes under Section 59A of the
Code) or windfall profit tax, custom, duty or other tax, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest, penalties or additions to tax with respect to any of the foregoing;
and "Tax" means any of the foregoing Taxes.
TAX GROUP. "Tax Group" shall mean any federal, state, local or foreign
consolidated, affiliated, combined, unitary or other similar group of which
AZATEL is now or was formerly a member.
TAX RETURN. "Tax Return" shall mean any return, declaration, report, claim
for refund or credit, information return, statement or other similar document
filed with any Governmental Body with respect to Taxes, including any schedule
or attachment thereto, and including any amendment thereof.
TRANSACTIONAL AGREEMENTS. "Transactional Agreements" shall mean this
Agreement and any agreement or document to be executed pursuant to this
Agreement.
SCHEDULE 1
AZATEL SHAREHOLDERS
NAME NUMBER OF COMMON SHARES OF AZATEL HELD
Xxxx Xxxxxxxx 75,000
Xxxxx Xxxxxx 75,000
Xxxxx Xxxxxx 75,000
