Exhibit 10.11
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (together with the Schedules and Exhibits
hereto, the "Agreement") is made as of November 24, 2003 by and among Sophia
Communications, Inc, a Delaware corporation (the "Seller"), Sophia Licensee,
Inc., a Delaware corporation (the "Subsidiary") and BizCom U.S.A., Inc., a
Florida corporation (the "Buyer"). Seller, Buyer and Subsidiary are occasionally
referred to herein as a "Party", and collectively as the "Parties."
WITNESSETH:
WHEREAS, Seller owns certain tangible and intangible assets utilized in
the 220 MHz Specialized Mobile Radio ("SMR") industry and relating to certain
000 XXx xxxxxxxx (xxx "000 XXx Xxxxxxxx"), as further described herein, which
assets it desires to sell to the Buyer, subject to the terms and conditions set
forth in this Agreement;
WHEREAS, the Subsidiary, which is a wholly-owned subsidiary of the
Seller, and which holds various licenses issued by the Federal Communications
Commission to operate radio stations under call signs WPOJ271, WPOJ272, WPOJ273,
WPOJ274, WPOJ275, WPOJ276, WPOJ277, WPOJ278, WPOJ279, WPOJ280, and WPOJ281 in
the 220-222 MHz band (the "220 MHz Licenses"), as further described herein,
relating to the operation of Seller's 220MHz Stations, desires to sell such 220
MHz Licenses to the Buyer, subject to the terms and conditions set forth in this
Agreement;
WHEREAS, Buyer desires to purchase such assets of Seller and
Subsidiary, as further described herein, subject to the terms and conditions set
forth in this Agreement; and
WHEREAS, defined terms used in this Agreement shall have the meanings
ascribed to them in this Agreement or expressly by definition in Article VIII,
except as otherwise expressly provided.
NOW, THEREFORE, in consideration of the premises, and respective
representations warranties, covenants and agreements of each of the Seller,
Subsidiary, and Buyer contained herein, and for other valuable consideration,
the receipt and sufficiency of which is hereby acknowledged by each of the
Seller, Subsidiary and Buyer, each of such Parties hereto, intending to be
legally bound hereby, agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.01 Purchase and Sale of Assets(i). Subject to the terms and
conditions hereof, (a) on the First Closing Date (as hereinafter defined),
Seller agrees to and shall assign, transfer, sell, convey and deliver to Buyer
all of Seller's right, title and interest in and to all of the assets of Seller
other than the Excluded Assets (collectively, the "Seller's Assets"). Seller's
Assets, together with the Excluded Assets and the Assumed Liabilities,
constitute all of Seller's assets used in its business as it is currently being
conducted. Seller's Assets are generally listed on Schedule 1.01(a) attached
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hereto. Seller's Assets shall be sold free and clear of all Liens, except for
the lien of Fidelity Leasing, a division of EAB Leasing Corp., relating to
certain communications equipment (the "Fidelity Lien"); and (b) on the Final
Closing Date, Subsidiary agrees to and shall assign, transfer, sell, convey and
deliver the 220 MHz Licenses to SMR Management, Inc, a wholly-owned subsidiary
of Buyer (hereafter "Buyer Sub") free and clear of all Liens (the Seller's
Assets, the 220 MHz Licenses and the Assumed Liabilities (defined below) are
collectively referred to herein as the "Purchased Assets"). Notwithstanding
anything contained herein to the contrary, the Parties hereto agree that Buyer
may in its sole discretion at any time and from time to time following the First
Closing Date, without any prior or other notice to the Seller, transfer some or
all of the Purchased Assets to one or more subsidiaries (other than the 220 MHz
Licenses which are being transferred pursuant hereto to Buyer Sub).
1.02 Excluded Assets. Notwithstanding any other provision of this
Agreement, the Purchased Assets shall exclude all of Seller's and Subsidiary's
assets listed on Schedule 1.02 (the "Excluded Assets").
1.03 No Assumption of Liabilities. Except for (a) contractual
obligations arising on or after the First Closing Date out of contracts, leases
and other agreements included in the Purchased Assets on Schedule 1.01(a), and
(b) any other liabilities expressly listed on Schedule 1.03, all of which shall
be assumed by the Buyer at the First Closing (the "Assumed Liabilities"), each
of Seller and Subsidiary shall retain, and Buyer shall not assume, or in any way
be responsible for, or liable with respect to, any debts, liabilities or
obligations of Seller and/or Subsidiary, whether arising out of or in connection
with the operation of Seller, Subsidiary, and/or the Purchased Assets before the
First Closing Date or otherwise, whether fixed, contingent or otherwise, known
or unknown. Buyer assumes no obligation to honor employment agreements between
Seller and Seller's employees, except as specifically identified on Schedule
1.03 hereto.
1.04 Purchase Price.
(a) The total purchase price (the "Purchase Price") for the
Purchased Assets shall be Sixteen Million One Hundred Thousand Dollars
(US $16,100,000.00) payable by Buyer to Seller and Subsidiary, as
follows:
(i) Three Hundred Thousand Dollars and no cents (US
$300,000.00) payable in readily available funds;
(ii) a promissory note (the "$2,900,000.00 Promissory
Note") issued by Buyer as maker to Seller or its assigns as
payee, substantially in the form of Exhibit A in the principal
amount of Two Million Nine Hundred Thousand Dollars and no
cents (US $2,900,000.00), with simple interest payable
semi-annually to accrue at the rate of four percent (4%) per
annum, all principal and unpaid interest, if any, to be due
and payable on or before December 31, 2007, with no early
prepayment penalty and which will be secured by a Pledge and
Security Agreement substantially in the form attached at
Exhibit G;
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(iii) a promissory note (the "$400,000.00 Promissory
Note") issued by Buyer as maker to Seller or its assigns as
payee, substantially in the form of Exhibit B in the principal
amount of Four Hundred Thousand Dollars and no cents (US
$400,000.00) with simple interest to accrue at the rate of
four percent (4%) per annum, all principal and interest to be
due and payable on or before January 31, 2004, with no early
prepayment penalty and which will be secured by a Pledge and
Security Agreement substantially in the form attached at
Exhibit G;
(iv) Five Million (5,000,000) shares of Buyer's
common stock, par value $.0001 per share (the "Shares") issued
to Seller; and
(v) a warrant (the "Warrant"), substantially in the
form of Exhibit C issued to Seller granting Seller or its
assigns the right to purchase One Million (1,000,000) shares
of Buyer's common stock, par value US $.0001 per share (the
"Warrant Shares") at an exercise price per share which will be
the lesser of (i) US $6.00 or (ii) the per share exercise
price for common shares established in those warrants which
are next issued by Buyer as part of a material private
placement securities offering which commences after the First
Closing Date, but in no event no less than US $3.00 per share.
The right to exercise any or all of the rights provided for in
the Warrant shall expire on December 31, 2007, for any portion
of the Warrant which remains unexercised on such date.
(b) The Shares, Warrants and Warrant Shares to be issued to
Seller pursuant to this Agreement shall be subject to "piggyback"
registration rights, lock-up provisions relating thereto, and "tag
along" rights, pursuant to a Registration Rights Agreement
substantially in the form attached hereto as Exhibit D. Upon issuance
of the Shares to the Seller, and in addition to any other rights Seller
may have as a shareholder of Buyer, Seller will be entitled to not less
than seven (7) days notice of, and the right to send an observer of its
choice to, each meeting of the Board of Directors duly held in
accordance with Buyer's organizational documents in accordance with the
terms of the Registrations Rights Agreement.
1.05 Adjustments to Purchase Price.
(a) The Purchase Price shall be increased or decreased as of
the Closing as required to effectuate the proration of expenses
relating to the Purchased Assets. All expenses arising from the
operation of the Purchased Assets, including real and personal property
taxes and assessments levied against the Purchased Assets, taxes
(except for taxes arising from the transfer of the Assets under this
Agreement), and similar prepaid and deferred items shall be prorated
between the Buyer and the Seller, with Seller being responsible for all
expenses, costs, and liabilities allocable to the operations through
October 31, 2003, and the Buyer being responsible for all expenses,
costs, and obligations allocable to operations on and after November 1,
2003. Prorations shall be calculated as of 12:01 a.m. In addition,
Buyer shall not be entitled to any credit for amounts paid to Seller
under the terms of the Memorandum of Understanding executed and
extended between the Parties.
(i) For purposes of making the adjustments pursuant
to this Section, Seller shall prepare and deliver a list
("Adjustment List") to Buyer within forty-five (45) days
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following the First Closing Date, or such earlier or later
date as shall be mutually agreed to by Seller and Buyer. If
the Adjustment Amount is a credit to the account of Buyer,
Seller shall pay such amount to Buyer, and if the Adjustment
Amount is a charge to the account of Buyer, Buyer shall pay
such amount to Seller, in each case in cash within five (5)
days following Buyer's receipt of the Adjustment List. In the
event Buyer disagrees with the Adjustment Amount determined by
Seller or with any other matter arising out of this
subsection, and Buyer and Seller cannot within fifteen (15)
days resolve the disagreement themselves, the Parties will
refer the disagreement to an independent certified public
accounting firm mutually agreeable to Buyer and Seller, whose
decision shall be final and whose fees and expenses shall be
allocated between and paid by Seller and Buyer, respectively,
to the extent that such Party does not prevail on the disputed
matters decided by the accountants.
1.06 Allocation of the Purchase Price
The Purchase Price shall be allocated among the Seller's Assets and the
220 MHz Licenses as follows:
(a) the $2,900,000 Promissory Note (valued at its principal
amount) and 1,800,000 Shares (valued at $2.50 per share), totaling
Seven Million Four Hundred Dollars ($7,400,000.00) in consideration,
shall be assigned to Subsidiary as full consideration for the 220 MHz
Licenses; and
(b) Seven Hundred Thousand Dollars ($700,000) shall be
assigned to the Seller's Assets other than the Transferred Technology,
and the balance of the Purchase Price shall be assigned to the
Transferred Technology.
Prior to the First Closing Date, Buyer and Seller shall use their reasonable
best efforts to agree on an allocation of that portion of the Purchase Price
which has been assigned to the Seller's Assets being sold hereunder other than
the Transferred Technology and the 220 MHz Licenses. In the event Buyer and
Seller cannot agree, the allocation shall be made by Buyer. Buyer and Seller
shall use such allocation for all reporting purposes in connection with federal,
state and local income and, to the extent permitted under applicable law,
franchise taxes. Buyer and Seller agree to report such allocation to the
Internal Revenue Service in the form required by Treasury Regulation ss.
1.1060-1T.
1.07 Closings.
(a) The First Closing. Subject to the satisfaction of all the
conditions to Closing specified in Article IV (except Section 4.01 (b)
hereof) unless waived by the Party to whom such unsatisfied condition
is applicable prior to such Party's obligation to close, the "First
Closing" of the transactions provided for herein shall take place at
the offices of Buyer at 10:00 A.M. EST on November 25, 2003, or such
earlier date as shall be mutually agreed to by Seller and Buyer (the
"First Closing Date").
(b) The Final Closing. The "Final Closing" of the transactions
provided for herein shall take place at the offices of Buyer at 10:00
A.M. EST on the fifth business day following the date on which the
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conditions set forth in Section 4.01(b) have been met or waived (the
"Final Closing Date"), except as set forth in Section 4.01(b).
(c) Effective Date. The First Closing and the Final Closing
shall be effective as of 12:01 a.m. on the respective closing dates.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.01 Representations and Warranties of Seller and Subsidiary, Generally
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, THE SELLER AND THE
SUBSIDIARY MAKE NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO ANY MATTER RELATING TO THE PURCHASED ASSETS
INCLUDING, WITHOUT LIMITATION, INCOME TO BE DERIVED OR EXPENSES TO BE INCURRED
IN CONNECTION WITH THE PURCHASED ASSETS, THE PHYSICAL CONDITION OF ANY
PERSONAL PROPERTY COMPRISING A PART OF THE PURCHASED ASSETS, THE VALUE OF THE
PURCHASED ASSETS (OR ANY PORTION THEREOF), THE TRANSFERABILITY OF THE
PURCHASED ASSETS, THE TERMS, AMOUNT, VALIDITY OR ENFORCEABILITY OF ANY ASSUMED
LIABILITIES, THE TITLE OF THE PURCHASED ASSETS (OR ANY PORTION THEREOF), THE
MERCHANTABILITY OR FITNESS OF THE PURCHASED ASSETS FOR ANY PARTICULAR PURPOSE,
OR ANY OTHER MATTER OR THING RELATING TO THE PURCHASED ASSETS OR ANY PORTION
THEREOF. MOREOVER, THE TRANSFERRED TECHNOLOGY IS PROVIDED "AS IS" WITHOUT
WARRANTY OR CONDITION OF ANY KIND. THE ENTIRE RISK AS TO THE USE OF THE
TRANSFERRED TECHNOLOGY AND THE RESULTS OR PERFORMANCE THEREOF IS ASSUMED BY
BUYER AND ITS CUSTOMERS. WITHOUT IN ANY WAY LIMITING THE FOREGOING, THE SELLER
AND THE SUBSIDIARY HEREBY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE AS TO ANY PORTION OF THE
PURCHASED ASSETS.
2.02 Representations of Seller
Seller hereby makes the following representations and warranties to
Buyer, as of the date of this Agreement (unless otherwise indicated), which
representations and warranties shall continue in full force and effect from the
date hereof until and through the First Closing Date:
(a) Authority. Seller is a corporation, duly organized,
validly existing and in good standing under the laws of the State of
Delaware in which it is organized. Seller has all requisite power and
authority and the legal right to own its properties and to conduct its
business as currently conducted, and to execute, deliver and perform
this Agreement. Seller is, or prior to the First Closing will be,
authorized to do business as a foreign corporation in Texas and
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Illinois, being every jurisdiction where Seller reasonably believes
that such authorization is required due to the nature and extent of the
Seller's business and operations in such jurisdiction. Seller has
obtained all governmental and other third party approvals in order to
own and operate the Seller's Assets and conduct its business as
presently conducted, except where the failure to obtain such approvals
would not have a Material Adverse Effect on Seller or the Purchased
Assets, and all such approvals are in full force and effect. Seller's
execution, delivery, and performance of this Agreement have been duly
and validly authorized by all necessary action on the part of Seller,
including but not limited to the approval of more than 66 2/3rds of the
holders of its common shares and more than 90% of the holders of its
SERIES A Preferred shares and more than 90% of the holders of its
SERIES B Preferred shares, totaling more than 80% of shares voting on
an "as converted" basis. No dissenters' rights are provided by law,
regulation, or contract, to any of the Seller's shareholders relating
to or arising out of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Seller and
constitutes the legal, valid and binding obligation of Seller
enforceable in accordance with its terms against Seller except as may
be limited by laws affecting the enforcement of creditors' rights or
equitable principles generally.
(b) No Restrictions Against Performance. Except as noted on
Schedule 2.02(b) hereto, neither the execution, delivery, nor
performance of this Agreement by Seller, nor the consummation of the
transactions contemplated hereby will, with or without the giving of
notice or the passage of time, or both, violate any provisions of,
conflict with, result in a breach of, constitute a default under, or
result in the creation or imposition of any Lien or condition under,
(i) any and all organizational documents of Seller, including as
applicable, Seller's certificate of incorporation, bylaws, or
shareholders' agreement: (ii) any federal, state or local law, statute,
ordinance, regulation or rule, which is applicable to Seller or
Seller's Assets; (iii) any contract, indenture, instrument, agreement,
mortgage, lease, right or other obligation or restriction to which
Seller is a Party or by which Seller or Seller's Assets is or may be
bound; or (iv) any order, judgment, writ, injunction, decree, license,
franchise, permit or other authorization of any federal, state or local
court, arbitration tribunal or governmental agency by which Seller or
Seller's Assets is or may be bound. The execution and delivery of this
Agreement by Seller and the performance by Seller of the transactions
contemplated hereby will not constitute an act of bankruptcy,
preference, insolvency or fraudulent conveyance under any bankruptcy
act or other law for the protection of debtors or creditors.
(c) Third-Party and Governmental Consents. Except as set forth
on Schedule 2.02(c) hereto, no approval, consent, waiver, order or
authorization of, or registration, qualification, declaration, or
filing with, or notice to, any federal, state or local governmental
authority or other third party is required on the part of Seller in
connection with the execution of this Agreement or the consummation of
the transactions contemplated hereby.
(d) Title. Seller holds legal title to all of Seller's Assets.
Except for the Fidelity Lien, all of Seller's Assets are free and clear
of all Liens, of any nature whatsoever, whether absolute, legal,
equitable, accrued, contingent or otherwise, including without
limitation any rights of first refusal as to any of the Seller's
Assets. Except for the Fidelity Lien, there are no outstanding options,
warrants, commitments, agreements or any other rights of any character,
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however characterized, entitling any person or entity other than Buyer
to acquire any interest in all, or any part of, the Seller's Assets.
(e) Orders and Decrees and Related Matters. Neither Seller nor
any of the Seller's Assets is subject to any judicial or administrative
order, decree, ordinance or zoning restriction which would adversely
affect, or impose any condition on, the Seller, the Seller's Assets, or
the transactions described herein.
(f) Litigation. Except as set forth in Schedule 2.02(f) there
is no judicial or administrative action, or any suit, proceeding,
investigation or inquiry pending or, to the best Knowledge of Seller
after due inquiry, threatened against or relating to Seller, the
Seller's Assets, or the transactions contemplated hereby, before any
federal, state or local court, arbitration tribunal or governmental or
regulatory authority which could, individually or in the aggregate, (i)
result in the voluntary or involuntary transfer of any of the Seller's
Assets; or (ii) adversely affect Seller, the Seller's Assets, or the
transactions contemplated hereby. Except as described in Schedule
2.02(f), Seller knows of no reasonable basis for any such action, suit,
proceeding or any investigation or inquiry relating to the same.
(g) NTP Agreements.
(i) To the best of Seller's Knowledge, Seller has not
sold or leased any radio product or engaged in the
manufacturing, sale or use of any device in its business which
infringes on any patents lawfully issued to NTP, Inc. or any
patents lawfully issued to NTP, Inc. by Xxxxx Xxxxxx
Associates, S.A.
(ii) To the best of Seller's Knowledge, Seller has
not reproduced, distributed, or made derivative works of any
software lawfully owned by NTP, Inc. or Xxxxx Xxxxxx
Associates, S.A. or committed any other act which would
constitute infringement of NTP Inc.'s copyright, trade secret
right or any other proprietary right in software lawfully
owned by NTP Inc. or Xxxxx Xxxxxx Associates, S.A.
(iii) None of the radio products sold or leased by
Seller to any third party are or were designed and marketed
for use in the transmission of e-mails.
(iv) None of the radio products sold or leased by
Seller to any third party are or were intended for use in the
transmission of e-mails.
(v) Seller makes no representations or warranties of
any kind with respect to the Technology and Patent License
Agreement, dated February 3, 1998, by and between Seller and
NTP, Inc., as amended July 25, 2002 (the "NTP Agreement") and
without limiting the foregoing, to the extent Seller has any
interest therein, and only to that extent, Seller is assigning
to Buyer the NTP Agreement but does not warrant (1) that it
has the right and ability to assign the NTP Agreement, (2)
that the NTP Agreement is valid and in effect as of the date
of this Assignment, or (3) that NTP, Inc. will consent to any
assignment to Buyer of any rights Seller may have in the NTP
Agreement.
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(h) Compliance with Laws. To the best of Seller's Knowledge,
Seller is in compliance in all material respects with all applicable
laws, regulations and administrative orders of (i) the United States,
including without limitation the Communications Act, (ii) the FCC,
(iii) any state, municipality, county, or other governmental
subdivision, to which Seller or the Purchased Assets may be subject,
except where non-compliance would not be expected to cause a Material
Adverse Effect on Seller or the Purchased Assets. Seller has not
received any notice, claim or complaint that it has not conducted or is
not presently conducting its business in accordance with all applicable
laws, rules and regulations which has not already been resolved
favorably to the Seller, and, to the best of Seller's Knowledge, there
is no law, rule, regulation or administrative order in effect or
pending which would restrict the Seller from carrying on its business
and operations in the same manner as presently conducted.
(i) Insurance. To the extent insurable, the Seller's Assets
are insured by Seller under policies of fire, casualty, liability and
other forms of insurance in such amounts and against such risks and
losses as are, in Seller's discretion, reasonable and adequate for the
Seller's Assets. Seller shall maintain such insurance until and
including the First Closing Date.
(j) Contracts. Except as set forth on Schedule 2.02(j), to the
best of Seller's Knowledge, Seller is not in default under any of the
Assumed Liabilities, full and complete copies of which, including any
and all amendments, modifications and extensions thereto, have
previously been provided by Seller to Buyer. Except as set forth on
Schedule 2.02(j), Seller has not received any notice of material
noncompliance with any term or provision of any of the Assumed
Liabilities. Seller is not aware of any condemnation or other
proceedings or any other matter which could reasonably be expected to
adversely affect the use of the property or properties which are the
subject of the Assumed Liabilities.
(k) Taxes. Seller has filed all income, sales, and use tax
returns required to be filed as of the date hereof with the Internal
Revenue Service and the State of Illinois in connection with the
Seller's Assets.
(l) Employees. Seller understands and acknowledges that Buyer
may seek to retain the services of one or more of Seller's employees;
Seller agrees that Buyer may retain one or more of such persons with no
liability on the part of Buyer to Seller in connection therewith except
as to any liabilities relating to vacation or sick days expressly
assumed hereunder. Seller is not obligated under any employment
agreement to any past employee.
(m) Broker's Fees. No agent, broker or other person acting
pursuant to the express or implied authority of Seller is or may be
entitled to a commission or finder's fee in connection with the
transactions described in this Agreement, or is or may be entitled to
make any claim against Seller or against Buyer as a result of any
action by Seller, for a commission or finder's fee.
(n) Representations and Warranties of Subsidiary. Seller
confirms all of representations and warranties made by Subsidiary
herein.
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(o) Financial Statements. Seller has provided, or on or before
thirty days following the First Closing will provide, to Buyer
unaudited financial statements of Seller for Seller's last two
completed fiscal years (ending on September 30), [including any
required "stub period"] and any required pro-forma financial
information.
(p) Accredited Investor. Seller acknowledges that it is an
accredited investor, as such term is defined under the Securities Act,
and has such knowledge and experience in financial, business and
investment matters, including the telecommunications industry and
specifically the 220-222 MHz segment of such industry, that it is
capable of evaluating the terms and conditions, merits and risks of the
transactions contemplated herein and the investment contemplated
hereby, and therefore considers itself a sophisticated, accredited
investor in connection with the investment contemplated hereby, and
specifically with regard to its investment in the Shares, Warrants and
Warrant Shares to be issued to it pursuant to this Agreement. To the
best of Seller's Knowledge, based on information provided by such
shareholder not earlier than September 30, 2003, except as listed on
Schedule 2.02 (p), each of Seller's shareholders is an accredited
investor, as such term is defined under the Securities Act.
(q) Information. Seller acknowledges its receipt and review of
the Disclosure Documents. Seller, through its officers, directors and
corporate and securities counsel, has had the opportunity to ask
questions of, and to receive answers from, the officers and directors
of Buyer concerning the Buyer, its business affairs and operations, the
transactions contemplated by this Agreement, and the Disclosure
Documents
(r) Acknowledgment of Risks. Seller understands and
acknowledges, and by its execution hereof, confirms that, to the best
of Seller's Knowledge, its shareholders understand and acknowledge,
that there are significant risks to be considered in connection with
Seller's investment in the Shares, Warrants and Warrant Shares to be
issued to it pursuant to this Agreement, including without limitation
the risks and factors which might effect Buyer's future operating
results which are set forth in the Disclosure Documents.
(s) Investment and Related Matters. The Shares, Warrants and
Warrant Shares to be issued to Seller pursuant to this Agreement are
being acquired by Seller for its own account, and not for the account
or beneficial interest of any other person or entity. The Shares,
Warrants and Warrant Shares to be issued to Seller pursuant to this
Agreement are not being acquired by Seller with a view to, or for
resale in connection with, any "distribution" within the meaning of the
Securities Act or any applicable state securities laws except as part
of a liquidation of Seller and distribution of Seller's assets to its
shareholders after the First Closing DATE. Seller will comply in all
respects with applicable State of Delaware corporate laws, rules, and
regulations and applicable federal and state securities laws in
connection with its receipt of the Shares, Warrants, and Warrant Shares
and any later proposed subsequent dispositions thereof, if any, and,
upon request of the Buyer, provide evidence thereof satisfactory to
Buyer and its counsel.
(t) Residence. The address of Seller is correctly set forth in
the notice provisions set forth in this Agreement, and Seller is
resident in the State set forth therein.
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(u) Restricted Securities. Seller hereby acknowledges that:
(1) The Shares, Warrants, and Warrant Shares have not
been, and will not be, registered under the Securities Act or
any state securities laws and, as such, must be held by Seller
unless and until they are subsequently so registered under the
Securities Act and any applicable state securities laws, or
unless an exemption from registration thereunder is available.
The Shares, Warrants and Warrant Shares constitute "restricted
securities," as that term is defined in Rule 144 promulgated
by the SEC under the Securities Act.
(2) Seller shall not sell, assign or transfer any or
all of the Shares, Warrants or Warrant Shares to be issued to
it pursuant to this Agreement, other than as part of a
liquidating distribution to its shareholders, unless such
transfer is registered under the Securities Act and any
applicable state securities laws, or unless a specific
exemption from registration thereunder is available. Any sale,
assignment or transfer of any or all of the Shares, Warrants
or Warrant Shares to be issued to Seller pursuant to this
Agreement which is made pursuant to an exemption claimed under
the Securities Act and any applicable state securities laws
will require a favorable opinion of Seller's legal counsel, in
form and in substance satisfactory to Buyer and its legal
counsel, to the effect that such sale, assignment or transfer
does not and will not violate the provisions of the Securities
Act or any applicable state securities laws or the terms of
this Agreement. Notwithstanding anything contained herein to
the contrary, and in accordance with the terms of the
Registration Rights Agreement, no opinion of counsel shall be
necessary for a transfer to: (i) a wholly owned subsidiary of
Sophia or (ii) to any person, corporation or other entity that
(A) is a shareholder of Sophia as of the date hereof; and (B)
meets the definition of an "accredited investor" under the
Securities Act at the time of the transfer.
(3) Buyer is not under any obligation whatsoever to
file any registration statement under the Securities Act or
any state securities laws, to register any sale, transfer or
assignment of any Shares, Warrants or Warrant Shares to be
issued to Seller pursuant to this Agreement, or to take any
other action necessary for the purpose of making an exemption
from registration available to Seller in connection with any
such sale, transfer or assignment, except as such obligations
may be created under the Registration Rights Agreement to be
executed and delivered at the First Closing. Stop transfer
instructions will be issued by Buyer with respect to the
Shares, Warrants, and Warrant Shares to be issued to Seller
pursuant to this Agreement.
(v) Restrictive Legend. There will be placed upon all of the
certificates representing Shares, Warrants and Warrant Shares delivered
to Seller and any and all certificates delivered in partial or total
substitution therefore, a restrictive legend which will read
substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES
ACT") AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, CONVEYED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR OTHERWISE DISPOSED OF UNLESS (A) THEY ARE
COVERED BY A REGISTRATION STATEMENT OR POST-EFFECTIVE AMENDMENT
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THERETO, EFFECTIVE UNDER THE SECURITIES ACT, OR (B) SUCH SALE,
ASSIGNMENT, TRANSFER, CONVEYANCE, PLEDGE, HYPOTHECATION, ENCUMBRANCE OR
OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT. EXCEPT AS SET FORTH IN THE ASSET PURCHASE AGREEMENT
ENTERED INTO AMONG THE COMPANY, SOPHIA COMMUNICATIONS, INC. AND SOPHIA
LICENSEE, INC. DATED NOVEMBER 25, 2003 ("AGREEMENT"), ANY SALE,
ASSIGNMENT, TRANSFER, CONVEYANCE, PLEDGE, HYPOTHECATION, ENCUMBRANCE OR
OTHER DISPOSITION OF THESE SECURITIES WILL REQUIRE AN OPINION OF
HOLDER'S COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY AND
ITS COUNSEL TO THE EFFECT THAT SUCH TRANSACTION DOES NOT AND WILL NOT
VIOLATE THE APPLICABLE PROVISIONS OF THE SECURITIES ACT OR ANY
APPLICABLE STATE SECURITIES LAWS OR THE TERMS OF THE AGREEMENT.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
CERTAIN LOCK-UP RESTRICTIONS WITH THE COMPANY PURSUANT TO THE AGREEMENT
AND/OR THE REGISTRATION RIGHTS AGREEMENT.
(w) No Misstatements or Omissions. None of the information or
documents prepared by Seller that has been furnished, or which is to be
furnished by Seller to Buyer or to any of Buyer's representatives, and
no representation, warranty or covenant made in this Agreement by
Seller or in any agreement, document or instrument contemplated hereby,
and to the best of Seller's Knowledge, no information prepared by third
parties that has been furnished to Buyer by Seller, is or will be false
or misleading as to any material fact, or omits or will omit to state a
material fact required to make any of the statements made therein not
misleading in any material respect.
2.03 Representations and Warranties of Subsidiary. Subsidiary hereby
makes the following representations and warranties to Buyer, as of the date of
this Agreement (unless otherwise indicated), which representations and
warranties shall continue in full force and effect from the date hereof until
and through the Final Closing Date:
(a) Authority. Subsidiary is a corporation, duly organized,
validly existing and in good standing under the laws of the State of
Delaware in which it is organized. Subsidiary has all requisite power
and authority and the legal right to own its properties and to conduct
its business as currently conducted, and to execute, deliver and
perform this Agreement. Subsidiary is authorized to do business as a
foreign corporation in every jurisdiction where Subsidiary reasonably
believes that such authorization is required due to the nature and
extent of the Subsidiary's business and operations in such
jurisdiction. Subsidiary has obtained all governmental and other third
party approvals in order to own and operate the 220 MHz Licenses and
conduct its business as presently conducted, except where the failure
to obtain such approvals would not have a Material Adverse Effect on
Subsidiary or the 220 MHz Licenses, and all such approvals are in full
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force and effect. Subsidiary's execution, delivery, and performance of
this Agreement have been duly and validly authorized by all necessary
action on the part of the Subsidiary, including but not limited to the
approval of Seller, the Subsidiary's sole shareholder and holder of one
(1) share of the Subsidiary's common stock, constituting all of the
currently issued and outstanding voting securities of the Subsidiary.
There are no outstanding options, warrants, commitments, agreements or
any other rights of any character, however characterized, entitling any
person or entity to acquire any securities in the Subsidiary. This
Agreement has been duly executed and delivered by Subsidiary and
constitutes the legal, valid and binding obligation of Subsidiary
enforceable in accordance with its terms against Subsidiary except as
may be limited by laws affecting the enforcement of creditors' rights
or equitable principles generally.
(b) Assets, Liabilities and Business of Subsidiary. Except for
the 220 MHz Licenses, Subsidiary does not own and since its inception
has never owned any other assets, and does not have and since its
inception has never had any liabilities, fixed, contingent or
otherwise. Except for its interest in the 220 MHz Licenses, Subsidiary
does not and since its inception has not transacted any business of any
type or nature whatsoever. Subsidiary is not and since its inception
has never been a Party to any contract, agreement, arrangement or
understanding of any type whatsoever with any third party/parties.
Subsidiary does not and since its inception has never had any
employees, consultants or employee benefit plans of any type or nature
whatsoever.
(c) No Restrictions Against Performance. Neither the
execution, delivery, nor performance of this Agreement by Subsidiary,
nor the consummation of the transactions contemplated hereby will, with
or without the giving of notice or the passage of time, or both,
violate any provisions of, conflict with, result in a breach of,
constitute a default under, or result in the creation or imposition of
any Lien or condition under, (i) any and all organizational documents
of Subsidiary, including as applicable, Subsidiary's certificate of
incorporation, bylaws, or shareholders' agreement; (ii) any federal,
state or local law, statute, ordinance, regulation or rule, which is
applicable to Subsidiary or the 220 MHz Licenses; (iii) any contract,
indenture, instrument, agreement, mortgage, lease, right or other
obligation or restriction to which Subsidiary is a Party or by which
Subsidiary or the 220 MHz Licenses are or may be bound; or (iv) any
order, judgment, writ, injunction, decree, license, franchise, permit
or other authorization of any federal, state or local court,
arbitration tribunal or governmental agency by which Subsidiary and/or
the Subsidiary's Assets is or may be bound. The execution and delivery
of this Agreement by Subsidiary and the performance by Subsidiary of
the transactions contemplated hereby will not constitute an act of
bankruptcy, preference, insolvency or fraudulent conveyance under any
bankruptcy act or other law for the protection of debtors or creditors.
(d) Third-Party and Governmental Consents. Except as set forth
on Schedule 2.03(d) hereto, no approval, consent, waiver, order or
authorization of, or registration, qualification, declaration, or
filing with, or notice to, any federal, state or local governmental
authority or other third party is required on the part of Subsidiary in
connection with the execution of this Agreement or the consummation of
the transactions contemplated hereby.
(e) Title. Subsidiary holds legal and beneficial title to all
of the 220 MHz Licenses. The 220 MHz Licenses are free and clear of all
Liens, of any nature whatsoever, whether absolute, legal, equitable,
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accrued, contingent or otherwise, including without limitation any
rights of first refusal, except such restrictions as are imposed by the
FCC on the 220 MHz Licenses. There are no outstanding options,
warrants, commitments, agreements or any other rights of any character,
however characterized, entitling any person or entity other than Buyer
to acquire any interest in all, or any part of, the 220 MHz Licenses.
(f) Orders and Decrees and Related Matters. Except such
restrictions as are imposed on licenses issued by the FCC generally for
the use of the 220 MHz band, neither Subsidiary nor any of the 220 MHz
Licenses is subject to any judicial or administrative order, decree,
ordinance or restriction which would adversely affect, or impose any
condition on, the Subsidiary, or the 220 MHz Licenses, or the
transactions described herein.
(g) Litigation. There is no judicial or administrative action,
or any suit, proceeding, investigation or inquiry pending or, to the
best of Subsidiary's Knowledge after due inquiry, threatened against or
relating to Subsidiary, the 220 MHz Licenses, or the transactions
contemplated hereby, before any federal, state or local court,
arbitration tribunal or governmental or regulatory authority which
could, individually or in the aggregate, (i) result in the voluntary or
involuntary transfer of any of the 220 MHz Licenses; or (ii) adversely
affect Subsidiary, the 220 MHz Licenses, or the transactions
contemplated hereby, and Subsidiary knows of no reasonable basis for
any such action, suit, proceeding or any investigation or inquiry
relating to the same.
(h) FCC Regulatory Compliance. The 220 MHz Licenses are in
full force and effect. All fees due and payable to governmental
authorities pursuant to the rules governing the 220 MHz Licenses have
been paid, except where the failure to pay any such fees would not
result in a Material Adverse Change. No event has occurred with respect
to the 220 MHz Licenses which, with the giving of notice or the lapse
of time or both, would constitute grounds for revocation of any of the
220 MHz Licenses. The Subsidiary is in compliance in all material
respects with the terms of the 220 MHz Licenses, as applicable, and
there is no condition, event or occurrence existing, nor is there any
proceeding being conducted of which the Subsidiary has received notice,
nor, to the Knowledge of the Subsidiary, is there any proceeding
threatened by any governmental authority or an other fact which would
cause the termination, suspension, cancellation or non-renewal of any
of the 220 MHz Licenses, or the imposition of any penalty or fine by
any governmental authority. Other than obtaining the FCC's consent to
the assignment of the 220 MHz Licenses, and a notice of the
consummation of such assignment after the Final Closing, no
registrations, filings, applications or notices to, transfers,
consents, approvals, audits, qualifications, waivers or other action of
any kind is required from the FCC in order to avoid the loss of any
such license, or any asset, property or right pursuant to the terms
thereof, or the violation or breach of any applicable law thereto, by
virtue of the execution, delivery and performance of this Agreement as
contemplated herein, except where the failure to have taken any such
action or to have made such filing or notice would not result in a
Material Adverse Change.
(i) Broker's Fees. No agent, broker or other person acting
pursuant to the express or implied authority of Subsidiary is or may be
entitled to a commission or finder's fee in connection with the
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transactions described in this Agreement, or is or may be entitled to
make any claim against Subsidiary or against Buyer as a result of any
action by Subsidiary, for a commission or finder's fee.
(j) No Misstatements or Omissions. None of the information or
documents prepared by Subsidiary that has been furnished, or which is
to be furnished by Subsidiary to Buyer or to any of Buyer's
representatives, and no representation, warranty or covenant made in
this Agreement by Subsidiary or in any agreement, document or
instrument contemplated hereby, and to the best of Subsidiary's
Knowledge, no information prepared by third parties that has been
furnished to Buyer by Subsidiary, is or will be false or misleading as
to any material fact, or omits or will omit to state a material fact
required to make any of the statements made therein not misleading in
any material respect.
(k) Employees. Subsidiary has no employees. Subsidiary is not
obligated under any employment agreement to any past employee.
2.04 Representations and Warranties of Buyer. Buyer hereby makes the
following representations and warranties to each of Seller and Subsidiary as of
the date of this Agreement (unless otherwise indicated), which representations
and warranties shall continue in full force and effect from the date hereof
until and through the Final Closing Date:
(a) Authority. Buyer is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Florida in
which it is organized. Buyer has all requisite power and authority and
the legal right to own its properties and to conduct its business as
currently conducted, and to execute, deliver and perform this
Agreement. Buyer is authorized to do business as a foreign corporation
in every jurisdiction where Buyer reasonably believes that such
authorization is required due to the nature and extent of the Buyer's
business and operations in such jurisdiction. Buyer has obtained all
governmental and other third party approvals in order to conduct its
business as presently conducted, except where the failure to obtain
such approvals would not have a Material Adverse Effect on Buyer, and
all such approvals are in full force and effect. Buyer's execution,
delivery, and performance of this Agreement have been duly and validly
authorized by all necessary action on the part of Buyer. This Agreement
has been duly executed and delivered by Buyer and constitutes the
legal, valid and binding obligation of Buyer enforceable in accordance
with its terms against Buyer except as may be limited by laws affecting
the enforcement of creditors' rights or equitable principles generally.
(b) No Restrictions Against Performance. Neither the
execution, delivery, nor performance of this Agreement by Buyer, nor
the consummation of the transactions contemplated hereby will, with or
without the giving of notice or the passage of time, or both, violate
any provisions of, conflict with, result in a breach of, constitute a
default under, or result in the creation or imposition of any Lien or
condition under, (i) any and all organizational documents of Buyer,
including as applicable, Buyer's articles of incorporation, as amended,
bylaws, or any shareholders' agreement in effect; (ii) any federal,
state or local law, statute, ordinance, regulation or rule, which is
applicable to Buyer; (iii) any contract, indenture, instrument,
agreement, mortgage, lease, right or other obligation or restriction to
which Buyer is a Party or by which Buyer is or may be bound; or (iv)
any order, judgment, writ, injunction, decree, license, franchise,
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Asset Purchase Agreement
permit or other authorization of any federal, state or local court,
arbitration tribunal or governmental agency by which Buyer is or may be
bound.
(c) Third-Party and Governmental Consents. Except as set forth
on Schedule 2.04(c) hereto, no approval, consent, waiver, order or
authorization of, or registration, qualification, declaration, or
filing with, or notice to, any federal, state or local governmental
authority or other third party is required on the part of Buyer in
connection with the execution of this Agreement or the consummation of
the transactions contemplated hereby.
(d) Orders and Decrees and Related Matters. Except such
restrictions as are imposed on licenses issued by the FCC generally for
the use of the 220 MHz band, neither Buyer nor any of the licenses
issued by the FCC to the Buyer's is subject to any judicial or
administrative order, decree, ordinance or restriction which would
adversely affect, or impose any condition on, the Buyer or the
transactions described herein.
(e) Litigation. There is no judicial or administrative action,
or any suit, proceeding, investigation or inquiry pending or, to the
best of Buyer's Knowledge after due inquiry, threatened against or
relating to Buyer or the transactions contemplated hereby, before any
federal, state or local court, arbitration tribunal or governmental or
regulatory authority which could, individually or in the aggregate
adversely affect Buyer or the transactions contemplated hereby, and
Buyer knows of no reasonable basis for any such action, suit,
proceeding or any investigation or inquiry relating to the same.
(f) Compliance with Laws. Buyer is in compliance in all
material respects with all applicable laws, regulations and
administrative orders of (i) the United States, including without
limitation, the Securities Act and the Exchange Act, and the
Communications Act and the FCC Rules; (ii) the FCC; (iii) the SEC; (iv)
any State; and (v) any municipality, county, or subdivision to which
Buyer, or any of its property is or may be subject, except where
non-compliance would not be expected to cause a Material Adverse Effect
on Buyer. Buyer has not received any notice, claim or complaint that it
has not conducted or is not presently conducting its business in
accordance with all applicable laws, rules and regulations, and, to the
best of Buyer's Knowledge, there is no law, rule, regulation or
administrative order in effect or pending which would restrict the
Buyer from carrying on its business and operations in the same manner
as presently conducted.
(g) Securities to be Issued to Seller. Upon their issuance and
delivery by Buyer to Seller pursuant to this Agreement, the Shares,
Warrants and Warrant Shares will be duly issued, fully paid and
nonassessable.
(h) Broker's Fees. No agent, broker or other person acting
pursuant to the express or implied authority of Buyer is or may be
entitled to a commission or finder's fee in connection with the
transactions described herein, or is or may be entitled to make any
claim against Seller, Subsidiary or against Buyer as a result of any
actions by Buyer, for a commission or finder's fee.
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(i) FCC Matters. Buyer and Buyer Sub each satisfies the
criteria for obtaining and holding licenses issued by the FCC as a
"very small business" as set forth in Section 1.2111 of the FCC Rules
and to Buyer's Knowledge, the FCC has no basis for assessing any unjust
enrichment penalties against the Seller or Subsidiary by reason of the
assignment of the 220 MHz Licenses to the Buyer.
(j) Financing. The Buyer's obligations under this Agreement
are not subject to any financing contingency and the Buyer has
sufficient funds available or committed to pay the cash amount due at
the First Closing Date and to pay timely and in full the obligations
due under the $400,000.00 Promissory Note. Buyer intends to meet its
obligations under the $2,900,000.00 Promissory Note from the results of
future operations and/or future borrowings or the issuance of new
equity, but the exact method of funding has not yet been determined.
(k) Due Diligence Required.
BUYER ACKNOWLEDGES THAT BUYER IS BEING GIVEN THE OPPORTUNITY
TO CONDUCT AN INDEPENDENT INSPECTION AND INVESTIGATION OF THE PHYSICAL
CONDITION OF THE PURCHASED ASSETS, AND ALL OF THE INTELLECTUAL PROPERTY
ASSOCIATED THEREWITH, AND ALL SUCH OTHER MATTERS RELATING TO OR
AFFECTING THE PURCHASED ASSETS AS BUYER MAY DEEM NECESSARY OR
APPROPRIATE AND THAT IN PROCEEDING WITH THE CONSUMMATION OF THE
ACQUISITION OF THE PURCHASED ASSETS, EXCEPT FOR ANY REPRESENTATIONS AND
WARRANTIES EXPRESSLY SET FORTH HEREIN, BUYER IS DOING SO BASED SOLELY
UPON SUCH INDEPENDENT INSPECTIONS AND INVESTIGATIONS AND ACCORDINGLY,
BUYER WILL ACCEPT THE PURCHASED ASSETS AT THE APPLICABLE CLOSING "AS
IS," "WHERE IS," AND "WITH ALL FAULTS,", INCLUDING ANY INFRINGEMENT OF
ANY PATENT, SOFTWARE, TRADEMARK, TRADENAME OR OTHER INTELLECTUAL
PROPERTY RIGHTS OF ANY OTHER PARTY EMBEDDED IN THE PURCHASED ASSETS AS
OF THE DATE OF SALE.
(l) Financial Statements; Accounting Controls. Each of the
consolidated financial statements (including, in each case, any related
notes thereto) included in the Disclosure Documents (the "Buyer
Financial Statements") was prepared in accordance with U.S. generally
accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved and each fairly presented the
consolidated financial position of Buyer as of the respective dates
thereof and the consolidated results of its operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in
amount. Buyer's revenue recognition policies with respect to the Buyer
Financial Statements have been made in accordance with GAAP. Buyer
maintains a standard system of accounting in accordance with GAAP. All
of Buyer's general ledgers, books and records are located at Buyer's
principal place of business. Buyer's financial reserves are adequate to
cover claims incurred. The Company maintains a system of accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization, (ii) transactions are recorded as necessary to
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Asset Purchase Agreement
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets, (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(m) SEC Filings. Buyer has filed all forms, reports and
documents required to be filed with the SEC since October 1, 2001 and
has made available to Seller, in the form filed with the SEC, each of
the Disclosure Documents. As of their respective dates, the Disclosure
Documents (i) were prepared in accordance with the requirements of the
Securities Act or, Exchange Act as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Disclosure
Documents, and (ii) did not at the time they were filed (or if amended
or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) 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 the light of the
circumstances under which they were made, not misleading. None of
Buyer's subsidiaries is required to file any forms, reports or other
documents with the SEC. There are no material contracts or other
documents that would be required to be described in a prospectus
included in a registration statement on Form SB-1 under the Securities
Act or the rules and regulations of the Commission thereunder.
(n) Capitalization. The authorized capital stock of Buyer
consists, or will consist immediately prior to the Closing, of
200,000,0000 shares of Common Stock, $.0001 par value per Share of
which 15,764,750 shares are issued and outstanding as of November 14,
2003. All such shares have been duly authorized, and all such issued
and outstanding shares have been validly issued (including, without
limitation, issued in compliance with applicable federal and state
securities laws), are fully paid and nonassessable and are free of any
liens or encumbrances other than any liens or encumbrances created by
or imposed thereon by the holders thereof. The Buyer is not currently
authorized and has not issued any shares of preferred stock as of the
date hereof.
(o) Options/Warrants As of the date hereof, Buyer has reserved
2,000,000 shares of Common Stock for issuance pursuant to Buyer's Stock
Option/Stock Issuance Plan (the "Stock Option Plan"), under which no
options are outstanding for shares. Buyer has reserved 8,241,000 shares
of Common Stock for issuance upon exercise of outstanding warrants.
Other than as set forth herein, Buyer has not issued any other
convertible securities to any person including convertible notes. All
shares of Common Stock subject to issuance as aforesaid, upon issuance
on the terms and conditions specified in the instruments pursuant to
which they are issuable, shall be duly authorized, validly issued,
fully paid and nonassessable.
(p) Except as set forth in the Form 10KSB/A filed by Buyer on
October 3, 2003 and Form 10-QSB filed by Buyer on November 19, 2003,
since October 1, 2003 there have been no amendments of any Buyer stock
options, warrants or convertible notes and no changes in the capital
structure of Buyer other than issuances of Common Stock and/or warrants
issued as a result of private placements initiated by the Buyer prior
to October 31, 2003.
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(q) Absence Of Certain Changes And Events. Except as set forth
in Schedule 2.04(q), or as otherwise disclosed in the Disclosure
Documents, since June 30, 2003, there has not been:
(i) Any Material Adverse Change in the financial
condition, results of operation, assets, liabilities, business
or prospects of Buyer or any occurrence, circumstance or
combination thereof which reasonably could be expected to
result in any such Material Adverse Change;
(ii) Any material transaction relating to or
involving Buyer (other than the transactions contemplated
herein) which was entered into or carried out by Buyer other
than in the ordinary and usual course of business;
(iii) Any adverse relationships or conditions with
vendors or customers that may have a Material Adverse Effect
on Buyer; and
(iv) Any other event or condition of any character
that has resulted in a Material Adverse Effect, or may
reasonably be expected to have a Material Adverse Effect, upon
Buyer.
(r) Compliance with Laws. Except as otherwise set forth in
Schedule 2.04(r), or as otherwise disclosed in the Disclosure
Documents, Buyer has complied and is in compliance in all material
respects with all applicable foreign, federal, state, and local laws,
statutes, licensing requirements, rules, and regulations, and judicial
or administrative decisions where the failure to comply could have a
Material Adverse Effect on Buyer. There is no order issued,
investigation, or proceeding pending or notice served on Buyer or, to
Buyer's Knowledge, threatened, with respect to any violation of any
law, ordinance, order, writ, decree, rule, or regulation issued by any
federal, state, local, or foreign court or governmental agency or
instrumentality.
(s) Undisclosed Relationships. Except as disclosed in the Form
10KSB/A filed on October 3, 2003, no relationship, direct or indirect,
exists between or among the Buyer on the one hand, and the directors,
officers, shareholders, customers or suppliers of the Buyer on the
other hand.
(t) Taxes. Each of the Buyer has filed all necessary federal,
state and foreign income and franchise tax returns and has paid all
taxes required to be paid by any of them as reflected on such returns,
and, if due and payable, any related or similar assessment, fine or
penalty levied against any of them, except where failure to pay would
not result in a Material Adverse Change. The Buyer has made adequate
charges, accruals and reserves, if any, in respect of all federal,
state and foreign income and franchise taxes for all periods as to
which the tax liability of the Buyer or any of its consolidated
subsidiaries has not been finally determined, except as would not
result in a Material Adverse Change
(u) Insurance. The Buyer is insured by recognized, financially
sound institutions with policies in such amounts and with such
deductibles and covering such risks as are generally deemed adequate
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Asset Purchase Agreement
and customary for its businesses including, but not limited to,
policies covering real and personal property owned or leased by the
Buyer against theft, damage, destruction, and acts of vandalism.
(v) Employment Law and ERISA. To its Knowledge, the Buyer has
not violated any safety or similar law applicable to its business, nor
any federal or state law relating to discrimination in the hiring,
promotion or pay of employees nor any applicable federal or state wages
and hours laws, except for violations that, individually or in the
aggregate, would not result in a Material Adverse Change. The Buyer is
in compliance in all material respects with all presently applicable
provisions of ERISA. No "reportable event" (as defined in ERISA) has
occurred with respect to any "pension plan" (as defined in ERISA). The
Buyer has not incurred and does not expect to incur liability under (i)
Title IV of ERISA with respect to termination of, or withdrawal from,
any "pension plan" or (ii) Sections 412 or 4971 of the Code. Each
"pension plan" for which the Buyer would have any liability that is
intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and to the Knowledge of the Buyer,
nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(w) FCC Regulatory Compliance. All licenses and authorizations
issued by the FCC and state authorities governing telecommunications
matters applicable to and required for the operation of the business of
the Buyer are in full force and effect. All fees due and payable to
governmental authorities pursuant to the rules governing those licenses
have been paid, except where the failure to pay any such fees would not
result in a Material Adverse Change. No event has occurred with respect
to those licenses held by the Buyer which, with the giving of notice or
the lapse of time or both, would constitute grounds for revocation of
any licenses. To Buyer's Knowledge, the Buyer is in compliance in all
material respects with the terms of its FCC licenses, as applicable,
and there is no condition, event or occurrence existing, nor is there
any proceeding being conducted of which the Buyer has received notice,
nor, to the Knowledge of the Buyer, is there any proceeding threatened
by any governmental authority which would cause the termination,
suspension, cancellation or non-renewal of any of its FCC licenses, or
the imposition of any penalty or fine (that is material to the Buyer
taken as a whole) by any governmental authority. No registrations,
filings, applications or notices to, transfers, consents, approvals,
audits, qualifications, waivers or other action of any kind is required
from the FCC or any state authorities governing the telecommunications
activities operated by the Buyer in order to avoid the loss of any such
license, or any asset, property or right pursuant to the terms thereof,
or the violation or breach of any applicable law thereto, by virtue of
the execution, delivery and performance of this Agreement as
contemplated herein, except where the failure to have taken any such
action or to have made such filing or notice would not result in a
Material Adverse Change.
(x) Complete Disclosure. No representation or warranty made by
Buyer in this Agreement, nor any financial statements prepared and
furnished or to be prepared and furnished by Buyer or its
representatives to Seller pursuant hereto or in connection with the
transactions contemplated hereby, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material
fact necessary to make the statements or facts contained herein or
therein not misleading.
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ARTICLE III
COVENANTS
3.01 Seller's and Subsidiary's Covenants. Seller and the Subsidiary
hereby jointly and severally covenant and agree that:
(a) Conduct of Business. From the date hereof until the First
Closing, Seller shall, and from the date hereof until the Final
Closing, Subsidiary shall:
(i) maintain and preserve the Seller's Assets and the
220 MHz Licenses and conduct the business of the Seller and
the Subsidiary in a reasonable and prudent manner, in the
ordinary and usual course, and consistent with its past
business practice and maintaining insurance coverage for the
full replacement value of the Seller's Assets (to the extent
insurable);
(ii) use commercially reasonable efforts to secure
assignments to Buyer of all agreements identified on Schedule
1.01, including all required consents to such assignments;
(iii) to the extent any employment laws apply to the
transactions described herein, cooperate in good faith with
Buyer in complying with all such laws.
(iv) to the extent Buyer may require audited
financial statements for such periods in order to meet any
requirements of the Securities Act, the Exchange Act or the
rules and regulations of the SEC, Seller will cooperate with
Buyer in obtaining such audited financial statements, at
Buyer's sole cost and expense.
(b) Negative Covenants. From the date hereof until the First
Closing, Seller shall not, and from the date hereof until the Final
Closing, Subsidiary shall not, without the Buyer's written consent,
(i) modify any of the leases or other agreements
listed on Schedule 1.01(a) hereto, except as may be approved
by Buyer in its reasonable discretion in advance and in
writing, or take any action which would constitute a material
breach of the terms of any such lease or other agreement in
any material respect;
(ii) except in the ordinary course of Seller's
business, sell, transfer, dispose of, or create or suffer any
Lien on any of the Seller's Assets, except for the Fidelity
Lien;
(iii) sell, exchange, or otherwise dispose of, enter
into any agreement to sell, exchange or other dispose of,
mortgage, pledge or otherwise encumber, or grant any option or
other right with respect to, the FCC Licenses.
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(iv) take any other action which would have a
Material Adverse Effect on Seller or Subsidiary or any of the
Purchased Assets, including, without limitation, the value or
condition thereof;
(v) enter into any lease or other agreement,
arrangement or understanding with respect to the Purchased
Assets which is not necessary in the ordinary course of
Seller's or Subsidiary's business other than the leases and
agreements already entered into.
(c) Access and Information. To the extent Buyer reasonably
deems necessary for purposes of this Agreement and the transactions
described herein, Seller and Subsidiary shall permit Buyer, its
counsel, accountants and other representatives to have full access,
throughout the period prior to the First Closing, and during Seller's
normal business hours, to Seller, specifically including without
limitation, the equipment, properties, and books and records of Seller
relating to the Seller's Assets and the operations of Seller's
business, the books and records of Subsidiary relating to the 220 MHz
Licenses, and will cause to be furnished to Buyer and its
representatives during such period all information concerning the
Seller's Assets as Buyer or its representatives may reasonably request,
including without limitation all equipment manuals and maintenance
records associated with the Seller's Assets. All books and records of
Seller and Subsidiary provided to the Buyer by the Seller for review,
including all copies thereof, are all true, correct and complete in all
material respects, and fairly reflect a true record of each of Seller
and Subsidiary and their respective business and operations, including
but not limited to the Purchased Assets through the date hereof.
(d) No Shop. Seller agrees that, from the date hereof until
Final Closing or termination of this Agreement pursuant to Article VII
hereof, neither it nor any of its agents will take any action, directly
or indirectly, to solicit indications of interest in, or offers for,
the sale of any of the Purchased Assets, from anyone other than Buyer.
Seller agrees promptly to inform Buyer of any offers or solicitations
to purchase any of the Purchase Assets, including the terms thereof,
made by any third party.
(e) Confidentiality. The Parties hereto are bound by the terms
of the Reciprocal Non-Disclosure Agreement, dated April 1, 2003 (the
"NDA"). Whether or not the transactions described herein are
consummated, to the extent not inconsistent with the terms of the NDA,
Seller agrees to use its best efforts to keep the existence and terms
of this Agreement confidential, including but not limited to the nature
and amount of the consideration, and any and all information with
respect to the Buyer; provided, however, that each Party may disclose
such information to its lawyers, accountants, and other
representatives. Notwithstanding the foregoing, Seller may disclose
this Agreement or any part hereof to the FCC or any third party if
required to do so by law or contractual obligation; however, in such
case, Seller shall, prior to such disclosure, (x) notify Buyer as to
the identity of the Party to whom Seller intends to make the
disclosure, and (y) redact all references to Buyer in the Agreement.
(f) Agreement to Pay Creditors. Seller agrees to use the
$300,000.00 cash portion of the Purchase Price (provided in Section
1.04(a)) to pay all of the debts and obligations of the Seller that are
due and payable as of the First Closing Date and/or otherwise.
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(g) Consolidated Tax Return. For the tax year 2003, Seller and
Subsidiary agree to file consolidated Federal and state income tax
returns.
(h) Subsidiary's Covenants. Seller agrees to cause Subsidiary
to fully and timely comply with Subsidiary's covenants made herein.
(i) Further Assurances. Seller and Subsidiary agree, without
further consideration, to execute and deliver such other instruments of
transfer and take such other action as Buyer may reasonably request in
order to put Buyer in possession of, and to vest in Buyer, good, valid,
and unencumbered title to the Purchased Assets in accordance with this
Agreement and to consummate the transactions contemplated hereby.
3.02 Covenants of Buyer.
(a) Buyer agrees to use its best efforts to timely satisfy the
construction obligations imposed by Sections 90.767(a)(1) and
90.769(a)(1) of the FCC Rules as they apply to each of the 220 MHz
Licenses, including any extensions relating thereto (the "Buildout
Requirements"). On or before the Final Closing Date and not less than
once each calendar month thereafter Buyer shall prepare and deliver to
Seller a report (along with verifiable documentation) (the "Buildout
Report") demonstrating Buyer's efforts to date in attempting timely to
satisfy the Buildout Requirements for each of the 220 MHz Licenses. The
Buildout Report shall be prepared in the form and substance reasonably
satisfactory to the Seller. Upon achieving full construction and filing
with the FCC as to all of the 220 MHz Licenses, Buyer shall certify
such full compliance in writing to the Seller.
(b) Access and Information. To the extent Seller reasonably
deems necessary for purposes of this Agreement and the transactions
described herein, Buyer shall permit Seller, its counsel, accountants
and other representatives to have full access, throughout the period
prior to the First Closing, and during Buyer's normal business hours,
to Buyer's books and records relating to the operations of Buyer's
business. All books and records of Buyer provided to the Seller for
review, including all copies thereof, are all true, correct and
complete in all material respects, and fairly reflect a true record of
Buyer and its business and operations.
(c) Seller's Employees. As of November 1, 2003 Buyer has
offered to employ certain of Seller's employees, and Buyer has agreed
to and shall (i) assume all obligations to any of Seller's employees
who is employed by the Buyer prior to the Final Closing for any accrued
vacation or sick leave for which such employees have become eligible
during his or her employment with Seller with the exception of Xxx
Xxxxx and Xxxx Xxxxx, and (ii) offer each such employee a plan for
employee health insurance benefits on the same terms and conditions as
may be offered from time to time by Buyer, in its sole and absolute
discretion, and subject to change, to Buyer's employees (which health
insurance benefits and the terms and conditions thereof, it is
acknowledged by Seller, may be materially different that what was being
offered by Seller to its employees), and (iii) any such person will
also be eligible to participate in other benefits, if any, on the same
terms and conditions as which Buyer may, from time to time, in its sole
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discretion offer to Buyer's employees, all of which benefits, including
health insurance benefits, and the terms and conditions thereof, being
subject to change in Buyer's sole and absolute discretion.
(d) Distribution of Shares on Liquidation of Seller. Buyer
hereby acknowledges that Seller may liquidate and distribute the
Shares, the Warrant and/or the Warrant Shares to its shareholders as
soon as it is legally able to do so. Buyer covenants and agrees to
cooperate fully with Seller in taking such actions, including the
issuance of new certificates for the Shares, the division of the rights
represented by the Warrant into multiple warrants, and the registration
of such certificates on its books, as Seller may reasonably request in
order to accommodate such liquidation, subject to the terms and
conditions of Section 2.02(u)(2).
3.03 Covenants of All Parties. All of the Parties hereto covenant and
agree that:
(a) Assignment Application. Promptly following the execution
of this Agreement, if not previously filed, the Parties hereto agree to
promptly prepare and file with the FCC their respective portions of an
application (the "Assignment Application") seeking the consent of the
FCC to transfer the 220 MHz Licenses and the ownership thereof from
Subsidiary Buyer Sub. Buyer shall be responsible for paying any and all
filing fees associated with the Assignment Application. The Parties
agree to cooperate in the prosecution of the Assignment Application,
including to the extent commercially reasonable, opposing any petitions
or other filings that challenge the qualifications of either Party to
the transaction to hold any FCC licenses. Each Party shall notify the
other in the event it receives or desires to make any communication
from or to the FCC concerning the Assignment Application.
(b) Disclosure to Parties. If any of the Parties should become
aware, prior to the Final Closing, that any of its representations,
warranties or covenants is inaccurate or incapable of being performed,
such Party shall promptly give written notice of such inaccuracy or
incapability to the other Party; provided, however, that nothing
contained in this Section 3.03(b) shall relieve the Party bound by such
representation, warranty or covenant from complying with such
representation, warranty, or covenant.
(c) No Hindrance. Each of the Parties hereto will take all
commercially reasonable actions necessary to satisfy the conditions to
closing set forth in Article IV, and no Party shall take any action
than can reasonably be expected to hinder to prevent the consummation
of the transactions contemplated herein.
(d) Disclosure of Agreement by Buyer. Seller and Subsidiary
acknowledge and agree that following the Final Closing, Buyer will
publicly disclose the existence of this Agreement and its terms and
conditions, and will file a copy of same with the Commission pursuant
to its reporting obligations under the Securities Exchange Act of 1934.
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ARTICLE IV
CLOSING CONDITIONS
4.01 Conditions to Obligations of Buyer.
(a) First Closing. This Agreement and the obligations of Buyer
to perform hereunder shall be subject to the satisfaction by each of
Seller and Subsidiary, or waiver in writing by Buyer, of the following
conditions at or prior to the First Closing:
(i) Corporate Authorization. Seller and Subsidiary
shall have each delivered to Buyer certified copies of the
resolution(s) of their respective Board of Directors
authorizing the execution, delivery and performance of this
Agreement by Seller and Subsidiary, respectively.
(ii) Representations, Warranties, Covenants and
Obligations. All representations and warranties of Seller and
Subsidiary contained in this Agreement shall, except as
expressly provided herein, be true and correct in all material
respects as of the date hereof and until and through (i) the
First Closing Date for the Seller; and (ii) the Final Closing
Date for the Subsidiary. Seller and Subsidiary shall have each
performed and complied in all material respects with all of
their respective covenants and obligations under this
Agreement.
(iii) Third-Party Consents. Seller and Subsidiary
shall have each obtained and delivered to Buyer all necessary
consents and approvals of third parties or governmental
authorities to permit Buyer to acquire the Purchased Assets
without the addition of any condition which would have a
Material Adverse Effect on any of the Purchased Assets.
(iv) No Material Adverse Change. There shall not have
been any Material Adverse Change in any of the Purchased
Assets since the date of this Agreement.
(v) Deliveries. Seller and Subsidiary shall have each
delivered to Buyer each of the documents and other items
specified in Section 5.01 hereof for delivery at the First
Closing.
(vi) Liens and Indebtedness. All Liens and
indebtedness with respect to the Purchased Assets, except for
the Fidelity Lien, shall have been released to Buyer's
satisfaction.
(b) Notwithstanding the foregoing, the Buyer shall not be
obligated to purchase the 220 MHz Licenses or otherwise to perform any
obligations accruing after the First Closing unless the FCC shall have
granted its consent to the assignment of the 220 MHz Licenses from
Subsidiary to Buyer Sub without the addition of any condition which
would have a Material Adverse Effect on the 220 MHz Licenses, and such
grant shall have become a Final Order; provided, however, that if no
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petition to deny the FCC Application has been timely filed, and the
FCC's consent to such assignment without the addition of any condition
which would have a Material Adverse Effect on the 220 MHz Licenses is
granted on or before December 29, 2003, Buyer shall waive the
requirement that the FCC's action become a Final Order, and in such
event, the Final Closing shall occur on the earlier of (a) five
business days after all other conditions to closing have been met or
waived, or (b) December 30, 2003.
4.02 Conditions to Obligations of Seller and Subsidiary.
(a) This Agreement and the obligations of Seller and
Subsidiary to perform hereunder shall be subject to the satisfaction by
Buyer, or waiver in writing by Seller and Subsidiary, of the following
conditions at or prior to the First Closing:
(i) Representations, Warranties, Covenants and
Obligations. All representations and warranties of Buyer
contained in this Agreement shall, except as expressly
provided herein, be true and correct as of the date hereof,
and until and through the Final Closing Date. Buyer shall have
performed and complied with all of its covenants and
obligations under this Agreement.
(ii) Deliveries. Buyer shall have delivered to Seller
or Subsidiary, as the case may be, each of the documents
specified in Section 5.02 hereof.
(iii) No Material Adverse Change. There shall not
have been any Material Adverse Change in the operations,
assets or financial condition of the Buyer.
(b) Notwithstanding the foregoing, the Subsidiary shall not be
obligated to sell the 220 MHz Licenses or otherwise to perform any
obligations accruing after the First Closing unless the FCC shall have
granted its consent to the assignment of the 220 MHz Licenses from
Subsidiary to Buyer Sub.
ARTICLE V
DELIVERIES
The following deliveries shall be made by the respective Parties at the
applicable Closing:
5.01 Seller's and Subsidiary's Deliveries. Each of Seller and
Subsidiary shall deliver or cause to be delivered to Buyer each of the following
items at or prior to the First Closing, unless otherwise specified below:
(a) all of the Purchased Assets identified on Schedule 1.01(a)
hereof, provided, however, that if the FCC has not consented to the
assignment of the 220 MHz Licenses from Subsidiary to a wholly-owned
subsidiary of Buyer by the First Closing Date, then the 220 MHz
Licenses shall not be delivered until the Final Closing;
(b) one or more bills of sale conveying to Buyer all of the
Purchased Assets to be acquired hereunder, free and clear of any and
all Liens of any nature, except for the Fidelity Lien;
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(c) evidence satisfactory to Buyer of the assignment of all
leases and other agreements identified on Schedule 1.01(a) hereto
(d) the certified resolutions described in Section 4.01(a)
hereof; and
(e) copies of all equipment manuals and material maintenance
records associated with the Purchased Assets that are in the possession
of the Seller at the First Closing; and
(f) such other documents, assignments, bills of sale,
instruments of conveyance, and certificates of officers as reasonably
may be required by Buyer to consummate this Agreement and the
transactions contemplated herein.
5.02 Buyer's Delivery. Buyer shall deliver to Seller at the First
Closing:
(a) the Purchase Price as provided in Section 1.04 hereof,
provided, however, that if the FCC has not consented to the assignment
of the 220 MHz Licenses from Subsidiary to Buyer Sub by the First
Closing Date:
(i) the Shares and Warrant shall not be delivered at
the First Closing to the Seller but shall instead be deposited
in an escrow account with counsel for the Buyer ("Buyer's
Counsel") pursuant to an escrow agreement, substantially in
the form attached hereto as Exhibit E by and between the
Seller, Buyer and Buyer's Counsel (the "Escrow Agreement") to
be executed by all of such Parties thereto at the First
Closing. The Shares and Warrant shall only be delivered by
Buyer's Counsel to the Seller, if and when Buyer's Counsel is
advised in writing in accordance with the forms of instruction
attached to the Escrow Agreement to release and deliver the
Shares and Warrant. Notwithstanding the delivery of the Shares
and the Warrant to the Seller or to Buyer's counsel as escrow
agent, as the case may be, at the First Closing, Seller shall
not have any voting or transfer rights pertaining to the
Shares, Warrants, or Warrant Shares until such time as a Final
Closing has occurred.
(ii) Subsidiary and Buyer Sub shall enter into a
management agreement, substantially in the form attached
hereto as Exhibit F relating to the 220 MHz Licenses, which
management agreement shall provide for the management of the
Subsidiary's operations by the Buyer and provide for its
expiration upon the Final Closing.
(b) a security and pledge agreement, substantially in the form
attached hereto as Exhibit G to be entered into by the Seller and Buyer
(the "Security and Pledge Agreement") at the First Closing and
providing the Seller with a first in priority security interest in all
of the issued and outstanding shares of such wholly-owned subsidiary of
Buyer in order to secure the Buyer's obligations under the
$2,900,000.00 Promissory Note and the $400,000.00 Promissory Note;
(c) a non-exclusive, non-cancellable (provided neither Seller
nor Subsidiary is in default hereunder) license agreement,
substantially in the form attached hereto as Exhibit H, to be entered
into by the Seller and Buyer (the "License Agreement") at the First
Closing providing the Seller the right to use the technology comprising
a portion of the Purchased Assets being transferred to the Buyer solely
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in the Seller's operations in Mexico, Central America and Latin
America, subject to further expanded use if and upon the happening of
certain events as set forth therein;
(d) a Registration Rights Agreement substantially in the form
attached hereto as Exhibit D; and
(e) the Buildout Report provided in Section 3.02(a).
5.03 Deliveries at the Final Closing.
At the Final Closing, Subsidiary shall deliver to the wholly owned
subsidiary of Buyer one or more bills of sale conveying to Buyer all of the
Subsidiary's rights in the 220 MHz Licenses.
ARTICLE VI
INDEMNIFICATION
6.01 Indemnification by Seller. Seller agrees to defend, indemnify and
hold Buyer, any subsidiary or affiliate thereof, and its/their respective
successors, officers, directors, controlling persons, employees, consultants and
agents (collectively, the "Indemnified Buyer Group") harmless from and against
any and all Losses payable resulting from, arising out of, or incurred as a
result of: (a) the falsity of any representation, warranty or covenant made by
Seller herein or in accordance herewith; (b) the breach of any representation,
warranty, covenant, agreement or obligation made by Seller herein or in
accordance herewith; (c) any and all claims, liabilities and obligations of any
nature whatsoever arising out of the business and operation of the Seller and/or
the Subsidiary prior to the First Closing Date; or (d) any claim, action and/or
proceeding threatened and/or brought by any non-voting and/or non-consenting
and/or dissenting shareholder of Seller against any of the Indemnified Buyer
Group relating to or arising out any of the transactions contemplated hereby;
provided, however, that any Losses incurred by the Indemnified Buyer group that
arise from the Transferred Technology shall only be indemnified as provided in
Section 6.07 of this Agreement.
6.02 Indemnification by Subsidiary. Subsidiary agrees to defend,
indemnify and hold the Indemnified Buyer Group harmless from and against any and
all Losses payable to or for the benefit of, or asserted by, any Party,
resulting from, arising out of, or incurred as a result of (a) the falsity of
any representation, warranty or covenant made by Subsidiary herein or in
accordance herewith, (b) the breach of any representation, warranty, covenant,
agreement or obligation made by Subsidiary herein or in accordance herewith, or
(c) any and all claims, liabilities and obligations of any nature whatsoever
relating to the business and operation of the Subsidiary prior to the Final
Closing Date; provided, however, that any Losses incurred by the Indemnified
Buyer group that arise from the Transferred Technology shall only be indemnified
as provided in Section 6.07 of this Agreement.
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6.03 Indemnification by Buyer. Buyer agrees to defend, indemnify and
hold each of Seller and Subsidiary, any subsidiary or affiliate thereof, and its
respective successors, officers, directors and controlling persons, employees,
consultants and agents, harmless from and against any and all Losses payable to
or for the benefit of, or asserted by, any Party, resulting from, arising out
of, or incurred as a result of (a) the falsity of any representation, warranty
or covenant made by Buyer herein or in accordance herewith, or (b) the breach of
any representation, warranty, covenant, agreement or obligation made by Buyer
herein or in accordance herewith; or (c) any and all claims, liabilities and
obligations of any nature whatsoever arising out of the business and operation
of the Buyer after the First Closing Date, including those arising out of
Buyer's use or operation of the Seller's Assets on or after November 1, 2003.
6.04 Survival of Representations, Warranties, Covenants, Agreements and
Indemnity Provisions. The representations, warranties, covenants, agreements and
indemnity provisions herein made by each of the Seller and Subsidiary, on the
one hand, and Buyer, on the other hand, shall survive the First Closing and
shall be fully enforceable at law or in equity against such other Party and its
permitted successors and assigns by the other Party and its permitted successors
and assigns through and including one year after the First Closing, except that
representations and warranties relating to the 220 MHz Licenses shall survive
until the date which is six months after the Final Closing. Any investigation at
any time made by or on behalf of (or any disclosure to) any Party hereto shall
not diminish in any respect whatsoever its right to rely on the representations,
warranties covenants and agreements of the other Party/Parties hereto.
6.05 Notice of Claims. Buyer, Seller and Subsidiary each agree to give
prompt written notice to the other of any claim against the Party giving notice
which might give rise to a claim by it against the other Party/Parties hereto
based upon the indemnity provisions contained herein, stating the nature and
basis of the claim and the actual or estimated amount thereof. In the event that
any action, suit or proceeding is brought against Seller, Subsidiary or any
member of the Indemnified Buyer Group with respect to which any Party/Parties
hereto may have liability under the indemnification provisions contained herein,
the indemnifying Party/Parties shall have the right, at its sole cost and
expense, to defend such action in the name or on behalf of the indemnified
Party/Parties and, in connection with any such action, suit or proceeding, the
Parties hereto agree to render to each other such assistance as may reasonably
be required in order to ensure the proper and adequate defense of any such
action, suit or proceeding. None of the Parties hereto shall make any settlement
of any claim which might give rise to liability of the other Party/Parties under
the indemnification provisions contained herein without the written consent of
such other Party/Parties, which consent such other Party/Parties covenants shall
not be unreasonably withheld.
6.06 Limitation of Liability. Notwithstanding anything herein to the
contrary, Seller's liability under this Article VI shall be limited to Fifteen
Million Four Hundred Thousand Dollars ($15,400,000), which payment may be made,
at Seller's option, by the return of all or any number of the Shares issued to
the Seller (valued at $2.50 per share) and the $2,900,000 Promissory Note
(valued at its principal value), or in cash or cash equivalent, any combination
of the foregoing adding to the liability claimed.
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6.07 Intellectual Property Claims.
(a) Indemnification. Seller agrees to defend, and pay the
costs of defense (including without limitation court costs and
reasonable attorneys' fees), and pay the amount of any Losses against
Buyer, its affiliates and/or its or their respective officers,
directors, employees, and agents, resulting from third party actions,
causes of action, claims and demands to the extent based on an
allegation that Seller's use of the Transferred Technology in
connection with the Purchased Assets prior to the First Closing (1)
infringes any United States patent or copyright that was issued and
effective as of the date of this Agreement, or (2) incorporates any
trade secret misappropriated by Seller (as protected under the trade
secret laws of the United States ); provided, however, that the
foregoing indemnification obligation shall apply only if (i) the Seller
is promptly notified in writing of such claim; (ii) the Seller shall
have sole control of the defense or settlement thereof; (iii) the
indemnified Party shall furnish to the Seller on request all reasonable
information and assistance available to the indemnified Party for such
defense at the Seller's expense; and (iv) the indemnified Party shall
not admit any such claim and/or make any payments with respect thereto
without the prior written consent of the Seller.
(b) Exclusion of Damages/Limitation on Liabilities. Seller's
entire liability for Losses which are indemnified under this Section
6.07 shall not exceed One Hundred Thousand Dollars ($100,000.00). IN NO
EVENT SHALL SELLER BE LIABLE TO BUYER OR TO ANY OTHER PARTY FOR ANY
INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL, PUNITIVE OR OTHER DAMAGES
(INCLUDING WITHOUT LIMITATION DAMAGES FOR LOSS OF BUSINESS PROFITS,
BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION, OR OTHER PECUNIARY
LOSS) ARISING OUT OF OR RELATED TO THE TRANSFERRED TECHNOLOGY, EVEN IF
SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(c) NTP Agreement. Buyer acknowledges that the rights it
acquires under the assignment of the NTP Agreement, if any, may be
limited, and Buyer hereby waives any and all claims of any kind against
Seller relating to any alleged breach of this Assignment or Buyer's
inability to act as the successor in interest to Seller under the NTP
Agreement.
ARTICLE VII
TERMINATION
7.01 Termination Not Due to Breach. This Agreement may be terminated
(a) at any time by mutual written consent of Seller, Subsidiary, and Buyer; (b)
after one year from the date of this Agreement, by Buyer in the event that any
condition to the obligation of Buyer to close the transaction, has not occurred
and such condition to Closing has not been cured nor satisfied within twenty
(20) days after written notice thereof from Buyer to Seller and Subsidiary or by
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Seller or the Subsidiary, in the event that any condition to the obligation of
Seller or Subsidiary to close the transaction, has not occurred and such
condition to Closing has not been cured nor satisfied within twenty (20) days
after written notice thereof from Seller and Subsidiary to Buyer, unless, in
either instance, the failure to close is the result of a breach of the Agreement
by the terminating Party. If this Agreement is terminated pursuant to this
Section 7.01, (i) neither of the Parties hereto, nor any of their agents or
successors in interest, shall have any liability or further obligation to the
other Parties or any of its agents or successors in interest pursuant to this
Agreement; and (ii) all FCC filings, applications and other submissions relating
to the assignment of the 220 MHz Licenses from Subsidiary to Buyer Sub shall (to
the extent practicable) be withdrawn.
7.02 Termination Due to Breach by Buyer. In the event that Buyer fails
to comply with any material term or obligation or breaches any representation,
warranty or covenant contained in this Agreement in any material respect and
does not cure such failure within twenty (20) days of receiving written notice
from Seller , then Seller may at its option, by written notice to Buyer,
terminate this Agreement.
7.03 Termination Due to Breach by Seller and/or Subsidiary. In the
event that Seller and/or Subsidiary fails to comply with any material term or
obligation or breaches any representation, warranty or covenant contained in
this Agreement in any material respect and does not cure such failure within
twenty (20) days of receiving written notice thereof, then Buyer may at its
option by written notice to Seller and Subsidiary terminate this Agreement.
7.04 Effect of Termination. Termination of the Agreement pursuant to
any of the provisions of this Article VII shall not relieve any Party of any
liability or obligation which has accrued or been created prior to the date such
termination becomes effective.
ARTICLE VIII
DEFINITIONS
As used in this Agreement, the following terms which are not elsewhere
defined herein have the meanings set forth below:
"Communications Act" shall me the Communications Act of 1934, as
amended of 1996;
"Disclosure Documents" shall mean the following documents filed by
Buyer with the Commission: Buyer's Form 10-KSB and Form 10-KSB/A for the fiscal
year ended June 30, 2003; Buyer's Forms 10-QSB for the quarters ended September
30, 2002, December 31, 2002, and March 31, 2003; and Buyer's Forms 8-K from the
period July 1, 2002 through September 30, 2003.
"Exchange Act" shall mean the Securities Exchange Act of 1934
"FCC" shall mean the Federal Communications Commission or any successor
agency.
"FCC Rules" shall mean the rules, regulations and policies promulgated
by the FCC under the Communications Act.
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Asset Purchase Agreement
"Final Order" shall mean an action by the FCC as to which (a) no
request for stay by the FCC is pending, no such stay is in effect, and the
deadline for filing a request for any such stay has passed; (b) no appeal,
petition for rehearing or reconsideration, or application for review is pending
before the FCC and the deadline for filing any such appeal, petition or
application has passed; (c) the FCC has not initiated reconsideration or review
on its own motion and the time in which such reconsideration or review is
permitted has passed; and (d) no appeal to a court, or request for stay by a
court, of the FCC's action is pending or in effect, and the deadline for filing
any such appeal or request has passed.
"Knowledge" shall mean, as to any Party, the actual present knowledge
of the officers or directors of such Party.
"Liens" shall mean all liens, liabilities, claims, mortgages,
obligations, restrictions, or other encumbrances of any kind or nature
whatsoever, except encumbrances that are minor and that do not in the aggregate
materially affect the value, marketability or utility of the Purchased Assets.
"Losses" shall mean all losses, liabilities, damages, costs or
expenses, including reasonable attorneys' fees, penalties, and interest.
"Material Adverse Effect" shall mean an effect on the assets, business,
operations, financial condition or results of operations of a Party, that, taken
as a whole, is materially adverse to such Party, but shall specifically exclude
an effect resulting from (i) general economic conditions applicable to the SMR
industry, (ii) general conditions in the markets in which the applicable SMR
Stations operate, or (iii) circumstances that are not likely to recur and which
have been substantially remedied or can be substantially remedied without
substantial cost or delay.
"Materially Adverse Change" shall mean a change in the assets,
business, operations, financial condition or results of operations of a Party,
that, taken as a whole, is materially adverse to such Party, but shall
specifically exclude a change resulting from (i) general economic conditions
applicable to the SMR industry, (ii) general conditions in the markets in which
the applicable SMR Stations operate, or (iii) circumstances that are not likely
to recur and which have been substantially remedied or can be substantially
remedied without substantial cost or delay.
"SEC" shall mean the United States Securities and Exchange Commission,
or any successor agency.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Transferred Technology" shall mean that certain know-how, intellectual
property (including all patents, copyrights, trademarks and trade secrets) and
other technology for the manufacture, operation and use of radios operating in
the 220 MHz band for telemetry and other data transfer applications which have
been developed by or on behalf of Seller, including but not limited to those
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Asset Purchase Agreement
items identified in Section 7 of Schedule 1.01(a) and also including, to the
extent Seller has any interest therein, and only to that extent, the NTP
Agreement.
ARTICLE IX
GENERAL PROVISIONS
9.01 Expenses. Except as otherwise expressly provided herein, each
Party to this Agreement shall pay its own expenses (including without limitation
the fees and expenses of its agents, representatives, counsel, and accountants)
incidental to the negotiation, drafting, and performance of this Agreement
including, without limitation, the preparation of the applicable sections of the
FCC Assignment Application, but Buyer shall pay any FCC filing fees associated
with the filing of the FCC Assignment Application. In the event any
Party/Parties shall bring an action in connection with the performance, breach
or interpretation of this Agreement, the prevailing Party/Parties in any such
action shall be entitled to recover from the losing Party/Parties all reasonable
costs and expenses of such action, including attorneys' fees. Buyer shall pay
all applicable documentary stamp, sales and transfer taxes, if any.
9.02 Bulk Transfer Laws. Buyer hereby waives compliance by Seller and
Subsidiary with the laws of any jurisdiction relating to bulk transfers which
may be applicable in connection with the transfer of the Purchased Assets to
Buyer.
9.03 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of Seller, Subsidiary, Buyer and their respective
successors and permitted assigns, but shall not be assignable or delegable in
whole or in part by Seller, Subsidiary, or Buyer.
9.04 Waiver. No provision of this Agreement shall be deemed waived by
course of conduct, including the act of closing, unless such waiver is made in a
writing signed by all Parties stating that it is intended specifically to modify
this Agreement, nor shall any course of conduct operate or be construed as a
waiver of any subsequent breach of this Agreement, whether of a similar or
dissimilar nature.
9.05 Entire Agreement. This Agreement (together with the Schedules
hereto) supersedes any other agreement, whether written or oral, that may have
been made or entered into by Seller, Subsidiary and Buyer (or by any director,
officer, agent, or other representative of such Parties) relating to the matters
contemplated hereby, with the exception of the NDA and the Letter Agreement.
This Agreement (together with the Schedules hereto, the $2,900,000.00 Note, the
$400,000.00 Note, the Security and Pledge Agreement, the License Agreement, the
Escrow Agreement, the Management Agreement, the Shares, the Warrant, and the
various consents and assignments, and other documentation relating hereto)
constitute the entire agreement by and among the Parties and there are no other
agreements or commitments except as expressly set forth herein.
9.06 Further Assurances. Each of the Parties hereto agrees to execute
all documents and instruments and to take or to cause to be taken all actions
which are necessary or appropriate to complete the transactions contemplated by
this Agreement.
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9.07 Risk of Loss. Each of the Parties hereto hereby acknowledges and
agrees that the risk of loss, damage or destruction of the Seller's Assets shall
be solely upon the Seller until the First Closing, and upon the First Closing
shall pass to Buyer. In the event of such loss, damage or destruction prior to
the First Closing, Seller shall promptly restore, replace or repair the damaged
property to its previous condition at its/their own cost, and Seller shall have
the right to use all insurance proceeds to effect such restoration, replacement
or repair and to retain all excess proceeds.
9.08 Notices. All notices, demands, requests, and other communications
hereunder shall be in writing and shall be deemed to have been duly given and
shall be effective upon receipt if delivered by hand, or sent by certified or
registered United States mail, postage prepaid and return receipt requested, or
by prepaid overnight express service, or via telecopier to the Parties'
respective telecopier numbers set forth below (upon the sending Party's receipt
of a printed telecopier confirmation of the recipient's receipt of the
telecopied communication). Notices shall be sent to the Parties at the following
addresses (or at such other address or telecopier number for a Party as shall be
specified by like notice; provided that such notice shall be effective only upon
receipt thereof as provided for above):
(a) If to Seller:
Sophia Communications, Inc.
0000 Xxxxxxx Xxxx
Xxxxx 0000
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Telecopier No. (000) 000-0000
with a copy to:
Xxxxxxxxx Xxxxxx Xxxxxx, LLP
0000 X Xxxxxx, XX, Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxxx Xxxxxxx, Esq.
Telecopier No. (000) 000-0000
(b) If to Subsidiary (prior to the Final Closing):
Sophia Licensee, Inc. c/o
Sophia Communications, Inc.
0000 Xxxxxxx Xxxx
Xxxxx 0000
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Telecopier No. (000) 000-0000
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with a copy to:
Xxxxxxxxx Xxxxxx Xxxxxx, LLP
0000 X Xxxxxx, XX, Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxxx Xxxxxxx, Esq.
Telecopier No. (000) 000-0000
(c) If to Buyer:
BizCom U.S.A., Inc.
0000 XX 00 Xxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: President
Telecopier No. (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxx Xxxxxxxx, Esq.
Telecopier No. (000) 000-0000
9.09 Specific Performance. The Parties agree and acknowledge that, due
to the unique nature of the subject matter of this Agreement, either Party would
be irreparably damaged in the event of a breach of this Agreement, which damage
could not be adequately compensated except by specific performance of this
Agreement. In the event that any Party refuses to perform, or otherwise
breaches, this Agreement, it is agreed that the non-breaching Party shall have,
in addition to any other rights available to it, the right to obtain temporary
or permanent injunctive relief, including but not limited to, specific
performance of any and all obligations without any showing of actual damage or
inadequacy of legal remedy.
9.10 Amendments, Supplements, Etc. This Agreement may be amended or
modified only by a written instrument executed by all of the Parties hereto
which specifically states that it is intended to amend or modify this Agreement.
9.11 Severability. If, at any time, the FCC, or any other applicable
federal, state, or local governmental authority, or any court or arbitration
tribunal having jurisdiction determines that any provision of this Agreement is
void, invalid or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein, and, in lieu of each such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of this
Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and still be legal, valid and
enforceable and still preserve each Party's benefits and equities hereunder.
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9.12 No Third Party Beneficiaries. Nothing herein, express or implied,
is intended to or shall confer on any person or entity, other than the Parties
hereto and Buyer Sub to which the 220 MHz Licenses are being assigned from
Subsidiary, any rights under or by reason of this Agreement.
9.13 Governing Law. This Agreement and the legal relations between the
Parties hereto shall be governed by and construed solely in accordance with the
substantive laws of the State of Florida, without giving effect to its conflict
or choice of law principles thereof.
9.14 Jurisdiction and Venue; Service of Process; Waiver of Trial by
Jury; Attorneys' Fees. If any dispute or controversy shall arise between any of
the Parties hereto, such dispute or controversy may only be brought for
resolution solely in the federal and/or state courts located in Broward County,
Florida. Each of the Parties hereto hereby consent solely to the jurisdiction
and venue of such courts, and agree that they shall not contest or challenge the
jurisdiction or venue of such courts. Each of the Parties hereto agrees that
service of any process, summons, notice or document, by U.S. registered or
certified mail, to its address set forth in or as provided in Section 8.08
herein shall be effective service of process for any action, suit or proceeding
brought against it in any such court. In recognition of the fact that the issues
which would arise under or relating to this Agreement, are of such a complex
nature that they could not be properly be tried before a jury, each of the
Parties hereto waives trial by jury. The prevailing Party in any action and/or
proceeding shall be entitled to recover its reasonable attorneys' fees and costs
from the other Party/Parties to such action, suit or proceeding.
9.15 Titles and Headings. Titles and headings to sections hereof are
inserted for convenience of reference only, and are not intended to be a part
of, or to affect the meaning or interpretation of, this Agreement.
9.16 Transition. Seller, Subsidiary, and Buyer shall cooperate and take
such action as may be reasonably requested by the other in order to effect the
transactions contemplated herein.
9.17 Execution in Counterparts 9.18 This Agreement may be executed in
one or more counterparts, and a copy of the executed document transmitted to the
other Party via facsimile or email, each of which shall be deemed an original,
but all of which together shall constitute one and the same agreement.
9.19 Rule of Construction that Ambiguities to be Construed Against the
Drafter Not Applicable. As all Parties to this Agreement have been represented
by their respective counsel in connection with this Agreement, the rule of
construction that ambiguities shall be construed against the drafter shall not
be applicable.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
SELLER: SOPHIA COMMUNICATIONS, INC.
By: /s/ Xxxxxxx Xxxxxx
------------------
Xxxxxxx Xxxxxx, Chairman of the Board
SUBSIDIARY: SOPHIA LICENSEE, INC.
By: /s/ Xxxxxxx Xxxxxx
------------------
Xxxxxxx Xxxxxx, Chairman of the Board
BUYER: BIZCOM U.S.A., INC.
By: /s/ Xxxxx Xxxxx
---------------
Hanan "Xxxx" Xxxxx, President
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SCHEDULE 1.01(A)
SELLER'S ASSETS - THE FIRST CLOSING DATE
----------------------------------------
THE ASSETS AND CONTRACTUAL RIGHTS AND OBLIGATIONS TO BE CONVEYED,
TRANSFERRED, ASSIGNED, AND DELIVERED BY SELLER TO BUYER AT THE FIRST CLOSING
(THE "SELLER'S ASSETS") ARE THE FOLLOWING:
1. Equipment, and personal property listed on attached sheets.
2. Inventory listed on attached sheets.
3. Work in Process listed on attached sheets.
4. All designs, drawings, and documents of Seller, except as
provided on Schedule 1.02.
5. Agreements, including but no limited to tower site and office
leases and assignment and consents related thereto, as listed
on Schedule 1.03.
6. All U.S. customers of Seller including those customers listed
on Schedule 1.03.
7. Any and all rights owned by Seller to licenses, trademarks,
patents, copyrights, trade secrets, trade secret rights and
similar intellectual property, as identified below:
A. all designs, drawings, know how and information and
all rights, of whatever nature (including, but not
limited to, patent, trademark, copyright, know how
and trade secrets and rights related thereto), to:
(i) all equipment and personal property set
forth in this Schedule 1.01 (a) of the
Agreement;
(ii) the inventory set forth in this Schedule
1.01(a) of the Agreement;
(iii) the Work in Progress set forth in this
Schedule 1.01(a) of the Agreement;
(iv) all plans, concepts, notebooks, inventions,
products, know how, manufacturing
techniques, work product and papers relative
to any of the above.
B. the trade names CX2 TECHNOLOGIES, XXXXXXXXXX.XXX, and
SOPHIACOMM, and any other trade names used by Seller
and material to the business of Seller, but not the
rights to the corporate name SOPHIA COMMUNICATIONS,
INC., or SOPHIA COMMUNICATIONS;
C. the trademarks SOPHIA, SOPHIA COMMUNICATIONS, and CX2
TECHNOLOGIES, including but not limited to Federal
Trademark Application Serial No. 78/168,512, filed
September 27, 2002 for CX2 TECHNOLOGIES, the
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assignment of which is made in conjunction with an
assignment of the entire assets of the business to
which the xxxx relates. Buyer will be the successor
to the business of Seller to which the xxxx relates;
D. the goodwill associated with the aforementioned trade
names and trademarks, and all trademark
registrations, trademark applications, extensions and
renewals of the same for the marks;
E. the website xxxxxxxxxx.xxx and all content thereon;
F. the domain xxxxxxxxxx.xxx and xx0xxxx.xxx;
G. all advertising, ads, signs, trade show materials and
promotional materials for (i) all equipment and
personal property set forth in this Schedule 1.01(a);
(ii) the inventory set forth in this Schedule
1.01(a); (iii) the Work in Progress set forth in this
Schedule 1.01(a);
H. the manufacturing process, technology and know-how to
produce products in (i) all equipment and personal
property set forth in this Schedule 1.01(a); (ii) the
inventory set forth in this Schedule 1.01(a); (iii)
the Work in Progress set forth in this Schedule
1.01(a);
I. all computer programs, code, operating instructions
and operating manuals developed directly by Seller
for, as well as all information regarding or relating
thereto (i) all equipment and personal property set
forth in this Schedule 1.01(a); (ii) the inventory
set forth in this Schedule 1.01(a); (iii) the Work in
Progress set forth in this Schedule 1.01(a); and
L. U.S. Patent No. 6,567,397, and all currently existing
inventions and improvements thereon, whether subject
to a patent application or not, and all
continuations, extensions, renewals, continuations,
continuations-in-part and divisionals of patent
rights.
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SCHEDULE 1.01(B)
SELLER'S ASSETS - THE FINAL CLOSING DATE
----------------------------------------
THE ASSETS AND CONTRACTUAL RIGHTS AND OBLIGATIONS TO BE CONVEYED,
TRANSFERRED, ASSIGNED, AND DELIVERED BY SUBSIDIARY TO A WHOLLY-OWNED SUBSIDIARY
OF BUYER AT THE FINAL CLOSING (THE "SUBSIDIARY'S ASSETS") ARE THE FOLLOWING:
1. The licenses issued by the Federal Communications Commission
to the Company to operate radio stations under call signs
WPOJ271, WPOJ272, WPOJ273, WPOJ274, WPOJ275, WPOJ276, WPOJ277,
WPOJ278, WPOJ279, WPOJ280, and WPOJ281 in the 220-222 MHz
band.
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SCHEDULE 1.02
EXCLUDED ASSETS
---------------
1. Seller's right, title and interest in RD220, Seller's Mexican
subsidiary, and all assets related to RD 220.
2. Sophia's corporate books and records.
3. Accounts Receivable as of the First Closing Date of $15,398.96.
4. Laptop computer assigned to Xxx Xxxxx.
5. Desktop Computer assigned to Xxxx Xxxxx.
6. Sophia Office Lease deposit of $12,742.
7. Deposit of $2,868.33 paid to Commonwealth Edison related to the
provision of electric utility services.
8. The following insurance policies and related prepaids that total
$9,839.87 (as of 10-31-03):
(a) Commercial and Property
(b) Travelers #I-660-0788783-TCT-03 - Package Policy
(c) Travelers #I-810-7802W163-IND-03 Automobile Policy
(d) Travelers #ISF-CUP-7802W292-IND-03 Umbrella Policy
9. The following insurance policy and related prepaids that total
$8,626.86 (as of 10-31-03):
(a) Director's and Officers policy #000-00-00 with National Union
Fire Insurance Co. of Pittsburgh, PA
10. Any and all cash, cash equivalents and all other accounts receivable,
bank deposits and securities held by Seller.
11. The rights to the corporate name SOPHIA COMMUNICATIONS, INC. (provided,
however, that upon request of Buyer at any time after the First Closing
and payment of reimbursement to Seller of expenses to change its
corporate name, including reasonable and related fees to change its
certificate of incorporation, Seller will assign this corporate name to
Buyer)
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SCHEDULE 1.03
ASSUMED LIABILITIES
-------------------
Liabilities of Seller to be assumed by Buyer at the First Closing are
the following:
CUSTOMER CONTRACTS:
1. Contract with Lumbee River Coop for 40 Datatracker Radios -- dated
01/01/03
2. Contract with Devon Energy for Network Services related to the Carthage
Base Station - dated 05/23/03
3. Contract with Bitspoint for 500 Unit Radio Order - dated 09/15/03
LEASES:
Base Station Leases:
--------------------
1. Chicago Tower and Leasing 0000 X 000xx Xx., Xxxxxxx Xxxxx, XX
2. Chicago Tower and Leasing 00000 Xxxxxxxxx Xx., Xxxx Xxxxxx, XX
3. Chicago Tower and Leasing 0000 X. Xxxxxx Xx., Xxxxxx, XX
4. Chicago Tower and Leasing 0000 X. 00xx Xxx., Xxxx, XX
5. Aurora Antenna 0000 Xxxxxx Xxxx, Xxxxxx, XX
6. Spectrasite Communications 00 X. 000 Xxxxxxx, Xxxxx, XX
7. Spectrasite Building Group Park Tower, 0000 X. Xxxxxxxx Xx., Xxxxxxx, XX
8. Spectrasite Building Group X. Xxxxxxx Xx, Xxxxxxxx, XX 00000 (Holiday Inn)
9. Pinnacle Towers 0000 Xxxxxxxx Xxxx, Xxxxxxxxxx, XX
10.Pinnacle Towers Xxx Xxxxx Xxxxx, Xxx Xxxxx, XX
11.First United Corp 00000 X. Xxx Xxxx Xxx., Xxxxxx Xxxx, XX
12.Teachers Insurance & Annuity
Association of America One X. Xxxxxx Drive, Wacker, IL (Chicago)
13.American Tower Corp. 00000 X. Xxx Xxxx Xxx., Xxxxx Xxxx, XX
(Houston)
14.American Tower Corp. 00000 X. Xxx Xxxx Xxx., Xxxxxxxx, XX (Panola
College)
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Office Leases:
--------------
1. Lease agreement dated November 1, 1999, as amended on February 28, 2001, with
Madison Ridge Associates, c/o JSQ, Inc., 0000 X. Xxxxxxxx Xxxx, Xxxxx 000, Xxxx
Xxxxx, Xxxxxxxx 00000, for certain premises located at Suites 15 & 50, 0000
Xxxxx Xxxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxxx 00000.
2. Lease agreement with Madison Ridge Associates, c/o JSQ, Inc., 0000 X.
Xxxxxxxx Xxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxxx 00000, for certain premises
located at Suite 10, 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxxx 00000,
assumed by Seller from ESA Telecomm -Systems Group, Inc. pursuant to an
Assignment and Assumption agreement dated February 1, 2002.
Other Leases:
-------------
1. Lease with Fidelity Leasing/Citicapital for telephone system.
2. Lease with Fidelity Leasing/Citicapital for additional telephone equipment.
OTHER OBLIGATIONS:
1. Spectrum Management Agreement between Seller and Tantalus Systems Corp. dated
April 3, 2003.
2. Subject to the limitations of Section 2.02(g) herein, Seller agrees to
transfer any and all right, title and interest that it may have under the NTP
Agreement to BizCom and BizCom agrees to assume any and all obligations of
Sophia, to the extent that any such obligations exist, under the NTP Agreement.
3. Pursuant to Section 3.02(c) of this Agreement, as of November 1, 2003 Buyer
has offered to employ certain of Seller's employees, and Buyer has agreed to and
shall assume all obligations to any of Seller's employees who is employed by the
Buyer prior to the Final Closing for any accrued vacation or sick leave for
which such employees have become eligible during his or her employment with
Seller with the exception of Xxx Xxxxx and Xxxx Xxxxx.
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SCHEDULE 2.02(B)
RESTRICTIONS AGAINST PERFORMANCE
--------------------------------
NONE.
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SCHEDULE 2.02(C)
THIRD PARTY AND GOVERNMENTAL CONSENTS
-------------------------------------
1. FCC consent to the assignment of the 220 MHz Licenses from Subsidiary to
Buyer Sub.
2. The NTP Agreement
LEASES:
Base Station Leases:
1. Spectrasite Communications 00 X. 000 Xxxxxxx, Xxxxx, XX
2. Spectrasite Building Group Park Tower, 0000 X. Xxxxxxxx Xx., Xxxxxxx, XX
3. Spectrasite Building Group X. Xxxxxxx Xx, Xxxxxxxx, XX 00000 (Holiday
Inn)
4. Pinnacle Towers 0000 Xxxxxxxx Xxxx, Xxxxxxxxxx, XX
5. Pinnacle Towers Xxx Xxxxx Xxxxx, Xxx Xxxxx, XX
6. First United Corp 00000 X. Xxx Xxxx Xxx., Xxxxxx Xxxx, XX
7. Teachers Insurance & Annuity
Association of America One X. Xxxxxx Drive, Xxxxxx, IL (Chicago)
8. American Tower Corp. 00000 X. Xxx Xxxx Xxx., Xxxxx Xxxx, XX
(Houston)
9. American Tower Corp. 00000 X. Xxx Xxxx Xxx., Xxxxxxxx, XX (Panola
College)
Office Leases:
--------------
1. Lease agreement dated November 1, 1999, as amended on February 28, 2001, with
Madison Ridge Associates, c/o JSQ, Inc., 0000 X. Xxxxxxxx Xxxx, Xxxxx 000, Xxxx
Xxxxx, Xxxxxxxx 00000, for certain premises located at Suites 15 & 50, 0000
Xxxxx Xxxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxxx 00000.
2. Lease agreement with Madison Ridge Associates, c/o JSQ, Inc., 0000 X.
Xxxxxxxx Xxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxxx 00000, for certain premises
located at Suite 10, 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxxx 00000,
assumed by Seller from ESA Telecomm -Systems Group, Inc. pursuant to an
Assignment and Assumption agreement dated February 1, 2002.
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Other Leases:
-------------
1. Lease with Fidelity Leasing/Citicapital for telephone system.
2. Lease with Fidelity Leasing/Citicapital for additional telephone equipment.
Other Agreements:
-----------------
Spectrum Management Agreement between Seller and Tantalus Systems Corp. dated
April 3, 2003.
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Asset Purchase Agreement
SCHEDULE 2.02(F)
LITIGATION
----------
L.A. Harp & Associates vs. Sophia Communications. Matter relates to fee dispute
regarding marketing communication activities. Sophia is represented by Xxxxxx X.
Xxxxxxxxxx, Xx., Esq. The original complaint stated damages of $71,393.85. On
November 19, 2003, Harp offered Seller a counter proposal of $55,000 to settle
this matter. Settlement discussions are on-going.
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SCHEDULE 2.02(J)
CONTRACTS
---------
NONE
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Asset Purchase Agreement
SCHEDULE 2.02(P)
ACCREDITED INVESTORS
--------------------
See attached list.
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SCHEDULE 2.03(D)
THIRD PARTY AND GOVERNMENTAL CONSENTS
-------------------------------------
1. FCC consent to the assignment of the 220 MHz Licenses from
Subsidiary to Buyer Sub.
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Asset Purchase Agreement
SCHEDULE 2.04(C)
THIRD PARTY AND GOVERNMENTAL CONSENTS
-------------------------------------
1. FCC consent to the assignment of the 220 MHz Licenses from
Subsidiary to Buyer Sub.
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Asset Purchase Agreement
SCHEDULE 2.04(Q)
ABSENCE OF CERTAIN CHANGES AND EVENTS
-------------------------------------
NONE.
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SCHEDULE 2.04(R)
COMPLIANCE WITH LAWS
--------------------
None.
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