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EXHIBIT 10.19
ASSET PURCHASE AGREEMENT
BY AND AMONG
ONE TOUCH COMMUNICATIONS, INC.,
A GEORGIA CORPORATION,
XXXXX X. XXXXXXX,
XXXX X. XXXXXXXX,
MULTI-LINK TELECOMMUNICATIONS, INC.,
A COLORADO CORPORATION,
AND
ONE TOUCH COMMUNICATIONS, INC.,
A COLORADO CORPORATION
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of December 22, 1999 by and among ONE TOUCH COMMUNICATIONS, INC., a
Georgia corporation ("Seller"), MULTI-LINK TELECOMMUNICATIONS, INC., a Colorado
corporation ("Multi-Link"), ONE TOUCH COMMUNICATIONS, INC., a Colorado
corporation and wholly owned subsidiary of Multi-Link ("Buyer"), XXXXX X.
XXXXXXX, a resident of the State of Georgia ("Xxxxxxx"), and XXXX X. XXXXXXXX, a
resident of the State of North Carolina ("Beguelin," and together with Xxxxxxx,
the "Shareholders"). In this Agreement, Buyer, Multi-Link, Seller and the
Shareholders are sometimes referred to individually as a "Party" and
collectively as "Parties."
RECITALS
A. Seller operates a telecommunications business (the "Business")
located at 0000 Xx. Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx Xxxxxxxx.
B. Shareholders collectively own 100% of the outstanding capital stock
of Seller.
C. Buyer intends to buy, and Seller intends to sell, substantially all
of Seller's assets used in connection with the Business, upon the terms and
conditions of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. TRANSACTION CONFIDENTIALITY; PRESS RELEASES.
1.1 TRANSACTION CONFIDENTIALITY. The Parties agree to keep all
non-public information regarding the other Party strictly confidential, except
as may be required by law, in connection with any lawsuit between or involving
the Parties or any Party, or in connection with the assignment of those
contracts and agreements set forth on the schedule titled "Assumed Contracts"
attached hereto (the "Assumed Contracts"). Further, Seller and the Shareholders
each agree to keep all of the terms, conditions and provisions of this Agreement
strictly confidential at all times and not to disclose or permit the disclosure
of such terms and conditions to any third party whomsoever, except for
disclosures of such information to Seller's or the Shareholders' professional
advisors, who shall agree to keep such information strictly confidential at all
times.
1.2 PRESS RELEASES. Neither Seller nor the Shareholders will issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of Buyer. Buyer may issue such
press releases or public announcements as Buyer's counsel determines may be
required by law to be made by Buyer or any of its Affiliates (as hereinafter
defined).
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1.3 SURVIVAL. The covenants of the Parties contained in this Section 1
will survive the termination of this Agreement or the Closing (as hereinafter
defined).
2. PURCHASED ASSETS; EXCLUDED ASSETS; ASSUMPTION OF LIABILITIES.
2.1 PURCHASED ASSETS. On the Closing Date (as hereinafter defined),
Seller will sell to Buyer, and Buyer will purchase from Seller, all of the
assets used in connection with the Business, other than the Excluded Assets (as
hereinafter defined, the "Purchased Assets"), free and clear of all security
interests, liens, restrictions, claims, encumbrances or charges of any kind
("Encumbrances"). The schedule titled "Purchased Assets" attached hereto lists
the main types and categories of assets that are included, but may not list all
assets that Buyer will acquire hereunder.
2.2 EXCLUDED ASSETS. Buyer will not acquire title to those assets
described on the schedule titled "Excluded Assets" attached hereto (the
"Excluded Assets").
2.3 LIABILITIES NOT ASSUMED. Buyer will not assume, and Seller and the
Shareholders will pay and discharge, any and all debts, obligations and
liabilities of Seller (whether absolute, accrued, contingent, fixed or
otherwise, and whether due or to become due), including, without limitation,
compensation, withholdings, workers' compensation or benefits owing to or with
respect to employees of Seller and all tax liabilities, arising, accruing or
otherwise relating to the period prior to the Closing Date (collectively,
"Seller's Obligations"); provided, however, notwithstanding the foregoing, Buyer
will assume the obligations of Seller with respect to the Assumed Contracts to
the extent arising, accruing or otherwise relating to the period on and after
the Closing Date.
3. PURCHASE PRICE; PAYMENT; ADJUSTMENTS; PRORATIONS; ALLOCATIONS.
3.1 PURCHASE PRICE; PAYMENT. The consideration to be paid by Buyer to
Seller for the Purchased Assets (the "Purchase Price") is payable as follows:
(a) $1,104,867.83 (the "Cash Portion") will be paid by Buyer on
the Closing Date by wire transfers as follows:
$980,000 to Seller; and
$82,876.30 to Associates Capital Corp. in settlement/payoff of
outstanding leases; and
$23,759.53 to Conseco Finance Corp. (f/k/a Greentree Financial
Corp.) in settlement/payoff of outstanding leases; and
$18,232 to Glenayre Electronics Capital Corp. in settlement/payoff
of an outstanding invoice.
(b) $2,020,000 (the "Stock Portion") will be paid by Buyer through
the delivery to Seller of shares of Multi-Link no par value restricted
common stock ("Common Stock"). The number of such shares to be
delivered shall be determined by dividing 2,020,000 by the closing bid
price of one share of Common Stock as reported
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by the NASDAQ Small Cap Market as of the last full trading day prior to
the Closing Date. The number of shares shall be rounded to the nearest
whole number.
(c) Buyer's assumption of obligations under the Assumed Contracts
from and after the Closing Date.
3.2 COMMON STOCK. The Common Stock will be unregistered and restricted
as to the right of resale or distribution in accordance with Rule 144
promulgated under the Securities Act of 1933, as amended ("Rule 144"). In
addition to the restrictions imposed by Rule 144, the Common Stock may not be
transferred without the prior written consent of Multi-Link until the following
time periods have elapsed from the Closing Date:
12 months - 50% of the Common Stock
18 Months - 25% of the Common Stock
24 Months - 25% of the Common Stock
The Common Stock will have appropriate legends typed on the reverse of
the share certificates describing the above restrictions on resale.
Seller agrees and consents to the entry of stop transfer instructions
with Multi-Link's transfer agent and registrar against the transfer of any of
the Common Stock except in compliance with the foregoing restrictions.
Multi-Link may, in its sole discretion, release all or any portion of the Common
Stock subject to this lock-up provision.
Seller further agrees that, during the lock-up period, it shall not
enter into any short sale, swap or any other type of arrangement that transfers
any portion of the economic consequences and benefits associated with the
ownership of the Common Stock without the prior written consent of Multi-Link.
3.3 PRORATIONS. All sales taxes, personal property taxes and
assessments which are past due or have become due upon any of the Purchased
Assets or in connection with the operation of the Business prior to the Closing
Date will be paid by Seller on or before the Closing Date, together with any
penalty or interest thereon. Current personal property taxes will be prorated
and adjusted between Buyer and Seller as of the Closing Date on a due date
basis. If current tax bills are unavailable at the Closing Date, the prior
year's tax bills will be used for proration purposes and taxes will be
re-prorated between Buyer and Seller when the current year's tax bills are
received. Any amounts owed by either Party with respect to such re-proration
will be paid to the other Party within 30 days of the determination of such
re-proration. All expenses of the Business for periods prior to the Closing Date
will be the obligation of and payable by Seller and all expenses of the Business
for periods on and after the Closing Date will be the obligation of and payable
by Buyer. All transfer, sales or similar tax due as a result of this transaction
will be paid by Seller at the Closing.
3.4 ALLOCATION OF PURCHASE PRICE. The Purchase Price for the Purchased
Assets shall be allocated as set forth in the schedule titled "Purchase Price
Allocation" attached hereto. This allocation will be conclusive and binding for
all purposes, and each Party will file all income or other tax returns in a
manner consistent with such allocation.
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3.5 ADJUSTMENT TO PURCHASE PRICE. The Purchase Price payable by Buyer
to Seller is subject to adjustment to the extent and under certain conditions as
provided in Section 10.2 hereof.
4. CLOSING.
4.1 CLOSING DATE.
(a) The closing of the transactions (the "Closing") contemplated
by this Agreement will occur on January 5, 2000, or on such other date
as may be mutually established by the Parties (the "Closing Date").
(b) The Closing is planned to take place via facsimile.
(c) Notwithstanding the foregoing provisions of subsection (a), at
Buyer's option and at no additional cost to Buyer, Buyer may extend the
Closing Date to a date no later than February 4, 2000.
4.2 ACTIONS TO BE TAKEN BY SELLER AND SHAREHOLDERS AT THE CLOSING. At
the Closing, Seller and/or the Shareholders will take the following actions and
deliver the following documents:
(a) Seller will execute and deliver to Buyer a counterpart of a
Xxxx of Sale, Assignment and Assumption Agreement in substantially the
form attached hereto (the "Xxxx of Sale") transferring to Buyer good
and marketable title in and to the Purchased Assets, free and clear of
all Encumbrances.
(b) Seller will deliver to Buyer all consents and approvals
(including, without limitation, shareholders' and directors' minutes)
required for Seller to (i) enter into this Agreement and consummate the
transactions described herein, and (ii) assign the Assumed Contracts to
Buyer.
(c) Seller will execute and deliver to Buyer such documents,
certificates and instruments as are reasonably requested by Buyer to
change Seller's name from "One Touch Communications, Inc" to a name
which is not confusingly similar to such name.
(d) Seller will deliver to Buyer good standing certificates (dated
within thirty (30) days prior to the Closing Date) for Seller from the
State of North Carolina and the State of Georgia.
(e) Seller will deliver to Buyer a copy of the Articles of
Incorporation of Seller (dated within thirty (30) days prior to the
Closing Date), duly certified by the Secretary of State of the State of
Georgia.
(f) Seller and Shareholders will deliver to Buyer a certificate,
duly executed by Seller and Shareholders, certifying that Seller and
Shareholders have complied with all of the terms, provisions and
conditions of this Agreement to be performed and complied with by them
at or prior to the Closing Date and that their representations and
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warranties are true in all material respects as of the date of this
Agreement and as of the Closing Date.
(g) Seller will deliver to Buyer a certificate of the Secretary or
Assistant Secretary of Seller, dated the Closing Date, certifying (i)
the resolutions duly adopted by the Shareholders and the Board of
Directors of Seller authorizing and approving the execution, delivery
and performance of this Agreement, and (ii) that such resolutions have
not been rescinded or modified and remain in full force as of the
Closing Date.
(h) Seller will deliver to Buyer an opinion of counsel to Seller
and Shareholders addressed to Buyer and Multi-Link in the form attached
hereto.
(i) Seller and the Shareholders will take such other actions and
will execute and deliver such other instruments, documents and
certificates as are required by the terms of this Agreement, or as may
be reasonably requested by Buyer in connection with the consummation of
the transactions contemplated herein.
4.3 ACTIONS TO BE TAKEN BY BUYER AND MULTI-LINK AT THE CLOSING. At the
Closing, Buyer and/or Multi-Link will take the following actions and deliver the
following documents:
(a) Buyer will execute and deliver to Seller a counterpart of the
Xxxx of Sale.
(b) Buyer will pay the Cash Portion of the Purchase Price by wire
transfer as instructed by Seller.
(c) Buyer and Multi-Link will deliver to Seller stock certificates
representing the Common Stock, or will issue irrevocable written
instructions to its transfer agent, American Securities Transfer &
Trust, Inc., to issue and deliver the Common Stock to Seller;
(d) Buyer will deliver to Seller good standing certificates for
Buyer and Multi-Link (dated within thirty (30) days prior to the
Closing Date) from the State of Colorado.
(e) Buyer will deliver to Seller a certificate, duly executed by
Buyer, certifying that Buyer has complied with all of the terms,
provisions and conditions of this Agreement to be performed and
complied with by it at or prior to the Closing Date and that its
representations and warranties are true in all material respects as of
the date of this Agreement and as of the Closing Date.
(f) Buyer will deliver to Seller an opinion of counsel to
Multi-Link addressed to Seller in the form attached hereto.
(g) Buyer will take such other actions and will execute and
deliver such other instruments, documents and certificates as are
required by the terms of this Agreement, or as may be reasonably
requested by Seller or the Shareholders in connection with the
consummation of the transactions contemplated herein.
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5. REPRESENTATIONS AND WARRANTIES.
5.1 REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS. Seller
and the Shareholders jointly and severally represent and warrant to Buyer and
Multi-Link as follows:
(a) Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Georgia and qualified
to do business in good standing in the State of North Carolina. Seller
has full power and lawful authority to (i) own and operate its assets,
properties and the Business, (ii) carry on the Business as presently
conducted, (iii) enter into this Agreement, and (iv) consummate the
transactions contemplated by this Agreement.
(b) The execution, delivery and performance of this Agreement have
each been duly authorized by all necessary corporate action on the part
of Seller, including director and Shareholder authorization. This
Agreement constitutes a legal, valid and binding obligation of Seller
and Shareholders, enforceable in accordance with its terms. Seller's
and Shareholders' execution, delivery and performance of this Agreement
does not and will not (i) constitute a breach or violation of Seller's
incorporation documents or bylaws, (ii) constitute a breach or
violation of any law, rule, regulation, material agreement, indenture,
deed of trust, mortgage, loan agreement or any material instrument to
which Seller or any Shareholder is a party or by which Seller or any
Shareholder or any of the Purchased Assets is bound or affected, (iii)
constitute a violation of any order, judgment or decree by which Seller
or any Shareholder or any of the Purchased Assets is bound or affected,
(iv) result in the acceleration of any material debt owed by Seller or
any Shareholder, (v) result in the creation of any lien or charge on
the Purchased Assets or (vi) require any authorization or consent of
any third party, including, without limitation, any governmental
authority or any party to an Assumed Contract, except for such
approvals and consents that have been or will be obtained, made or
given on or prior to the Closing Date as set forth on the schedule
titled "Consents" attached hereto.
(c) Seller has, and at the Closing Buyer will receive, good and
marketable title to the Purchased Assets, free and clear of all
Encumbrances. Other than computer equipment and computer peripherals,
Seller is not leasing any equipment, furniture, fixtures or other
personal property. Seller is not holding on consignment any equipment,
furniture, fixtures or other personal property. There are no special
assessments against any of the Purchased Assets. The Purchased Assets
which are tangible personal property are in a good state of repair and
operating condition, ordinary wear and tear excepted. The Purchased
Assets represent and constitute all assets, rights and privileges
currently owned or used by Seller in connection with the Business.
Other than that certain generator located at Beguelin's residence, all
of the Purchased Assets are located at the Property.
(d) The accounts receivable of Seller to be transferred pursuant
to this Agreement (the "Accounts Receivable") are bona fide accounts
receivable of Seller arising in the ordinary course of business and are
not subject to any defenses to collection or rights of setoff.
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(e) Seller has not, during the 180-day period prior to the date
hereof, made any extraordinary effort beyond the ordinary course of
business to collect the Accounts Receivable.
(f) To the best of Seller's knowledge, the Glenayre MVP System
(the "MVP") to be transferred pursuant to this Agreement is fully
functioning and in a good state of repair and working condition.
(g) Except as set forth on the schedule titled "Claims and
Litigation" attached hereto, (i) there is no third party (whether
private, governmental or otherwise) holding any claim of any nature
against Seller or the Purchased Assets, including claims arising out of
or in connection with the operation of the Business, (ii) Seller does
not know or have reasonable grounds to know of any dispute which
adversely affects, or may adversely affect, Seller, the Purchased
Assets or the Business, (iii) there is no present or threatened
walkout, strike or labor disturbance involving any of Seller's
employees, (iv) Seller and the Purchased Assets are not subject to any
pending or, to the best of Seller's knowledge, threatened litigation,
proceeding or administrative investigation of any kind or nature
(including, without limitation, any matter (including audits) involving
the Internal Revenue Service, or other federal or state taxing
authorities), (v) Seller has not violated any federal, state or local
law or ordinance or any rule, regulation order or decree of any
governmental agency, court or authority having jurisdiction over it or
over any part of its operations or assets that would have a material
adverse effect on the operation of the Business by Buyer or the
financial condition of Seller, and (vi) Seller has maintained all
material licenses and permits and has filed all registrations, reports
and other documents required by local, state and federal authorities
and regulating bodies in connection with the Business, all of which
licenses and permits are fully assignable to Buyer and on the Closing
Date will have been assigned to Buyer pursuant to the Xxxx of Sale.
(h) The schedule titled "Assumed Contracts" attached hereto
(together with the contracts listed in Section 7.1(i) hereof (the "Old
Contracts")) is a true and complete listing of any and all material
agreements and instruments relating to the Business to which Seller is
a party or the Purchased Assets are subject, and any and all related
agreements, including, without limitation, all leases, subleases,
warranty agreements, sales agreements, service agreements, maintenance
agreements, loan agreements and partnership agreements. Seller has
delivered to Buyer a true and complete copy of each Assumed Contract
and Old Contract and all other written instruments existing with
respect to the Assumed Contracts and Old Contracts. Each Assumed
Contract and Old Contract is valid and enforceable in accordance with
its terms. Neither Seller nor any other party thereto is in breach of
or in default under any Assumed Contract or Old Contract nor has any
notice or claim with respect to any breach or default thereunder been
given.
(i) The schedule titled "Employees" attached hereto is a true and
complete list of all employees of Seller, and their dates of hire,
positions, base salary and commission and/or bonus schedule (if
applicable), and employee benefits to which such employees are entitled
to participate. Except as set forth on such schedule (i) none of the
employees has any agreement (written or otherwise) with Seller and (ii)
all of such employees are terminable at will without any penalty,
liquidated damages or other
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required payment. There have not been any unfair labor practice
complaints, labor difficulties or work stoppages, or threats thereof,
affecting any of Seller's activities. Seller does not have any
collective bargaining or union contracts or agreements and there is no
union campaign presently being conducted to solicit employees to
authorize a union to request a national labor relations board
certification election with respect to any of Seller's employees.
(j) Seller has (i) filed, when due, with all appropriate
governmental agencies, all tax returns, estimates, reports and
statements required to be filed by it, all of which are true and
correct, and (ii) paid, when due and payable, all requisite income
taxes, sales, use, property and transfer taxes, levies, duties,
licenses and registration fees and charges of any nature whatsoever and
workers' compensation and unemployment taxes, including interest and
penalties thereon. Seller has withheld all tax required to be withheld
under applicable tax laws and regulations, and such withholdings have
either been paid to the respective governmental agencies or set aside
in accounts for such purpose.
(k) Seller does not maintain or contribute to, and has never
maintained or contributed to, any pension, retirement, profit sharing,
bonus, stock ownership, stock bonus or other plan including, without
limitation, any multiemployer plan as defined in ss. 3(3) of the
Employee Retirement Income Security Act of 1974, as amended.
(l) The schedule titled "Financial Statements" attached hereto
contains a copy of Seller's financial statements (which include, at a
minimum, a balance sheet and income statement) for the year ended
December 31, 1998, and for the ten month period to October 31, 1999
(the "Financial Statements"). The Financial Statements (i) are in
accordance with the books and records of Seller, which books and
records are complete and accurate in all material respects, (ii)
present fairly and accurately in all material respects the financial
condition of Seller as of the dates thereof, and (iii) have been
prepared on a basis consistent with the preparation of Seller's prior
years' financial statements. As of October 31, 1999, Seller had no
assets (whether tangible, intangible, real, personal, mixed or
otherwise) or liabilities (whether absolute, accrued, contingent, fixed
or otherwise, and whether due or to become due) except as set forth in
the Financial Statements.
(m) Except for the execution and delivery of this Agreement and
the transactions to take place pursuant hereto, since October 31, 1999,
(i) there has been no material change in the business, financial
condition, operating results, assets or, to the best of Seller's
knowledge, business prospects, employee, customer, or supplier
relations of Seller relating to the Business, and (ii) Seller has
conducted the operation of the Business only in the ordinary course of
business consistent with past practice.
(n) The schedule titled "Insurance Policies" attached hereto
contains a true and complete list of all policies of fire, liability,
workers' compensation and other insurance policies in force on the date
of this Agreement owned or held by Seller (including coverages), and
Seller has previously delivered to Buyer true and complete copies of
all such policies. All such policies are in full force and effect, all
premiums with respect thereto covering all periods up to and including
the Closing Date have been paid, and no notice of cancellation or
termination has been received with respect to any
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such policy. Except as set forth on such schedule, Seller has not
asserted any claims in excess of $1,000 per occurrence under any such
policy during the three-year period immediately preceding the Closing
Date.
(o) Seller has disclosed to Buyer all permits, licenses or
certificates of applicable regulatory agencies or authorities which
Seller believes are necessary to conduct the Business without
disruption or material adverse effect on Seller.
(p) Except as set forth on the schedule titled "Governmental and
Regulatory Consents" attached hereto, no permit, consent, approval or
authorization of, or declaration or notice to, or report or filing
with, any governmental or regulatory authority is required in
connection with the execution, delivery or performance of this
Agreement by Seller or the consummation by Seller of any other
transaction contemplated hereby.
(q) Seller does not have any patents, copyrights, or registrations
or applications therefor, arising from or relating to the operation of
the Business. Seller either owns or is otherwise entitled to use all
"Proprietary Rights" (as defined below) necessary to conduct the
Business as presently conducted. With respect to such Proprietary
Rights, (i) Seller owns all right, title, and interest in and to, or
has legal authority to use, all of such Proprietary Rights, (ii) there
have been no claims made against Seller for the assertion of the
invalidity, abuse, misuse, or unenforceability of any of such
Proprietary Rights, and there are no grounds for the same, (iii) Seller
has not received a notice of conflict with the asserted rights of
others, and (iv) the conduct of the business of Seller has not
infringed any such rights of others. Seller does not license any
Proprietary Rights arising from or relating to the Business to or from
third parties. Seller has taken all action reasonably necessary to
protect its Proprietary Rights. For purposes of this Agreement,
"Proprietary Rights" means all (I) trademarks, service marks, trade
dress, logos, trade names and corporate names and registrations and
applications for registration thereof, (II) computer software data and
documentation, (III) trade secrets and confidential business
information (including patentable and copyrightable works, financial,
marketing and business data, pricing and cost information, business and
marketing plans, and customer and supplier lists and information), (IV)
other intellectual property of Seller, and (V) copies and tangible
embodiments thereof (in whatever form or medium).
(r) Except as set forth on the schedule titled "Affiliate
Transactions" attached hereto, there is no transaction or agreement
currently in existence or proposed between Seller and any of its
Affiliates.
(s) The schedule titled "Suppliers" attached hereto is a true and
complete list of all suppliers utilized by Seller as of the date hereof
and, if different, during the prior 12 months, with respect to the
operation of the Business.
(t) Neither this Agreement nor any schedules, certificates or
other documents or information provided by Seller or the Shareholders
to Buyer in connection with this Agreement or the transactions
contemplated hereby contains or will contain any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements so made not misleading. There is no fact which has not been
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disclosed to Buyer of which Seller or any Shareholder is aware and
which has or could have a material adverse effect on the business,
financial condition, operating results, business prospects, assets or
employee, customer, supplier or other relations of Seller relating to
the Business.
(u) Neither Seller nor anyone acting on Seller's or any
Shareholder's behalf has employed any financial advisor, broker or
finder or incurred any liability for any financial advisory, brokerage
or finder's fee or commission in connection with this Agreement or the
transactions contemplated hereby.
(v) Seller has sufficient knowledge and experience in business and
financial matters to evaluate the merits and risks of an investment in
the Common Stock.
(w) Seller understands that the shares of Common Stock have not
been registered under the Securities Act of 1933, as amended (the
"Act") or any state securities law in reliance on an exemption
therefrom for non-public offerings and further understands that the
shares of Common Stock have not been approved or disapproved by the
United States Securities and Exchange Commission (the "SEC"), or any
other federal or state agency.
(x) Seller is acquiring the shares of Common Stock for its own
account, for investment purposes only, and not with a view to the sale
or other distribution thereof, in whole or in part, and is aware that
there are substantial restrictions on the transferability of the shares
of Common Stock; Seller understands that it must bear the economic risk
of an investment in the shares of Common Stock for an indefinite period
of time because the shares of Common Stock have not been registered
under the Act and, therefore, cannot be sold unless they are
subsequently registered under the Act or an exemption from such
registration has been established to the satisfaction of the Buyer or
Multi-Link, as appropriate (which may require an opinion of counsel
acceptable to the Buyer or Multi-Link); Seller understands that it has
no right to compel registration under the Act and that Multi-Link has
no present intention to register the shares of Common Stock under the
Act.
5.2 BUYER REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants
to the Seller and the Shareholders as follows:
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the state of Colorado, and has the
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement.
(b) The execution, delivery and performance of this Agreement have
each been duly authorized by all necessary corporate action on the part
of Buyer. This Agreement constitutes the legal, valid and binding
obligation of Buyer, enforceable in accordance with its terms. Buyer's
execution, delivery and performance of this Agreement does not and will
not (i) constitute a breach or violation of Buyer's organizational
documents, (ii) constitute a breach or violation of any law, rule,
regulation, material agreement, indenture, deed of trust, mortgage,
loan agreement or any material instrument to which Buyer is a party or
by which Buyer is bound or
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affected, (iii) constitute a violation of any order, judgment or decree
by which Buyer is bound or affected or (iv) require any authorization
or consent of any third party.
5.3 MULTI-LINK REPRESENTATIONS AND WARRANTIES. Multi-Link represents
and warrants to Seller and Shareholders as follows:
(a) Multi-Link is a corporation duly organized, validly existing
and in good standing under the laws of the state of Colorado, and has
the corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement.
(b) The execution, delivery and performance of this Agreement have
each been duly authorized by all necessary corporate action on the part
of Multi-Link. This Agreement constitutes the legal, valid and binding
obligation of Multi-Link, enforceable in accordance with its terms.
Multi-Link's execution, delivery and performance of this Agreement do
not and will not (i) constitute a breach or violation of Multi-Link's
organizational documents, (ii) constitute a breach or violation of any
law, rule, regulation, material agreement, indenture, deed of trust,
mortgage, loan agreement or any material instrument to which Multi-Link
is a party or by which Multi-Link is bound or affected, (iii)
constitute a violation of any order, judgment or decree by which
Multi-Link is bound or affected or (iv) require any authorization or
consent of any third party.
(c) The authorized capital stock of Multi-Link consists of
20,000,000 shares of Common Stock, no par value.
(d) The shares of Common Stock to be issued by Multi-Link
hereunder have been duly authorized and, upon issuance in accordance
with this Agreement, will be validly issued, fully paid and
non-assessable.
(e) The information contained in any and all filings by Multi-Link
under the Securities Exchange Act of 1934, as amended, was accurate and
complete in all material respects as of the date of such filings.
(f) Neither this Agreement nor any certificates or other documents
or information provided by Multi-Link to Seller in connection with this
Agreement or the transactions contemplated hereby contains or will
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements so made, in light of the
circumstances in which they were made, materially misleading.
5.4 SURVIVAL. The representations and warranties of the Parties
contained in this Section 5 will survive the Closing.
6. CERTAIN COVENANTS.
6.1 APPROVALS AND CONSENTS. Seller will obtain, in writing and without
penalty or condition which is adverse to Buyer, all necessary approvals and
consents required in order to authorize and approve this Agreement and to
consummate the assignment to, and assumption by, Buyer of the Assumed Contracts,
if any, and the sale of the Purchased Assets to Buyer.
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6.2 DUE DILIGENCE. During business hours and upon reasonable notice to
Seller, Seller will permit Buyer, and its counsel, accountants and other
representatives, to examine all of Seller's records, assets, properties,
contracts, tax returns, and operating permits, and to otherwise engage in a
complete and thorough due diligence review of Seller, its properties, the
Purchased Assets and the Business. Seller agrees to cooperate with such
examinations and analyses and to make its employees and agents reasonably
available to discuss such due diligence matters. As part of its due diligence
investigation, Buyer will obtain tax and lien searches (the "Lien Search") and
litigation searches (the "Litigation Search") from the areas in which Seller
conducts its business (including, without limitation, the federal districts,
states and counties in which Seller conducts its business). Buyer will pay for
the cost of such Lien Search and Litigation Search, and all updates thereto.
6.3 OPERATION OF BUSINESS. From and after the date hereof until the
Closing, Seller will: (i) operate its business in the ordinary course,
consistent with past practice; (ii) use its best efforts to preserve its
operations so that Buyer will obtain the benefits intended to be afforded by
this Agreement; (iii) not take or permit any action which would result in any
representation or warranty of Seller becoming incorrect or untrue in any
respect; (iv) obtain the prior written approval of Buyer in connection with all
material decisions affecting the business, operations, assets and liabilities of
Seller; (v) not make any extraordinary effort beyond the ordinary course of
business to collect the Accounts Receivable; and (vi) notify Buyer in writing
promptly after Seller becomes aware of the occurrence of any event that might
result in any of Seller's statements, representations and warranties under this
Agreement being or becoming untrue.
6.4 NOTICES. Buyer and Seller will promptly notify the other in writing
if it receives any notice, or otherwise becomes aware, of any action or
proceeding instituted or threatened before any court or governmental agency by
any third party to restrain or prohibit, or obtain substantial damages in
respect of this Agreement or the consummation of the transactions contemplated
hereby.
6.5 EMPLOYEES. Effective midnight on the business day immediately prior
to Closing, Seller will terminate all employees and will fulfill any and all
obligations imposed on Seller by any federal, state or local governmental
authority relating to such termination. Buyer undertakes to offer employment to
all employees of Seller, except those employees listed in the scheduled titled
"Excluded Employees" attached hereto. Buyer will consider all such persons so
employed to be "new hires". Buyer will not assume or be deemed to have assumed
any past or future obligations of Seller of any kind or nature to or with
respect to such employees, or any other employees of Seller who are not hired by
Buyer. Buyer will continue to provide health and other employee benefits not
materially different to those currently provided by Seller. All costs relating
to employees hired by Buyer arising or accruing from and after the Closing Date
shall be the obligation of Buyer, other than any costs or expenses relating to
the termination of such employees as employees of Seller (i.e., accrued vacation
pay, unpaid sales commissions, etc.), which shall be the obligation of Seller.
6.6 FURTHER ASSURANCES. Each Party will execute and deliver any further
instruments or documents, and take all further action, reasonably requested by
the other Party to carry out the transactions contemplated by this Agreement.
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6.7 NONCOMPETITION, NONDISCLOSURE, NONSOLICITATION.
(a) Xxxxxxx and Xxxxxxxx acknowledge, represent and warrant that
each of them will obtain significant direct and indirect benefits as a
result of the transactions contemplated hereby.
(b) In consideration of Buyer's payment of the Purchase Price,
Xxxxxxx and Beguelin hereby severally covenant and agree that he (i)
will not, for a period of three years from and after the Closing,
either directly or indirectly, whether as officer, director,
shareholder, employee, member, manager, owner, partner, investor,
lender or otherwise, enter into or engage in any business activity
related to the development, marketing or sale of enhanced services in
the telecommunications industry, or any other business which is or
could be competitive with the Business, in the United States of
America; provided, however, that Xxxxxxx, Xxxxxxxx and any of their
respective Affiliates may engage in the business currently conducted by
Air Express Services, Inc., The Overnight Company, Inc. or the
personnel and staffing business currently contemplated by Shareholders
and disclosed to Buyer; (ii) will not, for a period of three years from
and after the Closing, either directly or through the efforts of any
person acting as his agent, employ, solicit the employment of or in any
way retain the services of any employee or former employee of Buyer or
its Affiliates, or independent contractor or former independent
contractor of Buyer or its Affiliates (which independent contractor was
engaged by Buyer or any of its Affiliates for any activity related to
the Buyer's business, including, without limitation, independent sales
agents or computer support personnel), or influence or attempt to
influence any such person to terminate his, her or its relationship
with Buyer or any of its Affiliates to work for him or any of his
Affiliates or a competitor of Buyer or any of its Affiliates, unless
Buyer gives its prior written consent thereto; provided, however, that
Shareholders may solicit and retain the services of any former employee
or independent contractor of Buyer or its Affiliates that has not been
employed or contracted by Buyer or any of its Affiliates for a period
of six months; (iii) will not, for a period of three years from and
after the Closing, either directly or indirectly, attempt to cause any
potential or existing customer of Buyer or any of its Affiliates from
doing business or continuing to do business with Buyer or any of its
Affiliates; and (iv) will hold in confidence and not make use of, or
disclose, divulge, transmit or intentionally cause to be disclosed,
divulged or transmitted, to any third party at any time any
Confidential Information (as defined below) that he possesses relating
to Buyer, any of its Affiliates or the Business, without the prior
written consent of Buyer, until such time as such Confidential
Information becomes generally known to the public, provided that such
public knowledge was not caused by a breach of this Agreement or
disclosure by him or any of his Affiliates. At the Closing, Seller will
have delivered to Buyer all originals and copies of Confidential
Information (in whatever form or medium), and all notes, abstracts,
compilations, summaries and other materials containing Confidential
Information (in whatever form or medium). For purposes of this
Agreement, the term "Confidential Information" means the following: All
information set forth in the computer software data and documentation,
trade secrets, and confidential and proprietary business information,
including, without limitation, technical data, financial, marketing and
business data, pricing and cost information, business and marketing
plans, customer and supplier lists and information, and all copies and
embodiments thereof (in whatever form or medium).
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For purposes of this Agreement, "Affiliate" means, with
respect to any Person (as hereinafter defined), any Person that
controls, is controlled by or is under common control with such Person,
together with its and their respective members, managers, partners,
venturers, directors, officers, shareholders, agents, employees,
spouses and legal representatives. A Person shall be presumed to have
control when it possesses the power, directly or indirectly, to direct,
or cause the direction of, the management or policies of another
Person, whether through ownership of voting securities, by contract, or
otherwise. "Person" means an individual, partnership, limited liability
company, association, corporation or other entity.
(c) Xxxxxxx and Beguelin each expressly acknowledge and agree that
(i) the temporal and geographic limitations contained in this Section
6.7 are reasonable; (ii) any breach of any provision of this Section
6.7 would injure Buyer irreparably, and therefore, notwithstanding
Section 11.1, Buyer may obtain an injunction against a Shareholder in a
court of law restraining any violation of this Section, 6.7 without the
posting of any bond or the necessity of proving actual monetary loss,
in addition to any other remedies which might be available to Buyer at
law or in equity; and (iii) if the scope of any restriction contained
in this Section 6.7 is too broad to permit enforcement of such
restriction to its full extent, then such restriction will be enforced
to the maximum extent permitted by law, and Xxxxxxx and Xxxxxxxx each
hereby consent and agree that such scope may be judicially modified in
any proceeding brought to enforce such restriction.
6.8 INDEMNIFICATION BY SELLER AND SHAREHOLDERS. Seller and the
Shareholders, jointly and severally, shall defend, indemnify and hold Buyer, its
Affiliates and their respective members, managers, partners, venturers,
shareholders, directors, officers, employees, spouses, legal representatives,
agents, successors and assigns ("Buyer Indemnified Parties"), harmless from and
against any and all claims, judgments, damages, penalties, fines, costs,
liabilities, losses or expenses (including, without limitation, reasonable
attorneys' fees and expenses) (collectively, "Losses") arising from or directly
or indirectly relating to:
(a) any breach by Seller or a Shareholder of any term or provision
of this Agreement; or
(b) Seller's operation of the Business prior to the Closing Date,
including, without limitation:
(i) all employment related matters, including, without
limitation, (I) maintenance of all employee benefit plans and
policies, if any, (II) provision of employee benefits, if any, and
(III) violations by Seller of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended by the Internal Revenue
Code of 1986, as amended, the Employee Retirement Income Security
Act of 1975, as amended, and the Public Health Service Act, as
amended (collectively, "COBRA"); and
(ii) Seller's Obligations.
6.9 INDEMNIFICATION BY BUYER AND MULTI-LINK. Buyer and Multi-Link,
jointly and severally, shall defend, indemnify and hold Seller, its Affiliates,
and their respective members, managers, partners, venturers, shareholders,
directors, officers, employees, spouses, legal
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representatives, agents, successors and assigns ("Seller Indemnified Parties")
harmless from and against any and all Losses incurred by any Seller Indemnified
Party arising from or directly or indirectly relating to:
(a) any breach by Buyer or Multi-Link of any term or provision of
this Agreement; or
(b) Buyer's operation of the Business from and after the Closing
Date.
6.10 INDEMNIFICATION PROCEDURES. The Parties' respective
indemnification obligations under Sections 6.8 and 6.9 hereof are conditioned
upon compliance by a Party with the following procedures for indemnification
claims based upon or arising out of any claim, action or proceeding of any
nature by any person other than a Buyer Indemnified Party or Seller Indemnified
Party. For purposes of this Section 6.10, with respect to any specific claim,
action or proceeding, the Party obligated to provide indemnification under
Section 6.8 or 6.9 above is referred to as the "Indemnifying Party," and the
Party or Parties who are to be indemnified under Section 6.8 or 6.9 above are
referred to as the "Indemnified Party."
(a) If at any time a claim shall be made or threatened, or an
action or proceeding shall be commenced or threatened, against an
Indemnified Party which could result in liability of the Indemnifying
Party under its indemnification obligations set forth in Section 6.8 or
6.9, as applicable, the Indemnified Party shall give the Indemnifying
Party prompt written notice of such claim, action or proceeding. Such
notice shall state the nature and basis for the claim, action or
proceeding and a reasonable estimate of the amount thereof. An
Indemnified Party's failure to timely provide such notice, however,
shall not release the Indemnifying Party from its obligations
hereunder, unless the Indemnifying Party proves such failure prejudiced
the Indemnifying Party, and then the Indemnifying Party will be
released only to the extent of the prejudice so proven.
(b) The Indemnifying Party shall have the right to defend and
settle, at its own expense and by counsel of its own choosing, any such
claim, action or proceeding so long as the Indemnifying Party pursues
such settlement or defense in good faith and diligently; provided,
however, subject to Section 6.10(d) below, the Indemnifying Party shall
not consent to the entry of any judgment, or enter into any settlement
of any claim, action or proceeding, which does not effect the release
of the Indemnified Party from all liability in respect of such claim,
action or proceeding without the prior written consent of the
Indemnified Party.
(c) If the Indemnifying Party undertakes to defend or settle a
claim, action or proceeding, it shall promptly notify the Indemnified
Party in writing of its intention to do so, and the Indemnified Party
shall cooperate with the Indemnifying Party and its counsel in the
defense thereof and in any settlement thereof. Such cooperation shall
include, but shall not be limited to, furnishing the Indemnifying Party
with any books, records or information reasonably requested by the
Indemnifying Party that are in the Indemnified Party's possession or
control. An Indemnified Party may participate, at its expense, in the
defense or settlement of a claim, action or proceeding, provided that
the Indemnifying Party shall direct and control the defense or
settlement of such claim, action or proceeding. After the Indemnifying
Party has notified the Indemnified Party of
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its intention to undertake to defend or settle any such claim, action
or proceeding, and for so long as the Indemnifying Party diligently
pursues such settlement or defense, the Indemnifying Party shall not
be liable for any additional legal expenses incurred by an Indemnified
Party in connection with any defense or settlement of such claim,
action or proceeding.
(d) If the Indemnifying Party desires to accept a final and
complete settlement of any such claim, action or proceeding and an
Indemnified Party refuses to consent to such settlement, then the
Indemnifying Party's liability under this Agreement with respect to
such claim, action or proceeding shall be limited to the amount offered
by the Indemnifying Party with respect to such settlement, and the
Indemnified Party shall reimburse the Indemnifying Party for any
additional costs of defense which the Indemnifying Party subsequently
incurs with respect to such claim, action or proceeding and all
additional costs of settlement or judgment.
If the Indemnifying Party does not undertake to defend such claim,
action or proceeding to which an Indemnified Party is entitled to
indemnification under Section 6.10(c) above, or fails diligently to pursue the
defense or settlement of such claim, action or proceeding, the Indemnified Party
may undertake such defense or settlement through counsel of its choice, at the
cost and expense of the Indemnifying Party, and the Indemnifying Party shall
reimburse the Indemnified Party for the amount paid in such defense or
settlement, and any other liabilities or expenses incurred by the Indemnified
Party in connection therewith; provided, however, that under no circumstances
shall the Indemnified Party consent to the entry of any judgment, or enter into
any settlement of any claim, action or proceeding without the prior written
consent of the Indemnifying Party.
6.11 OBLIGATIONS OF SHAREHOLDERS. Notwithstanding anything to the
contrary contained herein, the Shareholders, jointly and severally, together
with the Seller make all representations and warranties, and agree to perform
all covenants of Seller and the Shareholders (except the obligations of the
Shareholders under Section 6.7 hereof) set forth herein. Whenever the Agreement
requires Seller to take any action, the Shareholders will cause Seller to take
such action.
6.12 AUDIT. During the six month period after Closing, Buyer may, at
its election, cause the financial statements of Seller covering the two years
ended December 31, 1998 and December 31, 1999 to be audited by a certified
public accounting firm selected by Buyer. Buyer will pay all costs and expenses
in connection with the audit. Seller and the Shareholders will provide Buyer and
its auditors with all information and other assistance reasonably requested by
any of them in connection with the audit.
6.13 EXCLUSIVITY. In consideration of the expenses to be incurred by
Buyer in negotiating and preparing to consummate the transactions contemplated
hereby, Seller and each of the Shareholders agrees that from the date hereof
until the Closing Date, neither Seller nor any of the Shareholders will enter
into any agreement, discussion, or negotiation with, provide information to, or
solicit, encourage, entertain, or consider, any inquiries or proposals from any
other Person with respect to the possible disposition of a material portion of
the Business or the Purchased Assets (whether by asset sale, stock sale,
business combination or otherwise).
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6.14 PAYMENTS TO CREDITORS. Seller will maintain sufficient assets to
pay, and will pay within a reasonable period after Closing, all amounts owing to
its creditors as of the Closing Date.
6.15 SURVIVAL. The covenants of the Parties contained in this Section 6
will survive the Closing.
7. CONDITIONS PRECEDENT.
7.1 CONDITIONS TO OBLIGATIONS OF BUYER AND MULTI-LINK. The obligations
of Buyer and Multi-Link under this Agreement are subject to the satisfaction, on
the Closing Date, of each of the following conditions, any of which may be
waived in writing by Buyer or Multi-Link:
(a) Seller and the Shareholders will have fully complied with and
performed all of their respective obligations under this Agreement.
(b) All representations of Seller and the Shareholders in this
Agreement will be true and complete as of the date when given and on
the Closing Date.
(c) All consents, approvals and waivers required to consummate the
transactions contemplated by this Agreement will have been obtained in
writing by Seller and provided to Buyer without any penalty or
condition which is adverse to Buyer.
(d) Buyer will have received evidence of the due authorization and
execution of this Agreement by Seller and Shareholders in form and
substance satisfactory to Buyer.
(e) There will not have been any material adverse change in the
financial condition, business, prospects or future business of Seller,
or in the condition of the Purchased Assets, or any event which may, in
the future, cause such a change, or any pending or threatened material
litigation or other proceeding against Seller, or the Purchased Assets.
(f) Buyer will have been satisfied with the results of its due
diligence investigation of Seller, the Purchased Assets and the
prospects of the on-going Business.
(g) Buyer will have been satisfied from the results of the Lien
Search and Litigation Search that the Purchased Assets are free of any
Encumbrances.
(h) Seller and Shareholders shall have executed and delivered to
Buyer and Multi-Link all closing documents required by Section 4.2
hereof.
(i) Buyer shall have assumed, or entered into a replacement
agreement acceptable to Buyer, with respect to the following contracts:
(i) Paging Services Contract dated April 29, 1997 between
Seller and Pagenet, Inc.
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(ii) Paging Services Contract dated February 26, 1997 between
Seller and Metrocall.
(iii) Paging Services Contract dated July 7, 1997 between
Seller and Arch Communications, Inc.
(iv) Local Telephone Service Contract dated May 28, 1998
between Seller and BTI Telecommunications, Inc.
(v) Agent Contract between Seller and Frontier
Communications, Inc.
7.2 CONDITIONS TO OBLIGATIONS OF SELLER AND SHAREHOLDERS. The
obligations of Seller and Shareholders under this Agreement are subject to the
satisfaction, on the Closing Date, of the following conditions, any of which may
be waived in writing by Seller or Shareholders:
(a) Buyer and Multi-Link will have fully complied with and
performed all of their obligations under this Agreement.
(b) All representations of Buyer and Multi-Link in this Agreement
will be true and complete as of the date when given and on the Closing
Date.
(c) Buyer and Multi-Link will have executed and delivered to
Seller and the Shareholders all closing documents required by Section
4.3 hereof.
8. TERMINATION OF AGREEMENT; EFFECT OF TERMINATION.
8.1 TERMINATION. This Agreement may be terminated at any time before
the Closing as follows:
(a) By Buyer, by notice to Seller, if any of the conditions
precedent to Closing under Section 7.1 hereof has not been satisfied as
of the Closing Date or has become incapable of being satisfied by the
Closing Date.
(b) By Seller, by notice to Buyer, if any of the conditions
precedent to Closing under Section 7.2 hereof has not been satisfied as
of the Closing Date or has become incapable of being satisfied by the
Closing Date.
8.2 EFFECT OF TERMINATION. With the exception of the obligations under
Sections 1 and 11.8 hereof, which survive termination of this Agreement, upon a
termination in accordance with Section 8.1 hereof, this Agreement will have no
further force or effect. The Parties' rights under this Section 8.2 are
cumulative and are in addition to the other rights and remedies available to
them under any other agreement or applicable law.
9. RISK OF LOSS.
If, prior to the Closing Date, the Purchased Assets or any portion
thereof, are destroyed by fire or other casualty, then Buyer will have the
option, to be exercised within ten days following the date Buyer receives actual
notice of such destruction or taking, but in any event prior to the Closing
Date, to either (a) deduct from the Purchase Price the value of those
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Purchased Assets which were so destroyed or taken as is mutually agreed to by
Buyer and Seller or, in the event of disagreement, in the amount determined by
an arbitrator or appraiser mutually agreeable to Buyer and Seller, and to
otherwise consummate this transaction, (b) consummate this transaction without
any deduction, in which event Buyer will be entitled to receive all proceeds
payable to Seller due to such destruction or taking, if any, and Seller will
assign such proceeds (or the right to receive such proceeds) to Buyer and also
pay Buyer the amount of any deductible associated with any such claim under
Seller's insurance, or (c) in the event of a material loss (as determined in
Buyer's sole discretion), to terminate this Agreement. Any reduction in the
Purchase Price as provided in this Section 9 shall be made by deducting 1/3 of
such reduction from the Cash Portion and 2/3 of such reduction from the Stock
Portion.
10. POST CLOSING.
10.1 CONSULTING SERVICES. Xxxxxxx and Xxxxxxxx will each render
consulting services (the "Consulting Services") to Buyer from the Closing Date
through March 31, 2000. The Consulting Services will include, without
limitation:
(i) taking all reasonable and necessary actions to familiarize and
acquaint Buyer with all material aspects of the Business and assisting
Buyer in implementing the transition of the Business from control of
Seller to control of Buyer.
(ii) making available to Buyer any and all information or
knowledge that Shareholders have regarding the Business, and providing
strategic advice to Buyer with respect to the Business.
(iii) the provision of basic bookkeeping and accounting services
similar to the services provided by Xxxxxxx prior to Closing, to insure
a smooth transition of record keeping.
(iv) the continued training and development of Xxxxx Xxxxxxx in
all aspects of the Business to prepare him to fulfill his proposed role
as general manager of Buyer after March 30, 2000.
10.2 GUARANTEED MINIMUM EBITDA.
(a) Each Shareholder and Seller jointly and severally guarantees
that the earnings before interest, taxes, depreciation and amortization
relating to the Purchased Assets for the month of March, 2000 (the
"March EBITDA"), as determined in accordance with generally accepted
accounting principles, shall be at least $44,100. The March EBITDA
shall equal (i) the net xxxxxxxx (i.e., gross xxxxxxxx less credits and
refunds) from the Purchased Assets on March 1, 2000, less (ii) the
expenses arising from or relating to the Business in the expense
categories listed on the schedule titled "EBITDA Expenses" ("EBITDA
Expenses") for the month of March, 2000. Buyer will conduct the
Business during March, 2000 consistent with past practices in all
material respects.
(b) If the March EBITDA is less than $44,100, then within 10 days
after notice by Buyer to Seller and/or the Shareholders, Seller shall
refund to Buyer a portion
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of Purchase Price (the "Refunded Amount") equal to (i) sixty multiplied
by (ii) the difference between $44,100 and the March EBITDA. Seller
and/or the Shareholders shall return 1/3 of the Refunded Amount to
Buyer in cash and 2/3 in Common Stock. The number of such shares to be
returned shall be determined by dividing 2/3 of the Refunded Amount by
the closing bid price of one share of Common Stock as reported by the
NASDAQ Small Cap Market as of the last full trading day prior to the
Closing Date. Notwithstanding the foregoing, if the March EBITDA is
less than $44,100 due to an adverse change in revenues or customer
based xxxxxxxx resulting from a technical or MVP alteration implemented
by Buyer after Closing, then that decrease in revenues or customer
based xxxxxxxx will not be discounted against the EBITDA calculations.
10.3 OFFICE SPACE. Buyer will provide Beguelin with office space
through March 31, 2000 in order that Beguelin may provide the Consulting
Services. Space may be available after March 31, 2000 by mutual agreement.
11. MISCELLANEOUS.
11.1 ARBITRATION. After Closing, any dispute concerning this Agreement,
except for disputes related to intentional misstatements, concealment, or fraud
by a Party or any proceeding to enforce the provisions of Section 6.7 hereof,
will be subject to mandatory binding arbitration and will be referred to a panel
of three neutral arbitrators for final determination pursuant to the Commercial
Rules (the "Rules") of the American Arbitration Association (the "AAA"). Such
arbitration will be administered by the AAA and held in Raleigh, North Carolina.
Any such arbitration will be initiated by a written request for arbitration
delivered by one Party to the other Parties and to the AAA. A panel of three
neutral arbitrators will be selected in accordance with the Rules. The hearing
will be commenced within 60 days of the selection of the arbitrators. Within ten
days following the closing of the hearing, a final decision will be made
concerning the disputed matter, which decision and the basis therefor will be in
writing and delivered to the Parties. The final decision of the arbitrators will
be binding on the Parties and enforceable in any court of law having
jurisdiction thereof. Pending final decision of the disputed matter, the Parties
will continue to diligently observe and perform the terms of this Agreement. In
such arbitration, (i) the prevailing Party will be entitled to recover its
reasonable attorneys' fees and costs, (ii) the non-prevailing Party will be
responsible for the costs of arbitration (including, but not limited to the
costs of the arbitrators and AAA fees) and (iii) the laws of the State of North
Carolina will be applied. Notwithstanding the foregoing, if the aggregate amount
in dispute (inclusive of all claims and counterclaims) is less than $50,000, the
foregoing provisions will apply except that the arbitration will be conducted by
one neutral arbitrator instead of a panel of three arbitrators. If arbitration
is commenced before a single arbitrator, such arbitration shall continue with a
single arbitrator even if the aggregate amount in dispute exceeds $50,000 after
the commencement of arbitration.
11.2 NO WAIVER. No waiver of any breach of any provision of this
Agreement will be deemed a waiver of any other breach of this Agreement. No
extension of time for performance of any act will be deemed an extension of the
time for performance of any other act.
11.3 SEVERABILITY. The provisions of this Agreement will be deemed
severable, and if any provision of this Agreement is held illegal, void or
invalid under applicable law, such provision may be changed to the extent
reasonably necessary to make the provision legal, valid and binding. If any
provision of this Agreement is held illegal, void or invalid in its entirety,
the
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remaining provisions of this Agreement will not be affected but will remain
binding in accordance with their terms.
11.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the schedules,
exhibits and attachments to such agreements contain the entire agreement of the
Parties with respect to the purchase and sale of the Purchased Assets and the
other transactions contemplated by such agreements. This Agreement may be
amended only by an instrument in writing signed by Buyer and Seller and
Shareholders. The headings in this Agreement are solely for convenience of
reference and will not affect the interpretation of any provision of this
Agreement. The exhibits and schedules to this Agreement are incorporated as a
part of this Agreement.
11.5 APPLICABLE LAW. This Agreement will be construed in accordance
with and governed by the laws of the State of North Carolina, without regard to
conflicts of laws provisions.
11.6 TIME IS OF THE ESSENCE. The Parties acknowledge and agree that
time is of the essence with respect to the consummation of the transactions
contemplated by this Agreement.
11.7 BINDING AGREEMENT, ASSIGNMENT. Neither Seller nor the Shareholders
may assign their respective obligations, rights or benefits hereunder to a third
party without the prior written consent of Buyer. Subject to the preceding
sentences, this Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors, heirs and
permitted assigns.
11.8 EXPENSES. Each Party will pay its own reasonable expenses,
including reasonable attorneys' and accountants' fees, incurred in connection
with the negotiation of this Agreement, the performance of its obligations
hereunder, and the consummation of the transactions contemplated by this
Agreement; provided that, subject to the provisions of Section 11.1 hereof, in
any proceeding or other attempt to enforce, construe or to determine the
validity of this Agreement, the nonprevailing Party will pay the reasonable
expenses of the prevailing Party, including reasonable attorneys' fees and
costs.
11.9 NOTICES. All notices, demands or other communications required or
permitted to be given hereunder will be in writing, and any and all such items
will be deemed to have been duly delivered upon personal delivery; or as of the
third business day after mailing by United States mail, certified, return
receipt requested, postage prepaid, addressed as follows; or as of the
immediately following business day after deposit with Federal Express or a
similar overnight courier service, charges prepaid, addressed as follows; or
upon delivery by facsimile (with telephone confirmation of delivery and machine
generated proof of transmission) to the facsimile number set forth below:
Notices to Seller or the Shareholders:
One Touch Communications, Inc.
0000 Xx. Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
Phone: (000) 000-0000
Facsimile: (000) 000-0000
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23
Xxxxx X. Xxxxxxx
0000 Xxxxx Xxxxx Xxxx
Xxxxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxx X. Xxxxxxxx
00000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Nicholls & Xxxxxxxx, P.A.
X.X. Xxx 00000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx Xxxxx Xxxxxxxx, Esq.
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Notices to Buyer or Multi-Link:
Multi-Link Telecommunications, Inc.
0000 Xxxxxx Xx., Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx
Phone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxx, Johnson, Robinson, Xxxx & Xxxxxxxxx, P.C.
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Any Party may change its notice information by written notice given to
the other Parties in accordance with this Section 11.9.
11.10 COUNTERPARTS; FACSIMILE EXECUTION. This Agreement may be executed
in one or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same instrument. This Agreement may be executed by telefacsimile
signature and a telefacsimile signature will constitute an original signature
for all purposes.
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11.11 NO THIRD PARTY BENEFICIARIES. This Agreement will not confer any
rights or remedies upon any person other than the Parties and their respective
heirs, successors and assigns, as applicable.
11.12 REMEDIES. The rights and remedies of the Parties hereunder are
cumulative and are not in lieu of, but are in addition to, any other rights or
remedies which the Parties may have at law or in equity.
IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement as of the date set forth in the introductory paragraph of this
Agreement.
SELLER:
One Touch Communications, a Georgia
corporation
By:
------------------------------------
Xxxxx X. Xxxxxxx
President
BUYER:
One Touch Communications, a Colorado
corporation
By:
------------------------------------
Xxxxx X. Xxxxxxxxx
Chief Executive Officer
MULTI-LINK:
Multi-Link Telecommunications, Inc., a
Colorado corporation
By:
------------------------------------
Xxxxx X. Xxxxxxxxx
Chief Executive Officer
SHAREHOLDERS:
----------------------------------------
Xxxxx X. Xxxxxxx
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----------------------------------------
Xxxx X. Xxxxxxxx
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TABLE OF CONTENTS
PAGE
1. TRANSACTION CONFIDENTIALITY; PRESS RELEASES....................................................1
1.1 Transaction Confidentiality...........................................................1
1.2 Press Releases........................................................................1
1.3 Survival..............................................................................2
2. PURCHASED ASSETS; EXCLUDED ASSETS; ASSUMPTION OF LIABILITIES...................................2
2.1 Purchased Assets......................................................................2
2.2 Excluded Assets.......................................................................2
2.3 Liabilities Not Assumed...............................................................2
3. PURCHASE PRICE; PAYMENT; ADJUSTMENTS; PRORATIONS; ALLOCATIONS..................................2
3.1 Purchase Price; Payment...............................................................2
3.2 Common Stock..........................................................................3
3.3 Prorations............................................................................3
3.4 Allocation of Purchase Price..........................................................3
3.5 Adjustment to Purchase Price..........................................................4
4. CLOSING........................................................................................4
4.1 Closing Date..........................................................................4
4.2 Actions to be Taken by Seller and Shareholders at the Closing.........................4
4.3 Actions to be Taken by Buyer and Multi-Link at the Closing............................5
5. REPRESENTATIONS AND WARRANTIES.................................................................6
5.1 Representations and Warranties of Seller and Shareholders.............................6
5.2 Buyer Representations and Warranties.................................................10
5.3 Multi-Link Representations and Warranties............................................11
5.4 Survival.............................................................................11
6. CERTAIN COVENANTS.............................................................................11
6.1 Approvals and Consents...............................................................11
6.2 Due Diligence........................................................................12
6.3 Operation of Business................................................................12
6.4 Notices..............................................................................12
6.5 Employees............................................................................12
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TABLE OF CONTENTS
(CONTINUED)
PAGE
6.6 Further Assurances...................................................................12
6.7 Noncompetition, Nondisclosure, Nonsolicitation.......................................13
6.8 Indemnification by Seller and Shareholders...........................................14
6.9 Indemnification by Buyer and Multi-Link..............................................14
6.10 Indemnification Procedures...........................................................15
6.11 Obligations of Shareholders..........................................................16
6.12 Audit................................................................................16
6.13 Exclusivity..........................................................................16
6.14 Payments to Creditors................................................................17
6.15 Survival.............................................................................17
7. CONDITIONS PRECEDENT..........................................................................17
7.1 Conditions to Obligations of Buyer and Multi-Link....................................17
7.2 Conditions to Obligations of Seller and Shareholders.................................18
8. TERMINATION OF AGREEMENT; EFFECT OF TERMINATION...............................................18
8.1 Termination..........................................................................18
8.2 Effect of Termination................................................................18
9. RISK OF LOSS..................................................................................18
10. POST CLOSING..................................................................................19
10.1 Consulting Services..................................................................19
10.2 Guaranteed Minimum EBITDA............................................................19
10.3 Office Space.........................................................................20
11. MISCELLANEOUS.................................................................................20
11.1 Arbitration..........................................................................20
11.2 No Waiver............................................................................20
11.3 Severability.........................................................................20
11.4 Entire Agreement; Amendment..........................................................21
11.5 Applicable Law.......................................................................21
11.6 Time is of the Essence...............................................................21
11.7 Binding Agreement, Assignment........................................................21
11.8 Expenses.............................................................................21
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TABLE OF CONTENTS
(CONTINUED)
PAGE
11.9 Notices..............................................................................21
11.10 Counterparts; Facsimile Execution....................................................22
11.11 No Third Party Beneficiaries.........................................................23
11.12 Remedies.............................................................................23
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