ASSET PURCHASE AGREEMENT
THIS
ASSET PURCHASE AGREEMENT (this “Agreement”) is made this 27th day of June, 2007,
(the “Effective Date”) by and among WQN,
Inc.,
a
corporation organized under the laws of the State of Texas (“Buyer”);
VoIP,
Inc.,
a
corporation organized under the laws of the State of Texas (the “Company
Parent”) and VoIP
Solutions, Inc.,
a
corporation organized under the laws of the State of Delaware (the
“Company”).
WHEREAS,
the parties are now entering into this Agreement to provide for the terms and
conditions upon which Buyer will purchase certain assets and business operations
of the Company that comprise the Company’s Business all as more fully described
herein (collectively, the “Assets”).
NOW,
THEREFORE, in consideration of the premises and of the mutual covenants,
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
I.
DEFINITIONS
AND
CONSTRUCTION
1.1 Certain
Definitions»
.
As used
in this Agreement, the following terms shall have the following meanings unless
the context otherwise requires:
“Agreement”
shall mean this Assets Purchase Agreement, including all Exhibits and Schedules
hereto.
“Business”
shall mean the business engaged in by the Company through its Dallas based
WQN
and Rocket VoIP business units and the customer base associated with those
business units, as of the Closing Date.
“Cash
Payment” shall mean the payment to be made to the Company pursuant to
Section 2.4 hereof.
“Closing”
shall mean the consummation of the transactions contemplated by this
Agreement.
“Closing
Date” shall mean the date on which the Closing occurs pursuant to
Section 3.
“Company
Material Adverse Effect” shall mean (A) a Material Adverse Effect on the Company
taken as a whole, or (B) a material adverse effect on the ability of the Company
to perform its obligations under, and to consummate the transactions
contemplated by, this Agreement; it being acknowledged that any adverse effect
of $10,000 or more on the Company shall in any event be deemed a Company
Material Adverse Effect.
“Contract”
shall mean any note, bond, indenture, mortgage, deed of trust, lease, franchise,
permit, authorization, license, contract, instrument, employee benefit plan
or
practice, or other agreement, obligation, commitment, arrangement or concession
of any nature whatsoever, oral or written.
“GAAP”
shall mean generally accepted accounting principles as accepted by the
accounting profession in the United States as in effect from time to
time.
“Governmental
Entity” shall mean any court, arbitrator, administrative or other governmental
department, agency, commission, authority or instrumentality, domestic or
foreign.
“Indebtedness”
shall mean, with respect to any Person, without duplication (whether or not
the
recourse of the lender is to the whole of the assets of such Person or only
to a
portion thereof), (i) every liability of such Person (excluding intercompany
accounts between the Company and any wholly owned Subsidiary of the Company
or
between wholly owned Subsidiaries of the Company) (A) for borrowed money, (B)
evidenced by notes, bonds, debentures or other similar instruments (whether
or
not negotiable), (C) for reimbursement of amounts drawn under letters of credit,
bankers’ acceptances or similar facilities issued for the account of such
Person, (D) issued or assumed as the deferred purchase price of property or
services (excluding accounts payable) or (E) relating to a capitalized lease
obligation and all debt attributable to sale/leaseback transactions of such
Person; and (ii) every liability of others of the kind described in the
preceding clause (i) that such Person has guaranteed or which is otherwise
its
legal liability.
“Intellectual
Property” shall mean all domestic or foreign rights in, to and concerning: (i)
inventions and discoveries (whether patented, patentable or unpatentable and
whether or not reduced to practice), including ideas, research and techniques,
technical designs, and specifications (written or otherwise), improvements,
modifications, adaptations, and derivations thereto, and patents, patent
applications, inventor’s certificates, and patent disclosures, together with
divisions, continuations, continuations-in-part, revisions, reissuances and
reexaminations thereof; (ii) trademarks, service marks, brand names,
certification marks, collective marks, d/b/a’s, trade dress, logos, symbols,
trade names, assumed names, fictitious names, corporate names and other
indications or indicia of origin, including translations, adaptations,
derivations, modifications, combinations and renewals thereof; (iii) published
and unpublished works of authorship, whether copyrightable or not (including
databases and other compilations of data or information), copyrights therein
and
thereto, moral rights, and rights equivalent thereto, including but not limited
to, the rights of attribution, assignation and integrity; (iv) trade secrets,
confidential and/or proprietary information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, schematics, designs, discoveries,
drawings, prototypes, specifications, hardware configurations, customer and
supplier lists, financial information, pricing and cost information, financial
projections, and business and marketing methods plans and proposals),
collectively “Trade Secrets”; (v) computer software, including programs,
applications, source and object code, data bases, data, models, algorithms,
flowcharts, tables and documentation related to the foregoing; (vi) other
similar tangible or intangible intellectual property or proprietary rights,
information and technology and copies and tangible embodiments thereof (in
whatever form or medium); (vii) all applications to register, registrations,
restorations, reversions and renewals or extensions of the foregoing; (viii)
Internet domain names; and (ix) all the goodwill associated with each of the
foregoing and symbolized thereby; (x) URL’s; (xi) 800 / 888 / 877 toll free
numbers; and (xii) all other intellectual property or proprietary rights and
claims or causes of action arising out of or related to any infringement,
misappropriation or other violation of any of the foregoing, including rights
to
recover for past, present and future violations thereof.
“Legal
Proceeding” shall mean any private or governmental action, suit, complaint,
arbitration, mediation, legal or administrative proceeding or investigation
pending or threatened, whether prior to or post closing and whether or not
a
contingent liability, arising or accruing from actions or activities of the
Company Parent or Company prior to the Closing Date.
“Lien”
shall mean any security interest, mortgage, pledge, hypothecation, charge,
claim, option, right to acquire, adverse interest, assignment, deposit
arrangement, encumbrance, restriction, lien (statutory or other), or preference,
priority or other security agreement or preferential arrangement of any kind
or
nature whatsoever (including any conditional sale or other title retention
agreement, any financing lease involving substantially the same economic effect
as any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction).
“Material
Adverse Effect” on any Person shall mean any circumstance, change or effect that
is or could reasonably be expected to be materially adverse to the business,
assets, liabilities, obligations, financial condition, results of operations
or
prospects of such Person.
“Material
Contract” shall mean any contract involving the sum of $10,000 or more singly or
in the aggregate if related.
“Person”
shall mean an individual, partnership, corporation, limited liability company,
trust, unincorporated organization, association, or joint venture or a
government, agency, political subdivision, or instrumentality thereof.
“Tax”
or
“Taxes” shall mean (i) any and all federal, state, local and foreign taxes and
other assessments, governmental charges, regulatory fees, duties, fees, levies,
impositions and liabilities in the nature of a tax, including taxes based upon
or measured by gross receipts, income, profits, sales, use and occupation,
and
value added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes and (ii) all interest, penalties and
additions imposed with respect to such amounts in clause (i).
“Tax
Return” shall mean a report, return or other information required to be supplied
to or filed with a Governmental Entity with respect to any Tax including an
information return, claim for refund, amended Tax return or declaration of
estimated Tax.
“VoIP”
shall mean voice over Internet protocol.
1.2 Terms
Generally.
The
definitions set forth or referenced in Sections 1.1 and 1.2 shall apply equally
to both the singular and plural forms of the terms defined. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”. As used herein, the phrase “to the Company’s knowledge”, or any
similar phrase or term relating to the knowledge of the Company means the actual
knowledge, after reasonable inquiry, of any of the officers or directors of
the
Company. “Reasonable inquiry” shall mean communication by any of the officers or
directors of the Company to the officers and field personnel of the Company
with
direct responsibility for the matter in question and to counsel with respect
to
matters involving questions of law, requesting such individual to review
specified provisions of this Agreement and to advise such person of any matter
relevant to the specified representation, warranty or provision.
II.
PURCHASE
AND SALE
2.1 Agreement
to Sell.
At
the
Closing (as defined in Section 3.1) and except as otherwise specifically
provided in this Section, the Company will validly and effectively grant, sell,
convey, assign, transfer and deliver to Buyer, upon and subject to the terms
and
conditions of this Agreement, all of the Company’s right, title and interest in
and to certain of the Company’s assets set forth in Section 2.2 (the
“Assets”) free and clear of all liens, including Tax Liens, pledges, security
interests, charges, claims, restrictions and encumbrances of any nature
whatsoever except as set forth on Schedule 2.6.
2.2 Included
Assets.
The
Assets referred to in Section 2.1 shall include, without limitation, the
following assets used or useful in the Business:
(a) all
items
of personal property (including but not limited to office furniture, office
equipment, and office supplies) and other tangible personal property related
to
the administration of the Business as is, where is and as set forth on
Schedule 2.2(a);
(b) all
items
of VoIP switching equipment, networking equipment, and customer premise
equipment as is, where is and as set forth on Schedule 2.2(b);
(c) all
items
of computer equipment; related peripherals and software licenses (as are
assignable) related thereto as is, where is and as set forth on
Schedule 2.2(c);
(d) all
rights under any written or oral Contract, lease, agreement, plan, instrument,
registration, license, certificate of occupancy, other permit, certification,
authorization or approval of any nature, or other document, commitment,
arrangement, undertaking, practice or authorization set forth on
Schedule 2.2(d);
(e) all
licenses, permits, subject to Buyer qualifying for all of said licenses,
permits, or authorizations and other governmental authorizations (hereinafter
referred to as “Licenses and Permits”) listed on Schedule 2.2
(e);
(f) all
rights under any trademarks, service marks, trade names or copyrights, whether
registered or unregistered, and any applications therefor utilized by the
Business as set forth on Schedule 2.2(f). The patents set forth on
Schedule 2.3 are specifically excluded from the Assets but shall be
licensed to Buyer under the license agreement set forth on Exhibit A;
(g) all
software technologies, methods, formulations, data bases and other intellectual
property used in the Business and listed on Schedule 2.2(g);
(h) all
records, manuals and other documents (collectively, the “Records”) relating to
or used in connection with the Business. If there is a claim made, the Company
shall have the reasonable right of access to the Records post closing for the
period of the applicable statute of limitations;
(i) the
customer base and all information, files, records, data, plans, customer and
supplier contracts and recorded knowledge, including customer records, customer
Contracts, customer lists, supplier lists and prospect lists forth on
Schedule 2.2(i);
(j) the
maintenance and service contracts (“Maintenance Contracts”), as are assignable,
set forth in Schedule 2.2(j), if any;
(k) all
merchant accounts, deposits, security deposits, and other items listed on
Schedule 2.2(k);
(l) all
accounts and notes receivable; and
(m) all
other
assets of the Business, including those that are integral to the day to day
operation of the Business, except those excluded under
Section 2.3.
2.3
Excluded Assets. The assets of the Business on Schedule 2.3
shall be specifically excluded from the sale.
2.4 The
Purchase Price and Payment.
(a) The
purchase price payable to the Company by Buyer shall consist of an aggregate
cash payment of Four Hundred Thousand ($400,000.00) Dollars (the “Cash Payment”)
Payable at closing. The Purchase Price and Earn-Out Compensation (as defined
below) shall be subject to adjustments in Section 2.5; to setoff as set
forth in Section 2.6; in Section 2.8 or anywhere else provided for in
this Agreement. The Purchase Price and any subsequent payment under this
Section may, at the Buyer’s option, be reduced by any amount the Company
owes the Buyer.
(b) The
Cash
Payment paid to the Company, after adjustments as set forth herein, shall be
the
“Purchase Price.”
(c) Buyer
will pay any sales tax associated with its purchase of the Assets.
2.5 Post
Closing Adjustments and Earn-Out Compensation.
(a) Provided
the Buyer does not have a claim against the Company Parent or the Company and
all Company Parent and Company liabilities and Indebtedness as of the Closing
Date are paid in full, Buyer shall pay the Company Earn-Out Compensation (the
“Earn-Out Compensation”) as follows:
(i) for
the
period beginning upon Closing and ending one (1) year thereafter: pay the
Company four (4%) percent of the total in excess of $200,000 per month of (a)
the gross revenues of existing customers of the Business; and (b) revenues
associated with the sale of existing products and services of the Business
(collectively, the “VoIP Asset Revenues”). The VoIP Asset Revenues shall be net
of returns, allowances and chargebacks. It is further intended that if existing
products or services of the Business are renamed, repackaged, enhanced, or
sold
through different channels, that related revenues are to be included in VoIP
Asset Revenues. Any revenues associated with the Buyer’s sale of its VoIP
services via the Buyer or Efonica website are specifically excluded from the
VoIP Asset Revenues and from the calculation of the Earn-Out
Compensation.
(ii) for
the
period beginning upon the first (1st) anniversary of the Closing and ending
one
(1) year thereafter: pay the Company three (3%) percent of the total of VoIP
Asset Revenues in excess of $150,000 per month.
(iii) For
the
period beginning upon the second anniversary of the Closing and ending one
(1)
year thereafter, pay the Company two percent (2%) of the VoIP Asset Revenues
in
excess of $100,000 per month.
(b) Earn-Out
Compensation shall be calculated on a quarterly basis at the end of each
calendar quarter and paid by Buyer to Company within thirty (30) days following
the end of each respective quarter, accompanied by a statement showing the
basis
for the calculations and payment.
(c) Buyer
may
not (i) move any or all of the customers of the Business to any affiliate of
Buyer; (ii) market to existing customers of the Business, the mailing list
of
the Business, or previous customers of the Business, all as listed in the
documents furnished to Buyer as part of this transaction, with the intent of
activating them as customers on Buyer’s service platform(s); or (iii)
incorporate the functionality, processes, or systems, or the components of
any
of the Intellectual Property or the network, into its now existing or newly
created products or services, until such time as the parties have agreed on
a
mutually acceptable method to track and allocate the VoIP Asset Revenues and
allow for the continued payment of amounts due under the Earn-Out Compensation.
The parties agree that any and all attempts to agree upon such a mutually
acceptable method will be negotiated in good faith and in a timely
manner.
(d) Should
Buyer elect to accelerate payment of the Cash Payment, the Parties will
negotiate in good faith to determine a mutually acceptable final payment from
Buyer to Company for the settlement of all amounts due hereunder.
2.6
No
Assumption of Liabilities.
Except
for and limited solely to the contractual obligations under the Contracts listed
on Schedule 2.2(d) and the liabilities listed on Schedule 2.6, Buyer
shall not assume, nor shall be liable for, any liabilities or obligations of
the
Company Parent, the Company or the Business, of any nature whatsoever, express
or implied, fixed or contingent, including, but not limited to any liability
for
any claim, regardless of when made or asserted, which arises out of or is based
upon negligence, strict liability or any express or implied representation,
warranty, agreement, contract or guarantee made by the Company Parent or the
Company, or alleged to have been made by the Company Parent or the Company,
or
which is imposed or asserted to be imposed by operation of law, in connection
with any product designed, manufactured, sold, shipped or installed by or on
behalf of the Company Parent or the Company, of or for any service performed
by
or on behalf of the Company Parent or the Company, including without limitation
any claim relating to the service, repair or replacement of any such product
and
any claim seeking recovery for property damage, consequential damage, lost
revenue or income or personal injury. In addition to the foregoing, in no event
shall Buyer assume any liability or incur any liability or obligation in respect
of any federal, state or local income or other tax or regulatory fee liability
of the Company Parent or the Company payable with respect to the Assets,
(including the Business), properties or operations of the Company Parent or
the
Company for any period through the Closing Date or thereafter or incident to
or
arising as a consequence of the negotiation or consummation by the Company
Parent or the Company of this Agreement and the transactions contemplated by
this Agreement and if requested to pay, defend or incur any liability, will
offset among other remedies as set forth in Section 2.8.
2.7
Allocation of Purchase Price. Buyer utilizing an independent third
party will determine the allocation of the Purchase Price for tax
purposes.
2.8
Adjustments. The Company and Buyer will make a reasonable effort
to obtain cut-off statements from vendors and other creditors of the Business
at
the Closing date. The Company will be responsible for paying those vendor and
creditor costs pertaining to the Company up to and including the Closing Date,
and Buyer will be responsible for paying those vendor and creditor costs
pertaining to the Business accruing after the Closing Date. For those costs
related to the Business that are not practical to obtain cut-off statements
as
of the Closing Date, including but not limited to accrued employee vacation
and
property taxes, and for those vendors unable to prepare a statement as of the
Closing Date, Buyer shall make the related payments, and then xxxx the Company
for those portions reasonably attributable to Business prior to the Closing
Date, and any amounts so billed shall be supported with the appropriate
documentation and the Company shall pay Buyer within thirty (30) days. Buyer
shall have the right to setoff payment otherwise due the Company under this
Section.
2.9
Unearned Revenue. The Company and Company Parent shall have no
obligation to Buyer for any unearned revenue at Closing, which is presently
being recorded in the Company’s general ledger account 22000.
III.
CLOSING
3.1
Closing. The Closing shall take place (i) at 10:00 a.m. (New York
time) at the offices of
Buyer, ________________________________________________________, on the
third business day following the date on which Parent provides the Company
with
written notice that the last of the conditions set forth in Article VIII is
satisfied or, if permissible, waived in writing; or (ii) on such other date
and
at such other time or place as is mutually agreed by the parties in this
Agreement in writing. Provided however, the Closing shall not occur later than
unless extended in writing by Buyer, and the Company has agreed that any
extension of the Closing will be by Buyer and the Company.
3.2 Items
to be Delivered at Closing. At the Closing and subject to the terms and
conditions contained in this Agreement:
(a) The
Company will deliver to Buyer the following:
(i) such
bills of sale with covenants of warranty, assignments, endorsements, and other
good and sufficient instruments and documents of conveyance and transfer, in
form and substance satisfactory to Buyer and its counsel, as shall be necessary
and effective to convey, transfer and assign to, and vest in, Buyer all of
the
Company’s right, title and interest in and to the Assets of the Business to be
sold under this Agreement, including, without limitation, (A) good, valid and
marketable title in and to all of the Assets of the Company related to the
Business, (B) good and valid leasehold interests in and to all of the Assets
leased by the Company related to the Business, and (C) all of the Company’s
rights under all agreements, contracts, commitments, leases, plans, bids,
quotations, proposals, licenses, permits, authorizations, instruments and other
documents to which the Company is a party or by which they have rights on the
Closing Date and which are to be sold under this Agreement and are related
to
the Business; and
(ii) all
agreements, contracts, customer prospect lists, commitments, leases, plans,
bids, quotations, proposals, licenses, permits, authorizations, instruments,
manuals and guidebooks, price books and price lists, customer and subscriber
lists, supplier lists, sales records, files, correspondence, and other
documents, books, records, papers, files and data belonging to the Company
which
are part of the Assets or relate to the Business of the Company; and
simultaneously with such delivery, all such steps will be taken as may be
required to put the Buyer in actual possession and operating control of the
Assets and the Business; and
(iii) all
schedules to be provided under this agreement, five (5) days prior to Closing,
along with all supporting documentation.
(b) Buyer
will deliver to the Company the following:
(i) the
Initial Cash Payment as set forth in Section 2.4(a)(i).
(ii) The
Promissory Note and Security Agreement.
3.3 Third-Party
Consents. To the extent that the
rights of the Company under any agreement, contract, commitment, lease, license,
permit, authorization or other Asset to be assigned to Buyer may not be assigned
without the consent of another person which has not been obtained, this
Agreement shall not constitute an agreement to assign the same if an attempted
assignment would constitute a breach or be unlawful, and the Company shall
use
its best efforts to obtain any such required consent(s) promptly. If any such
consent shall not be obtained or if any attempted assignment would be
ineffective or would impair Buyer’s rights under the instrument in question in
Buyer’s sole determination so that would not in effect acquire the benefit of
all such rights, then Buyer shall have the option of terminating this Agreement.
3.4 Further
Assurances. The Company, from
time to time within one (1) year after the Closing, at Buyer’s request, will
execute, acknowledge and deliver to Buyer 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 Buyer may reasonably request
in order to vest more effectively in Buyer, or to put Buyer more fully in
possession of, any of the Assets, or the Business.
IV.
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY PARENT
AND
THE COMPANY
The
Company Parent and the Company, jointly and severally, hereby represent and
warrant to Buyer on the date hereof and on the Closing Date as
follows:
4.1 Organization
and Qualification. Each the
Company Parent and the Company (a) is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation; (b) has all requisite corporate power and authority to own,
lease
and operate its properties and to carry on its business as it is now being
conducted and (c) is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the properties owned, leased or operated
by it or the nature of its activities makes such qualification necessary.
4.2 Authorization
and Validity of Agreement. Each
the Company Parent and the Company has all requisite corporate power and
authority to enter into this Agreement and to perform its obligations hereunder
and consummate the transactions contemplated hereby. The execution, delivery
and
performance by the Company Parent and the Company of this Agreement and the
consummation by the Company Parent and the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of the Company Parent and the Company. This
Agreement has been duly executed and delivered by the Company Parent and the
Company and is a legal, valid and binding obligation of the Company Parent
and
the Company enforceable against the Company Parent and the Company in accordance
with its terms.
4.3 Financial
Statements. The Company has
delivered to Buyer copies of the unaudited income statements of the Business
for
the fiscal year ended December 31, 2006, and the periods ended May 31,
and April 30, 2007, and the unaudited balance sheet of the Business as of
May 31, and April 30, 2007 (collectively the “Financial Statements”).
The Financial Statements have been prepared in accordance with past practices
and in accordance with generally accepted accounting principles (GAAP) applied
on a consistent basis throughout such period. The Financial Statements are
true,
correct and complete, and present fairly and accurately the financial condition
and position of the Business as of the dates indicated.
4.4 Absence
of Undisclosed Liabilities. Except as
set forth in Schedule 4.4, on the date hereof and as of the Closing Date,
the Company has no liabilities of any nature, whether direct, indirect, accrued,
absolute, contingent or otherwise (including, without limitation, liabilities
as
guarantor or otherwise with respect to obligations of others or liabilities
for
Taxes due or then accrued or to become due), that were not fully and adequately
reflected or reserved against on the Financial Statements of the Company. There
is no existing condition, situation or set of circumstances (excluding possible
changes in the Tax laws of any jurisdiction) that could reasonably be expected
to result in any such liability, other than liabilities (i) fully and adequately
reflected or reserved against on the Financial Statements; or (ii) incurred
since the Current Balance Sheet Date in the ordinary course of business
consistent with past practice, which in the aggregate are not material to the
Company. For purposes of this Section 4.4, “material” shall mean any amount
in excess of $10,000.
4.5 No
Material Adverse Change. Since the date of the Financial Statements,
there have been no material changes in the assets, properties, business,
operations, prospects or condition (financial or otherwise) of the Business
that, individually or in the aggregate, materially and adversely affect the
Business, nor does the Company know of any such change that is reasonably likely
to occur, nor has there been any damage, destruction or loss materially and
adversely affecting the assets, properties, business, operations, prospects
or
condition of the Business, whether or not covered by insurance.
4.6 Accounts
and Notes Receivable. All accounts
and notes receivable reflected in the Financial Statements and all accounts
receivable arising after the date of the Financial Statements (collectively,
the
“Accounts Receivable”) have arisen in the ordinary course of business ,
represent valid and enforceable obligations due to the Business, and are not
subject to any discount, set-off or counter-claim. All such Accounts Receivable
have been collected or, will be fully collectible in the ordinary course of
business in the aggregate recorded amounts thereof.
4.7 Tax
Matters.
(a) As
used
in this Agreement, “Taxes” shall mean all taxes, including without limitation
income taxes, corporation taxes, capital taxes, excise taxes, value added and
sales taxes, use taxes, gross receipts taxes, franchise taxes, employment and
payroll related taxes, goods and services taxes, transfer taxes, withholding
taxes, property taxes and import duties, levies, deductions, withholdings,
charges, public and private pension plan contributions, social security
contributions, workmen’s compensation contributions, public health
contributions, regulatory fees and taxes, assessments, fees of any nature,
and
all deficiencies or other additions to tax, interest and penalties owed by
the
Business the Company Parent and/or by the Company; and “Tax” shall mean any one
of them. The Company has paid all Taxes required to be paid through the date
hereof (other than Taxes not yet due and payable, the liability for which is
adequately reserved for by the Company in the Financial
Statements).
(b) The
Company has timely filed all Tax Returns required to be filed by it through
the
date hereof. Each of the Tax returns filed by the Company completely, correctly
and accurately reflects the amount of the tax liability for the period covered
thereby.
(c) There
has
not been any audit of any Tax Return filed by the Company, no audit of any
Tax
Return filed by the Company is in progress, and the Company has not been
notified by any tax authority that any such audit is contemplated or pending.
No
tax authority is now asserting or, to the best knowledge of the Company,
threatening to assert any Tax deficiency or claim for additional Taxes or
interest thereon or penalties.
(d) The
Company has withheld from each payment made to any of its past and present
officers, employees, consultants and agents the amount of any and all Taxes
and
other deductions required to be withheld and has paid or made adequate provision
for the payment of such amounts to the proper authorities.
4.8 No
Approvals or Notices Required; No Conflict with Instruments.
The
execution, delivery and performance of this Agreement and the related agreements
by the Company Parent and the Company will not contravene or violate (a) any
existing law, rule or regulation to which the Company Parent and the Company
is
subject, (b) any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body or authority
which is applicable to the Company Parent and the Company, or (c) the
Certificate of Incorporation or Bylaws of the Company Parent and the Company;
nor will such execution, delivery or performance violate, be in conflict with
or
result in the breach (with or without the giving of notice or lapse of time,
or
both) of any term, condition or provision of, or require the consent of any
other party to, any mortgage, indenture, agreement, contract, commitment, lease,
plan or other instrument, document or understanding, oral or written, to which
the Company Parent and the Company is a party or by which the Company Parent
and
the Company is otherwise bound. Except as set forth on Schedule 4.8, no
authorization, approval or consent, 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 the Company
Parent and the Company.
4.9 Legal
Proceedings. Except as set forth in Schedule 4.9, there is no
(a) Legal Proceeding pending or threatened, against, involving or affecting
the
Company or any of its respective assets or rights; (b) judgment, decree,
Injunction, rule, or order of any Governmental Entity applicable to the that
has
had or is reasonably likely to have, either individually or in the aggregate,
a
Company Material Adverse Effect; (c) Legal Proceeding pending or threatened,
against the Company that seeks to restrain, enjoin or delay the consummation
of
this Agreement or any of the other transactions contemplated by this Agreement
or that seeks damages in connection therewith; or (d) Injunction, of any type.
For the avoidance of any doubt, the Buyer and each of its shareholders, board
of
directors, officers, employees, agents or attorneys (each an “Indemnified
Party”), will be indemnified by the Company Parent and the Company from and
against any and all claims, liabilities, obligations, costs and attorneys’ fees
and held harmless in the event a Legal Proceeding is pending or threatened
against any Indemnified Party. This section shall survive Closing for a period
of two (2) years or, so long as there is no payment default by the Buyer in
the
third (3rd) year, three (3) years.
4.10 Licenses;
Compliance with Regulatory
Requirements. The Business holds the licenses, franchises,
authorizations, permits, certificates, variances, exemptions, concessions,
leases, instruments, orders and approvals (collectively, the “Licenses”), which
are listed in Schedule 4.10, required for or which are material to the
ownership of the Assets and the operation of the Business, all of which are
being assigned pursuant to this Agreement to Buyer. The Company is in compliance
with, and has conducted the Business so as to comply with, the terms of the
respective Licenses and all applicable laws, rules, regulations, ordinances
and
codes. Buyer will make all necessary disclosures to effectuate the transfer
of
any License.
4.11 Brokers
or Finders. No agent, broker,
investment banker, financial advisor or other entity is or will be entitled,
by
reason of any agreement, act or statement by the Company Parent and the Company
or its officers, employees, consultants or agents, to any financial advisory,
broker’s, finder’s or similar fee or commission, to reimbursement of expenses or
to indemnification or contribution in connection with any of the transactions
contemplated by this Agreement, and the Company agrees to hold Buyer harmless
from and against any and all claims, liabilities or obligations with respect
to
any such fees, commissions, expenses or claims for indemnification or
contribution asserted by any entity on the basis of any act or statement made
or
alleged to have been made by the Company Parent and the Company or its officers,
employees, consultants or agents. No agent, broker, investment banker, financial
advisor or other entity is or will be entitled, by reason of any agreement,
act
or statement by Buyer or its officers, employees, consultants or agents, to
any
financial advisory, broker’s, finder’s or similar fee or commission, to
reimbursement of expenses or to indemnification or contribution in connection
with any of the transactions contemplated by this Agreement, and Buyer agrees
to
indemnify and hold the Company Parent and the Company harmless from and against
any and all claims, liabilities or obligations with respect to any such fees,
commissions, expenses or claims for indemnification or contribution asserted
by
any entity on the basis of any act or statement made or alleged to have been
made by Buyer or its officers, employees, consultants or agents, as per separate
agreement by and between the Company and the Finder.
4.12 Leasehold
Interests. The leasehold interests
of the Business are set forth in Schedule 4.12. All such leases are in good
standing, have no Liens against them, and are in full force and effect. Such
leases will be assigned by the Company to Buyer effective as of the Closing
Date, with the consent of the Landlord.
4.13 Title
to Assets; Liens. Except as set forth on Schedule 4.13, the
Company has good, valid and marketable title to the Assets to be sold to Buyer,
free and clear of all liens, pledges, security interests, charges, claims,
restrictions and other encumbrances and defects of title of any nature
whatsoever, including, without limitation, all assets reflected in the Financial
Statements. There are no developments, pending or threatened, affecting any
of
the Assets that might materially detract from their value or materially
interfere with any present or intended use of the Assets.
4.14 Employees.
Set forth on Schedule 4.14 is
a complete list of the employee’s of the Business. Except as set forth in
Schedule 4.14, the Company is not delinquent in payments to any of its
employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed by them to the date hereof, or for
amounts reimbursable to such employees.
4.15 Provided
Information. All written information
concerning the Assets and the Business that has been prepared by or on behalf
of
the Company and that has been or will be provided to Buyer in connection with
this Agreement, was or will be, at the time made available, correct in all
material respects and did not, at the time made available, contain any untrue
statement of a material fact or omit to state a material fact necessary in
order
to make the statements contained therein not misleading in light of the
circumstances under which such statements were made.
4.16 Full
Disclosure. Now and as of the date of Closing, the Schedules hereto
or which shall be attached hereto prior to Closing, and all documents and other
papers listed therein or required to be delivered pursuant to this Agreement,
and all due diligence materials provided are true, complete, correct and
authentic. No representation or warranty of the Company Parent and the Company
contained in this Agreement, and, no document furnished by or on behalf of
the
Company Parent and the Company to Buyer pursuant to this Agreement or in
connection with the transactions contemplated hereby, contains an untrue
statement of a material fact or omits to state a material fact required to
be
stated therein or necessary to make the statements made, in the context in
which
made, not false or misleading.
4.17 Survival.
Except as provided in
Section 4.9, the Representations and warranties under this Section 4.
shall survive the Closing Date for a period of two (2) years or, so long as
there is no payment default by Buyer in the third (3rd) year, three (3)
years.
V.
REPRESENTATIONS
AND WARRANTIES OF PARENT AND _BUYER
Buyer
hereby represents and warrants to the Company Parent and the Company as
follows:
5.1 Organization
and Qualification. Buyer
(a) is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Texas, (b) has all requisite
corporate power and authority to own, lease and operate its properties and
to
carry on its business as now being conducted; and (c) is duly qualified or
licensed and is in good standing to do business in each jurisdiction in which
the properties owned, leased or operated by it or the nature of its activities
makes such qualification necessary.
5.2 Authorization
and Validity of Agreement. Buyer
has all requisite corporate power and authority to enter into this Agreement
and
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Buyer of this
Agreement and the consummation of the transactions contemplated hereby have
been
duly and validly authorized by all necessary corporate action on the part of
Buyer. This Agreement has been duly executed and delivered by Buyer and is
a
legal, valid and binding obligation of Buyer enforceable against Buyer in
accordance with its terms.
5.3 Disclosure.
Buyer has reviewed the due
diligence material provided by the Company Parent and the Company and each
Schedule attached hereto. Each document was reviewed with the presumption
of correctness on its face without further due diligence on Buyer’s
part.
VI.
ADDITIONAL
COVENANTS AND AGREEMENTS
6.1 Access
to Information.
(a) During
the period from the date of this Agreement and continuing until the period
of
the Statue of Limitations for any claim, and upon reasonable notice, the Company
will afford to Buyer reasonable access during normal business hours to its
personnel and to any books, records, financial data, operating data or other
information relative to the Business as Buyer will from time to time reasonably
request. Buyer agrees that it will not use any information obtained pursuant
to
this Section 6.1 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement or the ongoing operation of the
Business.
(b) During
the period from the date of this Agreement and continuing until the period
of
the Statute of Limitations for any claim and upon reasonable notice, the Buyer
will afford to Company Parent and the Company reasonable access during normal
business hours to its personnel and to any books, records, financial data,
operating data or other information necessary to audit the payments made under
Section 2.5 of this Agreement. Each of Company Parent and the Company
agrees that it will not use any information obtained pursuant to this
Section 6.1 for any purpose unrelated to the audit of the payments made
under Section 2.5 of this Agreement.
6.2 Confidentiality.
(a) Unless
otherwise agreed to in writing by the party disclosing the same (a “disclosing
party”), each party (a “receiving party”) will, and will cause its officers,
directors, employees, and agents (collectively referred to as such party’s
“Representatives”) to, (i) keep all Confidential Information (as defined below)
of the disclosing party in strict confidence and not disclose or reveal any
such
Confidential Information to any Person other than those Representatives of
the
receiving party who are participating in effecting the transactions contemplated
hereby or who otherwise need to know such Confidential Information, (ii) use
such Confidential Information only in connection with consummating the
transactions contemplated hereby and enforcing the receiving party’s rights
hereunder, and (iii) not use Confidential Information in any manner detrimental
to the disclosing party. In the event that a receiving party is requested
pursuant to, or required by, applicable law or regulation or by legal process
to
disclose any Confidential Information of the disclosing party, the receiving
party will provide the disclosing party with prompt notice of such request(s)
to
enable the disclosing party to seek an appropriate protective
order.
(b) A
party’s
obligations hereunder with respect to Confidential Information that (i) is
disclosed to a third party with the disclosing party’s written approval, (ii) is
required to be produced under order of a court of competent jurisdiction or
other similar requirements of a governmental agency, or (iii) is required to
be
disclosed by applicable law or regulation, will, subject in the case of clauses
(ii) and (iii) above to the receiving party’s compliance with the preceding
sentence, cease to the extent of the disclosure so consented to or required,
except to the extent otherwise provided by the terms of such consent or covered
by a protective order. If a receiving party uses a degree of care to prevent
disclosure of the Confidential Information that is at least as great as the
care
it normally takes to preserve its own information of a similar nature, it will
not be liable for any disclosure that occurs despite the exercise of that degree
of care, and in no event will a receiving party be liable for any indirect,
punitive, special or consequential damages. In the event this Agreement is
terminated, each party will, if so requested by the other party, promptly return
or destroy all of the Confidential Information of such other party, including
all copies, reproductions, summaries, analyses or extracts thereof or based
thereon in the possession of the receiving party or its
Representatives.
(c) For
purposes of this Section 6.2, “Confidential Information” of a party means
all confidential or proprietary information about such party that is furnished
by it or its Representatives to the other party or the other party’s
Representatives, regardless of the manner in which it is furnished.
“Confidential Information” does not include, however, information which (i) has
been or in the future is published or is now or in the future is otherwise
in
the public domain through no fault of the receiving party or its Representatives
or is otherwise required to be disclosed by law; (ii) was available to the
receiving party or its Representatives on a non-confidential basis prior to
its
disclosure by the disclosing party; (iii) becomes available to the receiving
party or its Representatives on a non-confidential basis from a Person other
than the disclosing party or its Representatives who is not otherwise bound
by a
confidentiality agreement with the disclosing party or its Representatives,
or
is not otherwise prohibited from transmitting the information to the receiving
party or its Representatives, or (iv) is independently developed by the
receiving party or its Representatives through Persons who have not had, either
directly or indirectly, access to or knowledge of such information. Nothing
contained in this Section 6.2 shall be construed to limit a receiving
party’s right to independently develop or acquire products without use of the
disclosing party’s Confidential Information.
(d) The
Company Parent, the Company, and Buyer (and any party related thereto) will
provide all parties at least two business days in advance with a draft copy
of
any press release associated with this Agreement, and will provide all parties
at least one business day in advance with a draft regulatory filing associated
with this Agreement.
(e) Notwithstanding
the restrictions set forth above, each party shall be entitled to make the
required filings and publications necessary to comply with the rules and
regulations of any securities regulatory agency. In the event the Company Parent
and the Company is required to make such filing that reference this Agreement
and/or Buyer shall be entitled to pre-approve such filing in
writing.
6.3 Obligations
Post Closing.
(a) For
two
(2) years following Closing, the Company Parent and the Company, and their
directors, officers, employees and agents will not, directly or indirectly,
on
the Company Parent or the Company’s behalf or on behalf of any other person or
entity, in any way or in any other capacity, solicit any customer purchased
under this Agreement, including calling upon any such customer, for the purpose
of soliciting or providing to such customer any products or services which
are
the same as or similar to those provided or intended to be provided by
Buyer.
(b) The
Company Parent and the Company agree that for a period of two (2) years from
Closing (the “Non-Competitive Period”), the Company Parent and the Company, and
their directors, officers, employees and agents shall not, directly as owner,
partner, joint venturer, stockholder, employee, broker, agent, principal,
trustee, corporate officer, director, licensor or in any capacity whatsoever
engage in, become financially interested in, be employed by, render any
consultation or business advice with respect to, or have any connection with,
any business engaged in providing products or services that are the same as
or
competitive with the Business.
VII.
INDEMNIFICATION
7.1 Indemnification
by the Company Parent and the Company.
(a) From
and
after the Closing, the Company Parent and the Company, jointly and severally,
will defend, reimburse, indemnify and hold harmless Buyer and each of its
subsidiaries, shareholders, directors, officers, employees and agents, (each
such person being referred to as a “Company Indemnified Party”) against and in
respect of:
(i) any
and
all liabilities and obligations of any nature whatsoever, except unearned
revenues as described in Section 2.9 of this Agreement, relating to the
Company Parent, the Company, the Business or the Assets that accrue prior to
the
Closing that any Company Indemnified Party becomes liable for as a result of
the
purchase of the Assets (including the Business) or related to this
Agreement;
(ii) any
and
all actions, suits, claims, or legal, administrative, arbitration, governmental
or other proceedings or investigations against any Company Indemnified Party
that relate to the Business or the Assets, and which result from or arise out
of
any event, occurrence, action, inaction or transaction occurring prior to the
Closing Date, including but not limited to claims made by any regulatory
agency;
(iii) any
and
all damages, losses, deficiencies, liabilities, costs and expenses incurred
or
suffered by any Company Indemnified Party that result from, relate to or arise
out of any material misrepresentation, breach of material warranty or
nonfulfillment of any material agreement or covenant on the part of the Company
Parent and the Company under this Agreement or from any misrepresentation in
or
omission from any certificate, response to due diligence, schedule, statement,
document or instrument furnished to Buyer pursuant hereto or in connection
with
the negotiation, execution or performance of this Agreement;
(iv) any
claim
by any former officer or employee or creditor of the Company Parent and/or
the
Company; and
(v) any
and
all actions, suits, claims, proceedings, investigations, demands, assessments,
audits, fines, judgments, costs and other expenses (including, without
limitation, reasonable legal fees and expenses) incident to any of the foregoing
or to the enforcement of this Section 7.1.
(b) Notice
must be given within a reasonable time after discovery of any fact or
circumstance on which a party could claim indemnification (“Claim” or “Claims”).
The notice shall describe the nature of the Claim, if the Claim is determinable,
the amount of the Claim, or if not determinable, an estimate of the amount
of
the Claim. Each party agrees to use its best efforts to minimize the amount
of
the loss or injury for which it is entitled to indemnification. If the party,
in
order to fulfill its obligations to the other party must take legal action
or if
the party is involved in legal action, the outcome of which could give rise
to
its seeking indemnification, one party shall consult with the other party with
respect to such legal action and allow it to participate therein. The Company
Parent and the Company shall at all times have the primary obligation of
defending any Claim and shall pay all costs and attorneys’ fees associated
therewith whether the action is brought directly against a Company Indemnified
Party. The Company Parent and the Company, and Buyer agrees that there are
no
special or punitive damages in the event of any violation of the within
Agreement.
(c) No
Claim
for which indemnification is asserted shall be settled or compromised without
the written consent of the Buyer.
(d) A
Claim
shall be deemed finally resolved in the event a matter is submitted to a court,
upon the entry of judgment by a court of final authority.
7.2 Payment
of Indemnification Obligation. The
Company Parent and the Company, jointly and severally, agrees to pay promptly
to
any Company Indemnified Party, the amount of all damages, losses, deficiencies,
liabilities, costs, expenses, claims and other obligations to which the
foregoing indemnities relate, including attorneys’ fees. Buyer may setoff any
indemnification obligation from any portion of the Purchase Price (including
the
Note) or the Earn-Out Compensation.
7.3 Other
Rights and Remedies Not Affected. The indemnification rights of the
Company Indemnified Party under this Article VII are independent of and in
addition to such rights and remedies as Buyer, Buyer and the Company Indemnified
Party may have at law or in equity or otherwise for any misrepresentation,
breach of warranty or failure to fulfill any agreement or covenant hereunder,
including without limitation the right to seek specific performance, rescission
or restitution, none of which rights or remedies shall be affected or diminished
hereby.
7.4 Survival.
Notwithstanding any right of any
party to investigate fully the affairs of the other party and notwithstanding
any knowledge of facts determined or determinable by such party pursuant to
such
investigation or right of investigation, Buyer has the right to rely fully
upon
the representations, warranties, covenants and agreements of the Company Parent
and the Company in this Agreement or in any Schedule, certificate or financial
statement delivered by any party pursuant hereto. All such Company
representations, warranties, covenants and agreements shall survive the
execution and delivery hereof and the Closing hereunder and the Company Parent
and the Company Indemnified Party shall be indemnified in accordance with this
Section 7 or other express provisions in this Agreement, and, except as
otherwise specifically provided in this Agreement, the obligations shall
thereafter terminate and expire at the end of the third (3rd) full calendar
year
after the Closing Date unless a claim has been asserted prior to that
date.
7.5 Disputes.
In the event of any disputes over
whether indemnification is owed hereunder, the parties will each make good
faith, concerted efforts to resolve the claim or third-party claim within 30
calendar days of notice. If a claim is not resolved within the 30 days, then
it
will be resolved by arbitration under the auspices of the American Arbitration
Association.
VIII.
CONDITIONS
PRECEDENT
8.1 Conditions
Precedent to the Obligations of Buyer; Parent; the Company Parent and the
Company.
The
respective obligations of Buyer (8.2) and the Company Parent and the Company
(8.3) to consummate the Closing are subject to the satisfaction at or prior
to
the Closing Date of each of the following conditions:
8.2 Conditions
Precedent to the Obligations of Buyer.
The
obligations of Buyer to consummate the Closing are subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, unless
waived by Buyer in writing:
(a) Accuracy
of Representations and Warranties.
The
representations and warranties of the Company Parent and the Company contained
in Sections 4 shall be true and correct in all respects as of the date of this
Agreement and on and as of the Closing Date as though made on and as of the
Closing Date. Each other representation and warranty of the Company Parent
and
the Company contained in this Agreement shall, if specifically qualified by
materiality, be true and correct and, if not so qualified, be true and correct
in all material respects in each case as of the date of this Agreement and
(except to the extent such representation and warranty speaks as of a specified
earlier date) on and as of the Closing Date as though made on and as of the
Closing Date.
(b) Performance
of Agreements.
The
Company Parent and the Company shall have performed in all material respects
all
obligations and agreements, and complied in all material respects with all
covenants and conditions, contained in this Agreement to be performed or
complied with by it prior to or on the Closing Date.
(c) Officers’
Certificate.
The
Company Parent and the Company shall have delivered to Buyer (i) a certificate,
dated the Closing Date, signed on behalf of the Company Parent and the Company
by the Chief Executive Officer, certifying as to the fulfillment of the
conditions specified in Section 8, (ii) certificates, dated the Closing
Date, signed by and on behalf of each of the individuals listed on
Schedule 8.2(c), and (iii) a certificate of the Secretary of the Company
Parent and the Company certifying, among other things the incumbency of all
officers of the Company Parent and the Company having authority to execute
and
deliver this Agreement and the agreements and documents contemplated hereby
and
the transactions contemplated hereby.
(d) Approvals.
All
third party consents required hereunder are acquired.
(e) Liens
and Encumbrances.
Except
as set forth on Schedule 8.2(e), on or before the closing, the Company
Parent and the Company shall have obtained a release and discharge of any and
all liens (including Tax Liens), security interests, restrictions, defects
and
encumbrances which affect the Business or Assets to be transferred and provide
Company with all UCC-3 forms where applicable.
(f) No
Adverse Enactments.
There
shall not have been any material statute, rule, regulation, order, judgment
or
decree proposed, enacted, promulgated, entered, issued, enforced or deemed
applicable by any foreign or United States federal, state or local Governmental
Entity, and there shall be no action, suit or proceeding pending or threatened,
which, in Buyer’s reasonable judgment (i) makes or may make this Agreement, or
any of the other transactions contemplated by this Agreement illegal or imposes
or may impose material damages or penalties in connection therewith,
(ii) otherwise prohibits or unreasonably delays, or may prohibit or
unreasonably delay transactions contemplated by this Agreement or increases
in
any material respect the liabilities or obligations of Buyer arising out of
this
Agreement, or any of the transactions contemplated by this
Agreement.
(g) Contract
Consents and Notices.
All
consents to contracts required in connection with the consummation of the
transactions contemplated hereby and which, if not obtained or given, would
have, individually or in the aggregate, a Material Adverse Effect on the
transactions contemplated shall have been obtained and given.
(h) No
Material Adverse Change.
Since
the date hereof, nothing shall have occurred, and Buyer shall not have become
aware of any circumstance, change or event having occurred prior to such date,
which individually or in the aggregate, has had or, in the reasonable judgment
of Buyer, could be expected to have, a material adverse effect on (i) the
transactions contemplated hereby or Buyer’s liabilities or obligations with
respect to such transactions, or (ii) the business, assets, results of
operations, financial condition or prospects of the Company Parent and the
Company, taken as a whole, or Buyer, taken as a whole (including any potential
change or event disclosed on any Schedule which, subsequent to the date hereof,
actually occurs) or (iii) a declaration of a banking moratorium or any general
suspension of payments in respect of banks in the United States.
(i) Receipt
of Approvals and Consents from Governmental Entities.
All
approvals and consents by any Governmental Entity required in connection with
the consummation of the transactions contemplated hereby shall have been
obtained and shall be in full force and effect, all filings with any
Governmental Entity as are required in connection with the consummation of
such
transactions shall have been made, and all waiting periods, if any, applicable
to the consummation of such transactions imposed by any Governmental Entity
shall have expired.
(j) Proceedings
Satisfactory.
All
actions, proceedings, instruments and documents required to carry out the
transactions contemplated hereby or incidental hereto and all other related
legal matters shall have been reasonably satisfactory to and approved by counsel
for Buyer and such counsel shall have been furnished with such certified copies
of such corporate actions and proceedings and such other instruments and
documents as such counsel shall have reasonably requested.
(k) Due
Diligence.
The
Company confirms in writing that it has provided and fully disclosed all
requested due diligence materials and the Buyer have completed a review of
and
have approved in writing, in their sole discretion, all due diligence materials
and schedules.
(l) Agreements.
The
Company shall have received consents in writing to the assignment of the rights
of the Company Parent and the Company from the parties to the Agreements listed
on Schedule 2.2 such that the Buyer may succeed to those
rights.
(m) E911
Notification.
The
Company will provide evidence satisfactory to Buyer and its counsel that they
have fully complied with the E911 notification requirement as set forth by
the
Federal Communications Commission where applicable.
(n) Debtor
and Creditor Act.
The
Company shall have complied with the rules and regulations of each particular
jurisdiction as they pertain to creditor’s rights, including but not limited to,
right of notification of an asset sale.
8.3 Conditions
Precedent to the Obligations of the Company Parent and the
Company.
The
obligation of the Company Parent and the Company to consummate the Closing
is
also subject to the satisfaction at or prior to the Closing Date of each of
the
following conditions, unless waived by the Company Parent and the
Company:
(a) The
representations and warranties of Buyer contained herein shall be true and
correct in all respects as of the date of this Agreement and on and as of the
Closing Date, as though made on and as of the Closing Date. Each other
representation and warranty of Buyer contained in this Agreement shall, if
specifically qualified by materiality, be true and correct and, if not so
qualified, be true and correct in all material respects in each case as of
the
date of this Agreement and on and as of the Closing Date, as though made on
and
as of the Closing Date.
(b) Buyer
shall have performed in all material respects all obligations and agreements,
and complied in all material respects with all covenants and conditions,
contained in this Agreement to be performed or complied with by them prior
to or
on the Closing Date.
(c) Officers’
Certificate. Buyer shall have delivered to the Company Parent and the Company
a
certificate, dated the Closing Date, signed on behalf of Buyer by the Chief
Executive Officer certifying as to the fulfillment of the conditions specified
in Section 8, certifying, among other things the incumbency of all officers
of Buyer having authority to execute and deliver this Agreement and the
agreements and documents contemplated hereby and the transactions contemplated
hereby.
IX.
TERMINATION
9.1 Termination
by Either Buyer or the Company Parent and the
Company. In the event any of the conditions contained in
Section 8.2 are not fully and completely satisfied as solely determined by
the Buyer, and the conditions shall not have been expressly waived in writing,
this Agreement shall terminate upon notice by the Buyer to the Company Parent
and the Company. In the event any of the conditions contained in
Section 8.3 are not satisfied by Buyer as of the Closing Date and the
conditions shall not have been waived, this Agreement shall terminate upon
notice by the Company Parent and the Company to Buyer. The Company, its Parent,
and Buyer agree that, in the event of any post-closing claims and/or matters
effecting the within Agreement, that the party that receives notice of the
claim
will provide written notice of the claim to all other parties, and that
following said notice, all other parties will have the right to cure any claimed
default, and that in the event the claimed default within 30 days is uncured,
then in that event, the parties agree to submit the claim to Arbitration, as
provided for herein.
9.2 Effect
of Termination and Abandonment. In the event of termination of this
Agreement pursuant to this Article IX, this Agreement, except as to the
provisions of Section 6.2 and Section 7 which shall expressly survive
any termination, shall become void and of no effect with no liability on the
part of any party hereto; provided, however, except as otherwise provided
herein, no such termination shall relieve any party hereto of any liability
or
damages resulting from any willful or intentional breach of this
Agreement.
X.
MISCELLANEOUS
10.1 No
Waiver, Survival of Representations, Warranties, Covenants and
Agreements. The respective representations and warranties of Buyer,
and the Company Parent and the Company contained herein or in any schedule
or
certificate or other instrument delivered pursuant hereto prior to or at the
Closing shall not be deemed waived or otherwise affected by any investigation
made by any party hereto or any knowledge of any party for whose benefit such
representations and warranties are made. The respective covenants and agreements
of the parties contained herein which are to be performed after the Closing
shall survive the Closing Date and shall only terminate in accordance their
respective terms.
10.2 Expenses.
The parties shall pay their 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.
10.3 Remedy.
The Company Parent and the Company
acknowledges that the Assets are unique and not otherwise available and agree
that, in addition to any other remedy available to Buyer; Buyer may invoke
any
equitable remedy to enforce performance hereunder, including, without
limitation, the remedy of specific performance.
10.4 Notices.
All notices, requests, demands,
waivers and other communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered personally (by courier service or otherwise) or mailed, certified
or
registered mail with postage prepaid, or sent by confirmed telecopier, as
follows:
|
If
to Buyer:
|
|
Xxxxxx
Xxxxxxx
|
|
0000
Xxxxxxxxx Xxxxxx
|
|
Xxxxxx,
Xxxxxxx 00000
|
|
With
a copy to:
|
|
Xxxxxx
X. Xxxxx, Esq.
|
|
Xxxxxxx
Xxxxx LLP
|
|
0000
Xxxx Xxxxxx, Xxxxx 0000
|
|
Xxxxxx,
Xxxxx 00000
|
|
Facsimile:
000-000-0000
|
|
If
to Company:
|
|
With
a copy to:
|
or
to
such other Person or address as any party shall specify by notice in writing
to
the other party. Any such notice shall be deemed to have been given (a) upon
actual delivery, if delivered by hand, (b) on the third (3rd) business day
following deposit of such notice, properly addressed with postage prepaid,
with
the United States Postal Service if mailed by registered or certified mail,
return receipt requested, or (c) upon sending such notice, if sent via
facsimile, with confirmation of receipt, except that any notice of change of
address shall be effective only upon actual receipt thereof.
10.5 Entire
Agreement. This Agreement (including the Schedules and Exhibits and
other documents referred to herein) constitutes the entire agreement between
the
parties and supersedes all prior agreements and understandings, oral and
written, between the parties with respect to the subject matter
hereof.
10.6 Assignment;
Binding Effect; Benefit. Neither
this Agreement nor any of the rights, benefits or obligations hereunder may
be
assigned by any party (whether by operation of law or otherwise) without the
prior written consent of the other party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Except for the
provisions (which may be enforced by the Indemnified Parties), nothing in this
Agreement, expressed or implied, is intended to confer on any Person other
than
the parties or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
10.7 Amendment.
This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the
parties.
10.8 Headings.
The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
10.9 Counterparts.
This Agreement may be executed
in counterparts, each of which shall be deemed to be an original, and all of
which together shall be deemed to be one and the same instrument.
10.10 Governing
Law and Venue; Waiver of Jury Trial.
(a) THIS
AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF TEXAS WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The
parties hereby irrevocably submit to the jurisdiction of the courts of the
State
of Texas and the venue for any litigation shall be within Dallas County,
Texas.
(b) EACH
PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT.
10.11 Joint
Participation in Drafting this Agreement. The parties acknowledge and
confirm that each of their respective attorneys have participated jointly in
the
drafting, review and revision of this Agreement and that it has not been written
solely by counsel for one party and that each party has had the benefit of
its
independent legal counsel’s advice with respect to the terms and provisions
hereof and its rights and obligations hereunder. Each party hereto, therefore,
stipulates and agrees that the rule of construction to the effect that any
ambiguities are to be or may be resolved against the drafting party shall not
be
employed in the interpretation of this Agreement to favor any party against
another and that no party shall have the benefit of any legal presumption or
the
detriment of any burden of proof by reason of any ambiguity or uncertain meaning
contained in this Agreement.
10.12 Severability.
The provisions of this Agreement
shall be deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the other
provisions hereof.
10.13 Enforcement.
The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to seek an injunction or injunctions to prevent breaches of this Agreement
and
to enforce specifically the terms and provisions of this Agreement in the courts
located in the State of New York, this being in addition to any other remedy
to
which they are entitled at law or in equity.
10.14 Attorneys’
Fees
and Costs. Unless expressly
set forth in the Agreement, if any action or other proceeding is brought for
the
enforcement or interpretation of this Agreement, or because of any alleged
dispute, breach or default in connection with any of the provisions of this
Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorneys’ fees and other costs incurred in that action or proceeding
(including, without limitation, reasonable attorneys’ fees and costs incurred in
all appellate proceedings), in addition to any other relief to which it may
be
entitled.
10.15 Representation
by Counsel. Each party has had
the opportunity and reasonable time, to consult the attorney and accountant
of
its choosing with reference to this Agreement and the transactions contemplated
herein.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first above written.
|
|
WQN,
Inc.
|
|
|
By:
|
|
/s/
Xxxxxx Xxxxxxx
|
|
|
Name:
|
Xxxxxx
Xxxxxxx
|
|
Title:
|
CEO
|
|
|
|
||
|
VOIP,
INC.
|
||
|
By:
|
|
/s/
Xxxxxxx Xxxxxxx
|
|
|
Name:
|
Xxxxxxx
Xxxxxxx
|
|
|
Title:
|
Chairman
& CEO
|
|
|
||
|
VOIP
SOLUTIONS, INC.
|
||
|
By:
|
|
/s/
Xxxxxxx Xxxxxxx
|
|
|
Name:
|
Xxxxxxx
Xxxxxxx
|
|
Title:
|
Chairman
& CEO
|
|
