ASSET PURCHASE AGREEMENT
Exhibit
10.47
THIS
ASSET PURCHASE AGREEMENT (this “Agreement”), made this 19th day of
December 2007, is by and among Xxxx Xxxxx, LLC, a Delaware limited liability
company with its principal place of business located at 0000 Xxxxxxxxx
Xxxxxxxxx, Xxxxx X, Xxxxxxxx, Xxxxxxx 00000 (“Xxxx Xxxxx”); FMG Ventures, LLC, a
Florida limited liability company doing business as Access Communications with
its principal place of business located at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx X,
Xxxxxxxx, Xxxxxxx 00000 (“Access”); JC Ventures, LLC, a Florida limited
liability company doing business as Xxxxxxx Business Systems with its principal
place of business located at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx X, Xxxxxxxx,
Xxxxxxx 00000 (“Xxxxxxx”) (Access and Xxxxxxx collectively referred to as
“Sellers”); Xxxx Xxxxxxxx, an individual residing at 00000 Xxxxxx Xxxxxx Xxx
Xxx., Xxxxxxxxx, Xxxxxxx 00000 (“JM”); Xxxxx X. Xxxxxx, an individual
residing at 0000 00xx Xxxxxx X., Xxxxxxxxx, Xxxxxxx 00000 (“CF”); and Teltronics
Direct, Inc., a Florida corporation with its principal office located at 0000
Xxxxxxxxx Xxxxxxxxxx Xxx, Xxxxxxxx, Xxxxxxx 00000 (“Purchaser”) (each entity a
“Party” and collectively the “Parties”).
WHEREAS,
JM and CF are equal owners of Xxxx Xxxxx, which in turn is the sole owner of
Access and Xxxxxxx; and
WHEREAS,
Access and Xxxxxxx are solely and exclusively engaged in the sale and
installation of telephone systems and the provision of related training and
support services (the “Business”); and
WHEREAS,
Sellers desire to sell, and Purchaser desires to purchase, certain personal
property and assets of Sellers relating to the Business, upon the terms and
subject to the conditions hereinafter set forth;
NOW,
THEREFORE, in consideration of the foregoing premises and the mutual covenants
and agreements contained in this Agreement, as well as for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:
ARTICLE
I
PURCHASE AND SALE OF
ASSETS
1.1 Purchase and Sale of
Assets. On the terms and subject to the conditions set forth
herein, Sellers shall, on the “Closing Date,” as hereinafter defined, convey,
transfer, assign and deliver to Purchaser, free and clear of all mortgages,
liens, pledges, security interests, charges, claims, demands, restrictions or
encumbrances of any kind, and Purchaser shall purchase and acquire, as
hereinafter provided, all of the following rights and assets of Sellers
(collectively, the “Assets”):
(a) All items
of office furniture, fixtures, equipment and supplies used or useful in the
Business, a description of which is set forth on Exhibit A attached to this
Agreement;
(b) All of
Sellers’ correspondence, lists and records concerning the customers, prospective
customers, suppliers and prospective suppliers of the Business and all of
Sellers’ books, records and documents relating to the Business or its
operations, including specifically but not exclusively all advertising and
marketing materials and service literature;
(c) Any and
all intangible assets, including without limitation all customer lists,
trademarks, business entity names, trade names, software programs, other
intellectual property and proprietary rights, telephone numbers, facsimile
numbers, email addresses and domain names related to or used in connection with
the Business;
(d) Any and
all rights that Sellers have in any agreement or contract, including without
limitation all amounts due and owing to, and/or received by, Sellers from and
after the Closing Date and relating to the Business;
(e) Any and
all prepaid expenses of the Sellers or otherwise held by or for the benefit of
Sellers;
(f) Any and
all work in process of the Sellers;
(g) All cash,
accounts, securities, and cash equivalents of Sellers;
(h) All
accounts receivable and notes receivable of Sellers; and
(i) All of
the goodwill of Sellers relating to the Business.
(j)
All other rights, properties and assets of every kind, character and
description, tangible or intangible , of the Sellers, whether or not similar to
the items specifically listed above.
1.2 Purchase Price.
Purchaser shall pay as full consideration for the Assets the following payments
(collectively the “Purchase Price”):
(a) Cash
at Closing in an amount equal to two hundred thousand dollars ($200,000)
(“Cash”). Sellers shall simultaneously deposit the Cash into the
Sellers’ attorney’s trust account, to be held, administered and disbursed by
Sellers’ attorney as Escrow Agent under the terms of an Escrow Agreement
attached as Exhibit C to this Agreement (“Escrow Agreement”). The Escrow
Agreement shall require the Escrow Agent to utilize the Cash for payment and/or
settlement in full of the Liens, Assessments, Judgments, Defaults and Pending
Lawsuits listed in Exhibit B to this Agreement prior to disbursing the Cash for
any other purpose.
(b) After
the end of each calendar year from 2008 through 2012 inclusive, Purchaser shall
pay to Sellers an aggregate of twenty-five percent (25%) of Purchaser’s Net
Profits (as hereinafter defined) for that immediately preceding calendar year,
for a total of five (5) payments (each an “Earn Out Payment”). “Purchaser’s Net
Profits” shall be calculated by the
Chief
Financial Officer of Purchaser utilizing Generally Accepted Accounting
Principles. Each payment of the Purchase Price, including each Earn
Out Payment, shall be paid fifty percent (50%) to Access and fifty percent (50%)
to Xxxxxxx.
1.3 Earn Out Payments to the
Sellers. Purchaser shall pay each Earn Out Payment within five
(5) business days following the date as of which each Earn Out Payment is deemed
to be finally determined. Purchaser shall make Earn Out Payments by
wire transfer of immediately available funds to the account(s) designated by the
Sellers to receive each Earn Out Payment.
(a) Procedure. As
promptly as practicable, and in any event not later than thirty (30) days after
the twelve (12) month anniversary of the Closing Date, Purchaser shall prepare
and deliver to Sellers a written statement (each an “Earn Out Payment
Statement”) setting forth in reasonable detail Purchaser’s good faith
calculation of each Earn Out Payment, as derived from Purchaser’s review of its
financial and other books and records related to its business
operations. Purchaser agrees to give to the Sellers or their
designated representatives reasonable access to Purchaser’s books and records
related to its business operations solely for purposes of their review of each
Earn Out Payment Statement.
(b) Sellers
may, in good faith, dispute the calculations contained in a Earn Out Payment
Statement by delivery of written notice thereof (a “Dispute Notice”) to
Purchaser within five (5) days following their receipt of the Earn Out Payment
Statement. The Dispute Notice shall set forth in reasonable detail
all items disputed, together with proposed changes thereto, including without
limitation, an explanation in reasonable detail of the basis on which the
changes are proposed.
(c) If (A) by
written notice to Purchaser within five (5) days following its receipt of the
Earn Out Payment Statement, Sellers accept the Earn Out Payment Statement, or
(B) Sellers fail to deliver a Dispute Notice within that five (5) day period,
the Earn Out Payment Statement delivered by Purchaser (and the Earn Out Payment
set forth therein) shall become final and binding on Purchaser and Sellers as of
the date of that acceptance or deemed acceptance.
(d) If
Sellers shall have timely delivered a Dispute Notice, then Purchaser and Sellers
shall attempt to reach agreement on the matters identified in the Dispute
Notice. If, within thirty (30) days following Purchaser’s receipt of
the Dispute Notice, Purchaser and Sellers shall not have reached a resolution in
writing of the matters identified in the Dispute Notice, then those matters
shall be submitted to the independent public accounting firm of Purchaser for
resolution. Purchaser and Sellers shall instruct the independent
public accounting firm to prepare and deliver, within thirty (30) days of such
submission, a revised Earn Out Payment Statement (including without limitation,
the calculation of the Earn Out Payment) taking into account all items not in
dispute between Purchaser and Sellers and those items requested by Purchaser and
Sellers to be resolved by the independent public accounting
firm. Purchaser and Sellers shall furnish or cause to be furnished to
the independent public accounting firm access to such employees, officers,
accountants, facilities, books, records, work papers, historical financial
information and other materials of Purchaser as the independent public
accounting firm may request. The fees and expenses of the independent
public accounting firm shall be borne by Purchaser if the independent public
accounting firm determines that any payment set forth in the Earn Out Payment
Statement
1.4 Allocation of Purchase
Price. The Purchase Price shall be allocated among the Assets
as determined by Teltronics. Notwithstanding any allocation of
the Purchase Price, it is hereby agreed that the sale and transactions described
in this Agreement are indivisible.
1.5 Liabilities
Except for
Purchaser’s assumption of the liabilities of Sellers incurred after the Closing
Date in connection with the agreements set forth in Exhibit E attached to this
Agreement, Teltronics, Inc. (“Teltronics”) and Purchaser shall not assume, and
shall not be deemed to have assumed, any other liability, debt or obligation of
the Xxxxxxx, XX, CF, Xxxx Xxxxx and/or their predecessors and/or affiliates
whatsoever, including without limitation (i) financial obligations related to
the Assets or the Business which were incurred prior to, or are in existence on,
the Closing Date, (ii) liabilities or obligations of the Xxxxxxx, XX, CF, Xxxx
Xxxxx and/or their predecessors and/or affiliates to their creditors, (iii)
liabilities or obligations of the Sellers with respect to any transaction
occurring after the Closing Date, (iv) income tax, sales tax, use tax or any
other federal, state or local tax, liabilities or obligations of the Xxxxxxx,
XX, CF, Xxxx Xxxxx and/or their predecessors and/or affiliates (v) contingent
liabilities or obligations of the Xxxxxxx, XX, CF, Xxxx Xxxxx and/or their
predecessors and/or affiliates (vi) liabilities for violations committed or
penalties incurred by the Xxxxxxx, XX, CF, Xxxx Xxxxx and/or their predecessors
and/or affiliates on or before the Closing Date, (vii) liabilities to employees
or former employees of the Sellers including, but not limited to, salaries,
wages, pensions or other benefits or severance or vacation pay, or (viii)
liabilities for claims, litigation, judgments or actions arising out of the
ownership or operation by the Sellers of the Business or the
Assets. Sellers and Purchaser specifically acknowledge and agree that
the payment by Purchaser of Earn Out Payments do not and shall not be deemed to
constitute payment, discharge, satisfaction or assumption by Teltronics or
Purchaser of any debt, obligation or liability of the Xxxxxxx, XX, CF, Xxxx
Xxxxx and/or their predecessors and/or affiliates including specifically but not
exclusively any tax obligations or other liabilities of the Xxxxxxx, XX, CF,
Xxxx Xxxxx and/or their predecessors and/or affiliates.
ARTICLE
II
CLOSING
MATTERS
2.1 Closing. The closing of the sale and purchase
of the Assets (the “Closing”) shall take place on December ___, 2007, at the
offices of Teltronics located at 0000 Xxxxxxxxx Xxxxxxxxxx Xxx, Xxxxxxxx,
Xxxxxxx 00000, or on such other date and at such other place as may be mutually
agreed upon in writing by Purchaser and Sellers. The date of the
Closing is referred to herein as the “Closing Date.”
2.2 Items to be Delivered at
Closing. At the Closing, and subject to the terms and
conditions herein contained:
(a) Sellers
shall deliver to Purchaser the following:
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(i)
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except
as otherwise contemplated in this Agreement, such bills of sale,
assignments, endorsements and other good and sufficient instruments and
documents of conveyance and transfer, in form reasonably satisfactory to
Purchaser and its counsel, as shall be necessary and effective to transfer
and assign to, and vest in, Purchaser all of Sellers’ rights, title and
interest in and to the Assets, including specifically but not exclusively,
good and valid title in and to all of the Assets owned by Sellers;
and
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(ii)
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all
of the customer and subscriber lists, sales records, files,
correspondences and other documents, books, records, papers, files and
data belonging to Sellers which are part of the Assets or related to the
Business;
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and
simultaneously with such delivery, Sellers shall take all such steps as may be
required to put Purchaser in actual possession and operating control of the
Assets.
(b) Purchaser
shall deliver to Sellers the Cash due and owing Sellers at the Closing in
accordance with Section 1.2 of this Agreement for deposit by Sellers with the
Escrow Agent under the Escrow Agreement.
2.3 Further
Assurances. From time to time after the Closing, at
Purchaser’s request, Sellers will execute, acknowledge and deliver to Purchaser
such other instruments of conveyance and transfer and will take such other
actions and execute and deliver such other documents, certifications
and further assurances as Purchaser may reasonably require in order to vest more
effectively in Purchaser, or to put Purchaser more fully in possession of, any
of the Assets. Each of the Parties will cooperate with the others and
execute and deliver to the other parties hereto such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by any other party hereto as necessary to carry out, evidence and
confirm the intended purposes of this Agreement.
2.4 Organization, Management,
and Control of Purchaser.
(a) At the Closing,
Purchaser, Teltronics, JM and CF will enter into a shareholder agreement
(“Shareholder Agreement”) in the form attached as Exhibit D to this
Agreement.
(b) Teltronics
and Purchaser will enter into an Administrative Services Agreement
(“Administrative Services Agreement”) on the Closing Date under which Teltronics
will provide certain administrative services to Purchaser upon terms mutually
acceptable to Teltronics and Purchaser subject to any approval
required under agreements between Teltronics and its lenders.
(c) Purchaser
shall sell all Cerato SE, ME, LE equipment and accessories and any other
products or services determined by Teltronics, acting in its sole discretion,
including specifically but not exclusively Hosted IP and/or SIP
services.
(d) The
President of Teltronics, JM and CF shall oversee all management decisions of
Purchaser that relate to the operational consolidation of all employees of
Access and Xxxxxxx.
ARTICLE
III
REPRESENTATIONS AND
WARRANTIES OF SELLERS, BUCK XXXXX, XX AND XX
Xxxxxxx,
Xxxx Xxxxx, XX and CF, jointly and severally, hereby represent and warrant to
Purchaser that:
3.1 Corporate
Existence. Sellers are limited liability companies duly
organized, validly existing and in good standing under the laws of the State of
Florida. Xxxx Xxxxx is a limited liability company duly organized validly
existing and in good standing under the laws of the States of Delaware and
Florida.
3.2 Corporate Power and
Authorization. Sellers and Xxxx Xxxxx have the power,
authority and legal right to execute, deliver and perform this
Agreement. The execution, delivery and performance of this Agreement
by Sellers and Xxxx Xxxxx have been duly authorized by all necessary corporate
action. This Agreement has been, and the other agreements, documents
and instruments required to be delivered by Sellers in accordance with the
provisions hereof (the “Sellers’ Documents”) will be, duly executed and
delivered on behalf of Sellers by duly authorized representatives of
Sellers. This Agreement constitutes, and the Sellers’ Documents when
executed and delivered will constitute, a legal, valid and binding obligation of
Sellers, enforceable against Sellers in accordance with their respective terms,
subject to (i) bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent conveyance or other similar laws relating to or affecting creditors’
rights generally, and (ii) as to enforcement, to general principles of equity,
whether such enforcement is considered in a proceeding in equity or at
law.
3.3 Validity of Contemplated
Transactions. The execution, delivery and performance of this
Agreement and the transactions contemplated herein do not and will not violate,
conflict with or result in the breach of (i) any term, condition or provision
of, or require the consent of any other person under, any existing law,
ordinance or governmental rule or regulation to which Sellers or Xxxx Xxxxx is
subject, (ii) any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body or authority
which is applicable to Sellers or Xxxx Xxxxx, (iii) the Articles of
Organization, Operating Agreement or other organizational or governing documents
of Sellers or Xxxx Xxxxx, or (iv) any mortgage, indenture, agreement, contract,
commitment, lease, plan, authorization or other instrument, document or
understanding, oral or written, to which Sellers or Xxxx Xxxxx is a party, by
which Sellers or Xxxx Xxxxx may have rights, or by which any of the Assets may
be bound or affected, or give any party with rights thereunder the right to
terminate, modify, accelerate or otherwise change the existing rights or
obligations of Sellers or Xxxx Xxxxx thereunder.
3.4 No Third Party
Options. There are no existing agreements, options,
commitments or rights with, of or to any person to acquire any of Sellers’ or
Xxxx Xxxxx’x assets, properties or rights included in the Assets or the Business
or any interest therein.
3.5 Financials. Sellers
have delivered the financial statements described in Exhibit F to this Agreement
which financial statements are true, complete and accurate in all
respects.
3.6 Tax and Other Returns and
Reports. All federal, state, local and foreign tax returns,
reports, statements and other similar filings required to be filed by Sellers
(the “Tax Returns”) with respect to any federal, state or local taxes,
assessments, interest, penalties, deficiencies, fees and other governmental
charges or impositions (including without limitation all income tax,
unemployment compensation, social security, payroll, sales and use, excise,
privilege, property, ad valorem, franchise, license, school and any other tax or
similar governmental charge or imposition under laws of the United States or any
state or municipal or political subdivision thereof) (the “Taxes”) have been
filed with the appropriate governmental agencies in all jurisdictions in which
such Tax Returns are required to be filed, and all such Tax Returns properly
reflect the liabilities of Sellers for Taxes for the periods, property or events
covered thereby. All Taxes, including without limitation those called for by the
Tax Returns, claimed to be due by any taxing authority from Sellers, have been
properly accrued or paid. Except as listed in Exhibit B attached to
this Agreement, Sellers have not received any notice of assessment or proposed
assessment in connection with any Tax Returns and there are not pending tax
examinations of or tax claims asserted against Sellers or any of their assets or
properties. Sellers have not extended, or waived the application of,
any statute of limitations of any jurisdiction regarding the assessment or
collection of any Taxes. Except as listed in Exhibit B attached to
this Agreement, there are no tax liens (other than any lien for current taxes
not yet due and payable) on any of the assets or properties of
Sellers. Sellers have no knowledge of any basis for any additional
assessment of any Taxes. Sellers have made all deposits required by
law to be made with respect to employees’ withholding and other employment
taxes, including without limitation the portion of such deposits relating to
Taxes imposed upon Sellers.
3.7 Title to
Properties. Sellers have good, valid and marketable title in
and to all of the Assets, free and clear of all mortgages, liens, pledges,
security interests, charges, demands, claims, restrictions and other
encumbrances and defects of title of any nature whatsoever, other than those set
forth in Exhibit
B attached to this Agreement.
3.8 Compliance with Law;
Authorizations. Sellers have complied with, and are not in
violation of, each law, ordinance or governmental or regulatory rule or
regulation, whether federal, state, local or foreign, to which the Business
and/or the Assets are subject, except where the failure to so comply would not
reasonably be expected to have a material adverse effect on Sellers and/or the
Business.
3.9 Litigation. Except
as fully disclosed in Exhibit B attached to this Agreement, no litigation,
including any arbitration, investigation or other proceeding of or before any
court, arbitrator or governmental or regulatory official, body or authority is
pending or, to the knowledge of Sellers, threatened against Sellers that relates
to the Assets, the Business or the transactions contemplated by this Agreement,
nor do Sellers know of any reasonably likely basis
3.10 Customer and Contract
Lists. Exhibit G sets forth
a true and complete list of all customers of Sellers, together with contact
information for each customer. Exhibit G also lists
all contracts and agreements related to the Business, oral or written, for which
Sellers receive, or have the right to receive, any revenue or consideration of
any kind (“Contracts”). All of the Contracts are assignable and all
rights under each and every Contract may be assigned and transferred to
Purchaser without the consent of another person. The relationships of
Sellers with their customers are good commercial working relationships, and none
of the customers of Sellers has cancelled, terminated or otherwise materially
altered or notified Sellers of any intention to cancel, terminate or materially
alter its relationship with Sellers. Sellers have not been notified,
either orally or in writing, by any of Sellers’ customers that there will be any
change in relations with the customers of Sellers as a result of the
transactions contemplated by this Agreement.
3.11 Employee Benefit Plans and
Arrangements. Sellers have no “employee benefit plans,” as
hereinafter defined, except as already disclosed in writing to Purchaser,
whether formal or informal, whether or not set forth in writing, and whether
covering one person or more than one person. For the purposes hereof,
the term “employee benefit plan” includes all plans, funds, programs, policies,
arrangements, practices, customs and understandings providing benefits of
economic value to any employee, or any former employee, or present or former
beneficiary, dependent or assignee of any such employee or former employee,
other than regular salary, wages or commissions paid substantially concurrently
with the performance of the services for which paid. Purchaser will
not assume any employee benefit plans of Sellers for employees hired by
Purchaser after the Closing.
3.12 Accounts Receivable.
All accounts receivable represent valid accounts related to sales by Sellers and
are fully collectible within sixty (60) days free and clear of any offset or
other claim.
3.13 Judgments and
Liens. Exhibit B sets forth all outstanding judgments, liens,
assessments, defaults and pending lawsuits against the Sellers and/or the Assets
(“Liens”) and is complete and accurate in all respects, and there are no
Liens other than as listed in Exhibit B.
3.14 Other
Judgments. Exhibit H lists judgments that are not filed
against or relate in any manner to the Sellers or the Assets and cannot form a
basis for any claim or demand against the Sellers, the Assets, Purchaser or
Teltronics. Exhibit K contains a complete list of judgments and liens
against the Assets which have been fully paid by Sellers. The
documents provided to Purchaser to prove payments and releases of the judgments
and liens listed in Exhibit K are true, correct and complete and were obtained
without agreement, commitment, condition or contingency of any
kind.
3.15 Completeness of
Disclosure. No representation or warranty by Sellers in this
Agreement or in any certificate, schedule, written statement, document or
instrument furnished or to be furnished to Purchaser pursuant hereto contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact required to be stated herein or therein or necessary to
make any statement herein or therein not misleading.
ARTICLE
IV
REPRESENTATIONS AND
WARRANTIES OF PURCHASER
Purchaser
hereby represents and warrants to Sellers that:
4.1 Corporate
Existence. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Florida.
4.2 Corporate Power and
Authorization. As of the Closing Date, the Purchaser will have
the power, authority and legal right to execute, deliver and perform this
Agreement. The execution, delivery and performance of this Agreement by
Purchaser will be duly authorized by all necessary corporate
action. This Agreement has been, and the other agreements, documents
and instruments required to be delivered by Purchaser in accordance with the
provisions hereof (the “Purchaser’s Documents”) will be, duly executed and
delivered on behalf of Purchaser by duly authorized officers of
Purchaser. This Agreement constitutes, and the Purchaser’s Documents
when executed and delivered will constitute, a legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with their
respective terms, subject to (i) bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent conveyance or other similar laws relating to
or affecting creditors’ rights generally, and (ii) as to enforcement, to general
principles of equity, whether such enforcement is considered in a proceeding in
equity or at law.
4.3 Validity of Contemplated
Transactions. The execution, delivery and performance of this
Agreement and the transactions contemplated herein by Purchaser does not and
will not violate, conflict with or result in the breach of any term, condition
or provision of, or require the consent of any other person under, (i) any
existing law, ordinance or governmental rule or regulation to which Purchaser is
subject, (ii) any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body or authority
which is applicable to Purchaser, (iii) the Certificate of Incorporation or
Bylaws of Purchaser, or (iv) except for those consents that will be obtained
prior to the Closing Date, any mortgage, indenture, agreement, contract,
commitment, lease, plan or other instrument, document or understanding, oral or
written, to which Purchaser is a party or by which Purchaser or its assets are
otherwise bound. Except as aforesaid, no authorization, approval or
consent of, and no registration or filing with, any governmental or regulatory
official, body or authority is required in connection with the execution,
delivery and performance of this Agreement by Purchaser.
ARTICLE
V
AGREEMENTS AND
COVENANTS OF PURCHASER AND SELLERS
5.1 Negative Covenants of
Sellers Prior to Closing. During the period from the date
hereof to the Closing Date, Xxxx Xxxxx and Sellers shall not, unless Purchaser
shall have given its consent thereto in writing:
(a) create,
assume or permit to exist any encumbrance on any of the Assets;
(b) sell,
lease or otherwise transfer any of the Assets other than in the ordinary course
of business for fair and adequate consideration;
(c) sell,
assign or transfer any patent, trademark, trade name, copyright or other
intellectual property right or intangible asset;
(d) incur any
other liability or obligation, whether absolute or contingent, other than
current liabilities incurred in the ordinary course of business;
(e) lose,
surrender or have revoked or limited any material license, permit or other right
granted by any governmental authority to operate any asset in the manner in
which they were intended to be operated;
(f) allow to
occur or exist any event of default under any contract or agreement to which
either Seller is a party;
(g) make any
material change in the rate of compensation payable or to become payable by
Sellers to any of their employees or agents, or enter into or amend in any
material respect any contract providing for compensation or benefits;
or
(h) agree to
do any of the things described in this Section 5.1.
5.2 Affirmative Covenants of
Sellers Prior to Closing. Sellers covenant and agree to
negotiate agreements with each of the parties to Liens listed in Exhibit B to
fully compromise, settle and pay each of such Liens in an aggregate
amount not to exceed the Cash.
5.3 Acquisition
Proposals. Sellers and Xxxx Xxxxx shall not, and shall not permit or
authorize any of their shareholders, officers, directors, employees or agents
to, directly or indirectly, solicit or entertain any inquiries or proposals or
participate in any discussions, negotiations or agreements relating to the
direct or indirect acquisition or disposition of any portion of the Assets, or
all or substantially all of the equity interests of Sellers, to or from any
person or entity other than the Purchaser (each an “Acquisition Proposal”), or
provide any assistance or any information to or otherwise cooperate with any
person or entity in connection with an Acquisition Proposal. Sellers
and/or Xxxx Xxxxx shall promptly disclose to Teltronics and Purchaser any
Acquisition Proposal which Sellers and/or Xxxx Xxxxx receives.
5.4 Third Party
Consents. Sellers shall use their best efforts to obtain
the consents, waivers and approvals as may be required under any of the
contracts or agreements being transferred hereunder so as to preserve all rights
of and benefits to the Purchaser thereunder, including specifically but not
exclusively all of the contracts or agreements included among the
5.5 Employee
Matters. Sellers will remain solely responsible for all
demands, claims, liabilities, damages and losses arising from or with respect to
the employment of their employees prior to the Closing Date, including without
limitation with respect to all salaries and all severance, vacation, medical,
sick, holiday, continuation coverage and other compensation or benefits to which
employees of Sellers may be entitled as a result of their employment by Sellers
prior to the Closing. All claims and obligations under, pursuant to
or in connection with any employee benefit plans of Sellers incurred prior to
the Closing Date will remain the responsibility of Sellers. Subject
to the foregoing, from and after the Closing Date, Sellers shall have no further
liability with respect to any employees subsequently employed by Purchaser, and
Purchaser shall be solely responsible from and after the Closing Date for all
salaries, benefits and other compensation of any and all of its employees
incurred from and after the Closing Date, including those employees formerly
employed by Sellers.
5.6 Restrictive
Covenants.
(a) Sellers
and Xxxx Xxxxx, agree that, for a period of five (5) years from and after the
Closing Date, none of them shall:
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(i)
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directly
or indirectly own or operate any business or engage in any activity which
competes with the Business or the business of Teltronics or the
Purchaser;
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(ii)
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directly
or indirectly solicit, canvass or approach any customer of Sellers,
Purchaser or Teltronics or any other person whom Sellers, Buck Xxxxx, XX
or CF contacted in connection with the Business prior to the Closing Date;
or
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(iii)
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directly
or indirectly employ, solicit or entice away any director, officer or
employee of Sellers, Purchaser, or
Teltronics.
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(b) Remedies. Sellers
and Xxxx Xxxxx, acknowledge and agree that monetary damages would be an
inadequate remedy for any breach or threatened breach of the terms and
conditions contained in this Section 5.6 and that, in the event of any such
breach or threatened
(c) Severability. Sellers
and Xxxx Xxxxx, acknowledge and agree that the restrictive covenants set forth
herein are reasonable and valid in all respects. If any court
determines that any restrictive covenants or any part thereof is invalid or
unenforceable, the remainder of the restrictive covenants shall not thereby be
affected and shall be given full effect, without regard to the invalid
portions. If any court determines that any restrictive covenant or
any part thereof is unenforceable because of the duration or scope of any
provision, such court shall have the power to reduce the duration or scope of
such provision, as the case may be, and in its reduced form, such provision
shall then be enforceable and shall be enforced.
5.7 Confidentiality. It
is understood that the respective businesses of Teltronics, Purchaser and
Sellers, and all matters related thereto, are of a confidential
nature. Prior to the date hereof there may have been revealed, and on
or after the date hereof there may be revealed, to Purchaser and Teltronics and
their affiliates and representatives, on the one hand, and to Sellers and their
affiliates and representatives, on the other, “Confidential Information,” as
hereinafter defined, concerning the business of Teltronics, Purchaser or
Sellers. In consideration for and as an additional inducement to the
parties to execute, deliver and perform this Agreement, Sellers, Buck Xxxxx, XX,
CF and Purchaser hereby agree that, following the termination of this Agreement
or any other failure of the transactions contemplated herein to be consummated,
neither party shall divulge or appropriate for their own use, or for the use of
any third party, any Confidential Information of another. As used
herein, the term “Confidential Information” means the following oral or written
information relating to the business of Teltronics, Purchaser or Sellers; client
or customer lists, agency or brokerage contracts, know-how, technology,
inventions, methodologies, trade secrets, patents, information relating to the
development, research, testing, manufacturing, marketing, sales, distribution
and uses of products and services, sources of supplies, budgets and strategic
plans, the identity and special needs of clients and customers, and any other
information which may give the party who received such Confidential Information
an opportunity to obtain an advantage over its competitors who do not know or
use such information; provided, however, that the term “Confidential
Information” shall not include (i) any such information that, prior to its use
or disclosure by any party hereto, can be shown to have been in the public
domain or generally known or available to clients, customers, suppliers or
competitors of the business of Teltronics, Purchaser or Sellers, as the case may
be, through no breach of the provisions of this Section 5.7 or other
non-disclosure covenants that were executed for the benefit of Teltronics,
Purchaser or Sellers, as the case may be, (ii) any such information that, prior
to its use or disclosure by any party hereto was rightfully in the receiving
party’s possession, without violation of the provisions of this Section 5.7 or
other non-disclosure covenants that were executed for the benefit
of,
5.8 Access to
Information. Sellers shall afford to Teltronics, Purchaser and
their accountants, counsel and other representatives, reasonable access during
normal business hours during the period prior to the Closing Date to (a) all of
their properties, books, contracts, commitments and records, and (b) all other
information concerning their business, properties and personnel (subject to
restrictions imposed by applicable law) as Teltronics, Purchaser or their
representatives may reasonably request. No information or knowledge
obtained in any investigation pursuant to this Section 5.8 shall affect or be
deemed to modify any representation or warranty contained herein or the
conditions of Sellers and Purchaser to consummate the transactions contemplated
herein.
5.9 Accounts
Receivable. Sellers
acknowledge and agree that any and all monies received by Purchaser or Sellers
from and after the Closing Date and relating to the Business purchased from
Sellers by Purchaser (“Post-Closing Receivables”) shall belong to
Purchaser. In furtherance thereof, any Post-Closing Receivables
received by Sellers shall be held in trust for, and promptly delivered to
Purchaser.
ARTICLE
VI
CONDITIONS PRECEDENT TO THE
CLOSING
6.1 Conditions Precedent to
Purchaser’s Obligations. All obligations of Purchaser under
this Agreement are subject to the fulfillment or satisfaction, prior to or at
the Closing, of each of the following conditions precedent:
(a) Representations and
Warranties True as of the Closing Date. The representations
and warranties of Sellers, Buck Xxxxx, XX and CF contained in this Agreement or
in any schedule, certificate or document delivered by Sellers, Buck Xxxxx, XX
and/or CF to Purchaser pursuant to the provisions hereof shall be true on the
date of delivery thereof and shall be true on the Closing Date in all material
respects with the same effect as though such representations and warranties were
made as of such date.
(b) Compliance with this
Agreement. Sellers, Buck Xxxxx, XX and CF shall have performed
and complied in all material respects with all agreements and conditions
required by this Agreement to be performed or complied with by Sellers, Buck
Xxxxx, XX and CF prior to or at the Closing.
(c) Closing
Certificate. Purchaser shall have received a certificate from
Sellers, Buck Xxxxx, XX and CF dated the Closing Date, certifying that the
conditions specified in Sections 6.1(a) and 6.1(b) hereof have been
fulfilled.
(d) No Threatened or Pending
Litigation. On the Closing Date, no suit, action or other
proceeding, or injunction or final judgment relating thereto, shall be
threatened or be pending before any court or governmental or regulatory
official, body or authority in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no investigation that
might result in any such suit, action or proceeding shall be pending or
threatened.
(e) Delivery of the
Assets. Sellers and Xxxx Xxxxx shall have delivered to
Purchaser actual possession of the Assets.
(f) UCC
Search. Not more than ten (10) days prior to the Closing,
Sellers shall have furnished to Purchaser Uniform Commercial Code, franchise and
tax lien search results for Sellers from the State of Florida, and a certificate
as to the good standing of Sellers in the State of Florida, and a certificate of
good standing of Xxxx Xxxxx in the States of Delaware and Florida all of which
shall be obtained and delivered at Sellers’ expense.
(g) Employment
Agreements. Each of JM and CF shall have entered into
employment agreements and non-competition, non-solicitation and confidentiality
agreements in the form attached as Exhibit I to this
Agreement (the “Employment Agreement”).
(h) Other
Matters. Sellers, Buck Xxxxx, XX and CF shall have delivered
to Purchaser such other documents, instruments, certifications and further
assurances as counsel for Purchaser may reasonably require, and Purchaser shall
have been satisfied with the results of the business, accounting, legal and
other due diligence into the financial condition and operations of Sellers for
all periods prior to the date of Closing, to be performed by Purchaser’s
accountants, attorneys and other representatives.
(i) Opinion of
Counsel. Sellers shall have delivered to Purchaser an opinion
from Sellers’ attorney in the form attached as Exhibit J to this
Agreement.
(j) Satisfactions of Judgments
and Liens Paid by Sellers. Sellers shall have delivered to
Purchaser recorded satisfactions or other written proof of full settlement and
payment of all the judgments and liens listed in Exhibit K attached to this
Agreement.
(k) Shareholder
Agreement. The Shareholder Agreement shall have been executed and
delivered.
(l) Administrative Services
Agreement. The Administrative Services Agreement shall have
been executed and delivered.
(m) Stock
Pledge. A Stock Pledge Agreement which secures the indemnity
obligations of Sellers, Buck Xxxxx, XX and CF under Article VIII of this
Agreement in the form attached as Exhibit L to this Agreement shall have been
executed and delivered.
(n) Escrow
Agreement. The Escrow Agreement shall have been executed and
delivered.
(o) Proof of Settlement
Agreements. Sellers shall have delivered to Purchaser written
proof signed by each of the creditors, plaintiffs and/or claimants listed in
Exhibit B that each of them will fully settle and release their respective
claims listed in Exhibit B for the amount listed in Exhibit B utilizing the Cash
and no other source for payment.
(p) Lender
Consent. Written consent to the transactions contemplated by
this Agreement from the lenders of Teltronics in form and substance satisfactory
to Teltronics.
6.2 Conditions Precedent to the
Obligations of Sellers. All obligations of Sellers under this
Agreement are subject to the fulfillment or satisfaction, prior to or at the
Closing, of each of the following conditions precedent:
(a) Representations and
Warranties True as of the Closing Date. The representations
and warranties of the Purchaser contained in this Agreement or in any list,
certificate or document delivered by Purchaser to Sellers pursuant to the
provisions hereof shall be true on the date of delivery thereof and shall be
true on the Closing Date in all material respects with the same effect as though
such representations and warranties were made as of such date.
(b) Compliance with this
Agreement. Purchaser shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement to be
performed or complied with by Purchaser prior to or at the Closing.
(c) Closing
Certificates. Sellers shall have received a certificate from
Purchaser dated the Closing Date certifying that the conditions specified in
Sections 6.2(a) and 6.2(b) hereof have been fulfilled.
(d) Shareholder
Agreement. The Shareholder Agreement shall have been executed and
delivered.
(e) Employment
Agreements. The Employment Agreements shall have been executed and
delivered.
ARTICLE
VII
TERMINATION
This
Agreement may be terminated at any time prior to the Closing Date, as
follows:
7.1 (a) By the mutual
written consent of Purchaser and Sellers; or
(b) By Purchaser, upon
notice to Sellers, if events occur which, without any breach by Purchaser of its
obligations hereunder, render impossible compliance with one or more of the
conditions set forth in Section 6.1 (and such compliance is not waived by
Purchaser); or
(c) By Sellers, upon
notice to Purchaser if events occur which, without any breach by Sellers of
their obligations hereunder, render impossible compliance with one or more of
the conditions set forth in Section 6.2 (and such compliance is not waived by
Sellers).
ARTICLE
VIII
INDEMNIFICATION
8.1 General Indemnification
Obligations of Sellers, Buck Xxxxx, XX and CF. Sellers, Buck
Xxxxx, XX and CF, jointly and severally, hereby covenant and agree to defend,
indemnify and hold harmless Teltronics and Purchaser, their shareholders,
officers, directors, agents and employees, from and against any and all losses,
costs, expenses, liabilities, claims, demands, judgments and settlements of
every nature that are incurred by any and all of them, including without
limitation the cost of defense thereof and reasonable attorney fees, accountant
fees and witness fees incurred, to the extent the same are not covered by
insurance, which arise out of (i) the breach, or if the subject of a third-party
claim, alleged breach, by Sellers, Buck Xxxxx, XX, or CF of any representation
or warranty made by Sellers, Buck Xxxxx, XX, or CF pursuant to this
Agreement, (ii) the non-performance, or if the subject of a third-party claim,
alleged non-performance, partial or total, of any covenant made by Sellers, Buck
Xxxxx, XX or CF pursuant to this Agreement, (iii) all liabilities, or if the
subject of a third-party claim, alleged liabilities, of Sellers, Buck Xxxxx, XX
or CF arising by reason of actions taken (or not taken) by Sellers, Buck Xxxxx,
XX or CF, (iv) all taxes (including, but not limited to, any net income, gross
income, sales, use, ad valorem, value added, transfer, franchise, payroll,
employment or excise tax), penalties and interest relating from, arising out of
or incurred with respect to any claims that may be asserted by any party based
upon, attributable to or resulting from the operations of the Business or for
which Sellers, Buck Xxxxx, XX and CF may be liable in respect of the Assets, for
all periods prior to the Closing Date, and/or (v) the operation of the
Business prior to the Closing Date.
8.2 General Indemnification
Obligations of Purchaser. Purchaser hereby agrees to defend,
indemnify and hold harmless Sellers, their members, managers, agents and
employees, from and against any and all losses, costs, expenses, liabilities,
claims, demands, judgments and settlements of every nature that are actually
incurred by Sellers, including without limitation the cost of defense thereof
and reasonable attorney fees, accountant fees and witness fees incurred, to the
extent the same are not covered by insurance, which arise out of (i) the breach,
or if the subject of a third-party claim, alleged breach, by Purchaser of any
representation or warranty
8.3 Method of Asserting
Claims.
(a) If any
person or entity who or which is entitled to seek indemnification under Section
8.1 or Section 8.2 (an “Indemnified Party”) receives notice of the
assertion or commencement of any third-party claim against such Indemnified
Party with respect to which the person or entity against whom or which such
indemnification is being sought (an “Indemnifying Party”) is obligated to provide
indemnification under this Agreement, the Indemnified Party will give the
Indemnifying Party reasonably prompt written notice thereof, but in any event
not later than twenty (20) days after receipt of written notice of a third-party
claim. The notice by the Indemnified Party will describe the
third-party claim in reasonable detail and will include copies of all available
material written evidence thereof. The Indemnifying Party will have
the right to participate in or, by giving written notice to the Indemnified
Party, to assume, the defense of any third-party claim at the Indemnifying
Party’s own expense and by the Indemnifying Party’s own counsel (reasonably
satisfactory to the Indemnified Party) and the Indemnified Party will cooperate
in good faith in that defense.
(b) If,
within ten (10) days after giving notice of a third-party claim to an
Indemnifying Party pursuant to Section 8.3(a), an Indemnified Party receives
written notice from the Indemnifying Party that the Indemnifying Party has
elected to assume the defense of the third-party claim as provided in the last
sentence of Section 8.3(a), the Indemnifying Party will not be liable for any
legal expenses subsequently incurred by the Indemnified Party in connection with
the defense thereof; provided, however, that if the Indemnifying Party fails to
take reasonable steps necessary to defend diligently the third-party claim
within ten (10) days after receiving written notice from the Indemnified Party
that the Indemnified Party reasonably believes the Indemnifying Party has failed
to take those steps, the Indemnified Party may assume its own defense, and the
Indemnifying Party will be liable for all reasonable costs and expenses paid or
incurred in connection therewith. Without the prior written consent
of the Indemnified Party, the Indemnifying Party will not enter into any
settlement of any third-party claim which would lead to liability or create any
financial or other obligation on the part of the Indemnified Party for which the
Indemnified Party is not entitled to indemnification hereunder, or which
provides for injunctive or other non-monetary relief applicable to the
Indemnified Party, or which does not include an unconditional release of all
Indemnified Parties. If a firm offer is made to settle a third-party
claim without leading to liability or the creation of a financial or other
obligation on the part of the Indemnified Party for which the Indemnified Party
is not entitled to indemnification hereunder and the Indemnifying Party desires
to accept and agree to that firm offer, the Indemnifying Party will give written
notice to the Indemnified Party to that effect. If the Indemnified
Party fails to consent to that firm offer within ten (10) days after its receipt
of the notice, the Indemnified Party may continue to contest or defend the
third-party claim and, in such event, the maximum liability of the Indemnifying
Party as to the third-party claim will not exceed the amount of that firm
offer. The Indemnified Party will provide the Indemnifying Party with
reasonable access during normal business hours to books, records and employees
of the Indemnified Party necessary in connection with the Indemnifying Party’s
defense of any
(c) Any claim
by an Indemnified Party on account of damages which does not result from a
third-party claim (a “Direct Claim”) will be asserted by giving the Indemnifying
Party reasonably prompt written notice thereof, but in any event not later than
twenty (20) days after the Indemnified Party becomes aware of the Direct
Claim. That notice by the Indemnified Party will describe the Direct
Claim in reasonable detail, will include copies of all available material
written evidence thereof and will indicate the estimated amount, if reasonably
practicable, of damages that have been or may be sustained by the Indemnified
Party. The Indemnifying Party will have a period of ten (10) days
within which to respond in writing to the Direct Claim. If the
Indemnifying Party does not so respond within such ten (10) day period, the
Indemnifying Party will be deemed to have accepted the accuracy of the
information set forth in that claim, in which event the Indemnified Party will
be free to pursue such remedies as may be available to the Indemnified Party on
the terms and subject to the provisions of this Agreement.
(d) A failure
to give timely notice or to include any specified information in any notice as
provided in Section 8.3(a), 8.3(b) or 8.3(c) will not affect the rights or
obligations of any party hereunder, except and only to the extent that, as a
result of that failure, any party which was entitled to receive that notice was
deprived of its right to recover any payment under its applicable insurance
coverage or was otherwise materially prejudiced as a result of that
failure.
8.4 Survival of Representations
and Warranties. All representations and warranties made by
Sellers, Buck Xxxxx, XX and/or CF in this Agreement or in any
certificate, schedule, statement, document or instrument furnished hereunder or
in connection with the negotiation, execution and performance of this Agreement
shall survive the Closing for a period of two (2) years; provided, however, that
the representations and warranties contained in Sections 3.1, 3.2, 3.3, 3.4,
3.6, 3.7 and 3.8 shall survive the Closing until the expiration of the statute
of limitations applicable to the matters covered thereby (after giving effect to
any waiver, mitigation or extension thereof granted by Sellers).
8.5 Offset. For
any and all losses and/or damages suffered by Purchaser or Teltronics which
arise out of any breach of any representation, warranty, covenant or other
obligation of Sellers, Buck Xxxxx, XX or CF under the terms of this Agreement,
Purchaser is entitled to and may offset against and reduce the amount of any
Earn Out Payment otherwise due to Sellers by the amount of those losses and/or
damages. In the alternative, Purchaser may, at its option, offset
against and reduce, and thereby redeem without other consideration, the number
of shares of Purchaser’s stock issued to JM and CF equal to the amount of those
losses and/or damages, at a price per share to be determined by the Chief
Financial Officer of Purchaser. Any Earn Out Payment so reduced and
paid pursuant to the terms of this Section 8.5 shall be deemed to satisfy
Purchaser’s payment obligation for that Earn Out Payment pursuant to Section
1.2(b) of this Agreement. The remedy provided to Teltronics and
Purchaser under this Section 8.5: (i) shall not be the sole remedy of Teltronics
and Purchaser for any breach of any representation, warranty, covenant or other
obligation of Sellers, Buck Xxxxx, XX or CF under the terms of this Agreement
and (ii) shall be in addition to any other remedy available to Purchaser or
Teltronics under the terms of this Agreement or under any and all claims and
causes of action which
Purchaser
or Teltronics is free to pursue against Sellers, Buck Xxxxx, XX or CF in law or
in equity.
ARTICLE
IX
MISCELLANEOUS
9.1 Sales, Transfer and
Documentary Taxes. Sellers shall pay all federal, state and
local sales, documentary and other transfer taxes, if any, due as a result of
the purchase, sale or transfer of the Assets in accordance
herewith.
9.2 Expenses. Except
as otherwise provided in this Agreement, and whether or not the transactions
contemplated herein are consummated, Sellers, Xxxx Xxxxx, JM, CF, and Purchaser
shall pay their, its or his own expenses incidental to the preparation of this
Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby.
9.3 Contents of Agreement;
Parties in Interest. This Agreement, together with all
Exhibits attached hereto and the documents referenced herein, sets forth the
entire understanding of the Parties with respect to the transactions
contemplated hereby. This Agreement may not be amended or modified
except by written instrument duly executed by all of the Parties.
9.4 Assignment and Binding
Effect. This Agreement may not be assigned by any Party
without the prior written consent of the other Parties. Subject to
the foregoing, all of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of each Party.
9.5 Waiver. Each
Party at any time may waive any term or provision of this Agreement to the
benefit of which it is entitled, by a duly executed written
instrument.
9.6 Notices. Any
notice, request, demand, waiver, consent, approval or other communication which
is required or permitted hereunder shall be in writing and shall be deemed given
only if delivered personally or sent Federal Express or other overnight delivery
service, or sent registered or certified U.S. mail, postage prepaid, as
follows:
|
If
to Purchaser, to:
|
Teltronics
Direct, Inc.
0000
Xxxxxxxxx Xxxxxxxxxx Xxx
Xxxxxxxx,
Xxxxxxx 00000
Attention: Xxxx
Xxxxxxx, President
|
|
|
With
a copy to:
|
Xxxxx
& Xxxxx, LLP
0000
Xxxxxxxx Xxxxx
Xxxxxxxxx,
Xxx Xxxx 00000
Attention: Xxxx
X. Xxxxx, Esq.
|
|
|
If
to Sellers, to:
|
FMG
Ventures, LLC
0000
Xxxxxxxxx Xxxxxxxxx, Xxxxx X
|
|
Xxxxxxxx,
Xxxxxxx 00000
Attention: Xxxx
Xxxxxxxx
|
||
|
JC
Ventures, LLC
0000
Xxxxxxxxx Xxxxxxxxx, Xxxxx X
Xxxxxxxx,
Xxxxxxx 00000
Attention: Xxxx
Xxxxxxxx
|
||
|
With
a copy to:
|
Xxxxxx
& Xxxxx, P.A.
0000
Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx,
Xxxxxxx 00000
Attention:
Xxxxx X. Xxxxxxxxx, Esq.
|
|
|
If
to Xxxx Xxxxx, to:
|
Xxxx
Xxxxx, LLC
0000
Xxxxxxxxx Xxxxxxxxx, Xxxxx X
Xxxxxxxx,
Xxxxxxx 00000
Attention: ________________
|
|
|
With
a copy to:
|
Xxxxxx
& Xxxxx, P.A.
0000
Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx,
Xxxxxxx 00000
Attention:
Xxxxx X. Xxxxxxxxx, Esq.
|
|
|
If
to JM, to:
|
Xxxx
Xxxxxxxx
00000
Xxxxxx Xxxxxx Xxx Xxx.
Xxxxxxxxx,
Xxxxxxx 00000
|
|
|
With
a copy to:
|
Xxxxxx
& Xxxxx, P.A.
0000
Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx,
Xxxxxxx 00000
Attention:
Xxxxx X. Xxxxxxxxx, Esq.
|
|
|
If
to CF, to:
|
Xxxxx
X. Xxxxxx
0000
00xx Xxxxxx X.
Xxxxxxxxx,
Xxxxxxx 00000
|
|
|
With
a copy to:
|
Xxxxxx
& Xxxxx, P.A.
0000
Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx,
Xxxxxxx 00000
Attention:
Xxxxx X. Xxxxxxxxx, Esq.
|
or to
such other address as the addressee may have specified in a notice duly given to
the sender as provided herein. Such notice, request, demand, waiver, consent,
approval or other communication will be deemed to have been given as of the date
so delivered or if mailed via registered or certified mail, on the third day
after said notice was mailed.
9.7 Governing
Law. This Agreement shall be governed by, construed,
interpreted and enforced in accordance with the laws of the State of
Florida.
9.8 Severability. Any
provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
provisions hereof, except to the extent that to do so would contravene the
present valid and legal intentions of Purchaser, Xxxxxxx, XX, CF and Xxxx Xxxxx;
and any such invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
9.9 Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original and all of which, when taken together, shall constitute
one and the same instrument.
IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
date first written above.
|
FMG
Ventures, LLC, d/b/a Access Communications
|
||
|
By:
|
/s/
XXXX
XXXXXXXX
|
|
|
Xxxx
Xxxxxxxx, Manager
|
||
|
JC
Ventures, LLC d/b/a Xxxxxxx Business Systems
|
||
|
By:
|
/s/
XXXXX
X. XXXXXX
|
|
|
Xxxxx
X. Xxxxxx, Manager
|
||
|
Xxxx
Xxxxx, LLC
|
||
|
By:
|
/s/
XXXX
XXXXXXXX
|
|
|
Xxxx
Xxxxxxxx, Manager
|
||
|
/s/
XXXX
XXXXXXXX
|
||
|
Xxxx
Xxxxxxxx, Individually and as Member
|
||
|
/s/
XXXXX
X. XXXXXX
|
||
|
Xxxxx
X. Xxxxxx, Individually and as Member
|
||
|
Teltronics
Direct, Inc.
|
||
|
By:
|
/s/
XXXX
XXXXXXX
|
|
|
Xxxx
Xxxxxxx, President and CEO
|
||
LIST OF
EXHIBITS AND SCHEDULES
Exhibit
A Office Furniture,
Fixtures, Equipment and Supplies
Exhibit B Liens,
Assessments, Judgments, Defaults and Pending Lawsuits Against Sellers and/or the
Assets
Exhibit
C Escrow
Agreement
Exhibit
D Shareholder
Agreement
Exhibit
E Assumed
Liabilities
Exhibit
F Financial
Statements
Exhibit
G Customers
and Contracts
Exhibit
H Other
Judgments Not Against Sellers or the Assets
Exhibit
I Employment
Agreement
Exhibit
J Opinion
Letter
Exhibit
K Discharge
of Judgments and Liens
Exhibit
L Pledge
Agreement
EXHIBIT
A
OFFICE FURNITURE, FIXTURES,
EQUIPMENT AND SUPPLIES
Previously provided to Purchaser by
Sellers and to be reaffirmed and approved by Purchaser prior to
Closing.
EXHIBIT
B
LIENS, ASSESSMENTS,
JUDGMENTS, DEFAULTS AND PENDING LAWSUITS AGAINST SELLERS AND/OR THE
ASSETS
| (a) |
|
Liens
and Assessments of the IRS in the amount as of December 24, 2007 of
$112,679.93.
|
| (b) |
|
Limetree Beach Resort
Condominium Association, Inc. v. FMG Ventures, L.L.C. d/b/a Access
Communications, commenced by Summons and Complaint filed October 3,
2007 in the Circuit Court of the Twelfth Judicial Circuit, Sarasota
County, Florida, case No.
2007CA10923NC
|
| (c) |
|
Merry Mechanization,
Inc. v. FMG Ventures, L.L.C. d/b/a Access Communications and JC Ventures,
L.L.C. d/b/a Xxxxxxx Business Systems, commenced by Summons and
Complaint filed November 2, 2007 in the County Court of the Twelfth
Judicial Circuit, Sarasota County, Florida, case No.
2007CC7922NC
|
| (d) |
|
X.X. Xxxxxxxx
Publishing & Advertising, Inc. v. JC Ventures LLC d/b/a Xxxxxxx
Business Systems, commenced by Summons and Complaint filed in the
Circuit Court of the Twelfth Judicial Circuit, Sarasota County, Florida,
case No. 2007CA10275NC
|
| (e) |
|
*Toshiba America
Information Systems, Inc. v. Access Communications, Inc., Xxxx X.
Xxxxxxxx, Xxxxx Xxxxxx and DOES 1 to 50, commenced by Summons and
Complaint filed in the Superior Court of California, County of Orange,
case No. 07CC08726
|
* A
judgment has been entered in Case 07CC08726 in the Superior Court of the State
of California for the County of Orange. The complaint provided for
the Plaintiff or its authority to have leave of the court to amend the complaint
to show true names and capacities and the defendant company’s legal
names. The guarantee attached to the complaint identified the company
as FMG Ventures, LLC and JC Ventures LLC. On the basis thereof the
judgment may be subject to amendment to incorporate a claim against the Sellers,
FMG Ventures, LLC and JC Ventures LLC and are accordingly listed herein as a
lien against the Sellers.
EXHIBIT
C
ESCROW
AGREEMENT
THIS
ESCROW AGREEMENT (“Agreement”), made and entered into this _____ day of
December, 2007 by and among Xxxx Xxxxx, LLC, a Delaware limited liability
company with its principal place of business located at 0000 Xxxxxxxxx
Xxxxxxxxx, Xxxxx X, Xxxxxxxx, Xxxxxxx 00000 (“Xxxx Xxxxx”); FMG Ventures, LLC, a
Florida limited liability company doing business as Access Communications with
its principal place of business located at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx X,
Xxxxxxxx, Xxxxxxx 00000 (“Access”); JC Ventures, LLC, a Florida limited
liability company doing business as Xxxxxxx Business Systems with its principal
place of business located at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx X, Xxxxxxxx,
Xxxxxxx 00000 (“Xxxxxxx”) (Access and Xxxxxxx collectively referred to as
“Sellers”); Xxxx Xxxxxxxx, an individual residing at 00000 Xxxxxx Xxxxxx Xxx
Xxx., Xxxxxxxxx, Xxxxxxx 00000 (“JM”); Xxxxx X. Xxxxxx, an individual
residing at 0000 00xx Xxxxxx X., Xxxxxxxxx, Xxxxxxx 00000 (“CF”); and Teltronics
Direct, Inc., a Florida corporation with its principal office located at 0000
Xxxxxxxxx Xxxxxxxxxx Xxx, Xxxxxxxx, Xxxxxxx 00000 (“Purchaser”) and Xxxxx X.
Xxxxxxxxx, Esq., an attorney at law with an office located at 0000 Xxxx Xxxxxx,
Xxxxx 000, Xxxxxxxx, Xxxxxxx 00000 (“Escrow Agent”) (each entity a “Party” and
collectively the “Parties”).
BACKGROUND
INFORMATION
The
Sellers are selling to Purchaser certain property and assets of Sellers relating
to their business (“Assets”) under an Asset Purchase Agreement executed by and
among Xxxx Xxxxx, Purchaser, Xxxxxxx, XX and CF of even date herewith (the
“Asset Purchase Agreement”). As set forth in Subsection 1.2(a) of the
Asset Purchase Agreement, the Purchaser has agreed to pay a portion of the
purchase price (“Purchase Price”) for the Assets by making a single payment of
$200,000.00 to the Sellers which shall simultaneously be deposited by the
Sellers into the attorney trust account of the Escrow Agent (the “Escrow Funds”)
to be held by the Escrow Agent as trustee and subject to the terms of this
Agreement. Xxxx Xxxxx, Purchaser, Xxxxxxx, XX, CF and Escrow Agent do
hereby agree as follows:
OPERATIVE
PROVISIONS
1. The
Sellers have deposited with the Escrow Agent, concurrently with the execution
and delivery of this Agreement, the Escrow Funds which represent a portion of
the Purchase Price for the Assets under Section 1.2(a) of the Asset Purchase
Agreement.
2. The
Escrow Agent will use the Escrow Funds solely to pay the liens, assessment,
judgments, claims and pending litigation in the amounts described in Exhibit A
to this Agreement (“Escrow Disbursements”). Escrow Agent upon request
will provide to the Purchaser and the Sellers, without charge, an accounting of
the Escrow Funds and all Escrow Disbursements. That accounting must
show all additions to and deductions from the Escrow Funds and the reason for
such deduction. Escrow Agent may not charge the Purchaser for holding
or keeping the Escrow Funds, or for using the Escrow Funds to pay Escrow
Disbursements. Escrow Agent shall obtain, from each and every creditor to whom
it pays an
3. If
at any time the Escrow Funds to make the payments of Escrow Disbursements are
not sufficient to make the payments of Escrow Disbursements when the payments
are due, Escrow Agent will immediately advise the Purchaser and the Sellers by
written notice setting forth the precise extent of any deficiency.
4. The
Escrow Agent will keep the Escrow Funds in an interest bearing account at a
savings or banking institution which has its deposits insured by a federal
agency, instrumentality, or entity. The interest will accrue for the
benefit of the Sellers.
5. The
Escrow Agent shall hold the Escrow Funds delivered to the Escrow Agent by the
Sellers and shall not deliver the Escrow Funds to any party other than the
creditors specified in the Escrow Disbursements, and then only in an amount not
to exceed the settlement amount listed for each Escrow
Disbursements.
6. The
Escrow Agent shall pay any and all Escrow Disbursements to the creditors within
ten (10) days after execution of this Agreement. Escrow Agent will be
responsible for any and all costs, including, but not limited to, late fees,
interest, penalties and reasonable attorney’s fees associated with the Escrow
Agent’s failure to pay the Escrow Items in a timely manner.
7. The
Escrow Funds shall be held by the Escrow Agent subject to the following terms
and conditions:
(a) The
Escrow Agent shall have no duty as to the collection or protection of the Escrow
Funds or any income thereon or as to the preservation of any rights pertaining
thereto, beyond the safe custody of any thereof actually in his possession and
the payment of the Escrow Items pursuant to the terms of this
Agreement. Except with respect to the Escrow Agent's obligations
under paragraph 4; Escrow Agent’s duty to maintain the Escrow Funds in safe
custody; and Escrow Agent’s duty for timely payment of Escrow Disbursements in
the correct amount for each item as set forth in paragraphs 5 and 6 and
otherwise in a manner consistent with the terms of this Agreement, the Purchaser
and the Sellers release the Escrow Agent from any claims, causes of action and
demands at any time arising out of or with respect to this Agreement, the Escrow
Funds and/or any actions taken or omitted to be taken by the Escrow Agent with
respect thereto, and the Sellers hereby agree to hold the Escrow Agent harmless
from and with respect to any and all such claims, causes of action and
demands.
(b) The
Escrow Agent may act relative this Agreement in reliance upon advice of counsel
in reference to any matter connected herewith. In any event, it will
not be liable for any mistake of fact or law, for any error of judgment, or for
any act or omission of any kind, except for its own willful
misconduct.
(c) This
Agreement sets forth in its entirety the duties and responsibilities of the
Escrow Agent with respect to any and all matters pertinent
thereto. The Escrow Agent need not refer to, and will not be bound
by, the provisions of any other agreement except for the Asset Purchase
Agreement and its Exhibits.
(d) If
the Escrow Funds are at any time attached, garnished or levied upon under any
court order, or in case the delivery of the Escrow Funds shall be stayed or
enjoined by any court order, or in case any order, writ, judgment or decree
shall be made or entered by any court affecting the Escrow Funds, then in any of
such events, the Escrow Agent is authorized to rely upon and comply with any
such order, writ, judgment or decree, and if he complies with any such order,
writ, judgment or decree, he shall not be liable to the Purchaser or the Sellers
or to any other person, firm, entity or corporation by reason of such
compliance, even though such order, writ, judgment or decree may be subsequently
reversed, modified, annulled, set aside or vacated.
(e) The
Escrow Agent may resign by giving ten (10) business days’ prior written notice
to the Purchaser and the Sellers; and thereafter shall deliver the Escrow Funds
to a successor escrow agent acceptable to the Purchaser and the Sellers, which
acceptance shall be evidenced by the written and signed acknowledgment of the
Purchaser and the Sellers. If no such acknowledgment is received by
the Escrow Agent within thirty (30) days after giving such notice, it is
unconditionally and irrevocably authorized and empowered, in its discretion, to
deliver the Escrow Funds to a court of competent jurisdiction.
8. The
escrow created hereby shall terminate on the date as of which the Escrow Agent
has received written notice from Purchaser and Sellers of their written
satisfaction as to all the releases obtained by Escrow Agent in exchange for its
payment of all Escrow Disbursements.
9. Notices
required or permitted to be given or made under this Agreement shall be in
writing and shall be given or made on the date mailed by U.S. First Class mail,
postage prepaid and addressed to the party being given the notice at the address
first set forth above. Any party may change the address to which
notice is to be given by notice to all other parties hereto. Notice
mailed as above provided shall be deemed given or made, and shall be effective
for all purposes on the date mailed. The Escrow Agent shall be
entitled to rely, without inquiry or investigation, upon any notice given to it
hereunder, provided such notice is not in contravention of the terms of this
Agreement.
10. This
Agreement shall inure to the benefit of and be binding upon Xxxx Xxxxx,
Purchaser, Xxxxxxx, XX, CF, Escrow Agent and their respective successors and
assigns.
11. This
Agreement embodies the entire agreement and understanding, oral or written,
among the parties hereto with respect to the subject matter
hereof. This Agreement may not be changed, modified, terminated,
cancelled or discharged, in whole or in part, unless the Purchaser and the
Sellers shall have given their prior written consent thereto, and such change,
modification, termination, cancellation or discharge is in a writing signed by
the Purchaser and the Sellers and delivered to the Escrow Agent.
12. No
waiver of any of the provisions of this Agreement, or of any of the rights of
any of the parties hereto, shall be effective or binding unless such waiver
shall be in writing and signed by the party claimed to have given, consented to
or suffered such waiver. All rights, privileges, benefits and
remedies hereunder are cumulative in nature and the exercise of any thereof
shall not be deemed an exclusive election of such right, privilege, benefit or
remedy, and shall not be in derogation of any other right, privilege, benefit or
remedy available at law, in equity or otherwise.
13. This
Agreement and the rights and obligations of the Escrow Agent and of the
Purchaser and the Sellers hereunder shall be construed in accordance with and
governed by the laws of the State of Florida without giving effect to the
conflict of laws principles thereof.
14. This
Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and year
first above written.
|
ESCROW
AGENT
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Xxxxx
X. Xxxxxxxxx, Esq.
|
||
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FMG
Ventures, LLC, d/b/a Access Communications
|
||
|
By:
|
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|
|
Xxxx
Xxxxxxxx, Manager
|
||
|
JC
Ventures, LLC d/b/a Xxxxxxx Business Systems
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||
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By:
|
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Xxxx
Xxxxxxxx, Manager
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Xxxx
Xxxxx, LLC
|
||
|
By:
|
|
|
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Xxxx
Xxxxxxxx, Manager
|
||
|
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||
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Xxxx
Xxxxxxxx, Individually and as Member
|
||
|
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Xxxxx
X. Xxxxxx, Individually and as Member
|
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Teltronics
Direct, Inc.
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By:
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Xxxx
Xxxxxxx, President and CEO
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||
EXHIBIT D
SHAREHOLDER
AGREEMENT
OF
TELTRONICS DIRECT, INC.
AMONG
TELTRONICS,
INC.,
XXXXX
X. XXXXXX,
AND
XXXX
XXXXXXXX
Dated
as of December ___, 2007
SHAREHOLDER
AGREEMENT
THIS
SHAREHOLDER AGREEMENT (“Agreement”) is made and entered into this ___ day of
December, 2007, by and among Xxxx Xxxxxxxx, an individual who resides at
_______________________________ (“JM”), Xxxxx X. Xxxxxx, an individual who
resides at _______________________________ (“CF”), Teltronics, Inc., a Delaware
corporation with its principal office located at 0000 Xxxxxxxxx Xxxxxxxxxx Xxx,
Xxxxxxxx, Xxxxxxx 00000 (“Teltronics”) (JM, CF and Teltronics each a
“Shareholder” and collectively referred to as the “Shareholders”).
W I T N E S S E T H:
A. Under an
Asset Purchase Agreement dated December 19, 2007 (“Asset Purchase Agreement”) JM
and CF each acquired ownership of seven and one-half (7.5) shares of the common
stock of Teltronics Direct, Inc. (“Company”).
B. The
Shareholders own beneficially and of record the number of shares of Common Stock
of the Company set forth opposite their respective names in Exhibit A attached
to this Agreement.
NOW,
THEREFORE, in consideration of the mutual agreements and covenants set forth
below and other good and valuable consideration, the receipt and sufficiency of
which hereby are acknowledged, the Shareholders agree as follows:
ARTICLE
I
DEFINITIONS
1.1 Defined
Terms. Unless otherwise defined herein, the following terms
are defined as follows:
“Affiliate” means,
with respect to any Person, (i) any other Person that, alone or together
with any other Person, directly or indirectly through one or more
intermediaries, controls, or is controlled by or is under common control with
such Person (or in the case of a natural Person, any of such Person’s Immediate
Family Members), or (ii) in the case of a natural Person, any of such
Person's Immediate Family Members, or any trust solely for the benefit of such
Person or such Person's Immediate Family Members. For purposes of
this definition, “control” (including
the correlative terms “controlled by” and
“under common control
with”), as used in respect of any Person, means the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities, by contract,
credit arrangement or proxy, as trustee, executor, agent or
otherwise. For purposes of this definition, a Person shall be deemed
to control another Person if such first Person directly or indirectly owns or
holds ten percent (10%) or more of the equity interests in such other
Person.
“Agreement” means this
Agreement (including the schedules and the exhibits hereto), as amended,
supplemented or modified from time to time in accordance with the provisions
hereof.
“Applicable Law” means
with respect to any Person, any and all provisions of any constitution, treaty,
statute, law, regulation, ordinance, code, rule, judgment, rule of common
law,
order, decree, award, injunction, judgment, Governmental Approval, concession,
grant, franchise, license, agreement, directive, published guideline, policy or
requirement, or other governmental restriction or any similar form of decision
of, or determination by, or any published interpretation or administration of
any of the foregoing by, any Governmental Authority, whether in effect as of the
date hereof or thereafter and in each case as amended, applicable to such Person
or its Subsidiaries or their respective assets.
“Applicable Securities
Laws” means the securities laws of any jurisdiction applicable under the
relevant circumstances.
“Asset Purchase
Agreement” has the meaning set forth in the recitals hereto.
“Business” has the
meaning set forth in the Asset Purchase Agreement.
“Business Day” means
each day of the calendar year other than days on which banks are required or
authorized to close in the State of Florida.
“Closing Date” has the
meaning set forth in the Asset Purchase Agreement.
“Commission” means the
Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.
“Common Stock” means
the Company's Common Stock, par value of $1.00 per share.
“Common Stock
Equivalents” means, with respect to any Shareholder as of any date, the
aggregate of the number of shares of Common Stock owned by such Shareholder and
the number of shares of Common Stock into or for which any Convertible
Securities owned by such Shareholder shall be convertible, exchangeable or
exercisable as of such date.
“Company” means
Teltronics Direct, Inc., a corporation organized by Teltronics under the laws of
the State of Florida.
“Confidential
Information” has the meaning set forth in Section 6.2 of this
Agreement.
“Convertible
Securities” means (i) any rights, options or warrants to acquire Common
Stock or any capital stock of the Company or any Subsidiary, and (ii) any notes,
debentures, shares of preferred stock or other securities or rights, in each
case which are convertible or exercisable into, or exchangeable for, Common
Stock or any other capital stock of the Company or any Subsidiary.
“Employment” mean the
Employment Agreements between the Company and each of JM and CF respectively
dated the date of this Agreement.
“Fair Market Value”
means the fair market value of the capital stock of the Company, as determined
by the Company’s Chief Financial Officer using GAAP.
“GAAP” means United
States generally accepted accounting principles, on a consistent basis
throughout the periods involved.
“Governmental
Approvals” shall mean any action, order, authorization, consent,
approval, license, lease, waiver, franchise, concession, agreement, ruling,
permit, tariff, rate, certification, exemption of, filing or registration by or
with, or report or notice to, any Governmental Authority.
“Governmental
Authority” means any nation or government, any state or other political
subdivision thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, government
(including any government authority, agency, department, board, commission or
instrumentality of the United States, any State of the United States or any
political subdivision thereof), or any tribunal or arbitrator(s) of competent
jurisdiction, or any self-regulatory organization having jurisdiction over the
relevant Person or Persons.
“Joinder Agreement”
means a written consent to be bound by the provisions of, and to become a party
to this Agreement in substantially the form of Exhibit B attached to this Agreement.
“Other Agreements”
means, with respect to any Person, each of the agreements and instruments, other
than this Agreement, to be entered into by such Person at or prior to the
Closing in connection with the transactions contemplated by the Asset Purchase
Agreement.
“Parties” means the
Company and the Shareholders. The term “Parties” also includes any
Shareholders that after the date hereof become parties to this Agreement in
accordance with the terms hereof.
“Person” shall mean
any natural person, company, corporation, association, partnership,
organization, business, firm, joint venture, trust, unincorporated organization
or any other entity or organization, and shall include any Governmental
Authority.
“Receiving Party” has
the meaning set forth in Section
6.2.
“Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect at the
relevant time.
“Shareholders” means
Teltronics, JM, CF, and any other owners of shares of capital stock of the
Company as may, from time to time, become parties to this Agreement in
accordance with the provisions hereof.
“Subsidiary” means
each corporation or other Person in which a Person owns or controls, directly or
indirectly, capital stock or other equity interests representing at least 50% of
the outstanding voting stock or rights, or other equity interests.
“Taxes” means any
domestic or foreign taxes, charges, fees, levies or other assessments, including
any income, alternative, minimum, accumulated earnings, personal holding
company, franchise, capital stock, net worth, capital, profits, windfall
profits, gross receipts, value added, sales, use, goods and services, excise,
customs duties, transfer, conveyance, mortgage, registration, stamp,
documentary, recording, premium, severance, environmental, real
property,
personal
property, ad valorem, intangibles, rent, occupancy, license, occupational,
employment, unemployment insurance, social security, disability, worker’s
compensation, payroll, health care, withholding, estimated or other taxes,
charges, fees, levies or other assessments, and including any interest,
penalties or additions relating thereto, imposed by any Governmental Authority
or other taxing authority on the Company or any Subsidiary.
1.2 Rules of
Construction. Words such as “herein”, “hereinafter”, “hereto”, “hereby” and “hereunder”, when used
with reference to this Agreement, refer to this Agreement as a whole, unless the
context otherwise requires. The words “include”, “includes”, “included” and “including” shall be
construed as if followed by the phrase “without being limited to”. A
reference to a particular gender means a reference to any gender.
ARTICLE
II
BOARD MATTERS, CORPORATE
GOVERNANCE
2.1 Nomination and Election of
Directors.
(a) Election of
Nominees. Effective on the date hereof and hereafter, and at
each annual meeting of shareholders of the Company or any special meeting called
for the purpose of electing directors of the Company (or by consent of
shareholders of the Company in lieu of any such meeting) or at such other time
or times as the Shareholders may agree:
(i) Teltronics shall
have the right, at its option, to nominate and elect five (5) directors to the
Board of Directors of the Company (the “Board”) (such
nominees hereinafter referred to as the “Teltronics
Designees”); and
(ii) JM and CF shall each
have the right, at his option, to serve on the Board of Directors of the
Company, until the termination of this Agreement.
(b) Initial
Nominees. Each Shareholder agrees that, effective on the date
hereof, the Board shall consist of no more than seven (7)
members. The following individuals are the members of the Board on
the date hereof to serve in such capacity until their respective successors have
been nominated and elected in accordance with Section 2.2 of this
Agreement: JM, CF, Xxxx Xxxxxxx, Xxxxxxx Xxx and Xxxxxx X. Xxxxxxx, (the initial
Teltronics Designees).
2.2 Implementation of Agreement;
Shareholders’ Actions. (a) Each Shareholder shall vote all of
its shares of capital stock entitled to vote in favor of and shall take all
other necessary actions within its control (whether in its capacity as a
shareholder of the Company or otherwise, including causing its directors and
officers to take all such necessary action), and (b) the Company shall take all
necessary action, in each case in order to implement the provisions of this
Agreement (including this Article II) and to
cause:
(i) the total number of
directors constituting the Board to be no more than seven (7) with such number
to be determined in a manner consistent with the provisions of Section 2.1 and this
Section
2.2;
(ii) the nomination and
election of the initial members to the Board in
accordance
with Section
2.1(b);
(iii) at the request of
Teltronics given at any time, the immediate removal from the Board (with or
without cause) of any or all of the Teltronics Designees (which vacancy caused
by such removal shall be filled promptly by the remaining directors in
accordance with the provisions of paragraph (iv) below);
(iv) (A) if any of the
Teltronics Designees shall for any reason cease to serve as a member of the
Board during his or her term of office, the resulting vacancy on the Board to be
filled by a replacement Teltronics Designee designated by Teltronics,
immediately upon the request of Teltronics; and (B) if JM or CF shall for any
reason cease to serve as a member of the Board during his term of office, the
resulting vacancy on the Board shall be filled by an individual designated by JM
or CF, as the case may be acceptable to Teltronics, upon his
request;
(v) the Board to manage
or direct the management of the Business and the affairs of the Company, and the
Company to provide to each member of the Board all relevant information which
reasonably would be considered necessary or advisable in order to manage or
direct the business and affairs of the Company;
(vi) the Board to meet
(in person, by conference telephone, video conference, or similar communications
equipment by means of which all directors participating in the meeting can hear
each other) not less frequently than quarterly;
(vii) at the request of
Teltronics given at any time, the election or appointment to any and all
committees of the Board of any or all of the Teltronics Designees;
and
(viii) the delivery of
notice, an agenda and any other relevant materials for each meeting of the
Board, such delivery to be made to all members of the Board prior to such
meeting; it being understood and agreed that no amendments or additions shall be
made to such agenda following such delivery without the unanimous consent of the
President of Teltronics.
2.3 Chairman. The
Chairman of the Board shall be selected by the President of
Teltronics.
2.4 Quorum. A
quorum at any meeting of the Board shall be a majority of the directors present
in person, by conference telephone, video conference, or similar communications
equipment by means of which all directors participating in the meeting can hear
each other, provided such quorum includes at least three (3) of the Teltronics
Designees. Except as otherwise provided in this Agreement, the
affirmative vote of a majority of the entire Board at a meeting duly called at
which a quorum is present, or the written consent of a majority of the members
of the Board, shall be required on all actions required to be taken by the
Board.
2.5 Proxies. Neither
the Company nor any Shareholder shall give any proxy or power of attorney to any
Person that permits the holder thereof to vote in his discretion on any matter
that may be submitted to the Shareholders of the Company for their consideration
and approval,
unless
such proxy or power of attorney is made subject to and is exercised in
conformity with the provisions of this Agreement.
2.6 Director Compensation and
Expenses. No director of the Company or any Subsidiary shall
receive any fees, stock options, equity or equity-linked securities, or other
compensation for its services as director unless approved by the Company and
Teltronics, except for reimbursement of those expenses described in the next
succeeding sentence. All directors of the Company shall be entitled
to reimbursement from the Company for all reasonable direct out-of-pocket
expenses incurred in connection with their service, as the case may be, which
shall include travel expenses for attending Board meetings and, if approved in
writing by the President of the Company, other travel expenses
related to the Company or the activities of the Board.
2.7 Officers. Subject
to the rights of JM and CF under their Employment Agreements, the
Board shall have the absolute right, in its sole discretion, to remove and
appoint officers, with or without cause, subject to all Applicable Laws. The
President and Chief Financial Officer of Teltronics shall be the President and
Chief Financial Officer respectively of the Company.
2.8 Actions Requiring Special
Consent of Teltronics. Notwithstanding anything herein that
may be to the contrary, for so long as Teltronics owns any of the Common Stock,
the Company shall be bound by the approvals of Teltronics required by Applicable
Law, its Certificate of Incorporation, by-laws and lending agreements and the
certificate of incorporation and the by-laws of the Company.
ARTICLE III
ISSUANCE
AND TRANSFER OF SHARES; RESTRICTIONS
3.1 Pre-Emptive
Rights. Each of the Shareholders hereby waives any and all
pre-emptive or similar rights with respect to its or his Common Stock and any
future issuance of securities of the Company.
3.2 Restrictions on Transfer of
Stock.
(a) Generally. No
Shareholder holding less than fifty percent (50%) of the shares of the Common
Stock may sell, assign, pledge, encumber, give, devise or otherwise dispose of
any interest in any Common Stock, whether voluntarily, by operation of law or
otherwise (a “Transfer”), unless he or it has first complied with all applicable
provisions of this Agreement. There are no restrictions on transfer by any
Shareholder holding fifty percent (50%) or more of the shares of the Common
Stock.
(b) Right of First
Refusal.
(i) Offer
Notice. At least 45 days prior to making any Transfer, a
Shareholder holding less than fifty percent (50%) of the shares of the Common
Stock proposing to make a Transfer (the “Transferring Shareholder”) shall
deliver a written notice (the “Offer
Notice”)
to the Company and to each of the other Shareholders (the “Other Shareholders”).
The Offer Notice shall disclose in reasonable detail the identity of the
prospective transferee(s), the number of shares of Common Stock to be
transferred (the “Offered Stock”), the consideration offered, and the proposed
terms and conditions of the Transfer; provided, that if the consideration being
offered to the Transferring Shareholder consists in whole or in part of
something other than U.S. dollars, then the notice shall also contain a good
faith estimate of the value of the consideration in U.S. dollars and an
explanation of the manner in which the estimate was made.
(ii) First
Option. The Company may elect to purchase all or any portion
of the Offered Stock at the price per share and on the terms specified in the
Offer Notice by delivering written notice of the Company’s election to the
Transferring Shareholder and the Other Shareholders within thirty (30) days
after the delivery of the Offer Notice.
(iii) Second
Option. If the Company has not elected to purchase all of the
Offered Stock within the thirty (30) day period referenced in subsection (ii)
above, each of the Other Shareholders may elect to purchase (pro rata in
accordance with their respective holdings of the Common Stock) all (but not less
than all) of such remaining Offered Stock at the price per share and on the
terms specified in the Offer Notice by delivering written notice of such
election to the Transferring Shareholder within sixty (60) days after delivery
of the Offer Notice (the “Election Period”). If the Other
Shareholders do not elect to purchase all of the remaining Offered Stock, any
remaining Offered Stock may be allocated among the Other Shareholders who have
elected to purchase the Offered Stock pro rata in accordance with their
respective holdings of the Common Stock, and those Other Shareholders shall have
ten (10) days following the Election Period (the “Extended Election Period”) to
elect to purchase that remaining Offered Stock.
(iv) If
the Company and/or any Other Shareholders have elected to purchase all of the
Offered Stock from the Transferring Shareholder, the transfer will be
consummated as soon as practicable after the delivery of the election notices,
but in any event within thirty (30) days after the identity of the transferees
has been determined.
(v) If
the Company and any Other Shareholders have not elected to purchase all of the
Offered Stock on or before the end of the Extended Election Period, the
Transferring Shareholder may, within ninety (90) days after the expiration of
the Extended Election Period, transfer all of such Offered Stock to the
transferee(s) specified in the Offer Notice at a price not less than the price
per share specified in the Offer Notice and on terms no less favorable to the
Transferring Shareholder in any material respect than the terms specified in the
Offer Notice. If the Transferring Shareholder does not transfer all
of such Offered Stock to the transferee(s) specified in the Offer Notice within
such ninety (90) day period, the Transferring Shareholder may not transfer any
such Offered Stock without first having complied with all applicable provisions
of this Agreement.
(c) Permitted
Transfers. The restrictions contained in this Agreement shall
not apply to any Transfer of Stock by any Shareholder to the Company and shall
not apply to any
Transfer
of Stock by any Shareholder holding fifty percent or more of the shares of the
Common Stock of the Company.
(d) Restrictions Applicable to
All Transfers. All Transfers shall be subject to the
following:
(i) Prior
to transferring any Stock to any Person, the Transferring Shareholder shall
cause the prospective transferee to execute and deliver to the Company and the
other Shareholders a joinder to this Agreement in the form attached as Exhibit B
to this Agreement, whereupon that holder shall be deemed a Shareholder hereunder
and shall have all the rights, privileges and obligations of a Shareholder as
set forth in this Agreement.
(ii) The
prospective transferee shall acknowledge in writing that the Common Stock has
not been registered under the Securities Act or any applicable state securities
laws, and may not be transferred in the absence of an effective registration
statement under such laws except pursuant to an exemption from such
laws. If Common Stock is being transferred pursuant to such an
exemption, then the Transferring Shareholder shall give prior written notice of
such exemption to the Company and the Company may request an opinion of the
Transferring Shareholder’s counsel as to the availability of such exemption,
which opinion and counsel shall be reasonably satisfactory to the
Company.
Section 1.2. Restrictions on
Encumbrances. No Shareholder shall assign, pledge, grant a
security interest in or otherwise permit any lien or encumbrance to attach to
any interest in any share of Common Stock or other capital stock of the Company,
unless approved in writing by the President of the Company. Any
action taken in violation of this restriction shall be null and
void.
Section 1.3 Take Along. If any
transfer of shares of Common Stock by Teltronics involves the transfer of more
than fifty percent (50%) of the issued and outstanding shares of Common Stock
owned by Teltronics to any unaffiliated party (“Sale of Control”) Teltronics may
but shall not be obligated to require each Shareholder to sell, or cause to be
sold, the same proportionate part of the Shares owned by him as are proposed to
be sold by Teltronics for the same consideration per Shares and otherwise on the
same terms and conditions obtained by Teltronics in the Sale of Control
transaction.
Section 1.4 Endorsement of Stock
Certificates. After execution of this Agreement, each Shareholder shall
submit the certificates for all of the Shares owned by them to the Company for
endorsement on the face of each certificate of the following
legend:
Any sale, assignment, transfer, pledge
or other disposition of theshares
of the stock
represented by this certificate is restricted by,and subject to,
the terms
and provisions of a Shareholder Agreement, dated December __ , 2007
a copy of
which is on file with the Secretary of the Company.
ARTICLE
IV
CERTAIN
COVENANTS
4.1 Covenants of the
Company.
(a) Accounting; Financial
Statements. The Company covenants and agrees with the
Shareholders as follows:
(i) Accounting. The
Company shall maintain and cause any Subsidiary to maintain a system of
accounting established and administered in accordance with GAAP, and shall set
aside on its books and cause any Subsidiary to set aside on its books, all such
proper reserves as shall be required by GAAP.
(ii) Financial
Statements.
(A) Commencing with the
quarter ending March 31, 2008, the Company shall deliver to the Shareholders,
promptly after the period covered thereby, and in any event within forty-five
(45) days thereafter, unaudited quarterly consolidated financial statements of
Teltronics, prepared in accordance with GAAP.
(B) Commencing with the
fiscal year ending December 31, 2008, the Company shall deliver to the
Shareholders, promptly after the period covered thereby, and in any event within
sixty (60) days thereafter audited consolidated financial statements of
Teltronics, prepared in accordance with GAAP and audited by an independent
certified public accounting firm approved by the President of the
Company,
(b) Insurance. As
promptly as practicable and in any event within thirty (30) days following the
Closing, the Company shall, and shall cause any Subsidiary to maintain or cause
to be maintained at all times (i) fire and casualty insurance policies, with
extended coverage, sufficient in amount to allow the Company or any Subsidiary
to replace any of its properties that might be damaged or destroyed and, (ii)
insurance policies against other insurable hazards, risks and liabilities to
person and property.
(c) Disclosure and Cooperation
with Respect to Transfers. Upon the request of any
Shareholder, the Company shall: (i) promptly supply to such
Shareholder or its prospective transferees of Common Stock or Convertible
Securities permitted by Applicable Law, all information regarding the Company
reasonably required to be delivered in connection with such Transfer, provided
that such transferee enters into a reasonable and customary confidentiality
agreement with respect to such information; and (ii) otherwise cooperate and
take all other actions as reasonably requested by such Shareholder in connection
with any Transfers permitted pursuant Applicable Law, including Applicable
Securities Laws.
(d) Taxes. The
Company shall, and shall cause any Subsidiary to, file all Tax returns and/or
reports required to be filed in each jurisdiction where such filing is required
and to pay and discharge all Taxes shown to be due and payable on such returns
and all other Taxes, assessments, governmental charges or levies imposed on them
or any of their respective properties, assets, income or franchises, to the
extent such Taxes, assessments, governmental
charges
and levies have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become an Encumbrance (other than a Permitted Encumbrance) on properties or
assets of the Company or any Subsidiary, as the case may be. Nothing
in this Section
4.1(d) shall preclude the Company or any Subsidiary from diligently
contesting in good faith any and all Tax-related assessments, reassessments,
charges or levies imposed on their respective properties.
ARTICLE
V
TERMINATION OF
AGREEMENT
5.1 Individual
Termination. This Agreement shall terminate with respect to JM
or CF, as the case may be, upon the first to occur of the
following:
(a) his
death;
(b) cessation of the
business operations of the Company for a continuous period of more than thirty
(30) days;
(c) any acquisition of
more than fifty percent (50%) of the capital stock or substantially all of the
assets of the Company by another entity;
(d) resignation by JM or
CF, as the case may be or, termination of his Employment Agreement with the
Company for any reason other than the reasons set forth in subsections 5.1(a)
through (c) of this Agreement.
5.2 Effect of Individual
Termination. In the event that this Agreement is
terminated with respect to JM or CF, as the case may be:
(a) for any of the
reasons set forth in subsections 5.1(a) through (c) of this Agreement, the
Company will redeem his shares of the Common Stock of the Company at one hundred
percent (100%) of their Fair Market Value, evaluated as of the date that this
Agreement is terminated with respect to him;
(b) for the reason set
forth in subsection 5.1(d) of this Agreement, the Company will redeem his shares
of the Common Stock of the Company at _fifty percent (50%) of their Fair Market
Value, evaluated as of the date that this Agreement is terminated with respect
to him.
5.3 Termination. This
Agreement shall terminate upon the occurrence of any of the following events.
(a) The Company’s
bankruptcy, receivership or dissolution;
(b) The transfer by the
next to last remaining Shareholder to the Company of all of his Shares and the
payment in full of the purchase price therefore;
(c) The occurrence of a
registered public offering of the Company’s securities under the Securities Act
of 1933;
(d) The consummation of
a merger in which the Shareholders receive securities which are publicly traded
under the Securities Act of 1933 and Securities Exchange Act of
1934;
ARTICLE
VI
GENERAL
6.1 Notices. All
notices, requests, demands, approvals, consents, waivers or other communications
required or permitted to be given hereunder (each, a “Notice”) shall be in
writing, in English and shall be (a) personally delivered, (b) sent by
facsimile transmission, provided that the original copy thereof also is sent by
pre-paid, first class, registered or certified mail (return receipt requested)
or by next-day or overnight mail or courier (to any United States address) or by
an internationally recognized express delivery service (to any foreign address),
(c) sent by pre-paid, first class, registered or certified mail (return
receipt requested) or by next-day or overnight mail or courier (to any United
States address), or (d) delivered by an internationally recognized express
delivery service (to any foreign address), postage and charges
prepaid:
(i) if to
Teltronics or the Company, at the address set forth for Teltronics in the first
paragraph of this Agreement;
(ii) if to JM, at the
address set forth for him in the first paragraph of this Agreement;
and
(iii) if to CF, at the
address set forth for him in the first paragraph of this Agreement;
or, in
each case, at such other address and numbers as may have been furnished in a
Notice by such Person to the other Parties. Any Notice shall be
deemed effective upon receipt (or refusal of receipt, if properly
delivered).
6.2 Confidentiality.
(a) Each
Shareholder recognizes and acknowledges that this Agreement, the business plans,
acquisition prospects, referral sources, customer and supplier lists, and
Intellectual Property of the Company as they may exist from time to time
(collectively, the “Confidential Information”) are valuable, special and unique
assets of the Company's business. Each Shareholder agrees that such
Shareholder shall not, in whole or in part, disclose any of such Confidential
Information to any Person for any reason or purpose that is not in furtherance
of the best interests of the Company, nor shall such Shareholder make use of any
such Confidential Information for its own purposes or for the benefit of any
Person (except the Company) under any circumstances. Notwithstanding
the foregoing, the Shareholder receiving Confidential Information (the
“Receiving Party”) shall have no obligations under this
Section 6.2: (i) with respect to Confidential Information which
is (A) known to the Receiving Party on a non-
confidential
basis at the time of disclosure from the Company or any Subsidiary, (B) at the
time of that disclosure, or thereafter, in the public domain other than pursuant
to a breach of an existing obligation by the Receiving Party,
(C) rightfully received from a third party without a restriction on further
disclosure and without breach of the other provisions of this Section 6.2, (D)
independently developed by the Receiving Party or (E) which is required to
be disclosed by any self-regulatory organization or by Applicable Law or at the
request of any Governmental Authority; provided, however, that the Company is
given prior notice of the disclosure of Confidential Information pursuant to
this clause (E) to the extent such prior notice is reasonably possible; or (ii)
following the two-year period after which such Shareholder ceases to be a
Shareholder of the Company. All correspondence, memoranda, notes,
records, reports, plans, designs, studies and any other papers, electronic data
or items that record Confidential Information received or made by a Shareholder
shall be the property of the Company, and such Shareholder shall immediately
deliver all originals and all copies thereof to the Company under Applicable Law
or any agreement between such Shareholder and the Company, including any
employment agreement.
(b) Notwithstanding
anything to the contrary contained in this Agreement, a Shareholder may provide
Confidential Information to its advisors or consultants; provided, however, that, in each instance,
the recipient of the Confidential Information enters into an agreement with such
Shareholder pursuant to which it agrees to be bound by the non-disclosure
obligations of this Section 6.2.
6.3 Specific
Performance. The Parties hereto recognize that the Company's
Common Stock and Convertible Securities cannot be readily purchased or sold on
the open market and that it is to the benefit of the Company and the
Shareholders that this Agreement be carried out; and for those and other
reasons, the Parties hereto would be irreparably damaged if this Agreement is
not specifically enforced in the event of a breach hereof. If any
controversy concerning the rights or obligations to purchase or sell any Common
Stock or Convertible Securities arises, or if this Agreement is breached, the
Parties hereto hereby agree that remedies at law might be inadequate and that,
therefore, such rights and obligations, and this Agreement, shall be enforceable
by specific performance. The remedy of specific performance shall not
be an exclusive remedy, but shall be cumulative of all other rights and remedies
of the Parties at law, in equity or under this Agreement.
6.4 Transferees and Future
Shareholders. The Company and any transferor Shareholder shall
cause any transferee of Common Stock or Convertible Securities pursuant to a
Transfer permitted by this Agreement that is not already a party to this
Agreement to execute a Joinder Agreement. The Company will cause any
other future holder of Common Stock or Convertible Securities to execute a
Joinder Agreement. Upon execution of such Joinder Agreement by any
such Person (provided the Transfer or issuance of Common Stock or Convertible
Securities shall not have been made in contravention of this Agreement or
Applicable Laws), such Person shall become a Party to this Agreement; provided,
however, that the foregoing shall not apply to Common Stock or Convertible
Securities that have been sold (a) pursuant to an effective registration
statement under the Securities Act, or (b) Rule 144(k) promulgated
thereunder (or any analogous or comparable foreign Applicable Securities
Laws).
6.5 Binding Effect;
Assignment. Each of the provisions and agreements contained in this
Agreement shall be binding upon and inure to the benefit of the personal
representatives, heirs, devisees, successors and assigns of the respective
Parties hereto; but none of the rights or obligations attaching to any party
shall be assignable.
6.6 Governing
Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Florida without
regard to the principles of conflicts of law thereof. Each Party
hereto hereby irrevocably submits to the nonexclusive jurisdiction of the courts
of the State of Florida and of the United States of America exercising
jurisdiction of matters arising in the City of Sarasota, for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of that court, that the venue thereof may
not be appropriate, that the suit, action or proceeding is improper or that this
Agreement or any of the documents referred to in this Agreement may not be
enforced in or by that court, and each Party hereto irrevocably agrees that all
claims with respect to each suit, action or proceeding shall be heard and
determined in such a Florida state or federal court. Each Party
hereby irrevocably waives personal service of process and consents to process
being served in any suit, action or proceeding by mailing a copy thereof to the
Party being served in the manner provided in Section 6.1 and agrees that service
in that manner shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by
law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
6.7 Severability. Should
any Section or any part of a Section within this Agreement be rendered void,
invalid or unenforceable by any court of law for any reason, such invalidity or
unenforceability shall not void or render invalid or unenforceable any other
Section or part of a Section in this Agreement.
6.8 Captions and
Section Headings. Article and Section captions and
headings contained in this Agreement are inserted as a matter of convenience and
for reference purposes only, and in no way define, limit, extend or describe the
scope of this Agreement or the intent of any provision hereof.
6.9 Amendments and
Waivers. Neither this Agreement nor any term hereof, may be
changed, waived, discharged or terminated orally, by course of conduct or in
writing, except that any term of this Agreement may be amended and the
observance of any such term may be waived (either generally or in a particular
instance and either retroactively or prospectively) with (but only with) the
prior written consent of (a) the Company, (b) the holders of at least 51% of the
then issued and outstanding Common Stock, and (c) Teltronics; provided, however,
that no such amendment or waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent therein. Any Party
may waive any of its rights or the obligations of the Company to that Party
hereunder without obtaining the consent of any other Person.
6.10 Entire
Agreement. This Agreement, and the
other documents referenced herein, constitute the entire understanding of the
parties hereto with respect to the subject matter hereof, and supersedes any
prior understandings or agreements, oral or written, and no amendment,
modification or alteration of the terms hereof shall be binding unless the same
be in writing, dated subsequent to the date hereof and duly approved and
executed by each of the parties hereto.
6.11 Schedules;
Exhibits. The schedules and exhibits attached to this
Agreement are hereby incorporated into this Agreement.
6.12 No Recourse to
Shareholders. The Parties agree that no Shareholder shall be
liable for any obligation of the Company pursuant to this Agreement and that the
Shareholders will look solely to the property and assets of the Company and that
no property or assets of any Shareholder shall be subject to levy, execution or
other enforcement procedure for the satisfaction of the obligations of the
Company, except to redress any malfeasance on the part any Shareholder in
connection with the Company's failure to perform any such
obligation.
6.13 Fees and
Expenses. Each Party shall pay its respective fees and
expenses in connection with the negotiation, execution and delivery of this
Agreement and the other documents and transactions contemplated
hereby.
6.14 Further
Assurances. Each Party shall cooperate and take such actions
as may be reasonably requested by another Party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
6.15 Condition to
Effectiveness. This Agreement shall become effective upon the
Closing under the Asset Purchase Agreement.
6.16 Counterparts. This
Agreement may be executed (including by facsimile transmission) with counterpart
signature pages or in one or more counterparts, each of which shall be deemed an
original and all of which together shall be considered one and the same
agreement.
6.17 Shares Subject to
Agreement. This Agreement shall apply to (a) the Common Stock
and/or Convertible Securities held by the Parties, if any, as well as any Common
Stock and/or Convertible Securities hereafter acquired by any such Party
(including any Common Stock issued upon the exercise, conversion or exchange of
any Convertible Securities) and (b) and any and all shares of capital stock of
the Company that may be issued in respect of, in exchange for or in substitution
of Common Stock and/or Convertible Securities, by reason of any stock dividend,
split, reverse split, combination, reclassification, merger, recapitalization,
share exchange or other transaction.
6.18 Attorneys’
Fees. Notwithstanding Section 6.13 of this Agreement, if any
Party initiates any legal action arising out of or in connection with this
Agreement, the prevailing Party in such legal action shall be entitled to
recover from the other Party all reasonable attorneys’ fees, expert witness fees
and expenses incurred by the prevailing Party in connection
therewith.
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the date first above written.
|
The
Company:
|
||
|
Teltronics
Direct, Inc.
|
||
| By: | ||
|
Xxxx
Xxxxxxx, President and CEO
|
||
|
Shareholders:
TELTRONICS, INC.
|
||
|
By:
|
|
|
|
Xxxx
Xxxxxxx, President and CEO
|
||
|
Xxxx
Xxxxxxxx
|
||
| Xxxxx X. Xxxxxx | ||
EXHIBIT
A
SHAREHOLDER
INFORMATION
|
Names and
Notice
|
Number of
Shares
of Common Stock
Owned
|
| Teltronics,
Inc.
0000
Xxxxxxxxx Xxxxxxxxxx Xxx
Xxxxxxxx,
Xxxxxxx 00000
Telephone:
000-000-0000
Facsimile:
000-000-0000
|
Eighty-Five
(85)
|
|
Xxxx
Xxxxxxxx
______________________
______________________
|
Seven and
one-half (7.5)
|
|
Xxxxx X.
Xxxxxx
______________________
______________________
|
Seven and
one-half (7.5)
|
EXHIBIT
B
FORM OF JOINDER
AGREEMENT
The
undersigned, having purchased shares of capital stock of Teltronics Direct,
Inc., hereby agrees to be bound by the terms and conditions of, and to become a
party to, the Shareholder Agreement dated December___, 2007 (the “Shareholder
Agreement”) as a “Shareholder” thereunder, the form of which is attached hereto,
as if the undersigned had been a party to such agreement as of the date
thereof.
Name:
Signature:
Address:
Facsimile
No.:
No. of
Shares:
I, the
undersigned, being the spouse of the above-named Shareholder, hereby acknowledge
that I have read and understand the Shareholder Agreement, and I agree to be
bound by the terms thereof.
Name:
Signature:
EXHIBIT
E
ASSUMED
LIABILITIES
Servicing obligations after the Closing
under Maintenance agreements to be approved by Purchaser prior to
Closing.
EXHIBIT
F
FINANCIAL
STATEMENTS
|
1.
|
Access
Profit & Loss Statements for the 12-Month Periods ended December 31,
2005 and 2006.
|
|
2.
|
Access
Balance Sheets as of December 31, 2005 and
2006.
|
|
3.
|
Access
Profit & Loss Statement for the Nine Month Period from January 1, 2007
through September 30, 2007.
|
|
4.
|
Access
Balance Sheet as of September 30,
2007.
|
|
5.
|
Xxxxxxx
Profit & Loss Statements for the 12-Month Periods ended December 31,
2005 and 2006.
|
|
6.
|
Xxxxxxx
Balance Sheets as of December 31, 2005 and
2006.
|
|
7.
|
Xxxxxxx
Profit & Loss Statement for the Nine Month Period from January 1, 2007
through September 30, 2007.
|
|
8.
|
Xxxxxxx
Balance Sheet as of September 30.
2007.
|
EXHIBIT
G
CUSTOMERS AND
CONTRACTS
Previously provided to Purchaser by
Sellers and to be reaffirmed and approved by Purchaser prior to
Closing.
EXHIBIT
H
JUDGMENTS
AND LIENS NOT AGAINST SELLERS OR THE ASSETS
1. Scansource
Inc.
2. North
Supply Company dba Sprint North Supply
3. Oasis
Outsourcing, Inc. fka Professional Employee Management, Inc.
4. Xxxxx
& Associates Accounting and Tax Services Inc.
5. Accu-Tech
Corporation
6. Xxxx
Xxxx, an individual
7. Florida
Department of Revenue
EXHIBIT
I
EMPLOYMENT
AGREEMENT
Employment
Agreement (“Agreement”), between Teltronics Direct, Inc. (the "Company") and
(the "Employee"), dated December __ ,
2007.
1. For
good consideration, the Company employs the Employee on the following terms and
conditions.
2. Term of Employment. Subject to
the provisions for termination set forth below, this Agreement will begin on the
date first set forth above and continue for a period of five (5)
years.
3. Compensation. The Company
shall pay Employee a salary of $_____ per year, for the services of the
Employee, payable at regular payroll periods as available. Employee’s salary
shall be subject to increases after the first year as determined and approved by
the Board of Directors of the Company. In addition, the Company shall pay a
commission of ___ percent (__%) of all collected revenues received on sales
of products and services approved by the President of the Company, less sales
and/or use taxes actually paid, import and/or export duties actually paid,
outboard transportation paid, prepaid or allowed, and amounts due or credited
due to returns.
4. Duties and Position. The
Company shall employ the Employee in the capacity of Vice President of Sales and
Marketing. The Employee's duties may be modified at the Company's discretion
from time to time.
5. Employees to Devote Full Time to
Company. The Employee will devote full time, attention, and energies to
the business of the Company, and, during this employment, will not engage in any
other business activity, regardless of whether such activity is pursued for
profit, gain, or other pecuniary advantage. Employee is not prohibited from
making personal investments in any other businesses provided those investments
do not require active involvement in the operation of said companies and these
other businesses do not in any way compete with the business activities now or
as they may exist during the period of Employee’s employment with the
Company.
6. Confidentiality of Proprietary
Information. Employee agrees, during and after the term of this
Agreement, not to reveal confidential information or trade secrets of the
Company (“Confidential Information”) to any person, firm, corporation, or
entity. Should Employee reveal or threaten to reveal Confidential Information,
the Company shall be entitled to an injunction restraining the Employee from
disclosing same, or from rendering any services to any entity to whom said
information has been or is threatened to be disclosed. The right to secure an
injunction is not exclusive, and the Company may pursue any other remedies it
has against the Employee for a breach or threatened breach of this condition,
including the recovery of damages from the Employee.
7. Reimbursement of Expenses. The
Employee may incur reasonable expenses for furthering the Company's business,
including expenses for entertainment, travel, and similar items. The Company
shall reimburse Employee for all business expenses for which Employee first
obtained the written approval of the President of the Company and presents an
itemized account of expenditures. The Employee will be provided a monthly Auto
Allowance of $____, plus reimbursement of reasonable auto
insurance. In addition, the Company will reimburse 80% of the
Employee’s approved business cost of cell phone use and 100% of the Employee’s
approved business use of internet services.
8. Vacation. The Employee shall
be entitled to a total of four (4) weeks of vacation time at full pay
per year from the Closing Date.
9. Insurances and Disability.
The Employee and his family will receive full medical and dental
benefits paid by the Company on terms commensurate with those offered to
employees of Teltronics, Inc.
10. Termination of Agreement. The
Company may terminate Employee’s employment only upon thirty (30) days prior
written notice upon the occurrence of any of the following events
(each a “Termination Event”):
(a) Employee’s
death;
(b) Employee’s
absence from work for any reason for a continuous period of more than ten (10)
days (excluding holidays, vacation and sick time) in any 365 day period within
the term of this Employment Agreement;
(c) Any
breach, default, non-performance, or non-compliance with the terms and
conditions of this Employment Agreement which goes uncured for more than 30
days;
(d) any
conduct constituting a breach of any duty of loyalty or good faith owed by
Employee to the Company which goes uncured for more than 30 days;
(e) commission
of any criminal violation of law, excluding traffic violations;
(f) The
sale of substantially all of the Company's assets to a single purchaser or group
of associate purchasers; or
(g) The
sale, exchange, or other disposition, in one transaction of the majority of the
Company's outstanding capital stock; or
(h) The
Company’s decision to terminate its business and liquidate its
assets;
(i) The
merger or consolidation of the Company with another company; or
(j) Bankruptcy
or chapter 11 reorganization of the Company.
(k) Failure
to fully perform and discharge the obligations of Employee described in Article
VIII of the Asset Purchase Agreement by and among Employee, Company and other
parties dated December 19, 2007.
11. Prohibited Activities.
Employee agrees that he will not, during the term of this Agreement and for a
period of three (3) years following the termination of his employment with the
Company, for any reason, directly or indirectly, for himself or on behalf of or
in conjunction with any other person, company, partnership, corporation or
business of whatever nature, engage, as an officer, director, shareholder,
owner, partner, joint venturer, or in a managerial or advisory capacity, whether
as an employee, independent contractor, consultant or advisor, or as a sales
representative, in any Competing Business within the State of Florida
(the “Territory”). Notwithstanding the above, the foregoing covenant shall not
be deemed to prohibit Employee from acquiring, as a passive investor with no
involvement in the operations of the business, less than five percent (5%) of
the capital stock of a business engaging in or operating a Competing Business
within the Territory whose capital stock is publicly traded on a national
securities exchange or over-the-counter. “Competing Business” shall mean any
business entity who engages in any activity which competes with any business s
activity of the Company and/or Teltronics, Inc. and/or their affiliates as may
be conducted during the term of this Agreement.
12. Non-Solicit. Employee will
not, during the term of this Agreement and for a period of five (5) years
following the termination of his employment with the Company, for any reason,
directly or indirectly solicit or engage in any business activity with any
current vendor or customer of the Company and/or Teltronics, Inc. and/or their
affiliates or any prospective customer whom Employee has ever contacted or
attempted to contact on behalf of the Company or on behalf of Xxxx Xxxxx, LLC,
FMG Ventures, LLC or JC Ventures, LLC.
13. Assistance In Litigation.
Employee shall upon reasonable notice, furnish such information and proper
assistance to the Company as it may reasonably require in connection with any
litigation in which it is, or may become, a party either during or after
Employee’s employment.
14. Merger. This Agreement
supercedes any and all prior agreements or understandings, oral or written, with
respect to the subject matter hereof, including specifically but not exclusively
any and all prior non-competition and/or non-solicitation agreements, written
and/or oral, all of which are hereby terminated.
15. Choice of Law and Venue. Any
claim or controversy that arises out of or relates to this Agreement may be
litigated in the state and federal courts situated in Manatee County, Florida.
The Company and the Employee expressly consent to the venue of those courts and
waive all defenses related to jurisdiction and venue in any proceeding arising
out of this Agreement, which shall be interpreted and enforced pursuant to the
laws of the State of Florida.
16. Limited Effect of Waiver by
Company. Should Company waive breach, default, non-performance or
non-compliance of any provision of this Agreement by the Employee, that waiver
will not operate or be construed as a waiver of further breach, default,
non-performance or noncompliance by the Employee.
17. Severability; Reformation. The
covenants in this Agreement are severable and separate, and the unenforceability
of any specific covenant shall not affect the continuing validity and
enforceability of any other covenant. In the event any court of competent
jurisdiction shall determine that the scope, time or territorial restrictions
set forth in this Agreement are unreasonable, then it is the intention of the
parties that such restrictions be enforced to the fullest extent which the court
deems reasonable and this Agreement shall thereby be reformed.
18. Equitable Relief. Because of
the difficulty of measuring economic losses to the Company as a result of a
breach of the covenants contained in this Agreement and because of the immediate
and irreparable damage that could be caused to the Company for which it would
have no other adequate remedy, the Company and the Employee each agree that the
foregoing covenants may be enforced by the Company by injunctions, restraining
orders and other equitable actions without the necessity or obligation of
posting bond.
19. Reasonable Restraint. The
Company and Employee each acknowledge and agree that the agreements hereunder
are necessary for the protection of the legitimate business of the Company and
that the foregoing covenants impose a reasonable restraint on the Employee in
light of the activities and business of the Company on the date of the execution
of this Agreement an the current plans of the Company.
Signed
this _____ day of December, 2007.
_________________________________
Employee
Teltronics
Direct, Inc.
By:__________________________
Xxxx
Xxxxxxx, President and CEO
EXHIBIT
J
XXXXXX
& XXXXX, P.A.
0000 Xxxx
Xxxxxx, Xxxxx 000
Xxxxxxxx,
Xxxxxxx 00000
December
___, 2007
Teltronics,
Inc.
0000
Xxxxxxxxx Xxxxxxxxxx Xxx
Xxxxxxxx,
Xxxxxxx 00000
Teltronics
Direct, Inc.
0000
Xxxxxxxxx Xxxxxxxxxx Xxx
Xxxxxxxx,
Xxxxxxx 00000
RE: FMG Ventures, LLC dba Access
Communications and JC Ventures, LLC dbaCollier Business Systems to
Teltronics Direct, Inc.
Ladies
and Gentlemen:
We have
acted as counsel to FMG Ventures, LLC, a Florida limited liability company doing
business as Access Communications (“Access”), JC Ventures, LLC, a Florida
limited liability company doing business as Xxxxxxx Business Systems
(“Xxxxxxx”), Xxxx Xxxxx, LLC, a Delaware limited liability company (“Xxxx
Xxxxx”), Xxxx Xxxxxxxx (“JM”) and Xxxxx Xxxxxx (“CF”) in connection with the
execution and delivery to you by Access, Xxxxxxx and Xxxx Xxxxx of documents set
forth on Exhibit A attached hereto (each individually a “Transaction Document”
and collectively the “Transaction Documents”). Terms used in this
opinion have the same meaning as defined in the Transaction
Documents.
Based
upon our examination and investigation necessary to render this opinion, we are
of the opinion that:
1. Access and
Xxxxxxx are limited liability companies duly organized, validly existing and in
good standing under the laws of the State of Florida. Xxxx Xxxxx is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware and duly qualified to conduct business
in the State of Florida.
2. Access,
Xxxxxxx, Xxxx Xxxxx, XX and CF have the power, authority and legal right to
execute, deliver and perform the Transaction Documents. The
execution, delivery and performance of the Transaction Documents by Access,
Xxxxxxx and Xxxx Xxxxx have been duly authorized by the Manager and Members of
Access, Xxxxxxx and Xxxx Xxxxx. The Transaction Documents have been,
and the other agreements, documents and instruments required to be delivered by
Access, Xxxxxxx and Xxxx Xxxxx in accordance with the provisions thereof have
been duly executed and delivered on behalf of Access, Xxxxxxx and Xxxx Xxxxx by
their duly authorized representatives. The Transaction Documents will
constitute legal, valid and
3. The
execution, delivery and performance of the Transaction Documents and the
transactions contemplated therein do not and will not violate, conflict with or
result in the breach of (i) any term, condition or provision of, or require the
consent of any other person under, any existing law, ordinance or governmental
rule or regulation to which Access, Xxxxxxx, Xxxx Xxxxx, XX or CF is subject,
(ii) any judgment, order, writ, injunction, decree or award of any court,
arbitrator or governmental or regulatory official, body or authority which is
applicable to Access, Xxxxxxx, Xxxx Xxxxx, XX or CF, (iii) the Articles of
Organization, Operating Agreement or other organizational or governing documents
of Access, Xxxxxxx or Xxxx Xxxxx, or (iv) any mortgage, indenture, agreement,
contract, commitment, lease, plan, authorization or other instrument, document
or understanding, oral or written, to which Access, Xxxxxxx, Xxxx Xxxxx, XX or
CF is a party, by which Access, Xxxxxxx, Xxxx Xxxxx, XX or CF may
have rights, or by which any of the Assets may be bound or affected, or give any
party with rights thereunder the right to terminate, modify, accelerate or
otherwise change the existing rights or obligations of Access, Xxxxxxx, Xxxx
Xxxxx, XX or CF thereunder.
4. Access and
Xxxxxxx have good, valid and marketable title in and to all of the Assets, free
and clear of all mortgages, liens, pledges, security interests, charges,
demands, claims, restrictions and other encumbrances and defects of title of any
nature whatsoever, other than those set forth in Exhibit B attached to
the Asset Purchase Agreement. Exhibit H attached to the Asset
Purchase Agreement lists judgments that are not filed against or relate in any
manner to the Sellers or the Assets and cannot form a basis for any claim or
demand against the Sellers, the Assets, Purchaser or
Teltronics. Exhibit K attached to the Asset Purchase Agreement
contains a complete list of judgments and liens against the Assets which have
been fully paid. The documents provided to Purchaser to prove
payments and releases of the judgments and liens listed in Exhibit K are true,
correct and complete and were obtained without agreement, commitment, condition
or contingency of any kind. A payoff letter showing the precise
settlement amount of $112, 679.93 to resolve all obligations of Access and
Xxxxxxx to the IRS as of December 24, 2007 is attached as Exhibit C
hereto.
5. No
litigation, including any arbitration, investigation or other proceeding of or
before any court, arbitrator or governmental or regulatory official, body or
authority is pending or threatened against Access or Xxxxxxx or any of their
affiliates other than those set forth in Exhibit B attached to the Asset
Purchase Agreement. There is no other litigation, including any
arbitration, investigation or other proceeding of or before any court,
arbitrator or governmental or regulatory official, body or authority that is
pending or threatened against Access or Xxxxxxx or any of their affiliates that
relates to the Assets, the Business or the transactions contemplated by the
Transaction Documents, nor do we know of any reasonably likely basis for any
litigation, arbitration, investigation or proceeding, the result of which could
materially adversely affect Access, Xxxxxxx, the Assets, the Business or the
transactions contemplated by the Transaction Documents. Neither of
Access and Xxxxxxx is a party to or subject to the provisions of any judgment,
order, writ, injunction, decree or award of any court, arbitrator or
governmental or regulatory official, body or authority which may adversely
affect Access, Xxxxxxx, the Assets, the Business or the transactions
contemplated by the Transaction
Documents. There
is no statutory or common law basis for any person or entity to make any claim
or demand or commence or continue any arbitration, investigation or other
proceeding which could result in the rescission of, or imposition or any other
equitable remedy on any portion or all of the transactions contemplated in the
Transaction Documents or could result in any claim or demand against the Assets,
the Purchaser or Teltronics.
Very truly
yours,
Xxxxxx &
Xxxxx, P.A.
By:
____________________________
Xxxxx
X. Xxxxxxxxx
EXHIBIT
A
The Transaction Documents consist of
the following:
|
(a)
|
Asset Purchase
Agreement by and among Access, Xxxxxxx, XxxxXxxxx, Xxxx Xxxxxxxx, Xxxxx
Xxxxxx and Teltronics Direct, Inc. dated
December 19, 2007 with attached Exhibits A through
K
|
|
(b)
|
Escrow
Agreement by and among Access, Xxxxxxx, Xxxx Young, Xxxx Xxxxxxxx, Xxxxx
Xxxxxx and Teltronics Direct, Inc. dated December ___,
2007
|
|
(c)
|
Shareholder
Agreement by and among Xxxx Xxxxxxxx, Xxxxx Xxxxxx and Teltronics Direct,
Inc. dated December ___, 2007
|
|
(d)
|
Pledge
Agreement by and among Xxxx Xxxxxxxx, Xxxxx Xxxxxx and Teltronics Direct,
Inc. dated December ___, 2007
|
|
(e)
|
Employment
Agreement by and among Xxxx Xxxxxxxx, Xxxxx Xxxxxx and Teltronics Direct,
Inc. dated December ___, 2007
|
EXHIBIT
B
LIENS AND
PENDING LAWSUITS AGAINST SELLERS AND/OR THE ASSETS
|
(a)
|
The
Liens of the IRS. The IRS have computed and provided a payoff
amount as of December 24, 2007 of $112,679.93 which will be paid from the
closing proceeds and releases running to Sellers will be exchanged for the
specified funds at the Sarasota District Director’s local
office.
|
|
(b)
|
Limetree
Beach Resort Condominium Association, Inc. v. FMG Ventures, L.L.C. d/b/a
Access Communications, commenced by Summons and Complaint filed October 3,
2007 in the Circuit Court of the Twelfth Judicial Circuit, Sarasota
County, Florida, case No.
2007CA10923NC
|
|
(c)
|
Merry
Mechanization, Inc. v. FMG Ventures, L.L.C. d/b/a Access Communications
and JC Ventures, L.L.C. d/b/a Xxxxxxx Business Systems, commenced by
Summons and Complaint filed November 2, 2007 in the County Court of the
Twelfth Judicial Circuit, Sarasota County, Florida, case No.
2007CC7922NC
|
|
(d)
|
X.X.
Xxxxxxxx Publishing & Advertising, Inc. v. JC Ventures LLC d/b/a
Xxxxxxx Business Systems, commenced by Summons and Complaint filed in the
Circuit Court of the Twelfth Judicial Circuit, Sarasota County, Florida,
case No. 2007CA10275NC
|
|
(e)
|
*Toshiba
America Information Systems, Inc. v. Access Communications, Inc., Xxxx X.
Xxxxxxxx, Xxxxx Xxxxxx and DOES 1 to 50, commenced by Summons and
Complaint filed in the Superior Court of California, County of Orange,
case No. 07CC08726
|
* A
judgment has been entered in Case 07CC08726 in the Superior Court of the State
of California for the County of Orange. The complaint provided for
the Plaintiff or its authority to have leave of the court to amend the complaint
to show true names and capacities and the defendant company’s legal
names. The guarantee attached to the complaint identified the company
as FMG Ventures, LLC and JC Ventures LLC. On the basis thereof the
judgment may be subject to amendment to incorporate a claim against the Sellers,
FMG Ventures, LLC and JC Ventures LLC and are accordingly listed herein as a
lien against the Sellers.
EXHIBIT
C
Payoff
Letter From IRS
EXHIBIT
K
DISCHARGE OF JUDGMENTS AND
LIENS PAID BY SELLERS
1. Xxxxxxxxx
Xxxxxxxx & Co., P.A.
2. Xxxxx
Distributors, Inc. fdba Catalyst Telecom, Inc.
EXHIBIT
L
PLEDGE
AGREEMENT
THIS
PLEDGE AGREEMENT (“Agreement”), dated December ___, 2007, is made by
and among Xxxx Xxxxxxxx, an individual residing at 00000 Xxxxxx Xxxxxx Xxx Xxx.,
Xxxxxxxxx, Xxxxxxx 00000 (“JM”) (“Pledgor”); in favor of Teltronics Direct,
Inc., a Florida corporation with its principal office located at 0000 Xxxxxxxxx
Xxxxxxxxxx Xxx, Xxxxxxxx, Xxxxxxx 00000 (“Pledgee”).
W I T N E S S E T H:
WHEREAS,
Pledgor, pursuant to a certain Asset Purchase Agreement dated December 19, 2007
(the “Asset Purchase Agreement”) by and among Pledgor; Pledgee; Xxxx Xxxxx, LLC,
a Delaware limited liability company with its principal place of business
located at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx X, Xxxxxxxx, Xxxxxxx 00000 (“Xxxx
Xxxxx”); FMG Ventures, LLC, a Florida limited liability company doing business
as Access Communications with its principal place of business located at 0000
Xxxxxxxxx Xxxxxxxxx, Xxxxx X, Xxxxxxxx, Xxxxxxx 00000 (“Access”); JC Ventures,
LLC, a Florida limited liability company doing business as Xxxxxxx Business
Systems with its principal place of business located at 0000 Xxxxxxxxx
Xxxxxxxxx, Xxxxx X, Xxxxxxxx, Xxxxxxx 00000 (“Xxxxxxx”) (Access and Xxxxxxx
collectively referred to as “Sellers”); is receiving seven and one-half (7.5)
shares of the Common Stock of Pledgee on the date of this Agreement;
and
WHEREAS,
Pledgor is making and agrees to representations, warranties and covenants within
the Asset Purchase Agreement and its Exhibits on which Pledgee is relying and
will continue to rely, and without which Pledgee would be unwilling to execute
the Asset Purchase Agreement; and
WHEREAS,
as consideration for the execution of this Agreement by the Pledgee, and to
further secure the obligations of the Pledgee under the Asset Purchase
Agreement, Pledgor agrees to pledge and grant to Pledgee a security interest in
(i) seven and one-half (7.5) shares of the Common Stock of Pledgee (the
“Stock”), (ii) any other interest in Pledgee now owned or hereafter acquired by
Pledgor, and (iii) Distributions (as defined below) to Pledgor of or from
Pledgee (each, a “Pledged Interest” and, collectively, the “Pledged
Interests”).
NOW
THEREFORE, in consideration of the premises and the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency whereof are hereby acknowledged, the parties hereto hereby covenant
and agree as follows:
Section
1. Pledge. Pledgor
hereby pledges, assigns, hypothecates, delivers, sets over and grants to Pledgee
a lien on and first priority security interest in and to all right, title and
interest of Pledgor in the Pledged Interests, any certificates, instruments or
documents representing the same, all options and other rights, contractual or
otherwise, in respect thereof (including, without limitation, any registration
rights) and all dividends, distributions, liquidation proceeds, cash,
instruments and other property (including, without limitation, additional stock
or securities distributed in respect of any Pledged Interests by way of stock
splits, spin-offs, reclassification, combination, consolidation, merger or
similar arrangement) to which Pledgor is entitled with respect to the Pledged
Interests, whether or not received by or otherwise distributed
to
Pledgor, whether such dividends, distributions, liquidation proceeds, cash,
instruments and other property are paid or distributed by Pledgee in respect of
operating profits, sales, exchanges, refinancing, condemnations or insured
losses of the assets of Pledgee, the liquidation of Pledgee’s assets and
affairs, management fees, guaranteed payments, repayment of loans, reimbursement
of expenses or otherwise (collectively, the “Distributions”) in respect of or in
exchange for any or all of the Pledged Interests, and Pledgor’s rights, remedies
and benefits under the Organizational Documents of Pledgee, all rights and
powers of Pledgor arising under the Organizational Documents of
Pledgee or under law, including, without limitation, all rights of Pledgor to
vote on any matter specified therein or under law; all rights of Pledgor to
cause an assignee to be substituted as shareholder, in Pledgee in the place and
stead of Pledgor; all rights, remedies, powers, privileges, security interests,
liens, and claims of Pledgor for damages arising out of or for breach of or
default under the Organizational Documents of Pledgee; all rights of Pledgor to
access to the books and records of Pledgee and to other information concerning
or affecting Pledgee. The security interests, rights, remedies and
benefits of Pledgee granted by this Section 1 and all proceeds
thereof are hereinafter collectively referred to as the “Pledged
Collateral.” Pledgor irrevocably and unconditionally waives all
rights, if any, which may exist in his favor to purchase or acquire any of the
Pledged Collateral to the extent the same may arise as a result of the pledge
thereof effected hereby, or the acquisition or disposition thereof by Pledgee or
any other Person pursuant to the rights and remedies afforded Pledgee hereunder
or any exercise thereof. “Organizational Documents” shall mean with
respect to Pledgee, its Articles of Organization and Operating Agreement and any
exhibits or schedules thereto (as amended, supplemented or modified from time to
time).
Section
2. Security for
Obligations. This Agreement secures (i) any and all
obligations of Pledgor under the Asset Purchase Agreement, and/or the
Shareholder Agreement between Pledgor and Pledgee of even date herewith
(“Shareholder Agreement”) (ii) any and all obligations of Pledgor now or
hereafter existing under this Agreement, and (iii) any and all other obligations
of Pledgor to Pledgee now or hereafter existing (all such obligations being
hereinafter collectively referred to as the “Obligations”).
Section
3. Delivery of Pledged
Collateral.
(a) Concurrent
with this Agreement: (i) the Pledged Interests shall be delivered, transferred
to or placed under the control of the Pledgee by Pledgor by certificates,
instruments, or other documents now or hereafter representing or evidencing the
Pledged Collateral (“Certificates”) and, as appropriate, shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form and
substance reasonably satisfactory to Pledgee; (ii) Pledgor shall deliver to
Pledgee such Uniform Commercial Code financing statements, executed by Pledgor
and in a form ready for filing, as may be necessary or desirable to perfect
and/or evidence the security interests in the Pledged Collateral granted to
Pledgee pursuant to this Agreement; and (iii) Pledgor shall deliver
satisfactory evidence to Pledgee in its sole discretion that all other filings,
recordings, registrations and other actions Pledgee deems necessary or desirable
to establish, preserve and perfect the security interests and other rights
granted to Pledgee pursuant to this Agreement shall have been made.
(b) If
Pledgor shall acquire (by purchase, Distribution or otherwise) any additional
securities or ownership interest of any kind or nature in, or rights to
Distributions from, or relating to, Pledgee (collectively, “Securities”) at any
time or from time to time after the date hereof, Pledgor will forthwith pledge
and deliver such Securities (and all certificates or instruments representing
such Securities) as collateral with Pledgee and deliver to Pledgee the other
documents and evidence described in the preceding Section 3(a) to effect any
transfer thereof as required hereby, together with a certificate executed by
Pledgor describing such Securities and certifying that the same have been duly
pledged with Pledgee hereunder.
(c) If
Pledgor shall come into possession of any Distribution, including any dividends,
distributions, liquidation proceeds, cash or other property paid or distributed
with respect to the Stock at any time or from time to time after the date
hereof, Pledgor shall surrender such Distributions to Pledgee who may apply any
such Distributions to any portion of the Obligations then due or hold such
Distributions as part of the Pledged Collateral.
(d) Pledgee
shall have the right to appoint one or more agents for the purpose of retaining
physical possession of any of the Pledged Collateral, which may be held (in the
discretion of Pledgee) in the name of Pledgor, or endorsed or assigned in blank
or in favor of Pledgee or any nominee or nominees of Pledgee or any agent
appointed by Pledgee in accordance herewith.
Section
4. Voting Power,
Etc. Notwithstanding anything to the contrary contained in
Section 1 hereof, provided that no Event of Default (as hereinafter defined)
shall have occurred and be continuing, but subject in all respects to the terms,
conditions, prohibitions or limitations on the actions of Pledgor as a
shareholder of Pledgee provided in the Organizational Documents of Pledgee,
Pledgor shall be entitled to exercise all voting, consensual and other powers of
ownership pertaining to the Pledged Collateral (including, without limitation,
to make determinations, to exercise any election (including, without limitation,
election of remedies) or option, and to give or receive any notice, consent,
amendment, waiver, approval or other rights described in Section 1 hereof),
provided that no ratification shall be given, nor any power pertaining to the
Pledged Collateral exercised, nor any other action taken, which would violate or
be inconsistent with the terms of this Agreement or which would have the effect
of impairing the position or interests of Pledgee, or, in each case, in such a
manner as would reasonably be expected to have an adverse effect on the ability
of Pledgor to perform its obligations hereunder. If any of the
foregoing rights are exercised by Pledgor, Pledgor shall promptly give written
notice to Pledgee of its exercise of such right. Upon the occurrence
of any Event of Default and for so long as such Event of Default is continuing,
Pledgee shall have the sole and exclusive right to exercise all voting,
consensual and other powers of ownership pertaining to the Pledged
Collateral.
Section
5. No
Assumption. Notwithstanding anything contained herein to the
contrary, whether or not an Event of Default shall have occurred, and whether or
not Pledgee elects to foreclose or otherwise realize on its security interest in
the Pledged Collateral as set forth herein or exercise any of its rights under
this Agreement or otherwise, neither this Agreement, receipt by Pledgee of any
Distributions, the foreclosure or other realization by Pledgee of the security
interest in the Pledged Collateral nor any exercise by Pledgee of
any of
its rights under this Agreement or otherwise, shall in any way be deemed to
obligate Pledgee to assume any of Pledgor’s obligations, duties, expenses or
liabilities with respect to the Pledged Collateral or any agreement relating
thereto, and in the event of any such foreclosure, realization or other exercise
of rights, Pledgor shall remain bound and obligated to perform such obligations
and Pledgee shall not be deemed to have assumed any of such
obligations.
Section
6. Events of
Default. The occurrence of any of the following events shall
constitute an “Event of Default” under this
Agreement: (a) Pledgor shall at any time fail timely to
perform or comply with any provision of this Agreement or the Asset Purchase
Agreement after Pledgor actually obtains knowledge of such default or after
notice of such default and a cure period of ten (10) days during which to cure
such default; or (b) any of the covenants, agreements, representations or
warranties made by Pledgor in this Agreement, the Asset Purchase
Agreement and/or the Shareholder Agreement shall be, or at any time shall
become, false or inaccurate in any material respect after Pledgor actually
obtains knowledge of such default or after notice of such default and a cure
period of ten (10) days during which to cure such default; or (c) if
there shall occur any Event of Default under the Escrow Agreement attached as
Exhibit C to the Asset Purchase Agreement.
Section
7. Representations, Warranties
and Covenants. Pledgor represents and warrants to, and agrees
with, Pledgee as follows:
(a) Pledgor
has full power and authority to execute and deliver to Pledgee this Agreement,
and to perform the obligations and carry out the duties imposed upon Pledgor by
this Agreement, without any conflicting obligation whatsoever, whether imposed
by operation of any contract or other arrangement, law, rule, regulation or
order by any governmental entity.
(b) Pledgor
is, and at all times will be, the only record and beneficial owner of the
Pledged Collateral. Pledgor will defend Pledgee’s right, title and
interest in and to the Pledged Collateral pledged by it pursuant hereto against
the claims and demands of any third party. The costs and expenses
incurred by Pledgor to defend Pledgee’s rights, title and interests in and to
the Pledged Collateral, shall be borne solely and exclusively by
Pledgor.
(c) Pledgor’s
rights to Distributions, if any, under the Organizational Documents of Pledgee
are not subject to any defense, offset, counterclaim or contingency
whatsoever. Giving effect to the aforesaid grants and pledges to
Pledgee and the deliveries required hereunder, Pledgee has, as of the date of
this Agreement, and, as to any Pledged Collateral acquired from time to time
after such date, shall have, a valid, perfected and continuing first priority
lien upon and security interest in the Pledged Collateral; provided, however, that no
representation or warranty is made with respect to the perfected status of the
security interest of Pledgee in the proceeds of the Pledged Collateral
consisting of “cash proceeds” or “non-cash proceeds” as defined in the Uniform
Commercial Code in effect in the State of Florida (the “Code”).
(d) Pledgor
agrees to pay, and to save Pledgee harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all stamps, excise,
sales or other taxes which may be payable or determined to be payable with
respect to any of the
Pledged
Collateral or in connection with any of the transactions contemplated by this
Agreement or the exercise by Pledgee of any right or remedy granted to
it.
(e) Pledgor
shall not transfer any of the Pledged Collateral until payment or satisfaction
in full of the Obligations.
(f) This
Agreement and each provision herein has been duly authorized, executed and
delivered by Pledgor and constitutes the legal, valid and binding obligation of
Pledgor, enforceable against Pledgor in accordance with its terms.
The
representations, warranties and covenants set forth in this Section 7 shall survive the
execution and delivery of this Agreement.
Section
8. Further
Assurances. Pledgor agrees that at any time and from time to
time Pledgor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be reasonably necessary or
desirable, or that Pledgee may request, in order to perfect and protect any
security interest granted or purported to be granted or to enable Pledgee to
exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral.
Section
9. Distributions.
(a) Upon
the occurrence and continuation of an Event of Default:
(i) All
rights of Pledgor to receive Distributions and any and all proceeds from the
sale or other disposition of the Pledged Collateral (or any portion thereof)
which Pledgor would otherwise be authorized to receive and retain shall cease,
and all such rights shall thereupon become vested in Pledgee, who shall
thereupon have the sole right to receive and hold as Pledged Collateral such
Distributions and proceeds.
(ii) All
Distributions and proceeds which are received by Pledgor contrary to the
provisions of paragraph (a) of this Section 9 shall be received
in trust for the benefit of Pledgee, shall be segregated from other funds of
Pledgor and shall be forthwith paid over to Pledgee as Pledged Collateral in the
same form as so received (with any necessary endorsement).
(iii) All
Distributions received by Pledgor in a partial or total liquidation of Pledgee
shall, in the event that any of the Obligations remain outstanding at the time
of such partial or total liquidation, be paid to Pledgee and applied by Pledgee
to such outstanding Obligations.
Section
10. Transfers and Other Liens;
Additional Interests. Pledgor agrees, so long as any of the
Obligations are outstanding, not to:
(a) sell,
transfer or otherwise dispose of, or grant any option or similar right with
respect to, any of the Pledged Collateral; or
(b) create
or permit to exist any lien, security interest or other charge or encumbrance
upon or with respect to any of the Pledged Collateral.
Section
11. Appointment of
Attorney-in-Fact. Pledgor hereby appoints Pledgee the
attorney-in-fact for Pledgor, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, from time to time in
Pledgee’s discretion to take any action and to execute any instrument which
Pledgee may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, to receive, endorse and collect all
Distributions and any instruments made payable to Pledgor representing any
dividend, interest payment or other Distributions in respect of the Pledged
Collateral or any part thereof and to give full discharge for the
same. Pledgor agrees that the foregoing power constitutes a power
coupled with an interest which may not be revoked and which shall survive until
all of the Obligations shall have been indefeasibly paid in full and satisfied,
provided that except with respect to the execution and filing of the Uniform
Commercial Code Financing Statements, this paragraph shall not be effective
until the occurrence of an Event of Default.
Section
12. Pledgee to
Perform. If Pledgor fails to perform any agreement contained
herein, Pledgee may itself perform, or cause performance of, such agreement, and
the expenses of Pledgee incurred in connection therewith shall be payable by
Pledgor in accordance with Section 17 hereof.
Section
13. Remedies Upon
Default. Upon the occurrence of any Event of
Default:
(a) Pledgee
may, without any notice to Pledgor of the occurrence of such Event of Default,
exercise in respect of the Pledged Collateral, in addition to the other rights
and remedies provided for herein or otherwise available to Pledgee, all the
rights and remedies of a secured party under the Code in effect at that time,
and Pledgee may also, without notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at public or private sale,
at any exchange, broker’s board or at any of Pledgee’s offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as Pledgee may
deem commercially reasonable. Pledgor agrees that, to the extent
notice of sale shall be required by law, at least ten (10) business days notice
to Pledgor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable
notification. Pledgee shall not be obligated to make any sale of
Pledged Collateral regardless of notice of sale having been
given. Pledgee may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefore, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
(b) Pledgee
may transfer all or any part of the Pledged Collateral into Pledgee’s name or
the name of its nominee or nominees, by endorsing the Certificates.
(c) Pledgee
may vote all or any part of the Pledged Collateral (whether or not transferred
into the name of Pledgee) and give all consents, waivers and ratifications in
respect of the Pledged Collateral and otherwise act with respect thereto as
though it were the outright owner thereof (Pledgor hereby irrevocably
constituting and appointing Pledgee the proxy and attorney-in-fact of Pledgor,
with full power of substitution to do so).
(d) Any
Pledged Collateral or proceeds thereof held by Pledgee as Pledged Collateral and
all proceeds thereof received by Pledgee in respect of any sale of, collection
from or other realization upon all or any part of the Pledged Collateral may, in
the discretion of Pledgee, be held by Pledgee as collateral for, and/or then or
at any time thereafter, be applied (after payment of any amounts payable to
Pledgee pursuant to Section 17 hereof), in whole or in part by Pledgee for the
benefit of Pledgor, against all or any part of the Obligations and in such order
as Pledgee shall elect. Any surplus of such Pledged Collateral or
proceeds thereof held by Pledgee and remaining after payment or satisfaction in
full of all of the Obligations and the expenses referred to in Section 17 hereof
shall be delivered or paid over to Pledgor or to whomsoever may be lawfully
entitled to receive such surplus.
(e) Each
right, power and remedy of Pledgee provided for in this Agreement or
now or hereafter existing at law or in equity or by statute shall be cumulative
and concurrent and shall be in addition to every other such right, power or
remedy. The exercise or beginning of the exercise by Pledgee of any
one or more of the rights, powers or remedies provided for in this Agreement now
or hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by Pledgee of all such other rights,
powers or remedies, and no failure or delay on the part of Pledgee to exercise
any such right, power or remedy shall operate as a waiver thereof.
Section
14. Jurisdiction, Venue, Service
of Process. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT SHALL BE BROUGHT, AT PLEDGEE’S OPTION, ONLY IN THE COURTS OF THE
STATE OF FLORIDA, MANATEE COUNTY OR THE MIDDLE DISTRICT OF
FLORIDA. PLEDGOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS. PLEDGOR IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS AS SET FORTH
ABOVE. PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THE
COURTS REFERRED TO ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING
CONTAINED HEREIN SHALL AFFECT THE RIGHT OF PLEDGEE TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST PLEDGOR IN ANY OTHER JURISDICTION.
Section
15. Jury Trial
Waiver. EACH OF PLEDGOR AND PLEDGEE HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS
Section
16. Indemnity. The
Pledgor agrees to indemnify and hold harmless the Pledgee from and against any
and all claims, demands, losses, judgments and liabilities (including
liabilities for penalties) of whatsoever kind or nature, and to reimburse the
Pledgee for all costs and expenses, including reasonable attorneys’ fees,
growing out of or resulting from this Agreement or the exercise by the Pledgee
of any right or remedy granted to it hereunder; provided, that the Pledgor shall
not be required to indemnify the Pledgee in respect of any claims, demands,
losses, judgments, liabilities, costs or expenses arising from the gross
negligence or willful misconduct of the Pledgee. In no event shall
the Pledgee be liable, in the absence of gross negligence or willful misconduct
on its part, for any matter or thing in connection with this Agreement other
than to account for moneys actually received by it in accordance with the terms
hereof. If and to the extent that the obligations of the Pledgor
under this Section
16 are unenforceable for any reason, the Pledgor hereby agrees to make
the maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law. Notwithstanding any other
provision of this Agreement, the Pledgee shall not be liable hereunder for any
action or failure to act hereunder, except to the extent of its gross negligence
or willful misconduct.
Section
17. Expenses. Upon
demand, Pledgor will pay to Pledgee the amount of any and all expenses,
including the reasonable fees and expenses of Pledgee’s counsel and of any
experts and agents, which Pledgee may incur in connection with (i) the sale of,
collection from, or other realization upon, any of the Pledged Collateral, (ii)
the exercise or enforcement of any of Pledgee’s rights hereunder, or (iii) the
failure by Pledgor to perform or observe any of the provisions
hereof.
Section
18. Amendments, Waivers,
Etc. No amendment or waiver of any provision of this
Agreement, nor consent to any departure by Pledgor herefrom, shall in any event
be effective unless the same shall be in writing and signed by Pledgee, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
Section
19. Notices. All
notices, demands, instructions and other communications required or permitted to
be given to or made upon any party hereto shall be given in the manner specified
in the Asset Purchase Agreement, and at the address of each party hereto set
forth below its signature on the signature page hereto. The parties
hereto may change the address at which they are to receive notices hereunder by
notice in writing in the foregoing manner to all parties.
Section
20. Continuing Security
Interest; Transfer. This Agreement shall create a continuing
security interest in the Pledged Collateral and shall (i) remain in full force
and effect until the indefeasible payment or satisfaction in full of the
Obligations, (ii) be binding upon Pledgor, its permitted transferees,
representatives, successors and assigns, and (iii) inure, together with the
rights and remedies of Pledgee hereunder, to the benefit of Pledgee and its
permitted transferees, representatives, successors and
assigns. Without limiting the generality of
Section
21. Severability. If
for any reason any provision or provisions hereof are determined to be invalid
and contrary to any existing or future law, such invalidity shall not impair the
operation of or affect those portions of this Agreement which are
valid.
Section
22. Governing Law;
Terms. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Florida (without giving
effect to principles of conflicts of law). Unless otherwise defined
herein, terms defined in the Code are used herein as therein
defined.
Section
23. Recitals. The
Recitals at the beginning of this Agreement are hereby incorporated into the
substantive provisions of this Agreement.
Section
24. Counterparts. This
Agreement may be executed in one or more counterparts (including by means of
facsimile or other non-alterable electronic transmission), and it shall not be
necessary that the signature of, or on behalf of, each party, or that the
signatures of all persons required to bind any party, appear on each
counterpart, but it shall be sufficient that the signature of, or on behalf of,
each party, or that the signatures of the persons required to bind any party,
appear on one or more such counterparts. All counterparts shall
constitute one and the same instrument. It shall not be necessary in
making proof of this Agreement or any counterpart hereof to produce or account
for any of the other counterparts.
IN
WITNESS WHEREOF, Pledgor has caused this Pledge Agreement to be executed and
delivered as of the date first set forth above.
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TELTRONICS
DIRECT, INC.
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| By: | |||
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Xxxx
Xxxxxxxx
|
Xxxx
Xxxxxxx, President and CEO
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| Address: |
00000 Xxxxxx Xxxxxx Xxx Xxx.
Xxxxxxxxx, Xxxxxxx 00000
|
Address: |
0000 Xxxxxxxxx Xxxxxxxxxx Xxx
Xxxxxxxx, Xxxxxxx 00000
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PLEDGOR:
* * * *
*
State of
FLORIDA
County
of ________________
On _____________
before me appeared Xxxx Xxxxxxxx, who is personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is subscribed
to within the instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the
instrument.
Notary
Public,
Commission
No. __________________
Expires _________________________
___________________________________
Notary
PLEDGEE:
* * * *
*
State of
FLORIDA
County
of ________________
On ______________
before me appeared Xxxx Xxxxxxx, who is personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is subscribed
to within the instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the
instrument.
Notary
Public,
Commission
No. ___________________
Expires _________________________
________________________________
Notary
